SpaceX’s Starlink Push, The Real Price of Oil, and the NBA’s Big Bet 10/9/26

0:00Tu Sausage McMuffin with Egg no cambió. Tu recibo, sí. El Sausage McMuffin with Egg extra value meal. Trae un hash brown y un café pequeño por cinco dólares. Solo en McDonald's por tiempo limitado. Precios y participación pueden variar. The price of the promotion can be lower than the price of mine. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading.

0:35Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. You're listening to The Exchange. Here's today's show.

0:51And welcome to The Exchange, everybody. I am Brian. In for Kelly today, stocks, they are higher across the board. Technology rebounding following yesterday's sell-off over some open AI revenue concerns. Today, you've got broad gains for the AI trade from servers to hardware to connectivity. All those names are making you money today. Not making you money today, the telco trade, AT &T, Verizon, T-Mobile, they're all sharply lower. It is on news that SpaceX buying Spectrum and may roll right into the cell phone business. Tesla, by the way, related. Also higher on the back of that SpaceX headline.

1:27Hi, everybody. It is a big hour here on The Exchange, and we are going to start with this incredible bull market run for stocks. Believe it or not, the big bull run turning four years old next week. Of course, technology stocks, they've been the main driver of gains over that time. And while technology's concentration may be cause for some concern, your first guest says the market's narrowness also creates opportunity. And listen to this rather crazy stat. 40 % of the S &P 500 is in a technical bear market. That means down 20 percent or more from recent highs. And with those moves down, he's pouncing.

2:08Chris Moranji is president and co-CIO of Value at Gabelli Funds. And he is here in today's opening exchange. Chris, welcome. What are you pouncing on today? Well, we'll talk about SpaceX in a moment. Let's do it. We'll talk about it now. Friday news. Not really news. Elon has not been shy about his astronomical ambitions to dominate the world of connectivity. And, you know, listen, he's got a very profitable growing business in Starlink. He spent$20 billion to buy Spectrum from Echo Star last year. And this is just another piece of the puzzle, buying some more Spectrum. They're going to be our new cell phone provider.

2:46We won't use Verizon or AT &T. We'll use Starlink. They are for a lot of people today, and they'll be for even more in the future. It's going to take time. They are going to be Spectrum constrained. There's room for a lot of competitors. But the current sort of trio of wireless operators and the wire line operators are going to be competing. It's going to take a while to reach equilibrium. So you heard the stat. You know the stat. I'm going to quote you back to you. Forty percent down 20 percent or more. Some people say, wow, it's a sign that the market is unhealthy under the hood. As we have, by the way, talked about others, maybe like you, Chris, would say, guess what?

3:22Buy low, sell high. Any of those stocks in that 40 percent? that you like. Yeah, there are many opportunities there. Obviously, this market's been dominated by energy and by the AI trade. And that's left some opportunities around some quality companies that are in the middle. And you've got to think about those companies in the middle, plus minuses for AI. And these are ones that are still to be determined, but I'll talk about three real quick. Okay. First, you've got Rollins, the Orkin man, pest control, a company I haven't talked about in 15 years because it's been an excellent compounder, but traded at astronomical multiples 50 times.

3:58Stock's been cut in half this year. Why was it trading at 50 times earnings? Rollins. When I think of Rollins, they got Henry Rollins, or I think of a university in Orlando. Well, that may be true. But listen, pests are ubiquitous. They're not going away. AI is not going to defeat them. But they did stub their toe because they have to readjust their client acquisition model because of this agentic commerce. That's a fixable problem. and the business is not structurally impaired. Number two, similar story, the waste companies. Gone nowhere in two years. Great businesses. They have enormous pricing power as quasi-utilities, a lock on a very limited number of landfills around the U.S.

4:36We're not dumpster diving on Republic Services, our favorite amongst them. But... By the way, I like the pun, very slick, dumpster diving. I get it. Not quite there. And somebody made the comment years ago that these companies, the trash companies, they may pick up the trash, but they pick up your money because what they do is they collect money. Because to your point, they kind of have semi-regional monopolies. They're almost like an airline or, to your point, a utility. I won't use the M word, but they do have a growth kicker if there is a rebound in housing as well. We loved them when there was inflation.

5:13There's still inflation, probably going to be more inflation. They have enormous pricing power. Republic is number two. Yes. Over a waste management, you like a republic. Yeah, so there's big three companies in the U.S. like republic. Does the third company also start with an R? It doesn't. I should have come up with that. You should. But actually, I have one. I'll talk about Rogers Communications in a second. But I'll quickly mention another one in the news today. That's American Express. It's a little more controversial, a little bit more cyclical exposure. But 15 times for a company that's growing earnings, mid-teens, 35 % plus ROE.

5:45That seems like a pretty good entry point. Stock's off 20 % this year. Why? Well, there's concerns about rates. There's concerns about credit. Stock was not cheap coming into the year, and it's reset lower. There's a reason that Berkshire Hathaway and our clients own a lot of this stuff. I do want, and I'm sure a lot of your clients also have their fancy cards, the Platinum card and the Centurion card. I do wonder if they've gotten a little bit, not just them, the other credit card companies have gotten a little bit greedy. It's like this race to the top, not the bottom, in the cost to have specific credit cards now.

6:13$1 ,000 here,$1 ,100 there. It adds up to real money. and I wonder if they've just gotten a little bit greedy. Well, they are on the right part of the K in the K economy, for sure. And it's an unmatched brand. Great management. Let's go now to the bonus stock, Chris. We'll call it the third R, Rogers. Yes. The Canadian telecom? The Canadian telecom company. You know it. Of course. That's where the Maple Leafs play where they're used to. That's right. They own the Maple Leafs. They do? That's why I like the stock. So, listen. I'm not a hockey guy. I love Canada, unlike some people. I love Canada, too.

6:44And we're not going to throw out the whole sector, the whole telco sector. We're idiosyncratic. Canada is less competitive. They actually, if you can't beat them, join them. Our partners with SpaceX. Or own them. Or own them. $60 billion U.S. enterprise value, about$20 billion of that at least, is due to the 100 % ownership of the Toronto Blue Jays, the Maple Leafs, and the Toronto Raptors. And they just bought 100 % of that in earlier this year. Sometime in the next year, they're going to either IPO or do a minority stake raise. Okay, so is Roger then okay, because I have no idea. I don't think I've ever literally ever talked about Rogers ever one time in 30 years of doing this.

7:18Is are they a sports company with like a communication side to the business? What are they? They started the other way around. I view them like you do. They're a sports company. We love. Yeah, but they were a cable company. Oh, for sure. For 30, 40 years. And like other other cable companies, media companies, they invested in media. They invested in content. And that's how they got their ownership of the J's and those other entities. And so would an MSG Madison Square Garden, I know it's not the same, but they had a cable unit at one time, too. Well, yes, that was Cablevision. Yeah. Is this kind of the model, though?

7:51And then you become a standalone sports company, and then you try to add revenue, add growth, add multiple. I don't know if it's the model, but Cablevision spun off MSG in 2010, February of 2010. It's on three other spinoffs. MSGS, which is the entity that's around$400 today, owns the Knicks and the Rangers. October 26th, they're splitting those two entities, two companies. The whole thing, if you use where the Lakers. Is that accretive, though? Like, is that what you want to? Should Rogers do that? Based on where the Lakers traded recently and where the Islanders traded private transactions, MSGS is worth over$700 a share easily.

8:29And we have a chance to monetize that by selling stakes in each of those companies, the Knicks and the Rangers post-disp. Maple Leafs are worth more, according to CBC Valuation, worth more than the Islanders. But I would imagine the Knicks are worth considerably more than ye olde Raptors, which... That is true. And again... When you have a dinosaur in your uniform, it's, you know... Well, the Leafs are probably worth the most in hockey because they are the Leafs and the Canadians love hockey and they're one of the original six. But the Lakers just traded for$12.5 billion. The Knicks are worth at least$13, probably more like$15.

8:59And that goes into the Rogers thesis. It does. And these are, talk about, nothing is AI proof, but these are pretty AI resilient companies. You know what I like about you, Chris, is that we spent the most time talking about the stock that you weren't even originally going to come in and talk about. I'm glad you never talked about it before. Rogers. And I just made stuff up. I mean, I'm glad that I got it right. I've been to one hockey game in my life. Literally one. And it was there. Hey, go to more. And the only thing I remember about it, they were playing the Canadiens, Les Abs. There was like an 85-year-old woman by herself at the hockey game, watching the hockey game.

9:30And I thought, this is cool. She's just hanging out watching hockey at 85 years old or whatever she was. I'm just still getting over the Braves and the Yankees being eliminated on the same day. The Braves are public. You should buy them, too. It's fantastic. Go Brewers. Chris, thank you very much. Don't make that. I'm not Kelly, but come on. Chris, it was great stuff. Really appreciate the time. Thanks for having me. Have a great weekend. Thank you very much. All right. On a more serious note, oil futures are down a little bit right now, three-tenths of one percent after attacks from Iran or likely their Houthi allies on Saudi Arabia and its citizens, by the way.

10:00Just absolutely despicable attacks, not even on energy assets, but on human beings at airports. And that sent prices higher yesterday. But even as the futures markets move, your next guest says you might want to stop looking at the futures and instead pay closer attention to the all in price for oil. Joining us now, Amrita Sen, founder and director of market intelligence at Energy Aspects, who is in the Middle East right now. Amrita, we did a piece the other day. I showed the viewers some of these exclusive numbers on the cost of shipping,$77 million for a cargo of oil from Houston to South Korea.

10:38What is the all-in cost on a barrel of oil right now? The all-in cost, Brian, depends on where to and where from. but it's about$40 to$50, or it can be up to$40 to$50 higher than the futures price that, you know, you're going on the ticker right now and what you and I look at. So do we stop looking then? I mean, we bring it up every 20 minutes on CNBC. It's what we've got. We don't have an easy way to show every cost of every barrel in the world. It's just not something that anybody, maybe you guys at Energy Aspects can do, but we can't. Should we stop looking at those prices then? I think this is the challenge we've had.

11:21And I think this war has really shown, unfortunately, I guess, that there is no one price of oil, right? I mean, obviously, we've always known this as a physical market, their shipping. But futures has always been a very good guide. I was just talking to a few of my hedge fund friends earlier today, and then we were having this exact conversation that how we have known this market, how they've traded this market for decades has simply changed right now because futures is probably capturing about 60 % at best of that physical fundamental. Cracks as well. If you look at diesel, which is something we've been harping about, gasoline and diesel both, usually crude used to capture 18 to 90 % of that price.

12:05Today, it's 50%. And I think this is a paradigm shift. And I just don't know how quickly we'll be able to go back to the old normal when the ticker price, what we've always been used to looking at, will capture the reality of the market. We're eight and a half months in. Do we know what normal means, Amrita? I'm not sure I know what normal means. I think that's exactly right. And I do think this is exactly why you're seeing the stresses in the system. Look, the administration needs to and wants to keep oil prices down. We've continuously seen jaw boning from the administration. But you can do that for futures because you just drive away participants.

12:47But ultimately, it's a real asset, right? These are not stock market shares. These are supply demand of barrels. And I think what you're seeing is, OK, you want higher flows from Hormuz? What's the cost of it? It could be five, eight times the cost of what it used to be. I mean, imagine I've just found out today while being in the region, one trip just to fill one VLCC, right? Two million barrels. We've seen shuttles take seven times, like it's gone back and forth seven times to fill one two million barrel VLCC. So imagine how ineffective and inefficient this whole thing is. So I completely agree with you.

13:28There is no normal. This is how we are getting the oil out. The cost of doing business, as I would call it, has just gone up significantly, like few times. And I think that's the reality we have to live with, which is highly inflationary. And I want to give a shout out to some of our allies and friends over in the Middle East because they've been dealing with so much. You know, you get the east-west pipeline gets hit. Saudis, Aramco, they get it back up and running very quickly. UAE very quickly going to put out a second pipeline. They've figured things out in a good way to move oil around. Oil is going to flow where it needs to go.

14:02The Iraqis are taking oil by truck. I mean, literally putting it in like hundreds of trucks and driving across the desert. But I just don't know, Amrita, how sustainable any of this is long term, just given what you just talked about, which is the price. I couldn't agree more. And again, I and I also want to echo this being in the region. What these what these countries are doing to keep all oil flowing for all of us is hugely commendable. There are risks associated. Like I was saying earlier, I was with Saudi Aramco yesterday and the resilience they continue to show and how quickly they bring back assets that have been under attack to make sure that the oil flows, hugely commendable.

14:47But that's the challenge of it. It comes at a cost. And I think, unfortunately, what we are looking at increasingly is the risk of a recession. potentially second half of next year, maybe 2028. These things take time. But the only way you balance this market now is by driving prices to the point where you start to kill off demand. That's$200 per barrel for diesel. And we are there. We've been there for over a month now. And I just don't see how we're going to get any respite from that. Crude can do its own thing, but we just don't have enough refining capacity to deal with that. Yeah, and we started by talking about the oil futures And maybe we stop looking at oil in general, because to your point, we want to look at the refined products, 200 bucks a barrel in parts of Europe.

15:31They're playing paying 11 or 12 dollars or maybe more, depending on the country, for the equivalent of a gallon of diesel. We're at 650 here in America and we're out of our minds about it. They're paying basically, basically almost double in Europe. In your data, Amrita, are you seeing any demand destruction yet? some i would say uh at the margins the problem is cumulatively right like globally including china which is where we've seen the biggest demand reduction because of all the ev trucks and ev cars still you're just under two million barrels per day the problem is the supply losses are more than double sometimes even triple that depending on uh which commodity you're looking at but particularly for products i'm talking about gasoline diesel jet nafta everything combined It's the magnitude that's the problem.

16:20Also, remember, in some cases, the demand losses I'm talking about is because the supply isn't there to consume. The challenge with diesel is that these things take time. We're talking about trucking. They sign annual contracts. You're not going to just stop shipping goods because prices have gone up. So that's the problem, that you need these$200 prices for at least six months, more like a year, before you start to see the impact. I'm Rita Sen, who's in the Middle East, and we're glad you're there. Safe travels. And Rita, thank you very much. Appreciate that. All right, coming up, this name used to trade pretty much on weather patterns, but now it's benefiting from the data center and AI boom.

17:01We'll show you the name and why one analyst who loves it. Plus, Verizon, AT &T, T-Mobile, they are getting hammered today. So is Elon Musk about to completely upend the entire wireless market?

17:18This is The Exchange on CNBC.

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18:24Social casino slots, bingo, solitaire, plenty of fun to keep us entertained. So why let a rain delay slow you down? Play now at ChumbaCasino.com. Let's Chumba! No purchase necessary. VGW Group Voidware prohibited by law. CT &Cs 21 Plus, sponsored by Chumba Casino. Hurricane Asias gaining steam as it nears the U.S. Gulf Coast. The storm is set to become the first in two years to hit the mainland of the United States. It's also the longest period we have gone in a year up to this point, right, October 9th, without an Atlantic Basin hurricane in 112 years. But now that streak is over, and Asias is here.

19:06And AccuWeather's Jeff Cornish is here as well with a closer look at the storm and its forecast. Jeff. Well said, Brian. I know a lot of the weather data and stats are kind of nuanced, and you nailed it. This was our latest first hurricane on record in the Atlantic Basin. Man, it only takes one, as they say. From an economic standpoint, just off the top here on CNBC, look at all these oil rigs. They're primarily to the west of the path of the storm, but about 15, 20 percent of them are being greatly impacted in the direct line of fire. This is a Category 3 hurricane. It really ramped up sharply today, this morning.

19:40and after it makes landfall probably very close to Pensacola or Pensacola Beach. Most of the path of the storm is going to take it east of the primary refinery areas as well, although the eastern primary area will have major problems. It's not going to be a big story in New Orleans. It's all east to the point of landfall and very close to the point of landfall. Here it is, though. It's a photogenic storm. That means it's a dangerous storm when it has this kind of a satellite presentation. And look at all the lightning, lots of lightning in the highly concentrated central part of the storm into the eyewall.

20:12We expect landfall 11 p.m. tonight, Eastern, 10 p.m. Central time out there in far western Florida. As a Category 2 hurricane, a little bit of wind shear will probably take the top wind down a little bit for where we are right now, but not by much. A very fierce storm, landfall close to 11 p.m. near Pensacola Beach, Florida. And we're going to be dealing with a nasty storm surge of most likely 6 to 10 feet on the east side of the storm. So we're looking at that right front quadrant, that wind fiercely plowing Gulf water into land. And look at the winds in the eye wall, 100 to 120 mile per hour gusts.

20:47A very nasty storm. We're going to see long-lasting power outages. Anybody out there who has power now, if you use a generator, make sure you keep it outside and away from the windows. There are often fatalities after a storm because of the misuse of generators. Brian? Jeff Cornish, Jeff, keeping us informed about this storm. Really appreciate it, Jeff. Thank you very much. And by the way, that in part what Jeff was talking about is actually what we're going to talk about now, because Generac is a massive maker of generators. And that stock used to be kind of largely driven by storms and weather events and power outages.

21:22But the AI build-out has provided another major catalyst for the company because it makes backup power generators for data centers. They just did an$8 billion multi-year deal with Amazon. And your next guest just initiated Generac at an overweight with a$303 price target, implying about 40 % upside from here. Let's bring in Dimple Gasai, head of power generation equity research at Piper Sandler. Dimple, good to see you again. Good to see you. Thanks for having me on. Well, listen, I don't like talking about generators and storms because I don't want anybody to lose their power. But as storms have become a little more extreme and more frequent, I got to imagine it's more in the consciousness.

22:01How much of Generac's business is, say, residential versus like a commercial data center? Good question. So as of 2025, about 40 percent of sales were all residential and 60 percent will now become data centers as of 2028. So that mix is now changing. And I think that's kind of what grows where the growth comes from looking out. And that's what we're more excited about. That said, you're talking about storms today. And I think the structural tailwinds are intact. Yeah, and those structural aspects. Listen, during Hurricane Superstorm Sandy here, we lost power in my home for 11 days. They can't do it.

22:44I mean, nothing works. Food goes bad. It's terrible. We're in a position where we're able to afford a backup generator. I'm blessed in that respect. Are these being adopted widely across the United States in a residential format, even though it is a big out? And we're going to talk to the CEO in the next hour about just this. It's a good question. So it depends on where on the map you're looking. So across 63 million homes in the U.S., there's a 6.5 percent penetration rate. But in the top five states that Generac serves today, there's a 20 percent penetration rate. So it's definitely more penetration to be seen.

23:20And interestingly enough, in our analysis, we're actually seeing migration trends into the south, which is where we're seeing a lot of the storm activity that's taking place. I think that proves to be quite a big tailwind. Because what I just heard from you on the other side of this, again, I'm not a math person. So don't hold it. If the math is bad, Dimple, don't hold it against me. 93.5 % of the country does not have one. And 80 % of the high penetration areas do not have one. That seems like a lot of opportunity for Generac. But again, you've got to be able to make sure people can afford it.

23:51Maybe that's financing or whatever else you can do because laying out the cash is hard. Especially when rates are high. You know, I think there's the rates element, the stock, you know, is very sensitive to the consumer. But at the same time, there's, you know, you have to look at who's actually buying these generators. So what we found is that, you know, new home buyers tend to be 65 year olds or higher. And that is the same cohort that can't afford to not have a generator if you're thinking about health care needs and, you know, for your home, oxygen tanks and so forth. So it actually becomes pretty mandatory in those scenarios.

24:29Your other top pick, get to another name, Mastec,$313 price target. You really like Mastec. How come? I like Mastec. I think, you know, it's still kind of priced like an old business when the business has changed. Similar story to Generac, right? I think Mastec has been unfairly penalized because you've seen a shift in the business or a push out in projects in the pipeline segment. You've seen communications that was shifted out as of the last earnings. So I think that's shaken a little bit of confidence. But in my view, the structural drivers are very much intact, which is one, pipelines. That's the LNG exports work that they do.

25:05But two, the data center, right, building out the gas laterals that bring the power to the data centers. And they've got a massive opportunity there. They do resips work, aeroderivatives, simple cycle, where we're seeing a lot of demand for data centers. And I think investors underestimate that demand. So I like the thesis on both of them. You've got Generac and you've got MassTech, both businesses that were kind of huge in one thing and still are, but are using all the new builds to create this business. But investors, they're not fully appreciating it. You're trying to help them fully appreciate that.

25:39But they're clearly missing it. What are they missing? Number one, for Generac, you're right. They're still pricing this business at a nine times multiple based on the resi side. That's how much the business trades, nine times EV, EBITDA. That doesn't afford any credit to this data center build out of the CNI, right? So they're kind of thinking that this data center leg has an end to it, a smaller terminal value than there should be. In my view, and the TAM numbers that we've calculated, the TAM opportunity is at least$16 to$21 billion. In the U.S. alone, much bigger than Generac CEO has kind of communicated to the market.

26:21So it's a bigger market, a bigger share for them to capture. The market's missing that, in my view. What you're saying is that people view the data center boom as short-lived, a couple years or maybe a decade. But then what are you going to do for me afterwards? So it's like a giant business for a short period of time. And then you kind of, quote, go back to normal. Right. Correct? Exactly. That's what they argue. And I disagree because I think the market is a lot bigger than the market gives credit to. And there's an international component. And even when data centers ought to turn at some point, you know, this new product of 3.2 megawatts or bigger will serve a different size or segment of the market, which is an opportunity.

27:01So you're saying when we have Aaron Jagfelt, the CEO of Generac, on in Power Lunch in the next hour, I might or might not be, should ask him how big the total addressable market may or may not be. Please do. I think I might just have a question. All right, very good. Dimple Gasai, Piper Sandler, and by the way, the CEO of Generac will join us in the next hour, but we're glad you're here in this hour. Dimple, thank you very much. Thank you for having me. Mastec and Generac. All right, up next, the NBA is betting big on China. Contessa Brewer is in China. You'll hear from her and NBA Commissioner Adam Silver ahead.

27:38And as we head to break, we'll look at some of the stocks hitting new all-time highs. Phillips 66, you know that. Abbey, Fortinet, Momentum, and more all at new highs. Markets up. Hope you're having a great Friday. We're back right after this.

28:01The Sausage McMuffin with Egg No cambió. Tu recibo, sí. El Sausage McMuffin with Egg Extra Value Meal Trae un hash brown Y un café pequeño Por cinco dólares. Solo en McDonald's Por tiempo limitado. Precios y participación Pueden variar. El precio de la promoción Puede ser más bajo Que el precio del meal. This episode is brought to you By Schwab Market Update An original podcast From Charles Schwab. Schwab Market Update An original podcast From Charles Schwab Provides an information-packed Daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading.

28:36Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. If you're a small business, the right hire can be make or break. Indeed Sponsored Jobs gets you quality candidates when you need them most. Join the 3.3 million employers worldwide that use Indeed to connect with quality talent that fits their needs. Listeners of this show will get a$75 sponsored job credit to help get your job the premium status it deserves at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Hiring now?

29:13Then this is a job for Indeed-sponsored jobs. All right, macro markets and stocks higher to end the week. And with these moves, the Dow, the S &B, and NASDAQ are set to end the week higher. And listen to this. The Nasdaq is trying. And I mean, we're there now. We still got what an hour and a half, two and a half hours to go. Trying for its first four week win streak since May. Meantime, the Russell 2000 smaller cap stock on pace for its fifth straight losing week. That's its longest stretch in more than four years. Small getting smaller. Big tech getting bigger. Energy also getting bigger, leading all S &P 500 sectors this week, hitting an all time high today.

29:54Oil prices likely higher to end the week. On the flip side, tech and industrials, the only two sectors set to end the week lower. But remember, the tech sector just hit a record high on Tuesday. We also mentioned industrials. Well, check out defense stocks. They're down. The ITA defense ETF hitting an all-time high in August. But since then, it's actually been in the middle of an eight-week losing streak. Take from that what you will. Now, let's go to Frank Collin with a CNBC News update. Good afternoon, Brian. Ukrainian negotiators are in the U.S. for another round of talks to try to end the war with Russia.

30:29NBC News reports the talks, which began today in Miami, are being led by Jared Kushner and Steve Witkoff, and the discussions will center on a new, quote, unified proposal that is focused on all aspects of the conflict. The attorney general in the United Arab Emirates saying today that the fly Dubai co-pilot who stabbed the captain was trying to launch a suicide attack on Ben Gurion Airport in Tel Aviv. He also says the co-pilot confessed to acting alone and using two previous flights to Tel Aviv to scout the route. And authorities say the suspect drew inspiration from the 9-11 attacks. And a Los Angeles judge granted temporary guardianship of Hayden Panettiere's multimillion dollar estate to her former fiance and heavyweight boxing champ Vladimir Klitschko.

31:09Their 11-year-old daughter is the sole beneficiary of that estate. Klitschko argued he needed control because people outside the family had allegedly been trying to profit off of her death. Benetier died of an accidental overdose in August. Brian, back over to you. All right, Frank, thank you very much. All right, coming up, one small step for Elon Musk, one giant leap for your connectivity. We'll talk about Starlink and the telecom carriers that are all down today. There's some news and a move that Starlink made. That's next.

31:50All right, welcome back to The Exchange. SpaceX stock is higher a little bit right now, three-tenths of 1%, because they inked a deal to purchase nationwide cell phone spectrum. They want to push deeper into the telecom market via their Starlink division. Now, that news, maybe it's not moving SpaceX, but it's moving AT &T, it's moving Verizon, it's moving T-Mobile. Those stocks are down 9 % or 8%. It's also a big story for the cell phone tower operators. American Tower, Crown Castle, SBA Communications, they're all going up 6%, 7%, or 11%. And those companies may be the big winners here as they have to build out more towers.

32:33Madison Rezahi is senior analyst covering communications infrastructure at Bernstein and joins us now. Madison, great to have this conversation. I would admit, unless the market's reacting, it's telling the story. if Starlink is going bigger into basically the cell phone business, are we going to need that many more new towers? Okay, Brian. So we're not building a bunch more towers, but what we suddenly have is a new carrier on the tower companies. Think of them today. They really only have three customers, right? AT &T, T-Mobile, and Verizon. And maybe we could have a fourth with this new SpaceX news.

33:07Okay, so they're going to make more money then off the towers that exist? Yes, exactly. How much more money? I have no idea how much money a cell phone tower makes. It's probably something like a 10 to 15 percent bump in recurring revenue for the tower companies. So think of them kind of like apartment buildings. They rent space and rings on the towers themselves. Once you've built up the tower, every incremental tenant that you add is very, very profitable. And again, they're capped out in terms of three carriers today. So this could be another one. Yeah, and Crown Castle is the big winner today.

33:41I assume the market has figured out who Starlink may use more of. Do you agree with the market reaction? How does that link up or sync up with your recommendations? Sure. So Crown is the best beneficiary today because they have the most proportionate number of U.S. towers. Crown is a U.S.-only pure play. American and SBA both have large domestic footprints. Americans are a little bit bigger than SBAs, but Crown is pure play U.S. So they're disproportionately rewarded here. Yeah. And you've got, let's see, I'm going through$214 price target on American Tower,$96 price target on Crown Castle. Big moves today.

34:21You want to are you looking to maybe raise some of these targets or are you happy where they are? Well, it's certainly not something we're going to say on air, but we've been sitting on these price targets and we feel good about them today. Towers have been extremely depressed since the SpaceX S1. there was a little bit of narrative overhang of, is satellite coming to eat terrestrial wireless networks? I think the clear answer here is no. We've been saying that from the time of the S-1, but to us, this is sort of a signal that SpaceX is really endorsing the fact that you need terrestrial wireless networks for mobile to work.

34:53We just made you, you just made your head of compliance and director of research very happy by not going into that. You're very welcome. Is there a chance the market's getting this wrong, Madison? I mean, just because Starlink's buying the spectrum, I mean, the market's reacting and saying, OK, this is going to get built out. I mean, what if it doesn't? Or is it a fait accompli? I certainly am not an Elon mind reader, and I'm not sure this would be my job if I was. But there are a couple of different ways that SpaceX can potentially offer a mobile solution here. They can build their own network, which is what we're talking about today.

35:27And I actually don't think that's the most likely scenario. They can partner with one of the wireless carriers, which is probably the most likely scenario. but they're all in detente and don't want to give them a deal. Or they could buy someone, which, again, we're not really in a position to speculate about, but probably is not the most likely scenario here. So what we're all trying to do is like a probability weighting of are they going to build, are they going to partner, in our view, for the towers, whether they end up actually building, which this could be a signal for, or whether this is really sort of a threat to build in order to get a partnership deal with one of the wireless companies.

35:59That's nothing but positive for towers. All right. Can't let you go. You also cover some of the data center names, the Equinix's, the digital realties of the world. Yesterday's big story was this$20 billion accounting change or switch, whatever word you want to say. I'm not going to say cut because they're not public. They don't give guidance from open AI. And everybody then is kind of, yes, for one day, people are like, well, is the data center story over? Is the data center story over? Absolutely not, Brian. And that's a curveball we didn't talk about. But no, the data center story is alive and well, particularly for names like Equinix and Digital Realty who hold large major metro footprints that are going to be increasingly essential in an inference based world.

36:37So I think we're going to see a lot of movement in the numbers from the labs. No one really knows how that ramp is going to go. We're still very early days, but we feel very, very high conviction on both Digital and Equinix, given their footprints. Well, I can't play baseball, but I could throw a curveball on TV. But you handled it beautifully. home run. Madison Rezae of Bernstein, thank you very much. Thanks so much. All right, take care. Coming up, we are less than two weeks away from the NBA season tip-off in the league. They're back in Macau, China, for their second straight year. You know who else is in Macau, China?

37:08Contessa Brewer. She swam there, and she joins us now. Contessa. I flew like a normal person, or like Superman, Brian. Listen, we have 14 ,000 Chinese fans packing the Venetian Arena in Macau for the Texas showdown. The rivals, the Mavericks against the Rockets. And you know what? The real slam dunk is for the NBA. I'll tell you why right after this on The Exchange.

37:41The NBA season starts on October 20th, but the league's international push is already well underway, returning to Macau for another year. So Contessa Brewer has returned to Macau for another year. And she joins us now with why Macau, I'm just going to keep saying it like that, Macau and China are so important to the NBA. Well, so this is the second year, as you said, Brian, that the games have been hosted in Macau at the Venetian Arena. The league is on kind of a makeup mission to win fans and influence sponsors. In 2018-2019 season, nearly half a billion fans in China watched NBA programming on Tencent's platforms.

38:21But there were some political hard feelings, froze out the NBA here, and cost the league, it says, as much as$400 million in lost revenue the following year. Brooklyn Nets owner Joe Tsai told me today that NBA-China games are really an opportunity to bring intensely engaging sports entertainment to Asia, but also to give players a broader worldview. I talked to the Rockets and to the Mavericks about playing here. To be in a new culture, a new environment, see a lot of new fans, people that haven't been able to see us before, it's a blessing for sure. The amount of people that you have an impact on because of this game and sport, I know our guys are very grateful to be a part of this.

39:01I'm just so grateful that the NBA has given us this platform to travel across the world and push basketball's agenda. The NBA is hoping to build not only the next generation of loyal fans, but potentially the next team rosters. We saw the Mavs Cooper flag and other players practicing with the kids here. And then we met this promising player, Zhang Ziu. She's only 19 years old. That's not old enough yet for the WNBA draft, but she already has her own fan base. And yes, she's tall. She's taller than Brian Sullivan. Commissioner Adam Silver told me today all the factors that fuel profits in the U.S., the media deals, the merchandise, the ticket sales, they are key to the league's growth plans here, Brian.

39:44She's way taller than I am. How tall is she? Wait. They say between 7 '3 and 7 '5. So, I mean, I didn't bring out the tape measure, but I saw her standing next to Yao Ming. And to me, it looked like she had advantage. I think Yao is like 7 '2", 7 '3". I don't remember. I mean, I love watching him play on the Rockets. I mean, you're not... Yeah, that's... Wow. And 19 years old. That is... That is something. She's got... You know, and then to be able to go to the United States and compete in the WNBA draft, it's really something special. You know, Yao Ming comes out on this floor, And Brian, you should have heard the crowd yelling for him.

40:34They have so much passion and so much respect for him as a former player. It's really incredible. I think he's the most, we both know the owner of the Houston Rockets. I believe Yao Ming is the most famous athlete in China in any sport. Like he is, he's basically like the Michael Jordan of China, right? Is that a fair estimation? Yeah, judging by the whoops and the hollers. I mean, all of the former NBA players who came out here got hearty applause. But Yao Ming is like, yeah, he's a superstar. What time is it there, by the way? Is it 149 in the morning? Exactly. It's exactly 12 hours difference from you.

41:17So it's the middle of the night here. Normally, I'd be out at the club, you know, just really tearing it up. Well, the lights actually look like you are at the club with a bottle full of bub. I mean, I just need more music. And they're matching the color of the lights with your outfit. It's very nice. Macau. If that's what happens, like a little TV. Even Macau's not big enough to contain Contessa Brewer. Contessa, thank you very much. Great stuff. Safe travels. Sure, Brian. Assuming she's coming home. All right, coming up. Does the double whammy of rising rates and OpenAI's little revenue possible revision spell trouble for data centers?

41:56We don't know, but Sima Modi does. She'll be along next. And do not forget to register for CNBC's Trading the Midterms Forum in October 14th. I guess Contessa Brewer is coming home because she's going to be hosting that event next week. So from Macau to D.C., where in the world is Contessa Brewer? Sign up, QR code, interwebs, cell phone, send us a letter. We're back after this.

42:24Welcome back. OpenAI's revenue adjustment raising new questions about the circular financing of the AI buildout. Seema Modi with more in today's Tech Check. Seema. Well, hey, Brian, it does certainly cast a light on how dependent some of the biggest names in the artificial intelligence buildout are on the Frontier Lab. Take NVIDIA, for example, committing about$100 billion to investing in OpenAI, most recently putting$30 billion in February. That capital, OpenAI invests in leasing data centers from the likes of Oracle, which it has committed$300 billion to, all while renting cloud storage from the hyperscalers and buying compute from AMD and NVIDIA, as well as the NeoClouds.

43:02This explains why the market may have to lower its expectations if OpenAI falls short of its revenue goals. But the latest updates from a number of OpenAI's partners suggest demand is holding up. GE Vinova, for example, its gas turbines power many of OpenAI's data centers. Its order book is full through 2031. Over the past week, suppliers like Micron and Marvell referencing how tight the memory and networking markets are. The question remains, though, who is left holding the risk if AI demand slows? And what happens to the fixed income investors, Brian, who have been funding the AI buildout? The move in Oracle's credit default swaps, as you can see widening this morning, suggests credit markets are getting more cautious.

43:41And now private equity getting in the mix. CNBC confirming earlier this week that Apollo Capital is helping facilitate SpaceX's$40 billion debt sale to buy, yes, more NVIDIA GPUs. Two investors we spoke to say demand, though, is still so high for compute that if OpenAI buys a little less, competing firms will be there to step in. Brian. How big of a conversation is this still on the street? I know it was a big deal. People are like, oh, they're paying this company to pay for that company that can buy more stuff that goes back into that company. That's what they mean. Are people still talking about this at the same level and volume that they were a couple of months ago?

44:18I think it still gets a lot of attention, especially when a headline like the one that came out last night raising questions about these revised financials from OpenAI. It certainly pushes investors to look back at the circular nature of this AI ecosystem, who's invested in what, and if there is some type of slowdown or an adjustment in expectations, which companies could get hit. Even if it's not a big financial hit, that may see just a little bit less demand. And does that create an open door for a competing firm to step in? Yeah, I mean, and why is Oracle at sort of the center of this conversation?

44:53Just because they took on more debt than others? Why are we focused so much on Oracle? Yeah, because Oracle has put much more money on the line to invest in the AI build-out amid this effort under Larry Elson to reinvent the company as one that is positioned to benefit from the artificial intelligence boom. It has a lot to lose, and it has a lot on the line. You know, there's a separate report from Bloomberg that with one of the data centers they're working on, they're actually hauling gas via trucks, which tells us that they are being incredibly thoughtful about ensuring that the data center timeline is not pushed back because the market is sensitive to any delays at this point, Brian.

45:32And of course, most of its data centers, its backlog is tied to OpenAI. The company has said in recent earnings calls that it's diversifying its pipeline. It's got Meta, it's got NVIDIA in the mix, but still about, I was just checking estimates, about 60 % of its remaining performance obligations still tied to OpenAI. That's why when there's a headline like this, you see Oracle stock respond the way it has over coming days, although bouncing back today. It is up 5.6 percent. Everything's up today. It's happy. It's happy Friday. Seema Modi, happy you're with us. Seema, thank you very much. Thanks, Brian.

46:04Yeah, folks, the entire market is up not only today, but now with gains for most of the major indexes, not the small caps for the week. We're going to have a lot more. We got two hours to go, and I'm going to see on the other side of this break with Power Lunch. See you then.

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