Stocks pull back from records as Fed minutes point to more hikes and Caterpillar slides

Hello and welcome to Market Domination. I'm Broo Pama and we are live from our New York City headquarters. There was just been an hour ago to go into the closing bell and stocks are under pressure now after a record-breaking day on Tuesday. We are seeing a bit of a pullback. We're also seeing moves in the 10-year Treasury yields and the 30-year Treasury yields. I know you're joining us now to also take a look at oil. You're also watching cryptocurrency. What are you seeing? >> Yeah, that's right, Brooke. If we just take a look, as you just mentioned, the 10-year Treasury and the 30-year, which we have been watching, easing a bit from the session highs from earlier, we are seeing that the 10-year Treasury note is at 528. It was at 534 earlier this morning. The 30-year at 566. If we take a look under the hood with equities where we're at, we're seeing that industrials are really taking it on the chin right now down more than 2%. You've got healthc care that's higher. Part of the reason why you may be seeing some weakness in industrials is because of a new inquiry that was opened into heavy equipment makers uh as to whether or not they're using unfair contracts uh uh for farmers. So this may be a regulatory overhang and part of the reason why if you look at our Wi-Fi interactive you're looking at the Dow right now and Caterpillar is down more than 6%. also watching Nvidia down more than 1% retreating from its record close yesterday and as you mentioned also I have been watching cryptocurrencies because we have been seeing Bitcoin down more than 2% there was some uh liquidation long longs uh long traders that had u been forced to liquidate over the last 24 hours. So, part of the reason why you're seeing uh Bitcoin at 83,000 per token, if it goes below 81, then you could be seeing it going lower, but if it holds above uh 85, then it could go up to 90 uh according to strategist. And then just as you mentioned, oil prices, these have been climbing a little bit of volatility that we've seen today, but Brent crude settling at above $100 a barrel. Brooke >> and Fay, thanks so much for bringing all down. and I appreciate it. You >> and investors getting some insight into the Federal Reserve's first rate hike in 3 years, which came last month. Now, the Fed minutes showing that officials backed the hike across the board to address persistent inflation, something they've really been focusing on, those steel prices, and most expect another one this year. But there wasn't urgency, suggesting the next move higher would come at the October meeting, which is what we've heard from officials in the weeks since the September rate hike. Join me now is Ben Eman's Fed Watch Advisors chief investment officer and founder. Ben, what do you make of these minutes? And does it sort of suggest or cement that October is now off the table here? >> Not entirely, I think, Brooke, but you know, the language is a bit about, >> you know, some seeing this rate hike as an insurance, others look at the neutral rate, others looked at AI, others look at the persistent inflation. So, a lot of different reasons why people voted for a rate hike. So what that tells you is that we get a lot of data in between and so people start making up their minds for those different reasons and then vote for this rate hike at the next meeting. So it's a very live meeting therefore it's on the table but it seems that the market is sort of thinking that this is not going to happen maybe because of the midterms elections. A lot of people think that's, you know, they don't want to do it before that that event or just simply there's just not sufficient and let's say evidence that they actually should move with another rate hike. Either way, they stay on the path of rate hikes. That was the big message today. >> Okay. So, so you're saying that there's still lots of data to sort of understand and unfold and and there might be more rate hikes to come by the end of the year, but not necessarily in the next coming meeting. >> Yeah, I think so. I mean it it's not like they're laying out a whole path like okay we're going to go down and start hiking every single meeting or signaling that and that's not surprising right they've always been somewhat data dependent approach but that they're back on the path and that they want to continue to raise rates is important for markets because we're really different environment now and I think what happened how they got to this point was that the straight of moose has become very complicated we have no idea how it actually is going to play out and how it's get solved I think that plays a a big role in their thinking because they see inflation just too far above the target. It's not coming down and energy has a big impact obviously on that. So that energy outlook being uncertain I think continues to play in their mind for decisions and why they're going to stay on the rate hike path not necessarily back away. >> I do want to get your take on the 30-year Treasury yield what we're seeing there because we saw it pull off the highs of the session earlier following that uh that that uh 10-year auction. So what exactly do you make of that moves? What exactly is the market telling us here? It >> was a very good auction this time. You know, it was like >> people were really interested. >> Yeah. Very very interested, you know, and I guess because you know, you had Yeah. 24 year high sort of like that headline idea. >> The highest since 2002, >> 2002. So it's like there's a good yield. I know a lot of people may have not been buying fixed income for a while. But then you got to think about where we came from, you know, from the low fours till now this level where we are now. And this is part of the tightening cycle that's being priced into yields and what is it going to be from here. So I think that there's buying happening but I don't think it's so super convincing that you know people are back into bonds because they believe yields have peaked. I don't think that's the case. >> Now at the same time you said in your note that you believe that yields are somewhat moving in lock step with these AI winners. So what can you tell us about that and how do you separate sort of this AI growth that we're seeing from genuine fear over inflation and higher prices right now? >> Yeah, and there's a connection there because you know in a minute shows too like some of Fed officials see AI as an inflation issue because it drives up all this power and electricity which filters through the CPI. But if you think of AI and and yields, what AI is doing to our economy is growth. like we're getting all this investments >> taking on a lot of debt though at the same time. >> That too a good point like it's in there's borrowing happening and there's growth happening and that's reflected in the yield. People call it competition for capital. I simply say you're boosting GDP with borrowing and investment and yields follow that path and that that's the other part of this rise in in interest rates and that's what the Feds acknowledge in the ministry put specifically in there that they see the yield move as a part of the economic environment currently not necessarily warranting for alarm to do something different to stop that rise. So if you're an investor here and you're hearing about these hundreds of billions of dollars that these companies are g getting uh you know taking on in terms of debt, should you be focused on the debt story here or or it seems like you're more focused on the growth opportunity at hand? >> Yeah, the growth opportunity matters most at right now. But as I wrote about like this this is dynamic that's interesting to play out too. If AI is driving everything, right, and it's really boosting growth and at some point this AI effect tapers off for whatever reason is, whether it's the data centers that have to be slowed down or there's regulation or just simply the appetite for AI changes, economic growth changes and then the debt dynamic becomes an issue because that GDP ratio continue to rise. We haven't really done much of that deficit like the 333 rule that Basson put out there not really mad except for growth I guess. So it's it's it's not that simple anymore to just say, "Okay, growth will get us out of this debt problem. We just have too much debt." So once AI slows down, the debt problem comes to surface. But right now, it's all about growth. >> Ben, I want to quickly get your take on that impact that regulation might have on AI and also this IPO market. We're hearing reports that Anthropic could go public as soon as early November, but investors, as you noted, are somewhat saying maybe even December, January. So how much of an impact does that have on anthropics road to the public markets? >> Yeah, it is an interesting dynamic we're getting now because the prediction markets think that it's not going to happen in November. I don't know maybe who knows, right? Like it's like it's it's a delicate timing obviously after the midterms if anything happens but I think it's also about like where is AI from here till the end of the year. What I wrote about was like it is a bullish story because you know Entropic is really working on meeting everything that the government wants in terms of the safety of the models in terms of the consumer demand. So I think that if they position themselves well enough after the midterms they can bring the IPO to market will obviously be a huge event because this is the largest IPO would ever have and I think it's similar type of let's say demand and multiples that SpaceX showed us in June. So there's a fever going to start building in the market. So I call like the market gets entropical, right? >> All right. I like that little phrase there. So you think SpaceX could be as big as uh Anthropic could be as big as SpaceX. >> Yeah. Or bigger even. So it's it's it's it definitely is a major major event for Marcus if it happens this year. >> All right, Ben, thanks so much for stopping by. I appreciate it. Thanks so much. And coming up, we have Microsoft debuting a new Nvidia powered laptop. We'll hear much more about that right after this break. That's Heat. Heat. Heat. Heat. Down. Down. Ah. Microsoft and Nvidia CEOs taking the stage together in San Francisco today to reveal a new AI laptop powered by Nvidia chips. Joining me now to break this all down is tech editor Dan Howie. Dan, break down what exactly this looks like. How does it feel? How is it different than maybe what we've seen in the past? >> Yeah, Brooke, this is the Microsoft Surface Laptop Ultra and it's the most powerful laptop that Microsoft has built to date. And as you said, the big deal here is that it's powered by an Nvidia chip. It's called the RTX Spark. This is a Blackwell based chip. You'll remember Blackwell is the platform that they build their data center chips on. Uh and so the push here is for ondevice AI which is AI that can basically just run on your laptop or your desktop. In this case, Microsoft and Nvidia are saying look this thing is powerful enough to run big heavyduty models. It has 128 GB of uh up to 128 GB of memory on board. Uh and they're also doing some work with Windows in the background allowing for what's known as hybrid AI. This is part of what's called the orchestration layer or uh essentially what allows uh a computer to decide which model to use or which agent to use for what and when. Uh and so we're seeing this kind of be pushed throughout the enterprise as well as increasingly consumer market. And so with Windows that means that you'll be able to use hybrid AI which is uh AI locally as well as in the cloud depending on your use case. And we're going to start to see a lot more of this going forward. Now, for now, uh the Surface Laptop Ultra is basically Microsoft's big kind of uh push here. It is expensive. It it will start at about $2,500. They're marketing it as kind of a MacBook Pro fighter. Uh they specifically point out the MacBook Pro uh with its uh M5 Pro chip as kind of the the main competitor to that. and they put up some stats during their presentation uh illustrating how they believe the laptop uh ultra is faster when it comes to image generation and video generation uh in their tests. And so this is going to be as I said something that we start to see a lot more of when it comes to the PC industry. Of course I think at this point it's still a little bit early for most consumers. This is really kind of an enterprise product uh as well as an early adopter product, but at some point it will become important for folks to be able to run AI on their devices. >> And that $2,500 price point for some consumers might be a bit scary at first. It'll be interesting to see adoption once it does get to that market. But at the same time, what exactly does this mean for rivals like Intel and AMD? Where do they stand in this now? I I think this just shows that when it comes to Windows, ARM processors, which is what this is based on is an ARM processor, uh are basically here to stay. You know, we had Qualcomm come out with their own ARMbased chips uh a few years back running on Windows and they they proved that they're more than capable of handling it and that they do it quite well. Uh and so with Nvidia now getting on board, I think it does start to raise that spectre of kind of a third fighter in the kind of processor space for uh PCs behind, you know, Intel and AMD. Now, Intel is still the the odds on favorite. I mean, they they dominate the space, but AMD has caught up a good amount just by virtue of the fact that they made those investments in the PC chip technology when Intel had kind of started to fall off. uh and so Intel under Liiputen and uh you know started to really turn around uh putting more investment into those chips. Uh we had seen that start under Pat Gellzinger the prior CEO uh with those different nodes that they were producing. AMD continues to kind of roll but it it's worth looking at these ARM chip based uh systems to say look there now is another option beyond the big two and they're pretty powerful. >> Yeah. And it's interesting to see exactly how far Intel has gotten and certainly reflected in the stock price. We're seeing that stock up more than 200% so far this year. But Dan, break this down for us because why do people need to use AI on their devices maybe instead of the cloud like we've been talking about for so many years now. >> Yeah, it's it comes down to two things really. Price and security. Um as as well as model choice. So on the price side, if you're running a, you know, you need to do something very basic, uh, when it comes to AI, summarizing an email or maybe drafting something uh, quickly, you don't necessarily want to pay for the most expensive model to do that. So if you have a free local model that you can download, then why wouldn't you use that? And so that's kind of the thinking here is if you can run something on your own device, you don't need to sign up for a subscription or perhaps you don't need to run through the tokens uh allocated to you via your subscription for kind of more mundane AI capabilities. For those that need the kind of heavyduty uh lifting that some higherend AI models have, then you would go for those. Uh I I also think on the security front uh it comes down to where you want your data to live. Now if you work in a space like you know medicine or law uh or financial services or you just you know want don't want large companies to have access to your data then using local models also makes sense. uh and then it's the kind of uh choice uh option that you have where you know you may say in in this hybrid kind of world that I want to use the cloud-based models for X and I want to use the onboard models for Y. And so that's where you get this kind of onboard AI discussion going. We've seen it take off uh for Apple. the Mac Mini and the Mac Studio really started to sell out with the kind of explosion in AI agents uh and Open Claw over the summer and that's just going to continue moving forward and this is Microsoft really saying hey look Apple's you know doing great there why can't we do that especially with the name uh Nvidia tied to it >> yeah and right now we are seeing Microsoft mostly flat Nvidia actually down about 1.4% 4% this afternoon. Dan Hi, thanks so much for breaking all down. I really appreciate it. Michael Dell making progress on a $6.25 billion donation to Trump accounts. Today he announced 10 million accounts have been funded so far and by the end of the week 25 million kids will have $250 in their accounts. Our own Jennifer Shamberger spoke to Dell Technologies founder and CEO moments ago and first asked him about this milestone. >> That's right. So, uh, 10 million children already have received $250 from us. And actually, by this Friday, uh, just in a few days, 25 million children will have $250 in their account from, uh, our philanthropic uh, entities. >> I know you've already donated so much. Do you have any plans to donate shares of Dell stock at some point in the future? you know, I I actually uh donated shares of Dell stock to our foundation and then and then sold them at in the foundation and the foundation is then putting the money in the accounts of these children. So that's that's how we did it. >> When you announced this uh $6 and a4 billion dollar donation, you said you had hoped that other wealthy philanthropists and executives would follow suit. We really haven't seen too much of that at this point. However, there have been some rule changes by the administration. Now, there are going to be or can be individual stock donations to thousands or even millions of children similar to what you have done. And I'm curious if you think that change is going to bring more people forward in making those donations. >> Yes. In fact, we already have uh Gwen Shotwell from SpaceX uh has, you know, generously said she's going to contribute uh I believe uh 2 million shares of SpaceX to uh 2 million children uh in in in actually between the ages of 11 and 18 where our gift is focused on children ages 2 to 10. Uh, and so there there are already several philanthropists that have joined us. Of course, Brad Gersner in the state of Indiana, Ray Dalio and his wife Barbara in the state of Connecticut. We have people adopting cities, adopting zip codes, and I believe there will be a number of additional philanthropists that join us. And of course we have now many many employers that are joining in the fund here and either matching the government's contribution or going much larger and contributing to the uh accounts of the children that work inside their companies or even children in the communities where they operate their businesses. There's been some criticisms of the rule changes in terms of the stock donations that can be donated that perhaps it could tie a child's long time long-term financial security to one individual company or stock or that billionaire donors could theoretically dump millions of dollars of stock into kids portfolios, manipulate asset prices or secure tax writeoffs. What do you say to those concerns? You know, these these seem like unlikely foreign cases to me. I mean, if you take uh so first of all, our gift, it goes in the S&P 500, right? And that's also true of the government's gift and Ray Barbara Dalio and Brad Gersner. In the case of Gwen Shotwell, she's giving two million shares of SpaceX to uh you know, two to to two million children. It's kind of hard for me to believe that's a bad thing, right? that that these children are going to somehow be negatively influenced because they now have one share of of SpaceX that they didn't have before, right? I mean, the alternative is they they didn't have it, right? So, it seems unlikely that that is some kind of devious plot to somehow influence these 2 million children. If anything, they're going to be interested in space and capitalism and how capital markets work, compounding and investing, and it will spark an interest in them that hopefully uh, you know, helps them as they become adults. >> That's a good point. I mean, you'd have to give a lot of stock to have that amount of concentration, right, in any child's portfolio. and and and of course the the sort of base foundation that a child has is the this gift from the United States government of $1,000 or in our case the $250 that's in their account which is in 500 companies the 500 biggest companies. So, you know, pretty hard for people to sort of cook up ways that this is somehow a devious plot by, you know, successful people. Uh I I think it's actually nonsense. That that that that's that's my that's my opinion. >> So it's one thing to uh give money to children and have it invested in an index fund. It's another thing to give them the tools to have the knowhow to manage themselves, the financial education. So are you looking at pairing your monetary efforts with educational efforts? Would you like to see the government take a bigger role in ensuring that this nation's youth has the financial knowhow to invest and to budget properly? >> You know, I think one of the challenges is you have 38% of family households who had no stock at all. Right? And so there's really no reason to learn about capitalism or capital if you don't have any. Right? Well, actually now we have 37 states where there is financial education that's already started and we believe that this will kick off a far greater interest in this and you know whether it's done in by the private sector or in community organizations I think it will occur in many many different ways. I I don't view it necessarily as you know a role of the central government to sort of figure out how to do this. I think it's going to spark the interest of these families. We've already seen it in the, you know, thousands and tens of thousands of letters that we've gotten from grandparents and parents and kids. You know, we're starting to kind of spark their interest and hey, I've got a little piece of all these companies. What is that all about? How does that work? So, I think I think it will happen. But you're absolutely right. Financial education is is critical and I think it's going to spark that interest. Maybe they'll tune into your network and learn learn more about finance. That's all great. >> I hope so. And really, really quick, cuz I know we got to let you go. What do you think this means for the overall stock market getting more younger Americans interested in and invested? >> You know, I think in the context of the overall market, I don't think it really changes the market dynamic because it's a relatively small amount compared to the overall, you know, market capitalization in the United States or the world. But more importantly, it starts them on the path of saving and investing and learning about compounding. And you know, hopefully we're not just giving them $250. We're giving them the beginning of an education and learning. And you know, when I was about 8 years old, I had a little savings account and I had, you know, eight or $10 in there and I learned about interest and compounding and that sparked an interest in me that has brought me to this moment to be able to do this. So, you know, if if we're able to spark that kind of interest in capitalism in some of those 25 million children, that will been a great thing. >> Jennifer Shamber, thank you for bringing us that interview. And coming up, Bank of America's top technology executive joins us from the bank's annual tech summit. Stick around. Back. Hey. Hey. Heat. Heat. Heat. Heat. Down. Down. Down. Ah. Bank of America is spending billions of dollars on tech as AI moves from moves from to the real world case scenarios across the bank. I want to bring in Bank of America's technology innovation summit is Hari Gopal Krishnan, chief technology and information officer at Bank of America. Hari, first of all, this is going to be a 14 billion annual spending plan for Bank of America. So, I'm curious, how do you plan to spend it and how will you measure that return of investment? Yeah, look, I mean, when I think about our spend every year, we always start with the where do our clients want us to be? What are the problems our clients are trying to solve every single day? And we always start with that because that's what matters to us. And so, we look at all the things our clients are asking for. They want asks us to make our financial lines better. They want to make sure that we're serving them in a timely basis. We're offering them product innovation. We want to make sure we're there for all of that. And so when I look at our spend, it's very focused on driving all that on behalf of our customers and clients. >> So when you think about measuring that return of investment, what will you be looking for? And also, how have these AI agents just changed the workflow at Bank of America? >> Yeah, if you look at it starts off when we try to understand what are the activities our clients are trying to perform and then figure out how we use a whole gamut of tools. AI is just one of the tools in the arsenal, right? We've been building payment applications, mobile applications, data uh analytics applications, and now AI to really create end-to-end client experiences. So, give you a couple examples. You know, giving a chatbot to a client, which is Erica, our platform that now has served three and a half billion interactions, lets customers do things on their own time, which then requires us to have to have less people to process all those daily interactions on behalf of our clients. That's an example of ROI where clients can do things themselves so we don't have to kind of do that work for them and it actually drives better customer satisfaction because they want to do things on their own time rather than wait for us. Similarly, when it comes to our own teammates, being able to provide tools that can save them minutes and hours of work in helping solve for what a client needs actually drops to the bottom line both from a revenue perspective and an expense standpoint for us. Hari, when you think about just the in general the allowance of employees as well as clients to have access or rather the AI agents to have access to this sort of very you know finite information, very personal information. There's some skepticism about that safety or those guardrails that maybe should be in place. What's your message? What are you telling clients as well as your employees when it comes to this fear around these AI agents having this sort of information? Yeah, you know, our AI strategy has always been predicated on responsible AI, which has within it a number of key things that are no compromises for us. Think about privacy, think about bias, think about ethics, think about, you know, workforce and what it means to the workforce. We're not going to just go roll out something because it's a cool new piece of technology. That's not what we do. We always pick up the problem with client need. Does AI fit the solution? And if it does fit the solution, what are the efficient guardrails that we need to have to protect security, to protect privacy, to make sure there's no bias in the model, to make sure that there's how we treat the customers fair and equitable, how associates work with them, all of that is put into the bucket before we actually roll out anything. So we have a pretty robust governance process we've had for a number of years and that is serving as well as we responsibly deploy the next generation of agents here. >> Hari, there there's also a lot of fear about AI adoption leading to job cuts. We saw a headline from Financial Times this morning about HSBC connecting AI adoption to fewer jobs. What are you doing at Bank of America? Does AI ultimately mean fewer employees? >> Yeah, look, workforce development is a big part of what we do. Uh we have an internal organization called the academy which is all about how we make sure all of our teammates are actually upskilling themselves as you start to see how we can transform our processes from what they used to be to a more contemporary process set of things that are driven by AI. That means we're investing in our teammates. We're investing in education. We continue to hire. We had a very significant campus hiring class that just came in. We continue to hire where we have to solve and meet customer demand and customer need while at the same time taking on mundane activities and toil that does not add value to our customer. We want to focus our teammates to focus on judgment and empathy and there's plenty of work to go around there. So we continue to hire and we continue to train and we continue to take a very in close look at how we develop our workforce for the future. Hari, I think that's really interesting because you're essentially saying that you're using some of this $ 14 billion to invest in upskilling upscaling uh your skills for your workforce. Is that correct? >> Absolutely. We've had a broad academy AI program where every one of our teammates has actually been introduced to how to become a good prompt engineer. How do you think about guardrails? And then specialized, for example, I run the software engineering function. We have an AI for engineers curriculum that is how do you become a great software developer? How do you do requirements differently? How do you test differently? So, it's all about AI is one more tool in our tool belt that's going to transform how we spend more time on client need and client problem solving and less time on mundane activities that really didn't add value but was taking up our time. >> All right. Now, you are joining us from the technology uh innovation summit. You have hundreds of startups there, investors as well. So, what are you hearing on the ground? What are some of the biggest challenges right now up against the companies that you're that you're seeing in firsthand? >> Yeah, I think the biggest thing we're trying to do is marry the state art of the possible that technology is enabling which is rising at an exponential pace with the ability to deploy responsibly with all the guardrails with all the safety with all the customer experience enhancements that makes it usable in a typical customer's life. And I think what's great about the summit that we host is we know that we're good at many things. We have three and a half billion transactions with Erica. We're serving our customers with record high levels of client satisfaction, but we're humble enough to know there are many things that are happening out there in the industry that we're not the expert at. So, bringing together what we're good at, which is serving clients and banking with what many of the folks here are good at, which is innovating on the bleeding edge of technology to come together to figure out how we can serve clients. That is fundamentally the debates and discussions we're having over the next couple of days here. >> Some of those vendors, I'm sure, are quite intriguing. some of these in uh vendors in the past have since from what I understand come on to Bank of America as clients or brought on into the company. So what's the threshold there? What should these startups be doing to get your attention right now? >> Yeah, it's amazing. It's it's our 15th year by the way and imagine where we were 15 years ago. Siri was just launched. Watson had won Jeopardy. I think music streaming was just picking up. So 15 years later technology becomes so mainstream. what we try to do with the partners here and to your point we've met thousands of companies had deep meetings with 30% of them and 20% of them have now become partners of ours. So this is not just about show and tell it's about long-term partnership and what we try to learn from them is what technology they provide. What we try to teach them is how do you do it responsibly. where we have a session called how to sell to Wall Street which is all about understanding how do you think about regulation how do you think about safety and soundness how do you deploy across 40 different global jurisdictions coming out of these my hope is the partners come out better equipped to build a better product that can help us serve our clients better >> hari sounds like a really interesting conference wishing you the best of luck thanks so much for taking the time to join us appreciate it >> thank you for having me appreciate it >> of course and coming up PepsiCo among the first companies reporting third quarter earnings We've got a look at what to expect from Food Giant. Hey, hey, hey. Down. Heat. Down. Down. Down. Hey. Hey. Food and beverage giant PepsiCo is set to report its third quarter earnings tomorrow with analysts keeping an eye on the brand's North America sector. sector where slower snack volume and rising inflation continues to weigh on its stock performance. Joining me for more on what to expect is RBC Capital Markets managing director Nick Modi. Thank you so much for being with us. Appreciate it. I want to start with that food business here in North America. It's been slow. It's expected to see another decline yet again. And this was also a critical point that Elliot Management brought up in their $4 billion uh acquisition stake stake last year. So what could we see in this report? Will it continue to be declines? >> Yeah, I mean we're expecting the the challenges to persist. I mean, keep in mind since they reported last quarter, gas prices have gone up, right? >> You know, free, which is the majority of their their food business um is very exposed to the convenience store channel. So, as gas price inflation happens, obviously that's going to put a little bit of a squeeze on the on the consumer wallet. And so, you know, what was already a tough situation has just gotten tougher. >> At the same time, we know that they plan to raise prices for Doritos and Ruffles by the end of 2026, 2027 because of what they're saying, but at the same time, they cut those prices by 15% earlier this year. So, how much of this is whiplash for the consumers and how might that translate into these results as well? Yeah, I mean it look it might help margins and I I I think a lot of the decisions PepsiCo is making right now is very margin and earningscentric. Uh but I I think it's just going to make their problem worse. I mean what we've seen is obviously inflation given where the consumer backdrop is right now with all the pressures that they're facing. Uh and potentially going into the winter where we might have very high electricity costs because energy costs are higher and we're having the super Elnino that might make it colder than normal. Um, you know, these are all things that I I think are going to manifest uh in in a tougher volume backdrop. I mean, for me, you know, they got some real issues. I mean, they they need to provide a little bit more value to the consumer, and they're obviously, based on what you said, going in the opposite direction. Um, but they also need real protein in their portfolio. They don't really have a anchor in protein, which is really where the consumer is migrating. And so, that is a much tougher solve uh for the company. >> So, what exactly could we see them go from here? because we heard about the impact that GLP1s is having. We heard about these higher prices hitting consumers mindset when they're going to the stores maybe grabbing less snacks. So what is the right answer here? It doesn't seem like Doritos protein is really doing it. >> It's it's not an easy solve. I mean, you know what what we think needs to happen is earnings have to come down so they can reinvest, reinvest in marketing, reinvest in price gaps and price points and reinvest in innovation and maybe even do some M&A uh to get a bigger uh anchor like I said in in the in the protein space. Um but again, these are not overnight fixes and so um you know consumer staples is in a tough spot generally speaking. tough choices have have to be made and I think a lot of management teams and boards are are resisting because they're trying to kind of wait it out but I just don't think that is a plausible scenario and so anywhere you slice or dice it um they're going to have to make some tough choices over the next 6 to 12 months. >> Nick, are you saying in the food segment they kind of need an acquisition like Poppy? Well, I I don't know if it's an acquisition um or if they can, you know, invest organically, but like let's let's take Meatsticks now. They do have, you know, a meatstick kind of um brand, but you know, is it scaled? Is it making a meaningful difference? I mean, it's pretty clear consumers are migrating to me sticks in the snacking space, right? And so, these are the types of questions that PepsiCo has to answer. These are very strategic questions. And let's just talk about Poppy for a second. I mean, just because you acquire something doesn't mean it's going to all of a sudden make a difference. I mean, Pepsi acquired Poppy and Poppy's been struggling lately. Um, right. So, it's not just about the acquisition. It's about actually how you integrate the acquisition as well. >> And like we said at the top of this, PepsiCo is one of the first companies to report of this broader third quarter earnings results. And so, could this be a red flag based upon we what we hear for the rest of the market here? Yeah, but you know that's that's the interesting thing about the stock market, right? Stocks are discounting mechanisms. Now, keep in mind since we kind of have a reescalation in the in the Iran conflict um and energy prices started to go up, you know, end of August into September and and certainly now um the stocks have come out come down quite a bit right anywhere between 15 10 and 15%. And so the market is already anticipating what I think is going to be a pretty challenging earning season. I want to quickly get your take on another company that we already did hear from today and that's Consolation Brands. We heard beer sales, wine, spirit sales were all up yet there is some concern about slowing consumer demand. So what's your take on that company and what do we expect to see towards the rest of the year? >> Yeah, we we we're actually recommending consolation. I mean unfortunate for them is you know the the overall category beverage alcohol category has been under pressure for a variety of reasons. Uh and I think a big chunk of that is cyclical, right? Higher gas prices, weighing on consumers, uh youth unemployment, so people coming right out out of college, legal age drinkers, the unemployment rate is higher than the national average. So these are all the things that are, I believe, contributing. But Constellation is outperforming in almost every state that they sell in, right? I think 49 out of 50 states they're actually gaining market share. And so they're doing a lot of the right things. So this really comes down to kind of the macros stabilizing. And so, you know, when we think about value creation and value of of a company, you know, we're saying, look, do we think what they're doing is sustainable? We we do believe what they're doing is sustainable. In fact, we believe with some addition kind of new new initiatives around merchandising and marketing and targeting. We think they can actually accelerate their business from where where it is today. Uh, but overall, the macros are really really weighing on on the volume picture and we think that'll continue. >> All right, definitely one to watch. Nick, thanks so much for joining us. Appreciate the breakdown. >> You bet. >> And a food, food, and beverage headlines that we are also watching today. Coca-Cola is making a bigger push into the better for you soda market. The company is adding another option to its lineup. Coca-Cola Zero Sugar with six grams of prebiotic fiber. That's right. The option with the the fiber will also be available for Sprite Zero Sugar and Fresca. Now, the pilot will begin this month in parts of New York, New Jersey, and Pennsylvania. So, you have to be there. But it is the latest move by Coke to compete in the beverage space as consumers look for drink offerings of benefits beyond just lower sugar. Also, this was a really interesting idea that caught my attention. It's floating around the restaurant world, specifically Starbucks and Chipotle. Well, Semaphore reporting that Chipotle is tapping bankers amid takeover concerns. And one theory being discussed, ready for this, is a potential tie up between Chipotle and Starbucks. There's no bid on the table. This is pure of some of their reporting, but supporters argue the companies could combine operations in real estate while keeping the brands separate. Wouldn't that be something? And finally, constellation brands. The Modello and Corona maker beating Wall Street's earnings expectations. Beer sales rising 5%, but sales of Modello Especial and Corona Extra. Well, they're declining. Now, ready for this one? The company also announced the acquisition of Ready to Drink brand Spike. I actually just heard about that brand, too. It's a deal potentially worth up to $353 million. And that's your food food and beverage roundup. All right, coming up, we have you covered through the closing on Wall Street. Do not go anywhere. that heat. Down. Take Ah. Stocks ending the day lower as investors pull back from Wall Street's record run. Anz Freay is joining us now. Anes, I know they're watching bond yields following that 10-year auction. We're also seeing Micron moving higher this afternoon. >> Yeah, that's right. And that's off of a bullish call at DA Davidson. But let's start out where you started, which is with the Treasury yields, which we have seen easing a bit because we had seen those climb to 2002 levels earlier. Uh for the 10-year Treasury, it's at 528. It had been at 53 uh earlier. And also for the 30-year, it's at 566. it had been at 57 uh earlier in the session throughout the day. Um we have seen selling when it comes to industrials and materials. We're looking at healthc care that's in the green. But over on the NASDAQ 100, take a look at some of the lagards today. We're looking at Nvidia pulling off from its record high close from yesterday. We also are looking at SpaceX and Meta that is under pressure. And then just taking a look at the semiconductor space. As you had mentioned, look, it's mostly red on the semis, but you've got Micron up more than 4% after DA Davidson put a $3,000 price target on that stock. I also do want to mention that we have been watching the cyber security space, which had been at around record highs with some of these stocks today. Really those taking it on the chain. You you're looking at Crowdstrike, that's down more than 4%. Palunteer network also lower as well. And then just rounding out where we're at with commodities, we have seen oil volatile throughout the session. WTI and crude today going higher, but then you also saw some movements there throughout the session. But look, Brent still settling above $100 a barrel. >> And that's correct. Thank you so much for breaking all down. Appreciate it. And for more on the trading day, we're bringing in Drew Pettit, Roundhill Investments chief investment strategist. Drew, I'd love to start sort of big picture here because we're seeing this sort of riskoff environment. We're seeing this pullback. So, what are the factors contributing to this market this afternoon? >> Look, it feels like a little bit of exhaustion. It's kind of like what worked. People are taking profits heading into the earnings season. It didn't feel like a really big newsy day. I I understand like oil's still high, but rates didn't crack any higher. it to us it feels really repositioned and driven and I still think there's some buy the dip impetus when you look at something like mags the magnificent 7 and some of the tech stocks they actually opened lower relative to where they're closing so little bit of exhaustion short-term repositioning but some some buy the dip activity intraday >> now speaking of those earnings expectations moving into that you say that investors have to be really closely watching both earnings and margins heading into this earning cycle So, walk us through that and who might come out on top given both those metrics. >> Yeah, it's funny. I think the running joke and I get it because I I used to be on the sell side before I came over to Round Hill. Everyone beats on earnings. We we get it. It the running joke. Okay. So, look, we expect a better beat than usual. So, that's step one. You need to do that. But the and during earnings season is you got to be better on profitability. So the sell side is actually very good at profitability estimates. They're almost spoton every quarter on gross margins. So you got to show that you have better margins than expected because that shows you have durable demand and pricing power. That is really what matters as we get into an aging bull market. And we think it's a lot of the secular growth themes around AI and the infrastructure buildout that actually still have that pricing power for now. At the same time, we've seen in these past two quarters pretty significant beats on earnings. You think that maybe we'll see a bit of an ease that maybe we won't see as high of a beat as we've seen in the past. So, what's your expectations around there? And how do you sort of quantify this? How should you be thinking about this heading into these results? >> You could see where economic data came in versus expectation. That's a really good leading indicator of where earnings beats are going to come in versus expectation. So look, those were still positive. The economic data even though it looked a little softer at the beginning of the quarter, kind of kicked back in later in the quarter. He had some better payrolls numbers as well. So look, the data was good. The surprises were positive. So you should get better beats than usual, but it comes in a tick. You know, the the real kicker is again, where can this go? And revisions have to keep going higher. So to us like you might get about 5% beat but you're not going to get these other items like tariff writeups really massive moves in investment writeups that really drove I would say a bigger chunk of the surprise than people realize >> we have some pretty significant events coming up I mean we have this October meeting from the Fed many pricing in no rate hike now saying it's off the table we also have the midterm election so what do you expect following these key pivotal events and how do you think we'll end up ending this year with those in mind >> on the Fed, I wouldn't be surprised if they actually held. I kind of agree with consensus on that one. If they did raise a quarter point, I think it it it really affects the front end. I think equities are really sensitive to the 10ear and the longer end of the curve. So, it's it's a little bit of a nothing story to us just because we've had such a big move in the tenure already. on the midterms. Look, I I've made no money in my life trading politics and it's a midterm election. So, even if you flip the House and the Senate, you still have, you know, a Republican White House or or presidency. It it again feels like the secular trends are still going to be in place. You might get some noise around there, but I don't think it changes the trend that we're probably going to stay in a narrower market between now and the end of the year. Now 2029 sounds like a really far timeline away, but you note that you think that we could see 10,000 on the S&P 500 by year end 2029. So what gets us there? It's earnings growth and we are at a point where earnings have been really strong this year and the operating earnings if you take out the things I mentioned before around writeups around tariff refunds and investments. There is a lot of really good demand in the secular stories that are a big part of the S&P 500 and we're going to compound earnings higher. So that's the driver right now. The estimates are for almost $525 in earnings for the end of 2029. That means to hit 10,000, you only need a 19 times multiple. We're trading at 24 1.5 times now. So earnings can do the heavy lifting to get to that big round number, which is more psychological scary than it is fundamental scary. >> Drew, at the same time, are you worried at all about this concentration that we're seeing right now in tech and and thinking about that runway over the next three years? I worry about it if the fundamental story breaks and right now we feel comfortable with it. I'm actually still more worried about the cyclical story because that's where we have more pressure. That's why I think really quietly in the background the Russell 2000 is almost in correction territory and keeps breaking down. I think people calling for valuation trades on small cap are kind of catching a falling knife there. So I don't worry about concentration because guess what? Portfolio managers in the rest of the world deal with it. That's not a new thing in markets. It's just relatively new to us in US markets. As long as the big stuff in the market still has a fundamental story, I feel okay medium term. >> Drew, thanks so much for breaking all down. I really appreciate it. >> Yeah, thanks for having me. >> Of course. And coming up, we've got an inside look into the creator economy and how it's expanding beyond brand deals and social media posts. It's now so much more. Heat. Heat. Happy. Down down. Down. Ow. Down. Heat. Heat. On the latest episode of Yahoo Finance is how they run. Chef and major food group co-founder Mario Carbone spoke to host Ryan Patel on everything from expanding his brands into grocery aisles to why strategic patience is his recipe for long-term success. Let's listen to part of that conversation. just to get to a place where the brand had enough momentum to even warrant creating this, right? So like >> the 10 years prior of opening, you know, this carbone and then subsequent ones and gaining momentum, gaining recognition to a place where >> it is viable to sell this thing across the country and give people a little bit of the restaurant. And then when you finally get to yeah the R&D of of making you know what is a small batch normally into this you know industrial amount and how do you not lose anything along the way >> was that hard you know creating this you know the first product the sauce to be able to get it right how many iterations >> it definitely took some time because we were you know it was it was still Rich and I doing it you know I remember he and I went to Pennsylvania which was the first place where we cooked the sauce in mass and we spent days there, you know, making that. >> How much sauce do you have that in that that weekend? >> Uh, I mean, a good amount of sauce, >> but you're learning, you're learning the equipment, you're learning the techniques, you're learning, you know, you're learning a new discipline. So, we had to get a crash course in that before then applying our recipes and techniques to it. So, it took days to just get to anything that was even viable. But even still to this day, you know, every time a batch is made, they send us a sample of that batch. So, I mean, it's still being tasted and tested by us even today when we're, you know, in 25,000 stores. >> Joining me now is the host of How They Run, Ryan Patel. Ryan, thanks for joining us. I mean, I would be lying if I didn't say that. I'm still dying to try that spicy pasta. So, we'll have to talk later after the show, but I want to know what are some of the biggest lessons that you learned from sitting down with Mario? >> Well, great joining you. And I think the biggest thing that I immediately saw when he walked in with us just viewing is the details. He would walk into the kitchen or to anywhere he has the amount of detail that he has still as a chef to what he's doing running a business still there. And and I think that's one thing that goes underestimated when people look at many of these companies that are growing, especially underneath his leadership. You know, they're going 100 million to 200 million plus. He's talking about potentially maybe going public, maybe not. And those are aspirations that most people don't even want to talk about. Yet he's throwing it out there to be able to build this empire and he's built different verticals. So it's not just the restaurants as you saw it was the sauce and the consumer package good hiring the right people and going global. I think that's a really great aspect of it, >> right? and building out that Carbone fine food story, but also at the same time it seems like you were able to get an inside look at the sort of relationship that he has between not only being an entrepreneur and a business man, but also that art of storytelling that he's been able to craft at the same time. So, what can you tell us there? Yeah, I mean it's it it's so genuine like you know sometimes you you know I'm lucky and that people want to have these conversations with with us and with me and you know I asked him about what leadership meant to him and he paused and because it wasn't just about the business it was personal and the storytelling is how he was raised and what he loves about Italian food and how he has to not retell the story but to make sure he stays true to the to the cookbook of what Italian you know American Italian-American food is. And to me that stands out. He's not trying to build something new. He's trying to be to keep that nostalgic among everyone among his guests or anything that he's doing. >> Ryan, I I know you mentioned it at the top, but if you had to say, what was the feeling like when he did discuss a potential opportunity to go public? >> He he didn't shy away from it. I mean, to me, I've been in many of these rooms and they would be like, "Oh, okay, sure. we, you know, but he he didn't shy away from it. He he he understands, I think, what it takes, right? That it is, it could be hard. And but he's also not naive to go, well, we could spin something off of a vertical, off of maybe it's the, you know, this is not him saying, this is me, you know, maybe it's off of a global expansion, maybe it's off of CPG. He's thinking about it in different verticals, which he could spin off. And that's what he said. And to me that's the evolution I think of him as a chef to a leader to overseeing you know co-founding uh this company and building and so to me that's the kind of exciting to follow to see that as mind is thinking and not letting himself you know he's still staying true to himself and being very transparent >> and with that transparency I mean how difficult has it been for the company to become more of a CPG player especially in this environment where we are seeing admittedly consumers pull It was so funny cuz I had asked him because I knew I you know you know how hard it is to start a CPG company and the first thing he told me was I needed to go hire someone who's done this before. I did this and I'm still learning from it. I'm still learning from um the CEO that they have in place. And so to me it's the flip side of not knowing what you don't know and still trying to learn from it. And I think that's probably one of the great assets he has to be able to continue to build a company. you know, you can't know everything, but you got to have the right people. And their retention rate, um, in, you know, within the restaurants throughout, their turnover is very low, and I think that's part of the success. >> Ryan, well, I can't wait to watch. Thanks for joining us. Appreciate it. >> Appreciate it, Brooke. >> The creator economy is evolving well beyond brand deals and social media posts with top creators increasingly building ecosystems that they hope can outlast the audience itself. One example is Fullbox, a new holding company built around Fortnite star Cody Clicks Conrad with his nine businesses and ventures. And joining me now is Darren Glover, CEO of Fullbox. Darren, thanks for being with us. I really appreciate it. So maybe this is someone's first time hearing of of you, of Clicks, of this whole company in general, but probably not. But break it down. What exactly are you aiming to do with this new company? >> I represented Clicks for the last four years. you get to a certain point of influence that sponsorship deals become um less exciting and you start to realize that this is not what your career is all about. Starts to like kind of lose your purpose in life is just chasing more sponsorship deals. And Clicks got to a point where he was asking what was next and what was next for him was how do we create longevity of impact? And in order to create a longevity of impact as someone of influence moving into his prime was to create a business structure around himself. And a year later, we finally launched it. >> Okay. And so for clicks, will will this fullbox model be just for him? Will you bring on more creators? What could the threshold look like to bring on maybe more personalities or content creators? >> People ask me about that. Are we're going to represent talent? And we don't want to represent talent. We want to build entities that can support talent. So, it's not that I want to represent and manage talent, but I want to have a business that might be able to support what that creator wants to do with their life or that professional gamer wants to do with their life. For us, all of our business entities are all about dreaming, our apparel brand. Three pillars of dreaming are dream bigger, manifest daily, and bring others with you. So, the bring others with you component is what our business entities are for. So, if you're an upand cominging gamer, we want to have something for you. If you're an experienced gamer or a creator, we want to have something for you, but we don't want to represent talent, but we want to create the services and solutions that might be able to help talent. >> Okay. And so, have people been knocking on your door trying to become a part of this new venture? And what has that looked like? What opportunities are you going to give to them or provide? >> Yeah, our the biggest launch we had was our impact arm, which is called the Dream and Access Fund. So we found out over the last >> four or five years that gaming PCs were a huge tool in order to get access to the industry. The industry >> alsoite quite expensive >> and expensive unless you want to be a schmuck like me on the business side. If you want to actually do something in front of the camera or something of value to games, it's either you compete, you create, or you develop. All three of these career choices, you need a gaming PC in order for you to partake at a high level. Maybe you could figure out how to do it with your phone, but the technology wasn't there. So for us it was how can we create an organization and an entity that we're able to give away gaming PCs and help kids on a career path within gaming. So within 72 hours we've had over a thousand dreamers as we're calling them submit their name and stories and details around why they want to be a recipient of one of these gaming PCs to be a part of our 2027 initiative in our program for them. >> Now I want to sort of broaden this out because you have had a pretty substantial role in building Click's fandom, his base. So maybe for this entire creator economy, what is the secret sauce to to having such a large following right now? >> I think it's consistency. It's not chasing attention. I think a lot of creators right now are chasing something and they're just chasing numbers and that's a very lonely feeling to be chasing an algorithm and you're you're constantly seeing what other people are doing and all you're doing is just trying to chase what the creator in front of you is doing. And I don't think that's a career option. I think being able to understand there's a quote uh I think from the founder of Airbnb. It's like I'd rather have a million people who love me or a hundred people who love me than a million people who sort of kind of like me sometimes. >> And I think that mentality of showing up consistently for the people who are already there rather than only focusing on the next viewer. The more you can create that, you can build a really awesome lifestyle around yourself without having to have 28 million like we do. You don't have to have the numbers to build it. You just have to have a very core community and a core community can be uh 2,000 or 1500 people that show up consistently across the board. So I think the more you can focus on just the people who constantly show up every day, the more you'll spend less time on everything that's new and you can start to build around just a niche community of people who love and support you. And the surprise will be you'll start to grow because of that >> because you're more authentic. It seems like it seems like that's the the key ingredient here. The analogy I use is like when you go into networking events, who's the worst person to talk to? The person who's constantly looking in the room on who next they're going to go chitchat with, but the person who's you have the best relationship with is the person that sits and looks at you. And then when the time is up to go talk, it was great to see you and they move on to the next person. That's that analogy of like there are 100 people here to see you today. >> Focus on them. Stop focusing on the hundred people that don't know you yet. >> Now, at the same time, we are seeing this rise of micro influencers. So, you're saying these people maybe a little bit less following. At the same time, those people might be wanting to take the leap of faith and quit their jobs and do this full-time. So, how do you do that with the hope to build an ecosystem like Fullbox, but but at the same time, you're maybe relying on these smaller sponsorship deals right now? >> It's not for everyone. I mean, that's like my big thing is like I didn't I didn't go on LinkedIn and search this job and apply for it. Like, I've built with clicks along the way. And he's huge to be able to have the risk to be able to do something like this. As a microcreator, you shouldn't be doing this. like this is not for you yet. But I think what yet >> but I think the mind it's more of a mindset. It's it's the mindset of thinking like a business I think is more of what we want to inspire more creators to think like instead of thinking like an online influencer. I've said this for a long time. Influencers and creators are the purest form of entrepreneur. So if you can think like an entrepreneur, sometimes your ideas change a little bit when you're thinking like you're an entrepreneur with media and content and customers rather than >> person with camera and products to sell online. Like there's just it's a different mentality. So for us it's hopefully we're inspiring people to think bigger and then over the next 24 I mean Cody's been doing this for the last 8 years. So, if you know after eight years, yes, you maybe you'd be able to be where we are, but we want to inspire people to think that way. >> Yeah. Content, customers, media, all under one umbrella. I really appreciate you breaking it all down. Thank you so much for joining us. >> You're very welcome. >> And also, I do want to hit on quick breaking news here because shares of Levi Strauss are moving in after hours trading. The data maker delivering a big earnings beat and raising its fullear profit outlook for the third quarter. Levi posting adjusted earnings at 48 cents a share, well ahead of the 36 cents Wall Street analysts expected. Meanwhile, revenue came in at $ 1.61 billion, just shy of estimates. Looking ahead, Levi now seeing fullear adjusted EPS of $154 to $156, up from its prior range. The company also targeting about a 6% organic revenue growth for the year. It also says its direct to consumer business remains on track for mid-s singledigit growth in the fourth quarter. The company also announcing a $100 million accelerated share repurchase program. That stock mostly flat as we make our way towards the end of the day. And time now for what to watch on Thursday, October 8th. On the earnings front, PepsiCo reporting its third quarter earnings before the bell. Investors will be watching closely for any signs of volume growth, especially across North America snack sales. Keep a lookout for that. Also, pushing ahead to Thursday afternoon, Freddy Mack is set to release its latest weekly mortgage rates data. Lots of people watching that. Prospective home buyers especially, they're looking to see if the 30-year fix will ease down from its current level of 7.28% or stay elevated amid persistent interest rate pressures. We're also getting fresh data on the labor market with the weekly initial jobless claims. Economists expecting claims to tick up to 200,000, slightly up from 197,000 in the week prior. And rounding out the day, we'll get some commentary from the St. Louis Fed president giving a speech on his latest economic outlook. Investors there will be listening closely for any potential hints regarding the path forward for interest rates. That's a wrap on today's show. Thank you so much for watching. We'll see you again tomorrow. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. N. Heat. Heat. N. Heat. Heat.