9AM HOUR: Faber Exclusive With Skydance CEOs, Crude Oil Surges, Yields and the 'Waller Effect" 10/8/26

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1:08It's been quite a journey, David. I followed it very closely, of course, as you know. You started the bidding for Warner at$18 a share. You ended at$31. When you include what you had to pay Netflix for their break fee, It was an increase of as much as$47 billion from your initial bid. Why is it worth it? Well, first, David, I don't know what you're talking about in terms of the journey here. It was smooth and easy. And no, it truly is. Walking in here today was quite remarkable because I remember the last time we were here was when we launched the hostel on your show. So becoming full circle today is really quite remarkable.

1:48And look, the reason why we went through everything that we did is because with the combination and the completion of this transaction, we are positioned to win in every single vertical that we operate in. By combining Paramount and Warner Brothers, we have the greatest content engine. With marquee intellectual property, you're uniting Lord of the Rings, Harry Potter, the DC Universe, under the same house as Mission Impossible, Top Gun Maverick, G.I. Joe, Transformers. You're immediately getting to scale and streaming. Between HBO Max and Paramount Plus, over 200 million global streaming subscribers, with, in addition to Pluto, 80 million monthly active users.

2:24We have an unmatched sports portfolio that includes the NFL, MLB, NHL, UEFA, basically PGA, just to name a few, not to mention the Olympics internationally. And an incredibly profitable linear portfolio anchored by CBS. When you look at our primetime lineup, the NCIS tonight just launched 42 % up basically from last year. Five of the top 10 cable channels. And we will transform this business. Well, let me start there then. Because, you know, you start as well, though. I mentioned the$47 billion additionally. Nobody thought you were going to get it for$18, but I bet you didn't think it was going to cost you$31 either when you started.

2:59So, you know,$79 billion in debt. You're almost seven times leverage. You have a target, though, of getting down to three times leverage, let's call it, three and a half years from now. You talk about transformation. You've got to deliver on that. What gives you the confidence you can do it and get to that three times leverage from where you are right now? Absolutely. So let's talk about the debt and the path to delevering. There's there's multiple avenues to delever. One is to grow the business. We're going to be investing more in content than any of our peers. We're projecting, you know, mid single digits, basically, you know, top line revenue growth on a company that's already producing close to 70 billion dollars of revenue.

3:35We have six billion dollars of synergies in the deal. And let's just look at what we did at Paramount. We were sitting here actually day one on your show at Paramount. We announced$2 billion of synergies. We are going to overperform that by 50%. We're going to complete$2.7 billion by the end of this year. And so when you look at, and then we're also going to be going from$4 billion in cash flow next year when you remove transaction costs to$10 billion by 2030. So we are absolutely in a position to where we can grow the business and delever simultaneously and create a tremendous amount of value for all stakeholders.

4:04You do. I mean, but you've got to invest as well. You mentioned the$4 billion in cash. You've got, I think it's$6 billion in interest costs going out a year. You've also got$800 million for a dividend. By the way, why have a dividend? Why bother, given the constraints you're under? It's good for shareholders. And again, when you look at the free cash flow conversion of this company, we can absolutely delever the business to three times in three years and invest more in content than any of our peers to be able to grow and scale this company. Absolutely. Again, I come back to it. What gives you that confidence when you say absolutely?

4:31Why? What are you seeing that, you know, many people are even rooting for you say, well, it's going to be a hard road. Let's look at the overall platform that we're operating right now. 12 % of all television watch time. That is second only to YouTube. So we have the scale, we have the intellectual property, we have the plan, and we have the people to be able to execute. And very thankfully, I'm sitting here with an incredible partner. And I believe the two of us are completely capable of the task at hand. Why did you hire Enon? So I've known Enon for seven years. I think he is an incredible operator.

5:04He's a visionary leader. There is candidly nobody in the world I would rather do this with. And I believe that as a team, we are incredibly strong. But actually, I'll let you answer that. You know what? I'd love to come to you in terms of just the synergy opportunity is key here. It does appear that is going to be one of your focuses day one. I guess I'll ask the question. What is your focus day one when you look at having to deliver on those cost synergies that are so important to making this deal work?

5:30Ynon Kreiz: Well, let me start by saying that I could not be more excited to be sitting here and partner with an entrepreneur like David and everything that he's accomplished today is nothing but inspiration. We have a unique opportunity to build the next generation media and entertainment global company that is powered by creativity and technology. We have the assets that David mentioned. We have the capability. We have the people. And all of this is happening at the point in time when the industry is at an inflection point where it's getting harder and harder to reach the consumer and aggregate fans. We have what it takes.

6:07Ynon Kreiz: We have what it takes. And while everybody is focused on synergy and debt, don't forget, this is a growth story. OK, well, a lot of people think it's a growth story. When you say we have what it takes, I'm trying to understand what I know the collection of assets is unparalleled in many ways. So we have a multi-year plan. Let's start with the synergy. We're looking to generate synergies of more than$6 billion over the next three years. This will come from technology, marketing consolidation, real estate optimization, and some labor, although labor is not the majority of the savings. Those synergies will take our EBITDA from$12 billion pro forma for next year up, obviously, by at least that amount.

6:51Ynon Kreiz: And in addition, we're looking to grow the business at mid-single-digit growth, CAGR, for the next three years by 2030. Right. With that, looking at our plan, we see a clear path to grow the business and achieve the profitability. To get to$10 billion in free cash flow, I guess, by 2030. That is a goal. And that will bring us to a three-time leverage ratio. No, that will be success. There's no doubt if you guys were able to do that. I look back. You joined, I think, Mattel as CEO in April of 2018. and not too many months later, you got rid of 25 % of the non-manufacturing jobs at the company. Is a similar type of approach needed here?

7:31Ynon Kreiz: Well, there's no question that we are already in full execution mode. We have a plan. This is my third day on the job, but we're already deep into it. We have an incredible team. We have multiple work streams. We have a clear vision and line of sight to achieve the savings we're aiming towards. Where do you start? It's a whole concept of opportunities. And when we talk about synergies, it's important also to say this is not about cost reduction. This is about re-engineering how we work. This is about reinventing the business model. So it's not just synergies and reducing costs, it's also improving how we perform.

8:12Ynon Kreiz: And we're looking to build a high-performing company, leveraging technology, leveraging capabilities, and build something that will stand out for years to come. And this is a long-term plan. This is not about a few days of share trading or, you know, or even managing synergies for three years. We're building a company for future generations, and we have an opportunity to stand out in a crowded market. But reducing the workforce is a part of that. Yes, and we said that. We were public about it. But when it comes to making those decisions, of course, we're thinking of our people. We're going to do it in the right way, respectfully, transparently, and communicate our plans.

8:54Ynon Kreiz: This will be part of the plan. This is part of the plan. It will be part of the process. How do you divide the labor here? What is your view? I mean, I asked you why you hired him, but now what? You know, do you have a clear idea of how you delineate sort of responsibility? So we absolutely have clear lines of delineation. First, I want to say is we're going to do everything as true partners. And really, sitting here today, this caps a three-year journey. We were talking about buying Warner Brothers Discovery before we actually closed on Paramount because we believe this gave us the scale and put us in a position to be able to win.

9:26So this has been a long-term strategic vision and strategy that I've had for three years. I'll continue to lead in strategy, creativity, technology. Enum will obviously focus on day-to-day operations of the company. But we'll do everything in partnership. And again, there's nobody else I'd do this with. Right. David, you know, one of the key gating issues for Warner Brothers Discovery and for many other companies that have cable networks has been the continued decline of the cable ecosystem. And free-to-air as well. That continues. And, you know, you can create synergies and get cost savings and create more cash flow.

10:05But then you're dealing with this decline on the other side. How do you see that playing out? So, look, I think, as Edan said, this is a growth story. When you put the two streaming services together, we do get to a world to where the studios and streaming business outpaces linear declines. And obviously the company grows and creates long-term value over time. But we're also bullish on the linear business. Again, like, let's look at the last year of owning CBS. It is the Tiffany network, the number one broadcast network for over 17 years. It's number one primetime lineup. We delivered a record-setting NFL season last year.

10:37And the linear businesses are separate, right? Broadcast is incredibly stable. Yes, cable is declining, but it is still high margin, highly cash flow generative. By putting these companies together, we can keep that business longer over time and make sure that we transition into a predominantly studios and streaming business and deliver long term value for sure. Do you have a view on sort of where, I mean, we all wonder when are we going to hit the bottom? Is it 50 million subs? When is it? The answer is you're already seeing actually the decline start to asymptote. I think so. You're already seeing it happen now.

11:06And again, let's just go back to what just happened two days ago on CBS, where viewership in primetime is up 42 % year to date. So I do think you're seeing that starting to slow. And when you contrast it to kind of the Warner Brothers discovery, the linear declines were not well understood at that moment in time. I think they are incredibly well understood now. We've been very conservative about what we're projecting in our model. And I think as a result of that, we'll be able to over-deliver for shareholders.

11:31Ynon Kreiz: You know, with that, David, just on you, this is an important point. is when you look at our linear TV portfolio, it's anchored by CBS, the crown jewel of broadcast television. And then we have 50 channels, 50 cable networks, including seven of the top 10 in the key demo of 18 to 49. And that allows us to reach audiences all over the world across every entertainment vertical. And as David said, the way we manage this portfolio is for the long term. So we believe we can still optimize profitability. Yes, there will be top-line decline. There's going to be decline. I've been a part of this world for 30-something years now.

12:11Unfortunately, it went like this, and now we're going like this. Can we step back, actually? Let's look back at how we got here 10 years ago. Tech came into media and fundamentally disrupted the business. Companies didn't pivot fast enough. We can talk a lot about the owner-operator entrepreneurial culture of Silicon Valley versus the more steward culture of Hollywood that candidly put the businesses in this position, this transaction is the solution to those mistakes 10 years ago. Big tech took platform technology, pushed into media. What we're doing, but by the people are still there for the content.

12:48They're there for the stories. They're there for the news that they love, the sports that they love, the stories they love. We have assembled an unmatched portfolio of intellectual property, sports, and news assets. And then we are building the product and tech organization that can compete with anybody coming out of Silicon Valley. That is going to enable us to push back. And when you look at the late delay to pivot, this accelerates streaming growth by years as a standalone company. And you get to that inflection point very, very quickly to where the growth businesses of studios and streamings, no, but outpace linear decline.

13:21I get it. And that I want to let's focus on that, because that is the key. If you're going to succeed, it's got to be the DTC portfolio. you. It's got to be the international platform, right, as well. Absolutely. And if you look at that, we have incredible room to run here in the States domestically. These services are still nascent internationally. So we have a tremendous amount of room to grow in the international business. Our fast business is growing rapidly, both in terms of engagement and market share. And then in addition to that, we are investing more in content than any of our peers. Like, just talk about the scale of it.

13:5230 movies a year, over 180 series, CNN news assets, CBS news asset, unmatched sports portfolio plus the product and tech layer, we are positioned to compete with anybody and to win by putting these companies together.

14:04Ynon Kreiz: And I would not, sorry, for this, on this point, where we stand out is not just with the incredible assets that we own in terms of content, but the ability to generate original content and find the next big hit. This is something that David has done consistently, consistently with Skydance. Well, it comes back to creativity. Exactly. So we're looking to win in content. This is the main tenant of the strategy, win in content. Right. And if we do that, it shows people are going to come to the platform. And this is something that no one does. There are other platforms, other D2C platforms, other cable networks, other broadcast networks.

14:39Okay, but I want to understand what the real goal is, though, in terms of, all right, you know, Netflix is out there. You see yourself becoming a number two. And you've said you're, and this is a quote, unifying under a single service over time in terms of Paramount Plus and HBO Max. What does that mean? How quickly does it happen? What comes first? No, no. So the answer is it's already happening. You know, we literally announced yesterday that we're unifying ad sales across the platforms. The product and tech teams are literally already at work unifying the back-end tech stacks. We actually just completed that for the three services at Paramount a month ago.

15:12When you look at agentic tooling and what you can now do with Claude and Codex, we can bring those back-ends together significantly faster. Do you think so? Because I mean, I hear that from others who tried to do it. It takes time, they say. I look at Disney and everything else. Do you think you can do it fast? The answer is we know so. And I will say when you look at legacy media companies have traditionally had IT organizations, not product and tech teams. We are building a true product and tech team. We've been doing it within a year with within Paramount. When you look at Dane Glasgow, who runs that business for us prior to joining us, he was running Facebook for Meta and has over 20 years basically working with the best technology companies in the world.

15:49We have that team in-house. And what you are seeing on average by deploying these AI tools across the company is on average a 50 % acceleration in terms of how fast you can get things done. For the high performers in the company, they are 10xing what they used to be able to do before. And when you talk about our synergy numbers, we're not applying AI to any of that. So when you look at how AI is going to transform every part of the business, we are really well positioned. But it's not going to transform movies. These 30 movies are not going to be AI generated. So what I would say is, look, we are a big believer that artificial intelligence is a tool for artists, not the other way around.

16:25And I don't think anything will disrupt that. What I do think is going to be possible when you talk about storytelling and artificial intelligence, I do believe it'll be one of the biggest unlocks for creativity. For example, 1983, James Cameron made the first Terminator movie,$4 million. That movie shot for shot today,$60 or$70 million. How many first-time directors with an original script and no movie star, completely unproven, get a$60,$70 million budget? If you can use those toolings to be able to have that movie cost$20 million today, it'll be a massive unlock for the creative community. Well, you need it.

17:01I mean, 30 movies is not going to be cheap. And sometimes they don't work, and so you're taking a loss on them. But we're doing it today. I mean, let's just actually look at what's accomplished. Paramount, in the first year of ownership, we went from 8 to 15 movies. Warner Brothers has over 15 movies on the calendar, so we literally have 34 movies dated for next year. We can absolutely handle that volume. It's baked into the business plan, and it positions us incredibly well. And you talk about streaming. What does 30 movies mean for streaming? It means every 11 days, a movie with a theatrical release window and a theatrical print and advertising campaign debuts on service.

17:35That's a lot. It's incredibly powerful. That leads to engagement and subscriber acquisition. Yeah. Yeah. You know, the TV side of your business, the production side of Warner Brothers is pretty significant, too. They sell important shows to a lot of the streamers. Are you going to keep doing that? Do you have an opportunity to raise price or do you eventually bring it all in-house? So we're going to increase production both for our own services. So basically, you know, we think first and foremost about the consumer. And we want to make sure that we are offering the best storytelling in the world on our platforms.

18:09and you're going to see us increase production for what is going to be available on our streaming service and linear networks and in the theater. In addition to that, we will absolutely continue to sell to third parties. And again, when you look at the overall television portfolio across the three studios, it's over 180 shows a year, more than any other company in the world. Right. You did lose Taylor Sheridan to NBC. Was that a blow? How do you view that in terms of what that's going to mean, given how important he has been at least to the success of Paramount+. So I have so much admiration and respect for Taylor.

18:38He's still under contract with us till 2029. We actually have nine series that we're making together between now and the end of his contract. If you haven't seen Lioness season three, it's truly spectacular. We have a great relationship. He's literally writing Call of Duty for us with Pete Burke as we speak. And we also just greenlit another movie of his. And all that intellectual property we own and stays at the company. So we're going to have a long relationship with Taylor. And does Paramount's content, I mean, and HBO Max's content, I'm just curious as to how you see that all. mixing and matching, so to speak, in terms of on one service for the end customer and what they want?

19:14So one of the things that is actually fantastic is the two services are highly complementary. It's actually the lowest overlap over any of the services. And we want to be a service that actually speaks to everyone. The lowest overlap in terms of subscriber basis. Correct. So the overlap is a lot less than people think. And it puts us in a position to be able to talk to every audience. We want to be something for everybody. and we want to be the number one destination for the most talented artists and filmmakers in the world. And we believe we're in a position to deliver a market-leading service.

19:43I want to talk a bit news here. Obviously, you now have CNN and CBS. You merged the news gathering operations. Is that fair to assume? I mean, there's got to be some cost savings there, right?

19:55Ynon Kreiz: Well, this isn't about cost savings in this case. We look to keep the businesses run in parallel with independent editorial operation. This is really important. and two separate businesses. And we're so fortunate to have such successful, well-established, highly recognized brands in news. Yeah, but news gathering though, why have them both do the same thing? Can't you just do once? They're absolutely operational efficiencies. And I'll say the operational efficiencies, we've looked at this deal for over a year. We know where every single dollar is. Again, I'll point to our track record at Paramount.

20:28And look, when you are the largest shareholder in the business, you are completely focused on how do we create long-term value for all of our shareholders. And so from that standpoint, we are 100 % confident in the$6 billion synergy number that we've outlined. Again, our track record is over-delivering quite significantly. We know where those are. You mentioned so many things you have to invest in, though. I mean, marketing is going to be required for the combination of the DTC platform, all of those movies. You feel confident you can deliver on all of that?

20:56Ynon Kreiz: This is all part of the plan. We have a multi-year plan. And as we've said, we expect to grow over the period. at mid-single-digit CAGR through 2030 and achieve profitable growth, increasing our EBITDA margin to the mid-20s and generate the$10 billion cash flow, free cash flow that we talked about. This is all part of the plan. Go ahead, David. One thing I just want to add, because I couldn't agree more. And again, I would point to what we did at Paramount, right? Even when you look at the synergies that we executed, we increased our investment in content. We doubled the film slate from 8 to 16 films.

21:31We greenlit 40 new and returning series. We invested in more sports rights while operating the business more efficiently. We're going to do the exact same thing here. It is all detailed out. And now we get to go execute on it. Now you get to write. Now you get to show us. So you mentioned sports right in the brief time I have left. The NFL, the change in control provision when you bought Paramount, was that exercised? Does it mean you're going to have to renegotiate with them sooner than you might have otherwise? So we have a great relationship with the NFL. I think one of the things that, you know, the NFL was actually an investor in Skydance.

22:03It is now an investor. Well, now today and also Skydance. So we delivered last year a record setting season with them. We anticipate being in business with the NFL for the foreseeable future. And based on all the conversations with Roger, I think he sees it the same way. And CNN's future, you know, was the subject that would seem of so much so many column inches. Certainly, David, you kept Mark Thompson. Why? He's done a phenomenal job. And we also, given everything everyone's been through, we want stability. We believe in editorial independence across the news organizations. We think CNN is a remarkable brand.

22:36We think CBS News is a remarkable brand. When you put these two businesses together, it has... CBS News under Barry Weiss has changed its approach to a certain extent. Do you expect similar moves from CNN? Right now, I'd say you have to talk to Mark. Corporate stays out of editorial. So again, I would say that's a conversation for Mark. It's a conversation for Barry. But we're going to support them. All right. I'm looking forward to future conversations with both of you. When we sit down a year from now, what are we going to be talking about in terms of your ability to deliver on these synergies you've talked about so much and on the growth that you're talking about?

23:08So I'll start. What should I hold you to? Performance, both economically and strategically. I'll start with strategic. We need to grow top line by mid-single digits. We need to put our streaming businesses together. We need to grow and scale our studio business, our D2C business. we need to execute on our platform and technological transformation at the company. And I believe if we do all of that, we'll be in really good shape. I'll pass it over to Inan to talk about performance.

23:33Ynon Kreiz: Well, you will see us progressing towards our targets in 2030. And specifically when it comes to synergies, we expect to achieve a third of our synergy target in the first year. There's more to come. This is not just about synergies. You will see the company start performing at the very high level. You will see great content. You will see engagement. You will see excitement for fans all over the world. And the company is positioned to win. I feel like if I'm there, I feel like I'm happy to see him. I'm not so sure I'm happy to see you. I'm coming down the hall. We're in it. Is that not there? We're in it together.

24:07Ynon Kreiz: We're in it together. And remember, this is a growth story. It's easy to focus on synergies. But ultimately, this is about growth. This is about creating long-term shareholder value. And we could not be better positioned to achieve that. And so, right, the last two days has not done that, of course. The stock price, I mean, it's only two days. But again, we don't control basically the first few days of trading. What we do control is the long-term future of this business. And we're going to deliver. We're going to create value for all stakeholders. And we could not be more excited to get to work.

24:35Guys, thank you. I really appreciate your taking the time. David Ellison, of course, chairman and CEO of Skydance. And Enon Krais, the co-CEO. Thank you both. Good luck ringing the bell. Thank you. And make sure you do it. 50 seconds. Hit that button. And don't let off on it, OK? Yeah, yeah. All right. Actually, it's our show right now. I'm going to send it back over to Carl and Jim. We're standing right over there, sitting right over there. David, we'll see you in a minute. Thanks, David Faber. Good Thursday morning. Welcome to Squawk of the Street. I'm Carl Quintanillo with Jim Kramer at Post 9 of the New York Stock Exchange.

25:05David's going to join us in a moment. Having just wrapped up that exclusive with Skydance's David Ellison and, you know, in Christ, talking about how the hard work now kind of begins. Jim, your thoughts? Look, I knew, you know, I'm really well at Mattel and before Mattel. I think he'll find a way to be able to cut costs. David mentioned that he let up a lot of people. He went to an asset like Mattel. It was actually brilliant. And I've been adamant that he saved the company with that. The company had way too much debt and too much manufacturing. Look, these guys, both David and the Inan, they're just saying it's growth, growth, growth.

25:36The unfortunate thing is that we know from the industry that we are in that it's not growth. Now, maybe David Zasloff, the portfolio that they bought, did have more growth than a lot of others. And David put together a pretty good company. He did say it was worth 28. They overpaid, but just by a couple. It's a debt. It's a debt. And I don't like the debt service is really high. And if you look at the debt of this versus the debt that they're putting in AI service. Sure, we'll talk about that in a minute. Yeah, you might just say, hey, listen, debt is debt. But it isn't because there's a lot of belief that the amount of money that's being raised in data centers is going to turn out to be far more because the NVIDIA chips are worth a lot more.

26:13We can talk about an Australian IPO that may not be doing well. But what I thought mattered was that I don't see, and David, I think, was very precise about it, I don't see the ability in the first few years to be able to pay down the debt the way they'd like, or even maybe even to meet the interest costs. But, David, you were very perceptive about the idea that that's really the issue. They wanted to come back with growth. Great interview. They wanted to come back with growth, growth, growth. And you came back with rigor, rigor, rigor. And maybe sometimes they crossed and sometimes they didn't.

26:41No, I mean, that's going to be the key for them, as to whether they can deliver on these goals that they're talking about. And the neon cry is going to execute, obviously, on those synergies, which is going to be such a key part of it. But, I mean, we made the point. They start life as a very highly levered company. They have aggressive timetable and growth and leverage reduction targets. And it's going to be interesting to watch. And, you know, you listen to Allison talk about the portfolio of assets. It is pretty impressive and wide ranging. 12 % of TV watch, which was interesting. During the approval process to get through regulators, you're like, oh, there's so much.

27:15competition. Now it's about, look at our scale next to YouTube. But of course that does make the point as well. YouTube, which is the beast. It's the giant. And we've watched it happen over these last five to 10 years. And it continues to be. And the growth there is obviously anybody in media would love to see that kind of growth. I did like the framework of legacy Hollywood, kind of lazy, let tech move in and merging that with muscle from Silicon Valley. And whether that's really a novel model that we don't know much about. We don't, but I thought that Ellison articulated that well. And in a way that even though I've heard him discuss it before, that was aggressive and empowering almost in a way.

27:58It did make you say, hey, wait a second. He's coming from a different place. And those who are backing him have said that all along. And now we'll have to wait and see. I wanted to, when I went into the interview, I said, you know that traditional media model, obviously nobody likes it. We're stuck in it ourselves. It's not what you want to be in. You want to be in growth. You want to be in it. I came back and said it's not a traditional meeting. They have a real shot here. However, I'm still skeptical because in the end, they still mentioned the CBS nighttime lineup. They still talked about NFL, which is costly.

28:30And I don't want to be levered to the NFL if I don't have the cash flow. Yeah, I didn't follow up on the NFL in terms of whether they're actually going to have to. You're beating yourself up already. I always do that every single time. You can never do them right. That's why you're HOF and the rest of us are playing a different game. I don't know about that. It did sound, Jim, like you're thinking more about the external environment, the competition for capital. Not so much about what's happening inside that building. I mean, this kind of company is correlating with the regular debt market. It's correlating with what Michelle Goss is doing at Levi Strauss, even though she would tell you, look, I just missed the market.

29:07I didn't have the right stuff. We'll talk about that. it's correlating with what Ray Lamo and LaGuardia, the world that he's in, whereas the AI world is not correlated. Now, it does not mean that it can't get too expensive. People keep confusing them. I'm saying it doesn't correlate with the GDP. These guys did hit the corporate bond market for a huge amount of money not very long ago in the same way that SpaceX is going to and Broadcom and so many others that are fueling a very different... Those are not correlated. No, they're not correlated. You know, you mentioned, of course... It's discretionary.

29:36I mean, I don't have to go to the mortgage. Yeah, you mentioned Ellison talking about tech disruption. Take a listen to what he had to say.

29:45Media and fundamentally disrupted the business. Yes. Companies didn't pivot fast enough. We can talk a lot about the owner-operator entrepreneurial culture of Silicon Valley versus the more steward culture of Hollywood that candidly put the businesses in this position. This transaction is the solution to those mistakes 10 years ago. Very interesting and said it very clearly. And of course, they are the control. He's the control shareholder. This is a very similar model to some of the behemoths in Silicon Valley that also like a like a meta have one person running it who is also the control shareholder.

30:21Now, did you feel that it was rather remarkable how Enon pivoted so quickly from Mattel to this new company. And we see it. I mean, she's someone, I saw a pivot to someone from Gap to Nike. I mean, there is this kind of jump, jump, jump. I mean, Enon was when I talked to him last, we were talking about Hot Wheels. That was very quick. Yeah, it was very fast. Very fast. We had MongoDB to Meta, right? Mattel to Skydance. We should be talking about it more. Today, it's the chief product officer from Athleta going to Lulu. There's a ton of churn. Yeah, and I just feel that I'm seeing these things happen at a rate of, I mean, I thought people had contracts.

31:07What about contracts? Ah, contracts. That could all be worked out. Contracts. I mean, look at the person from Gab. That was a recent hire there from Nike. They're putting together a Nike team at Lulu. I don't know. It's challenging, man. Help me there. All of those. Nike, Lulu. Yeah. What do we say? Yeah, I know. Finally, guys, you know, we did have sort of an answer from Ellison in terms of how he sees his job versus Enon Krais and what responsibilities they will be attacking. Take a listen. We absolutely have clear lines of delineation. First, I want to say is we're going to do everything as true partners.

31:50And really, sitting here today, this caps a three-year journey. We were talking about buying Warner Brothers Discovery before we actually closed on Paramount, because we believe this gave us the scale and put us in a position to be able to win. So this has been a long-term strategic vision and strategy that I've had for three years. Got to give them credit for actually executing it. It ended up being a lot more expensive than they would have liked. How much work can you do? Do you think David Zaslav didn't ring out every single cause, being a very good operator himself? No, he would argue that, of course, he did, and that it's very difficult, particularly if you continue to have the declines in the cable industry, which he was dealing with at the rate of a billion a year, a billion, and then I think it was$600 million or$700 million the next year.

32:32So that's the last three years in terms of those declines and what they meant. And that's why one of the keys is can you offset the decline with the synergies? You know, you're bailing water out of the boat on one side and then it's coming in on the other. Just look at this week. Emmys going to Prime, the Super Bowl going to Disney +, going to be streamed there. Right. Right. I mean, that is that's part of this process. At the same time, look, we used to work for a company called Comcast. OK, Comcast is down 25 percent this year. It yields 6.3 percent. It sells with a 6 PE. I mean, it does have universal, right?

33:05We haven't split it off yet. Hasn't split. Isn't that the proxy of what industry they're up against? Well, they're not up against the broadband industry. No, no, not because they're a content company. I'm just saying that this is, I've watched this stock go down. It's been brutal. It's been, you know that. It's been very difficult. The housing market is frozen. Formation is frozen. Disney's frozen. That's a big part of the broadband. Disney's frozen. By the way, yeah, when it comes to just overall, it's frozen. Yeah, got it. Distribution and content, nothing's looking particularly good, right?

33:38Even Netflix, of course, which we've talked about so often, which is a part of this overall story, having at one point had a deal to acquire Warner Brothers Discovery and its shareholder base still sort of saying, okay, well, what's the plan? I know, and we got a note today saying, listen, they don't have enough English product. They have language product. I mean, as far as I know, I never knew that that was important. I used to think that what mattered was wherever a country, you know, Squid Game said that didn't have a lot of English. It worked really well. And that, by the way, is the key because to have that international presence, and that's what Ellison was talking about as well, which they have not really had at HBO Max.

34:13Is there too much to watch, David? Never could be enough to watch, Jim. No, I mean, if you were Reed Hastings, wouldn't you say, listen, the way that people are consuming YouTube, it's pretty amazing. Right? I mean, Carl, we've mentioned that. He said years ago people were competing against time, not against time. Well, he said our biggest competition is sleep. Yes, sleep. That was the famous line. That's why I beat that a long time ago. It's Kramer 1, sleep 0. Yeah, no, you've figured that out. It's a good thing. From the old days when I didn't sleep on Tuesdays, that was the way to do it. Give one night.

34:44Fortunately, I've been experimenting with it a little bit lately. I really don't like it. No. Well, you have to, like Mike Wors said from Chevron, you got to get used to being tired. That's how you handle it. Thank you. Good stuff from Nat Faber. And we'll see Elson and Christ ring the bell in just a few minutes. Let's move to the market. Stocks are on pace to extend losses from yesterday as these inflation concerns take center stage. Oil's up today as Iran ramps up attacks on ships in the strait. Hurricane Isaiah's strengthening off the U.S. Gulf Coast. That's the first of the Atlantic season.

35:14Yields are up, too, hovering around 24-year highs. Some of that's a reaction to Waller today saying that more rate hikes are probably needed to combat inflation, Jim, although he did suggest some flexibility on timing. I thought that if you're going to have to put together something to say about interest rates and what you should do, it was just an incredibly intelligent piece where he just said, look, we thought that August wasn't going to be that bad. August turned out to be not good. And they do feel that the current hawk is pivot. He's lost faith in the transitory notion of oil and gas. And we're going to hear that from PepsiCo.

35:50We're going to hear that from a lot of companies. I just thought Waller was basically saying, look, things are too hot, but we're going to single. We're not going to just say two, and we're not going to say maybe two to five. This piece that he did, David, I felt was what the Fed should have been doing all along. Why? Well, because you don't want to surprise anybody. You want to kind of signal what you do it. Now, do you signal it to calling the Wall Street Journal? Is that the signal? Telling a reporter? Is that the signal? I don't like that. You don't like what? I don't like a Fed chief calling a reporter and saying, here's what I think might happen.

36:25I don't want to believe it. I don't want to believe that that really was the case. I'm talking about Jay Powell talking to a Wall Street Journal reporter. I don't want to believe that's the case. I don't believe that's just too frivolous for me. Okay. But I know that signaling, there are many ways to signal. Yes, there are. Besides just calling a report. What's interesting, Jim, is that Warsh came in saying he wanted to minimize Fed communication. Absolutely. The market's moved incredibly on, or at least odds have moved, on Waller, on Jefferson, on Bowman, separate from data. Look, I think that I am adamant that these people, that you should, and don't take this wrong.

37:03Imagine the NFL. You have a head coach and the offensive coordinator comes out and says, you know, look, I really, the head coach says this, but let me tell you what's going to happen this Sunday. That's unforgivable. And I have been arguing really reciprocally that you should maybe give up your rights to talk about this other than internally when you become an important person to Fed. I don't know why that's wrong. I mean, the NFL is the gold standard of how to run a company. And they just don't allow it. And I just don't think that anyone should be able to say, you know, keep it in the locker room.

37:34Okay. That's all I got for you. I guess because he did the paramount, he feels he can get away with anything. That is not true. No? You're done for the day. I'm still sitting here thinking, why didn't I follow up on the NFL? I let him just say, we have a great partnership. And I was like, are they going to raise your rate? You brought up the interest rates. You didn't need to have them single because they've offered so much debt that they've overwhelmed the market. How's that do it? How about this, Mr. Market? All right, oil's up, rates, Nasdaq's down. Is this a one-day thing? What's going on?

38:05No, we're stuck in this. Look, I was looking at Samsung when they reported last night, and it was a preliminary. Taiwan, 70. The number's really good. Samsung, the most ever. I figured maybe it's a push, because a lot of people have high. I'm saying those, because those were simultaneous when the president has decided once again, because he's looking at the number of attacks, that maybe he has to go bomb the heck out of. And this is something I was hoping we'd never get to, but that's what he's saying. So then you have the situation where oil spikes, then rates go up. And suddenly it's just like, oh, my God, we're trapped again.

38:36And then there's an incredibly large offering in Australia of a company that NVIDIA is backed that's ridiculously overvalued. And next thing you know, it's rates, oil, and some IPO in Australia that's bad with a huge deal for discretionary income where there is just so much debt. the company you just interviewed that I just say, hey, listen, in other words, don't step up the plate. Okay. The auction yesterday went well? It was fine. I mean, it was the highest paid for tens pretty much this century. Yeah, I said it was just an okay auction because what we're losing track of is that you're going to be, well, you're already underwater.

39:17You're already what? Well, I'm saying bonds are already, you know, lower interest rates are higher. Yeah, it was done at 5.3, okay, but that's where we are. I'm okay. There was plenty of demand. You got to tell it I'm okay twice, right? Is everything okay on the watch? You know, when you go like this and you're all excited. What, it thinks you fell? Yeah, I guess this is what's going to happen with mine. I get the Apple home. Well, you are a fall risk. Yes. I worry about you a lot. You're a firm age. You don't sleep and, you know, I mean. You know what I say to you? Okay. That's the extent of our banter now.

39:49You're welcome. Take a look at the pre-market. We're going to get to a ton of movers. We'll get to Broadcom, Oracle, SpaceX, of course, as Jim mentioned. There is Pepsi and Levi and more Skydance and LULU. Stay with us. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments.

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41:17Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. All right, eight minutes before we get started with trading here at the New York Stock Exchange.

41:49Let's get a mad dash. Palantir. I'm conscious of the fact that I basically laid out a two negative scenario. Some people might think there are individual companies, whether it be PepsiCo, whether it be Palantir, where there's some really interesting things to say. Goldman Sachs has put out a piece, an upgrade to buy on Palantir, that actually explains what Palantir does. I have been a long time a believer in this. what they've got is a forward-deployed engineer. It's not a software company that comes in and writes new programs. It just writes a new program. CARP's model is a fantastic model. And I have long believed that this stock's going to 250.

42:26I've been stymied because it got thrown back at the 208 level. But I reiterate that if you read the golden piece, you're going to say, you know what, this is a very rigorous, great growth company, and it's changing the enterprises that it goes into. So I really like it. because this forward-deployed engineer model is very different. It's actually hands-on. It's empirical, but they also look at the entire organization. And they offer a real solution for companies that are too bloated, don't know what they're doing, not just the enterprise, not just the government. I think people, if they can get a hold of the Goldman piece, they really say, oh, I see how different it is and how smart Alex Clark is in this team.

43:03They've got a lot of smart people. I mean, I know a lot of people. I don't know a few of them. No, there are plenty of smart people there, plenty of young smart people there, no doubt. And that's of value? Yes, it is. They understand Claude. They understand Claude. Hey, by the way. I mean, although nobody fully understands exactly why Claude does what it does. No, I'm kidding. I mean, the underlying technology. But yes. Zach. What happened? Well, he switched. What are you doing now? Why are you into another file? Because he switched to, we were getting tired of what Claude looked like. chat chat we're going back to chat chippy really oh look at this this is better than what raymond regardum put out this is my pepsico that's interesting i think that's going to actually mean a differential in the private market valuations for anthropic and open ai you're making that change tsmc and what is that that's claude it's boring no pictures anyway i all over america people are actually doing what i just did i know it seems crazy but there's kids trying to figure out, look, damn the tokens, full speed ahead.

44:08This is what people do, and I wanted to try to show, I know it probably doesn't show up at all. It does raise the question, Carl, as to how much of our brain we're going to keep using when they can just summarize everything we ever need to know. Cognitive decay was the phrase within Goldman. Well, long division. Who cares? Driving. Driving, yeah, we know that's over. I got enough cognitive decay to deal with just from getting old. And now I got to decay myself. You didn't ask the NFL question. That's what happened. I'll bet you Chad would have. You went there, I went there. Chad would have a louder.

44:41Why wasn't Chad in my ear? Wait, he didn't answer the question. He didn't answer the question. He's laughing. We got an opening bell actually speaking to Skydance for us. They're ringing the bell right here at the big board. Six minutes, five minutes from now. Don't go anywhere. Hi, I'm Roman Mars, host of 99 % Invisible. It's a podcast about all the thought that goes into things most people don't even think about. You're going to see stories everywhere. Follow and listen to 99 % Invisible wherever you get your podcasts. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much.

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45:53They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. When you talk about our synergy numbers, we're not applying AI to any of that. So when you look at how AI is going to transform every part of the business, we are really well positioned. But it's not going to transform movies. These 30 movies are not going to be AI generated. So what I would say is, look, we are a big believer that artificial intelligence is a tool for artists, not the other way around.

46:30And I don't think anything will disrupt that. What I do think is going to be possible when you talk about storytelling and artificial intelligence, I do believe it'll be one of the biggest unlocks for creativity. Ellison going on to talk about the cost of movies as well, potentially coming down significantly as a result of the things you can employ as a creator that will help you save a lot of money, which, you know, again, they're going to need to with a slate like they're talking about. Before AI became AI, as we know it, Jensen Wong showed me what he could do and how much more important, how much better it is than computer generated, and that you couldn't figure out which one of the, we're looking at Star Wars Stormtroopers, which were his and which were George Lucas's.

47:15Yes, and I've got to tell you, Carl, even in 2017, Jensen knew this is the future. And he is, in many ways, still a visionary beyond all belief. And this is going to affect talent. Taking a look up on the podium there, of course, Jerry Cardinal from Redbird, a large investor, as we said, in for$6 billion at the far end. And there you see Mekon Dalrahim. He was the one dealing with all the state AGs. Looking down here, seeing a lot of the dealmakers who were part of this transaction as well, of course. Blair Efron, Leon Calvarria from Citi, Blair Efron from Centerview. A lot of fees. A lot of big fees.

47:55A lot of financing. Yes. We're going to get to some of the banks in a second. Let's get the opening bell at the big board on Wall Street. It is Skydance. Celebrating this week's closing with the Paramount Warner Brothers discovering merger at the NASDAQ and Times Square. Memory technology provider Everspin celebrating 10 years. And at Steamboat in Chicago, it's Ned Davis Research, an independent investment advisory firm. In the old days of Manhattan, you pay Davis every day. So Jim, really not that far a move from 7800, still above levels that were resistance last couple of weeks. Yeah, I don't know if I want to come at that.

48:33I think that they're naturally anxious to say, geez, that's a pretty good opening. And I come back and say, yeah, but how about the next 7, 8? I mean, you know, it's 935. There's a lot ahead. I don't like where the interest rates are. I don't like where oil is. I don't really care for what happened in Australia with a company that's backed by NVIDIA, which is a ridiculously overvalued company. It's a Bitcoin miner that's become a data center play that I think is ridiculously valued. But David and I, what happened? Nothing. Are they like executing? Taking some photos. Are they executing already?

49:07Yeah. Now, when you said that Elon Musk is executing, are you talking about executing or are you just talking about doing well? Executing on the plan. On the plan. Yes. I don't know. I think the phrase was, we have what it takes, right? In this fragmented market where it's tougher to reach consumers, you need scales. Skydance stock, by the way, it had a tough couple of days after the close of the deal, rebounding ever so slightly. This morning, up 1%, right around$9 a share. But again, the float in this stock is so minimal. The equity is held by that guy and his family and a lot of their outside investors.

49:46Do we have the linchpin here? We're looking at an Ellison. There's another Ellison that is considered to be the key to data center spending and whether it's going to be able to make it so that you can have a common stock linked to so much debt. We have two of the, we have one of the richest people in the world. What I say to myself is, what do we have here? Do we have, is this just an oligarchical society that we put together? We need to see Oracle hang in there. Those are some big issues you just raised. But yeah, Oracle shares are down a bit and of course down 27 % for the year. Larry Ellison, who is one of the key backers of this transaction, owns, what, 41.9%, I think was a percent, 42.

50:28I've got to check where they are, but of that company. Not worrying about him. I wouldn't. No. The times I've worried about Larry Ellison were times that I was completely and utterly wrong. I think that, once again, I know we have CDS and all that. He ended up selling a huge amount of stock at the market. I didn't even know it was happening. I know. Whatever he's tackled, what has he ever lost at? Well, that's, and by the way, There are those who are believers in what Skydance is trying to do. Yes. They'll come back to that and say, hey, you've got Larry behind it as well. And he doesn't lose.

51:00He's the chief technology officer. He's the founder. He's a brilliant man. He doesn't lose. I have no relationship with him. I had a good relationship with Safra Katz. David has a good relationship with the current co-sideos. But you have to admit. Safra Katz on the board, by the way, of this company, of Skydance. Safra Katz is, what can I say, she's money. She's just a fabulous person. I just think she's unbelievable. All right, back to the AI trade, guys. You know, NVIDIA retreating a bit again. Not unexpected, of course, given the overall market dynamic. You know, look, there's really, it's really hard.

51:35With the NASDAQ down about half a percent. Well, look, Samsung preliminary, it's the greatest quarter of any company. The numbers from TSMC are just incredible. They reacted not well, and NVIDIA is just in lockstep with those companies, whether you think it should be or not. And then we have this Australian fiasco, a little company that, thank you, Bloomberg, I was not following, called Firmus, an NVIDIA-backed AI cloud company that NVIDIA invested$1.85 billion in Australia in 2025. And they were trying to get a deal of$33 billion. So you maybe invest, you know, the thing's really expensive. Okay.

52:17And there's open lockup. You can just apparently, we don't know. This is, I have to tell you, this is a little opaque, this firmness, but I know that this was the chatter. And here's an Australian Bitcoin miner that switched. It's got great plans. NVIDIA backed it, but it looks like the stock's overvalued. All these things have suddenly turned to make it so we think NVIDIA should be sold. I'm asking for more than that before I sell NVIDIA. Because how many times have people sold NVIDIA who watch this show? How many times? You have to soldier through NVIDIA. this fight's not worth fighting soldier through what vicissitudes we have these vicissitudes they do have a buyback i hope that they're keeping their powder dry for a little bit more down but i just think that we've we've seen this so many how do you get to six trillion you don't go in a straight line to six trillion six it's been a stair step and there's been moments where it's just total despair and people just say i'm out of that nvidia i don't want to touch it i called last night, I said, Jim, I diversified from NVIDIA to Micron.

53:16It's not total diversification. Maybe NVIDIA to Scottie. Someone would come back and say the latest chapters of those vicissitudes have been repaired by financing from NVIDIA themselves. But that's been their model. And if you go back over, but they somewhat$100 billion they've invested. They've done incredibly well. I think that what Jensen had to do was create a world of generative AI, and he had to do that by investing in everyone, including... Take a look at what happened with Matt Murphy, with Optic. Optic wasn't doing well, and yet Jensen said, you know what, we're going to have to have fiber in it, so let's give some money to Lumentum, to Coherent.

53:58Next thing you know, you've got an incredible market that's got optical all over it. That was what Matt Murphy was talking about from Marvell. I just think that Jensen, again, I'm in the visionary camp. There are people who are now saying, listen, he's too glib about cybersecurity. There's always been criticism about him ever since the company's crossed the trillion-dollar track because people just don't believe it. And yet Microsoft, the software company, we were happily paying$3 trillion for that. I think that the ecosystem that Jensen has set up is the most valuable ecosystem I've ever seen.

54:32Why do you think Corning can't rally here in this environment, for example? Well, that's a great question. We sold Corning for the Travel Trust because Corning had this tremendous run and then had one of these parabolic moves. And if you hit up, you can see the parabolic move straight up. That's not when you went to. We sold a lot of it from there all the way down because I hate parabolic moves. But it's churning. It's churning because it was in 77 not that long ago. So I think it's the same thing that someone will say. Someone called me last night about a stock that was up 134%, and they were very, said, this thing's killing me.

55:08And I said, well, it is up 134%. Corning is up a huge amount, and it's churning, and they've got money from, they get money from everybody. Big Apple customers at 48 times earnings. I don't know. I mean, I just think that when you have a stock that's up 80%, I say, you want 80 % or do you want Pepsi? You want Pepsi, which is stock is down very badly for the year. down 13%, not very badly, and has he yield. Yes. I prefer Corning to Pepsi, but I've got to tell you, I think that Ramon had a lot of good things to say. You do? Yes, I do. I think he had very good things to say. Well, he's going to join us as well in the next hour.

55:47Small coin factor. I mean, people just say, hey, listen, he missed. I'm looking at a growth trajectory that he reset, but the analysts haven't, in part because of the numbers that he put out earlier. Look, I think that PepsiCo is doing as well as it can. Even though he says it's not, they're spending a huge amount of money. They've got small form factor stuff. But they have oil and gas. And when you pick up a bag of Frito-Lays, small or big, David, you're talking about something related to oil. When you deliver to a supermarket something related to oil, that is not something he can do. No, you can't.

56:20That's related to oil and sometimes to diesel as well, which continues to be a key. I mean, Skydance doesn't have oil exposure. No, they don't. You're driving to the movies? It seems attenuated. I suppose, yes. That's a great word, yes. Attenuated? Yeah, sure. You see, you're not having that decay yet when you can come up with nice words. Thank you. You're welcome. Thank you. You're welcome. I'm going to put a horse head in your bed, though. In whose? Your bed. Oh, you are? Yeah. Okay, thank you for that as well. That was a Paramount movie. Smaller piece. That's why I meant... Oh, no, I mentioned it because Quarrow was obviously a Disney movie.

56:55Really? You fought through the fact that The Godfather was a Paramount movie, Yes. Yes. Robert Evans. Robert Evans. Paramount. One of the best. Well, I still use Best Ever. And then that other guy. Who's the other? They did that great series about him. Yes, yes. What was his name? Oh, the author? Yes. No, not the author. The guy who shepherded the whole thing through. You're right. Yep. I don't remember the name. Oh, who's the name of that? Well, we're dead. Somebody will remember. Well, good. We're too old. I forget what streamer that was on because we can keep track. Oh, my God. But, you know, there's just.

57:21All right. I'm going to move us along to the banks because I've been looking at the performance of the financial sector the last few sessions. It's not been good. It has not been good. Not been good. And I do wonder after, of course, what was a very strong year for much of this year, they've given it all up and then some. And when do you come back to them, Jim, if you want to come back to them? For my travel trust, I'm trying to figure out exactly that. When do I come back? I mean, Goldman's at 12 times earnings. I keep thinking to myself, and Goldman, they had some interesting pay package news.

57:53We just don't have a lot of deals. So maybe I have to wait for a reset? I don't know. JP Morgan, I want to own JP Morgan. I'm not going to—these stocks are coming in cold into earnings. And they're remarkable at making money. We don't know—a lot of times when I was at Goldman, I said, like, oh, my God, mortgages saved us? I didn't know mortgages were doing well. David Tepper saved us in junk. There are things that are going on at all of these that are better than you think. But we're looking at just ideas. Interesting FT piece today as well, Carl, about prime brokerage, an area I've been following for years because, of course, they service hedge funds.

58:29But how much more important it's become as a result of the multi-manager firms such as Citadel or Millennium or Point72 and the leverage that they take on. Jane Street as well in terms of what they're doing and how important that has become, guys, as a part of the overall earnings and growth for some of these banks. Are you worried about the regional banks and how you can move money around really fast now? Of course. That's part of the whole inertia disruption. I mean, some of the drawdowns, Jim, Goldman, 24, Morgan Stanley, 19, JPM, 11. And you know what's a really interesting chart is EUFN, which are European banks.

59:11That looks a little bit worse than the XLF itself. Well, I know there's a lot of French exposure. By the way, it's really incredible. Like Santander, it's been a little bit weak. Brazil is really big for Santander. Don't sell Santander on France. That makes no sense at all. Look, I'm going to say something that is not reckless, I believe. I think you have to layer into the banks because finally you have banks know how to deal with this interest rate environment. They surprise you. They know how to hedge. If we do get deals again after the midterm election, you'll have a home run. I like things that are inexpensive, but not all at once.

59:47You keep saying deals, but, I mean, think about the financings that we talk about every day. Those are deals. Well, no, I'm saying that. Those are enormous deals, and they have enormous fees associated with them. I'm saying that. So is the market not saying something when it sells a quarter of market cap off of Goldman Sachs? The market's just saying, listen, the IPOs are bad. M &A is bad. There are other ways to make money. The reason why we like IPOs and M &A is that's like seven people. Could be something else, Jim. Well, like the Fed? Yeah, well, obviously it could be. Like inflation? No, it's not a great environment for financials.

1:00:20But I'm saying the stocks sometimes reflect the fundamentals. Yeah. Okay, when I was speaking to Ray Molandini, that's from me in New York, I'm from PepsiCo. And I said, you know what? Your stock is so low, it'll actually probably end up doing well on cutting numbers. And that's what happened, at least at this moment. Right. So sometimes it's so low, it looks up to me. Yeah. Yeah. No. Look at this. It turns out that you put 4.75 % together with a trajectory, a trend line that's not bad, but the possibility that oil might go down someday. And you have a spin, and you have new products, including Frito-Lay protein and Frito-Lay olive oil.

1:01:01And what it says is, you know what? The man is handling this environment. And so, therefore, I'll buy it. I'll take the risk because now I know the quarter. It's 14 times early. This is PepsiCo. It's one of the finest grosses. It can get its mojo back. It can. But the name you've wanted to own this year is Coca-Cola. Yeah, but Coke's fully priced. Is it? You buy it. I want it to have real. Yeah, well, Coca-Cola's at 26 times early. It is. Yeah, we've put this chart up a few times. But, I mean. Yeah, well, okay. So, maybe at a certain point you say, you know what? And Ramon knew that. I wasn't crazy about the stock.

1:01:34I said, listen, you're not crazy, but I know. And I said, well, I just don't see the growth that I like. But at a certain point, you know, you got a situation where I'll take the fact that his actual sotto voce growth is a little better than people realize. And maybe you'll figure it out because he happens to be a very good executive. Meantime, Jim, you had Michelle Goss of Levi on last night. First dip below 19 since April. Here's what she told Jim on Mad. our consumer continues to prove resilient like i said our our issues in the u.s were dtc and those were our issues and on the flip side our u.s wholesale business was positive in the quarter so you know even when things get tighter you just you have to work harder um because they're still going to spend you just have to be that much more relevant more innovative okay so she missed the Mark, TTC, the Levi's stores, that's not just, you know, Ant and Buy Ant, e-commerce.

1:02:29She got it wrong. She had missed message. They didn't have the right product. And it's very funny what they did. Well, not funny, but, you know, the right product didn't have to be skinny. They went to skinny tight. At the beginning of the quarter, they were barrel. They were baggy. So these guys were going with barrel, baggy, and the wrong message. And what I thought I liked and the stock started reflecting is she saw it and they pivoted. And then, God, the last month was good, and this so far back to school was just not that great. But the last three weeks and then the first two weeks, I know that's short-sighted, but I'm saying that they figured out that it was no longer baggy for the most part.

1:03:03In the last three weeks. Do you want granularity or do you want... Anyway, what I'm saying to you is that... All changed in the last three weeks. This product's been around for a hundred and something years. Are you going to start modeling skinny tight versus baggy? She didn't just stand there and say, you know what? Barrels. I'm going barrels. I'm going baggy. The market doesn't know what it's doing. No, she pivoted. And so far, so good. And it's continuing at this level. For DTC, they'll go back to the mids. It was not a great quarter. But again, David, listen to me. It was not a great quarter.

1:03:39I'm listening. But did you come in and expect a great quarter if the stock went from 25 to 18? You're selling at 12 times earnings. I know the yield is only 3.3. But I'm saying there's a lot of companies that when you say, oh, boy, that was awful, and then you look at the chart and you say, tell me something I don't know. Kepsico, tell me something I don't know. Valero, Jim, just looking at how the energy names are leading today. This stock began the year in the 160s, 433 today. I wonder whether they're sitting there and they're just saying, oh, please, Congress, don't look at my price. Yeah. Please don't look at my price.

1:04:15We did get news that the IEA said this incremental release from Europe in the G7 is not incremental at all. It's actually part of the$400 million that was announced back in March. I see. So that kind of took some air out of the refining. Benjamin refining. That's what you want. And we know that the number of, I guess, what do you call it, events against shipping in Hormuz have been really bad. We were doing$15 million a day out of Hormuz in September. On Tuesday, we were$4 million from$15 million to$4 million. Shipping transit is about a two-month low here. No, I mean, the Houthis, I don't know whether the Saudi Arabian war with the Houthis is that good.

1:04:59There's a lot of things that are in play. And I do want to just go back on Valero so people understand. The reason why I don't think there should be any investigation is that Valero is one of the worst stocks for so long because there's no growth in refinery. It's finally their time. It's called a refinery in the United States, right? Well, no. And they've built one in forever. That said, isn't there this concern that they've been going full out and they're going to need to take some of them offline just for typical maintenance? It's always been the case. Steel mills and refineries, you've got to take them offline.

1:05:26And by the way, this hurricane has already shut about a quarter of production in the Gulf. No, this is a not ideal situation. And I do think that the market's not factoring in exactly how not ideal it is. I mean, I'm trying to figure out where to put some money to work for the trust to have a huge amount of cash. go through it every day. You have a huge amount of cash in the cash, really? Huge amount. You've been overweight in cash. Oh, my God. No, I don't like that. I'm not crazy about the market. I'm crazy. Where are you as a percent of cash historically, then? You know, mid-single, and I'm like double that.

1:05:56You are? Yeah, because it's like I come in every day and say, ooh, should I buy that now? No, I can't buy that. It's like, ooh, how about this? That's how I do it. You have to be visceral here. It's about being visceral. Off of the opening lows here, though, as the Dow is now down only about 74, much better than the pre-market. Claims were good, 197. That's the lowest since July. We will get some, we'll get more Fed speak. We'll get more Fed speak today. Kashkari and Musalm is the 10-year, a little backing off a bit below 528. Stay with us. Jim mentioned some of the good news out of Samsung and TSM overnight, not really helping the chip space or some of the neoclouds.

1:06:38Darm is the worst performer on the NDX. Core weaves there, Nebius, and even Intel. But bonds are doing the right thing, so I'm not going to give up. Long day ahead. We'll get to stop trading with Jim in a minute. Let's get to Jim and stop trading. Costco reported for the monthly numbers. I find the monthly numbers really not indicative because it's a short period of time, particularly because it's a little confusing given the fact that they sell gasly to a lot of them. But they were better. They were better. And I think that the stock has been reflecting lately that perhaps even though it sells at 41 times earnings, it's an interesting situation to be in when things get tough.

1:07:12So a little bit better because when times get a little tougher, you go to Costco and you save a lot of money. Jim, what do you got cooking for tonight? I've got a Nico Eagle, which is the best gold company on earth. And I can't wait because gold is kind of stalled here. And then I have EverPure, which is the old pure storage. And you want to stay in touch with every single company that has anything to do with data storage. that you want to see how things spread out. Like NXPI downgraded today. So a little too attenuated because it's auto. On semi, a little attenuated because it's auto. You have to be in data center, data center, data center.

1:07:43Attenuated's your new favorite word, isn't it? That's three times. Well, you said you liked it, so I decided to overweight it. I also liked your little... I took it from hold to buy. Was this chat or Claude? These are the show five or something. That's Claude. These crib sheets that Jim... That's Claude. Claude had no... Great creativity today. That's really helpful. So I said I'm switching. This is where we are. By the way, we can just do this now. They don't need to hear from us. Just read my cheat sheet. This is the future. Okay, listen. It was TLDR, David. I like it. It was TLDR. I like the way the whole thing's formatted.

1:08:19I like it. He doesn't even know what TLDR is, does he? Yeah, who does that? Too long didn't read. Oh, too long didn't read. We're slowly bringing favor into the 21st century. Your interview was TLDL. Wait, are we in the 21st century? You were TLDL. I like to pretend it's 1998. TLDL, my friend. TLDL? Too long? Didn't listen. Jim, we'll see you tonight at 26 p.m. Eastern Time. You've been listening to the opening hour of CNBC's Squawk on the Street. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.

1:09:01You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit CNBC.com forward slash Squawk on the Street disclaimer. Snoring, gasping for air during sleep, daytime sleepiness. I'm Shaquille O 'Neal, and this shouldn't be anybody's experience.

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