Apple’s Foldable iPhone, Brent Tops $100, AT&T CEO Interview 9/9/26

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1:01Can an apple a day keep the market bears at bay? Apple kicking off a big event right now out Westpocket of Power Lunch here in the east. We are Kelly and Brian. We'll give to Apple in a second, but energy also front and center today. Oil here creeping back toward $100 bucks of barrel, but doesn't even matter to your money. Yes, surprisingly kind of a whimper today, but a big day for AT&T. Apple's new iPhones hitting the shelves and AT&T is looking to ride the upgrade wave with a fresh device cycle that could fuel subscriber growth. AT&T CEO John Stanky joins us live from the Goldman technology conference with a shareholder update on their growth strategy. We'll talk about that next. All right, so we've got a lot to do, but let us start with the big event of the day. That is Apple. Now Apple is not only debuting some new products. It is also debuting a new CEO. McKenzie Segales joining us from the event in Cupertino, California, and Mac. I know there's some new things rolling out, but I guess one other big theme would be let the John Ternis era begin. And so it has right now onstage John Ternis has been introducing

2:08the new foldable phone. This is the most significant form factor change to this device in company history. It is called the iPhone Duo. They compare it to the size of a passport when it's closed, and then it opens up to something that resembles a small iPad. This is why iOS 27 has this new handoff feature, or essentially the same phone number can seamlessly move from an iPhone 18. We just got that, the 18 pro and pro max over to this new iPhone Duo foldable phone. In terms of what we've seen on the product side so far, that 18 pro and pro max they are talking about better battery life, introducing a few new colors, saying that the specs inside are better, the A20 pro chip. So a lot basically incremental updates here to the hardware, but the actual cosmetics of this 18 pro, very much the same, which is why the foldable is so compelling. Not seeing a lot happening with the stock, though, it's down 1%. What I will say on the AI side of this, because this entire presentation has been very much about presenting what Apple's AI strategy is,

3:09John Ternis, selling this idea of the iPhone as the ideal hardware for this new AI era. But some interesting features centered around the watch, that I just want to walk you through briefly. We've got something called audio intelligence here, and a feature specifically called Siri Recap. So what this does, Apple says that the watch can use essentially ambient listening throughout the day, and then at the end of the day give you a wrap up, a summary of all the conversations you've had. Have to imagine that they've been having a lot of conversations with lawyers about what this means, and states that are one party consent, but certainly a step up in terms of some of the Siri AI features that were first introduced at WWDC here in Cupertino earlier this summer. Guys, the foldable is probably other than seeing John Ternis himself. I thought handled it with such a plum for such a match. Imagine for a second, you're the person who follows Steve Jobs, and then Tim Cokou added, you know, 4.5 trillion of value, you're that guy. The moment to see he looked at ease on stage, frankly.

4:13And that's because he spent half his life at this company, 25 years building the hardware that's really the bread and butter of this company, half of their revenue, the half a trillion dollars that they bring in every year in terms of overall revenue. But half of that comes from the iPhone, and that's what John Ternis has been building. And so this is his big day because yes, he's introducing himself to Wall Street and the consumer, but he's showing what he's been working on and is R&D lab essentially. And so we're getting these bump-up specs, but the foldable is something that they have been working on for years now. And this is something where we're still waiting to hear about pricing that typically comes at the end of the at the end of the presentation. We don't know yet when they're going to release it. There were reports to indicate that this wouldn't actually come until the end of October, early November. And at least historically, this hasn't been a huge seller across Huawei and Samsung, only 23 million units a year, but you have to imagine I'm looking at these, I'm going to go test it out in a couple of minutes guys, but I'm looking at the live footage of this. And it's just nobody's to date has gotten that seamless screen, right? And it looks pretty

5:14impressive for what I'm seeing right now. Everyone's curious about the fold. Well, they have a fold line. Well, they've sold the fold problem. Yes, exactly. I will say my buddies had a foldable Samsung phone for about three years. So I'm not knocking Apple on, but I'm saying it's not a new thing like I've used it. No, but can they make it more elegant? That's the real question. Does it fit in a dude's pocket? It's small. Did you notice? That's a critical question. I mean, like for me, I have pocket. I'm not throwing it back at me too. I want to put it in a pocket. Yes, Mackenzie, come back with updates. Mackenzie, Sigalos, let's talk this stock side of the story. See if Will McEff, if it'll fit in his pocket. He is CIO at Prime Capital Financial. He owns Apple for their clients. A couple of things that we think I don't know if this has been confirmed yet. This was the rumors ahead of time. If you get the foldable, you don't get the telephoto camera lens. Some people care about that better camera. You also don't get the Face ID. You do maybe get battery life and Apple told us you can now port your number. So if you Brian want to try it, you can get a foldable

6:19and have your normal iPhone. And just use both with the same phone number, which has been a big hang up for people. Anyway, well, what are your thoughts? Kelly, Brian, thanks for having me today. And I think you hit the nail on the head here with new energy coming new CEO, John Turner's new product. But working with our advisors and our clients, we really ask the question like, what is Apple these days? It gets a Mag 7 company, obviously. But it's not an AI company. It's not a hyperscaler. And what we're seeing in real time is a re-rating from growth to value of a stock like Apple. It trades at 33 times earning, which is more like a consumer staple than a tech stock, which to me speaks to the certainty of the cash flows. It grows pretty slowly 8 to 12% a year. And what we're seeing now in Cupertino is just more reaffirmation that they're going to have the pipeline come to continue that growth. So the year is 2035. Are they laughing all the way to the bank on this strategy by not doing what Meta and everybody else is doing? Or are we all standing here going, oh, well, it went then from a, you know, a company that's just a consumer staple that

7:20makes some cool products is not worth as much in, you know, a decade than it as it is today. Well, this is the classic tradeoff of what you're paying for it, in my opinion. It trades at 33X NVIDIA's 24X Costco and Walmart are more expensive than Apple. So Apple's in this great spot. It sits between kind of a consumer staple and a growth company. And really the point I would like to remind everybody here of is we're seeing SpaceX and Throbic open AI. Those are the growth stocks going forward. Mag seven and software is rewriting in real time to more of a value play for our clients and our advisors. I'm going to say something I shouldn't say, but that's kind of my homework, which is Apple I've been doing this. I used to go to those events. Apple stock doesn't move on these product events. That's not taking anything away from what's happening today. It does it still always sell off. They almost sell off a little bit, but to your point over time will is where the value is enough people buy this new foldable phone. You increase cash flow, increase free cash flow. Maybe this stock gets a bit re-rated. You mentioned consumer staple. I would argue

8:22that outside of basic necessities, I mean the rawest food and shelter. This thing, this phone is the most staple of all the staples. People walk around with it like a cigarette. Totally there's 180 million of them in the country with about 360 million populations. That tells you everything you need to know about the utilization of the iPhone. And ultimately it's going to continue its slow growth by continuing to expand its products set to have users and ties to continue to buy their products. We're going to see touch screen MacBooks. John Ternas comes from a hardware standpoint. And so he's really I think reaffirming Apple's direction in the future is based upon all the product and hardware work they've done. And of course you can use hardware to run AI and they can tangentially drop AI to help kind of get some buzz around it. But ultimately there are consumer staple stock that should be positioned alongside other value stocks. Is it a must own? That's a tough question in my opinion. It's a top two stock in the country right from a market cap standpoint. So it's

9:24in video and Apple you have pretty dire tracking error if you don't own it. So I think given its place in the capital structure you should own an Apple. Well also as you say it's your anti-LLM AI play. Right. You know it is a way to have exposure to even though it's the value I get it but like to have some exposure to growth without having to worry about the balance sheet ramifications from everybody who's going to war right now trying to one up each other with these models. And what do you think of the way it's going to handle Siri now? Yeah it was that it's a number one week question we get from clients and client events. How do I diversify away from AI? It's Apple. It's you know- We're definitely number one question you get. It's our concern. How to diversify away from AI. They've clients will like- There's your that's the lead of this in it. I should have been the lead of the interview. Yeah. So that's exactly what we're positioning is that even though it's a tech stock it trades like a consumer staple tangentially related to AI it provides diversification against the Google and hyper scalers of the world. What else is in your anti-LLM anti-AI basket? Well if you're trying to hang out in the top cap structure here in the states it's

10:28the GLP1 name so Lily would be the other name that we like there. Some bellwathers are attractive to us but again they're tangentially related if you look at Cata Pillar it's data center built out so it's AI. What about Chase? I mean no. So I think that's a great point to talk about here is this rate environment is beneficial to the banks and there's a lot of cool things you can do with fix income. One of our other key things we're working with our advisors on is to let rates do the work going forward. We've had a couple like 20% year, 20% year, 15% year, your own track for a 15 to 20% year this year and equities and equities and so I think you need to look at the rate environment is helping to be the ballast of a portfolio. You're going to start buying longer than 10 years. You are here I'm going to take you to Treasury today and they can hug you because you're going to be in that and when we have the A plus bond auction it's this is these are the people who are buying debt at the end. Yeah totally. I mean we're building portfolios for clients and we've got 22,000 of them over hundreds of advisors so there's different flavors for different types of folks but at the end of the day you need some type of diversification in your portfolio. I know we got to go we got Halima next block on oil specifically but from a market perspective will are your clients talking

11:29at all about the price of oil because the market doesn't seem to care. Well you mean it's I shouldn't say that I should make it the lead story and it's a big deal. Can I tell you what the market doesn't care so we were a hundred dollars of barrel oil like 2011 through 2014 and 2022 the S&P was under 2000. I know S&P is pushing 8,000 now and oil is still at 100. You're going to take away the thing I'm doing in the next one. So that's like I'm from Alabama so keep it simple like to me $400 barrel oil would be concerning to the markets if you're just extrapolating S&P returns versus oil returns. Oil's gone nowhere for 15 years S&P is up 4x so that's your answer. It's literally what I'm doing in the next block but well that's a good no you it's a good tease you actually teased it for us. Well thank you. Thanks for having me. Thanks for coming well we really appreciate it. Well McGuff of Prime Capital. All right so as Kelly kind of alluded to your other big story today Scott Becant versus the bond market. Sort of earlier today to the Treasury Secretary announcing the size of their big buyback. Now the buyback itself will hit tomorrow but it's up to 6 billion that was 3x the normal amount. Let's go to Chicago and our Frick Santelli Rick.

12:36We can kind of see how the bond market is reacting selling a little bit. How are you and the bond traders reacting? You know it's just more of the same. Most of the bond traders I talked to for a month have been looking to test 5% so really nothing out of the ordinary and yes you're right. It's the biggest buyback by Treasury okay by the U.S. Treasury in terms of the Federal Reserve and their buybacks that fattened up their balance sheet over 9 trillion. Well what the the Treasury is doing is microscopic truly by comparison. It's just a bit out of the ordinary and at 11 o'clock Eastern look at the charts. Here's a 6 hour chart 2s and 10s. Both of them move higher. Obviously that orange line is the 10s and the 10s moved much higher quicker and if we look at the 2 10s spread you see it right there the steepening of the yield curve and 10 years around pace to continue to close at the highest yields going back to October of 23. But and this is important we're not alone this is a global event the mid east and energy prices which you keep referencing

13:41adequately and do a wonderful job Brian. It is one of the driving forces and it's a bigger force in much of Europe and Asia. There's I just picked a couple the guilds right there hovering just below 530 highest yield close in 20 years. If you look at what's going on the boon 344 highest yield close since 2011 these yields continue to move up and I could have showed you France and Italy as well. Brian back to you. Rick thank you and thank you for the kind words. All right we are just getting started and coming up one of America's fastest growing AI companies on a big defense dealage is made and Kelly you know the real risk of AI I don't killing us all great there's there's that but before we get to that Alimacroft is here on the energy powder kegs around Iran and also around Moscow.

14:43Never bad against American grit or American energy. Through innovation venture global is not only building some of the largest energy facilities in the world right here in the United States but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking we're busy building that's venture global that's unstoppable energy. This episode is brought to you by Schwab Market Update an original podcast from Charles Schwab Join host Keith Landsford for this information packed daily market preview delivered in 10 minutes or less including projected stock updates monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe at Schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

15:55Even regular juice can afford it. Give me that big open. Yeah. The whole biggest mess of us. Only 599 is whole senior. A bill for a limited time to participate in restaurants tax not included not valid for use within a combo or in combination with any other offer or discount. All right with oil prices in America creeping back toward 100 bucks of barrel and higher overseas we want to take a look at how the stock market oil and oil stocks have correlated in both the near and the medium term. Now the last time oil prices were this high was actually just about three months ago back in June. Now since that time the stock market overall the S&P 500 is just nudged higher by about 1.5 percent but oil and gas stocks have surged rising almost 15 percent in just three months so it's been a good run on the energy stock side not great overall but what about a bit of a longer or medium term we forget but four years ago the price of oil was as

16:56higher higher than it is right now on July 11th 2022 crude oil hit 97 bucks a barrel in fact it was 120 a barrel back in June of that year on reaction to Russia's invasion of Ukraine. So in the 50 or so months between then and now something remarkable has happened. The US stock market what will refer to moments ago Kelly has nearly doubled in July of 2022 the S&P 500 was just below 4,000 it is now clawing closer to 8,000 to be precise the overall market measured by the S&P 500 is up 93 percent since oil was at these prices back in the summer of four years ago in the meantime the XOP oil and gas ETF has risen 68 percent in that same four plus year period although most of those gains have come in the last few months all right three small conclusions number one no one can really know how these dual wars one with Iran the other between Russia and Ukraine are going to play out two if you do believe oil prices are ultimately going to come

18:01back down the macro stock market could be a good long place to invest by the way as it always is and three if you think oil prices are going to remain high history says oil and gas stocks could be worth your time and money kind of like Piper Sandler's Craig Johnson said on this very show yesterday all right for more than a hundred dollar oil all things energy and global macro let's bring in Halima Croft head of global commodity strategy at RBC capital markets also I see BC contributor and I'm not saying Halima that the higher price of oil and gasoline particularly diesel doesn't matter it matters to a lot of people particularly on the lower end of the socio-economic spectrum but the macro market hasn't reacted as much I'm sure you guys have these conversations amongst teams at RBC capital markets is there a point you think at which this really starts to take a bite I think the real question is Brian I think a lot of people in this

19:02market have been anticipating an end game for this conflict and so as we get into a situation where this looks like we could be hitting the one year anniversary of this war come February if we don't get a diplomatic off-ramp I think then the real questions will emerge about what does it look like in Europe if we don't get you know resolution in terms of gas markets there I mean think about it almost no-caterlNG has reached the market Europe is well below where it should be in terms of storage what if we get a cold winter there so Europe are watching very very carefully there does not seem to be a clear end to the product problems because we have two problems we have the Iran war but we also have the ongoing Russia Ukraine war and the diesel price situation shows no signs of abating so again I think duration really matters and I think some of the complacency was due to the fact that we have ample reserve at least accrued going into this conflict and the belief that this would be over soon yeah do we define soon because I don't I don't see any

20:08let's focus on Russia for a second everybody's focused on Iran I get it we had we had ships being blown up we'll get to that in a second kind of an odd strategy for Iran given that they have a limited supply of ships and when one gets blown up that's one less they had but I want to go to I want to go to Russia a lot of people don't realize this but they should just go on their interwebs and search for Google or not your Google or Bing whatever you want to do drone attack leapsick Germany and there was a near drone attack in Germany at an airport didn't get a lot of attention here that Germany blamed on Russia in other words if Germany is right Russia may have tried to hit a German airport with a drone that doesn't seem like a war that is de-escalating seems like something that is escalating you know ally and so the question of you what would be the US article five commitment in such a situation is that attack has been successful but prideier point I mean Russia is such a large exporter of diesel such a large product

21:11exporter what has been Ukraine's strategy for the past 12 months is aggressively attacking Russian refineries to deny fuel to the front lines and also more broadly go after the Russian ATM that finds the war and so that conflict is really in focus as we think about the shortage of refinery capacity we have one war which has become fluid energy war in terms of refineries we think about the Iran war some refineries in the Middle East have been attacked and then if you think about the U.S. our refineries are running at 98 percent capacity there is no shortage there's no spare refinery capacity that we can utilize there's no way to call an opact of refineries and get more refineries online. Halima appreciated for now thank you very much hilly mccroff joining us. let's get back to Mackenzie sagalos who has more headlines from the apple event you know the way that he's holding the phone I don't really see the fold Mac but anyway I'm about to go test it out because the event just wrapped Kelly and we have pricing now for the iPhone duo it is going to start

22:16at nineteen ninety nine for that base two hundred and fifty six gigabyte model it scales up to two terabytes that might be where some of that pricing around that three thousand dollar mark came in running up to this event in terms of the timing of when you can get your hands on this pre-orders will start October 16th it's going to be available October 23rd a few of the concessions that we've talked about no face ID just touch ID but there is a telephoto lens and there was a question as to whether or not that would be made available they talk about all the deep integrations of Siri AI into this product I will say it looks very similar and it's at the same price point as the Samsung Galaxy Z Fold so we're going to see whether or not this goes head to head in that market one of the biggest takeaways from this event is just how I high end apple has gone with this lot you cannot buy an iPhone in terms of this latest generation for less than twelve hundred dollars we only got the eighteen pro and the eighteen pro max that is a total departure from past strategy where if at least had this baseline model where you can enter in you know a new price point to enter

23:20for for apples so clearly looking to make up for some of the margin squeeze with memory by kind of forcing people into these higher tiers we've seen the company do this before kind of either phasing out a lower memory option or just starting you at a higher baseline and that's certainly what we are seeing here and what I will say in terms of the stock not a great reaction still down around one percent part of that might also be that the eighteen pro and the eighteen pro max didn't hike the price more it was only a hundred dollars per model we saw we actually saw the stock rewarded when we saw twenty percent hikes to the mac in the ipad so I have to wonder if if shareholders were looking for a little bit more of the consumer to take that on only other thing I would say is that apple upgrade that leasing program we were talking about a few weeks ago certainly going to be coming in handy as you look at a two nearly two thousand dollar entering price for this new foldable phone mccenzie thank you mccenzie's the gallows print just to point out we show that chart this is a better trading pattern than we usually see for apple

24:20events the shares could go green and if they do it could be a couple of reasons why it's down about a percent right now to quote gene monster we talked about last hour he said the new foldable iphone do a no seem ultra thin fifty percent larger screen his take they're going to sell more than he thought before seeing it thought it'd be five percent of iphone revenue in twenty seven now he thinks it's going to be ten percent still everyone still thought the price was going to be over two k a one nine nine nine is a big deal because it's close enough as mccenzie was saying to the price of the new regular eighteen's people might just go ahead and sale give it a try i big deal for well it is over two grand if you have sales tax which everybody does people buy it because this is your computer now but i mean let's be clear two thousand dollars i don't want to say it's a phone you can't call a phone can you can we call it folks but it's not a phone it's a computer that has a phone on it if people thought five percent would be the number i mean no one thought this was that's more expensive than i'm like a mac book although you're not going to put that up to your ears so i guess i get it and it has the good camera the the best

25:22camera which is this is a telephoto lens you spoke of earlier i don't yeah what wizardry is this my phone is a couple of years old so i don't know if i have this thing or not but if you care about having the best camera you were going to have to sacrifice that to use the duo the foldable phone but you don't they they found a way to actually include that so that will make it easier for people to say yes can i play just i don't say devil's advocate i do wonder will ask our viewers i have no idea will that foldable phone which looks cool will it take away market share from the ipad i don't know because now you have that they might need a small ipad not an ipad pro but do you need that apple might be great with that because i don't think the ipads are they two thousand dollar devices i mean yeah if you get the ipad pro the big one yeah with the big processor and a lot of memory mm-hmm maybe cellular coverage but i do want it's a good question for the audience will the foldable phone take market share from the ipad and as we debate that who's really in control us or the

26:22ai we will debate those risks rewards and the road ahead with sandbox a q c o jack hiteri right after the break september's always busy whole foods market can help their september stock up event makes it easy to load your pantry and freezer with flavorful nourishing food even better there are hundreds of sales get dinner going with canned soups and veggies lean on frozen pizzas pastas and seafood everyone loves their build your own family meals feeds for for just thirty five dollars stock up at whole foods market this episode is brought to you by swab market update an original podcast from Charles Schwab join host Keith lanceford for this information packed daily market preview delivered in ten minutes or less including projected stock updates monetary policy decisions and key results and statistics

27:28that may impact your trading download the latest episode and subscribe at swab dot com slash market update podcast or find Schwab market update wherever you get your podcasts yes is angus marksman this partner has one pound of a pound of hot sushi cooked to water angus feet it's more expensive a quarter pounder the burger with clothes and for only five ninety nine even regular juice can afford it like that guy give me that big old burger yeah he holds angus marks on us only five ninety nine is cold senior available for a limited time of participating restaurants tax on included not valid for use within a combo or in combination with any other offer or discount oh hi apple just unveiled its latest i phone lineup we're going to get to more on apple and john stank you of at and t and our friend jack hitteries sandbox thank you in a moment kelly but we want to do right now is do an apple price check because you you weren't making a call oh i'll make a call when you make it a call you're making the call kelly heaven here's not a call

28:32because this is so typical i was so skeptical that i would ever want the foldable i but then i see it today i see that price point i start thinking i don't know kind of kind of cute maybe it's going maybe it's actually going to be a big deal probably you know what we have on December 25th every year stink called christmas mhm Eric if you're out there all right let's talk more about this from maybe the other side of that coin the companies that actually make the telecoms that want to sell the iphone's to put them on their network and for that we don't have it but we do out in west and the communica opie event in san francisco david favor is with a guy who i think david may know something about selling phone hi david about selling phones and that is the at and t chairman and ceo yes it is and he does uh john stanky is his name it's nice to see here john it's going to be back they were just talking back in the studio of course about the new iphone's from apple i can remember the time when you actually with the only one carrying the iphone back in

29:37those days it's a long those days too yeah those were those were good days and good days for a tt but here we are i'm curious to get your your your thoughts a price point of two thousand dollar for a foldable phone but across the board prices are higher as a result of memory cost for example what is your sense in terms of the consumer's willingness to spend at that level and as a t and t's willingness to potentially subsidize some of those sales well look i i don't think this is the first time prices have gone up on devices i mean they've kind of been steadily going up over the last number of years so we have some indication of what happens when this occurs that oftentimes uh that pricing ultimately comes back to the consumer in some way shape or form and plan price is going up or lease structures changing and we've seen their behavior shift as a result of it we used to see devices replace every 24 months now it's closer to 36 months that's artifact of you know price goes up demand gets moderated right for i expect we'll see a little bit

30:41of that happen i don't think anybody's going to be out there subsidizing a two thousand dollar device for free but i do expect that there'll be ways that people can maybe get their hands on that depending on the products and services that they choose to buy from somebody and it'll be commensurate with the price of the the device and with memory prices going up i expect some of that's probably going to land back on the consumer i don't think subsidies going to go up dramatically there's been a little bit of increase in the subsidy the last couple of years and it's because customer values have gone up we don't have that dynamic occurring right now so my guess is it probably goes into pricing and the consumer we do so from your perspective as some again so no subsidy wars so to speak as we've seen at least with current model that's probably going to be the case maybe there'll be some play in the current model minus one so the previous version of it where that gets a little bit more active on promotions but you know that's rational move yeah i mean you just mentioned it you've said it before in terms of demand suppression i mean kind of how

31:45much inflation cano wireless market is or before it changes upgrade rates and things like that well i i think we as i said we've seen it before when it goes up $100 and you see a little bit modest suppression that goes on people adjust and do things differently they live with their device a little bit longer look the end of the day apples are really successful company they're going to continue to be successful and sell a lot of devices and we navigate our way through these moments reasonably well by meeting the customer needs expect we're going to do the same thing all right let's move on specifically to more things in your business actually want to take it right to this conference a guy named Jason Armstrong is the CFO of a company I used to know called Comcast he presented here a few hours ago and of course sent Comcast stock down what else is new um he was talking about competition in fiber he said in the third quarter what he calls a rational competition in terms of pricing has continued fiber pricing standalone fiber pricing 30 to 40

32:45dollar range for a gig is irrational he says they've been seeing it in the marketplace it's not to us a rational price point given what you have to spend in terms of your build up or household at 1500 and 2000 in a rural market are you responsible for some of that pricing or are you seeing it from some of your competitors yeah I think maybe Jason's perspective is held on he runs a broad band business and he resells wireless in our case we run a wireless business that we own and operate and we run to broadband business and we have a high percentage of our customers for example that have multi line accounts with us four lines five lines six lines family plans with even more extended family on it what we can do for promoting on those large accounts it's probably a little bit different than what he might see in his book of business and so what I think it's possibly rational to be down at those price points if the entire book of business and the household is as strong as it might be in our circumstance I don't think that's irrational I think

33:50that's a good way to go in and get the next 10 percent penetration in markets where we're that's a good one to get to 50 100 percent is it working it's working look at our last quarterly results acceleration and customer growth in both our broadband and our wireless space we had the most new accounts that we've had in over three years at the business we had margins improving we had acceleration and service revenues we had acceleration and EPS we had acceleration and EBITDA and when you kind of look at all those things look it's suggesting that we're getting a higher share of total industry service revenues and that's really our goal not necessarily to apportion it to one product or the other we just want a higher percentage of the household spend so you're perfectly comfortable spending and obviously your cap expending is only going up you're talking about what 250 billion over the next five years generally that's broad infrastructure but you're comfortable with the spending that you're doing in fiber in terms of the return that it's providing look we've been at

34:52the 24-ish level for the last several years yeah 24 billion roughly for the last several years that's what's built this foundation that's getting you the accelerated growth that you saw coming out of last quarter that's not going to go on forever you know we're in a position where we're building a lot of fiber and we're going to get to the tail end of our wireless retrofit that we've been doing which is going to wrap up largely this year a little bit in the next year and fiber will start to slow down so we think we got a great return for you right now a couple of things to hit on before we can sort of wrap up EcoStar obviously you you close that transaction it take your leverage up I think around to 3.2 and I'm accustomed to you guys being below three of late you want to target two and a half but you also kind of moved up buybacks because you thought the stock was cheap kind of equate those two for me I mean in terms of getting leverage down but still spending on buybacks and what EcoStar is going to do for you in terms of the spectrum I should say. Well I just gave you what happened the last quarter in terms of the operations of the business

35:55since the operational cash flows are very strong and that gives us the confidence to go ahead and move faster on a share buyback and as you know we've given guidance that we're going to be back down to two and a half turns after we do the EcoStar transaction part of that's being fueled by the extra growth that that spectrum is bringing in and we have another transaction that will be completing fairly shortly for us to establish our JV for the Lumen assets that we brought in when that JV gets established there'll be an infusion of cash that comes as a result of that that allows to take a trunch of that debt down immediately. And John I mean your stock is up about a leproson of the last three months it's had a relatively good run for a period of time at least over the last couple of years but there's the specter of Starlink out there that every investor wants to talk about. Do you take it seriously when Musk says that they're going to become a real competitor in the wireless business? I take every competitor that comes in seriously and I'm certainly not going to take somebody as talented and innovative as Elon Musk

36:59and the companies that he he stewards without a real serious consideration but it should be understood for multiple years you just talked about the levels investment we've been making. The foundation of that has been to get extensive fiber capillaries out there because fiber is absolutely 100% the best way to move data and it always will be at least in my lifetime. You believe that firmly obviously and you put the strategy in place. Put the company's name on it, my name on it and so we've been doing that for a number of years to put us in a position where we can compete with anybody and I feel really strongly that I'm sure there'll be some innovative opportunities to come from satellite. There'll be some desire to work their way into parts of our business and our job is to take our great wireless infrastructure, our great fiber, our great ability to support customers and meld these products and services together on one bill with new features and win in the market and we have every intention. When he gets that starship up and running

38:01increase the capacity of the satellites in the constellations 20 fold that's not a concern. And he can go and put more and more satellites up there and they're still not going to be fiber in terms of their ability to one perform on latency to reliability and three what it can do to ultimately take on more capacity. Not to mention all that data I mean I would assume we're only going one way. Then you know the upstream becomes really important from a technical perspective and especially in a mobile world going from a low-powered handset device up to a satellite is always going to be constrained in upstream capacity. We've talked about all the infrastructure we've built inside stadiums and hospitals and high-rise buildings where if you're in downtown Chicago 45% of your traffic is coming from inside a building that's being handled differently than cell towers outside or a satellite that can pick up something on the street. We're in really good position in terms of that infrastructure and what it can do to meet customers expectations. Well John I appreciate you're taking a little time getting an update. Thank you. It's good to see you again, Dave. Good to see

39:04you too. John, thank you to Chairman of CEO of AT&T. Brian sent it back to you. David and John thank you. Thank you very much. All right up next sandbox a QCO jack hittery on the risks and the rewards of AI. It's his company just made another big deal. Jack's one of the smartest minds in the world particularly around AI. You're going to want to hear what he has to say. It's next. Seems to be a new AI partnership every day. Today is no exception to that. Sandbox, a Q announcing today it's partnering with Northrop Grumman to use its navigation technology on unmanned drones. Joining us now to talk about the technology behind that partnership is the CEO of sandbox a Q jack hittery. Jack, it's great to have you here. Welcome. Good to see you. The questions about autonomous drones are so vast that I almost hesitate to

40:05delve into that before asking you about AI safety broadly speaking. I mean here we are with headlines and researchers saying yeah you know X percent chance it kills humanity. It almost makes drones seem like a side show. I mean can you talk about from your point of view you have deep concern in this space. Should we be concerned about what AI can do? Well as we all know AI has a tremendous amount of potential for positive but also there are definitely risks. Starting with the drones we know the future of both civilian and in warfare is drones. We see it every day right now in our screens with Russia Ukraine with Iran and so it's very important that the drones can find out where they're going. The GPS is being denied it's being jammed it's being spoofed in these theaters of war and so it's critical that we find ways of navigating without GPS. There is no GPS when a war is going on. And that's where this partnership with Northrop Grumman comes into play. We use our

41:07quantitative software from Sandbox, a Q with their drones, a lumberjack drone, a really powerful machine that can be used for a variety of applications in the theater of war and demonstrated successfully that with magnetic navigation picking up the magnetic field of the earth we can navigate successfully without GPS. So that's a key milestone right there. The use of quantitative AI and a drone together for big success. This is so critical Jack because it's not and I don't want to scare people anymore than the whole killing humanity thing which is you talk to people you know and we've talked to people too and they'll say listen if there's a real war people can shut off GPS if your car is being driven by GPS maybe the car just drives into a tree because the GPS goes down your technology that you're helping to develop and other things with critical materials and minerals and things like that. That's to get around that. Is that correct? It's to make it so that's not a vulnerability for either the defense department or I would imagine down the road

42:12maybe us even just in our cars and our daily lives. Yeah there's both civilian and military applications here. We have to become a resilient society. We have to know that even if GPS is out we can function both in wartime but also the critical national infrastructure of our country making sure that flights can go making sure logistics and freight and all that continues to function without GPS. It's critical that we become resilient. You mentioned critical materials Brian another key area. We cannot continue to be dependent on other countries to import all of these critical materials for batteries for energy for semiconductors. We must start making some semiconductors in the United States and we're beginning to do so and we're proud that we won the award to kick off that process there as well. When it comes to the larger picture of AI it's fundamental that we've got to make sure the AI is tested in sandboxes. No one intended but in

43:16sandboxes that are cut off from the internet so that we can really understand what is inside these AI models before they're let out. And by the way to their credit and the topic open AI, Google and others have all spoken to these issues and these risks. They are aware of them they're speaking to them they're addressing them. This is something that everyone has a role to play both industry and government. Big award Department of Commerce, sandbox, AQ 500 million dollars Jack Kittery always appreciate your insight and your views on the program Jack. Thank you. Great to see you all. Thank you. Let's get over to Frank Holland now for the CNBC news update Frank. Hi Kelly. President Trump promised this afternoon that oil prices would come tumbling down but not until right after the midterms. He said the administration will get gas prices below $2 a gallon triple A says the current national average. The $4.22 cents he did not give details on how he plans to get prices lower. The U.N.'s nuclear watchdog passed a resolution today reporting Iran to the

44:16United Nations Security Council for the first time in 20 years diplomat said Iran was in breach of its non-proliferation obligations. The Security Council is unlikely to act on the report because Iranian allies Russian and China are permanent veto-wielding members of that security council Iranian officials reacted to the resolution calling it a political move. The tape brothers lost their bid today to be released from a Miami jail as they fight extra edition to the UK where they are wanted on rape charges. This latest development comes after Romania and dated the social media influencers on similar charges last week. The brothers have denied all wrongdoing. Kelly? All right Frank thank you. Coming up we're digging into Oracle ahead of tomorrow's earnings report. Don't go anywhere. The share is still down 16 percent but I'm going to swing lately. We'll be right back. Oracle is trading near the flatline ahead of its earnings tomorrow but what can we glean from

45:18the options market? Let's ask Julius Spina. She's had a research at IG Group North America and at CBC contributor. Welcome. Thank you. So Oracle seems very tied to the OpenAI story. Is it not what what are the options telling us about? I'm sure it looks a lot different now than it did a week ago. It did actually. We're seeing some pretty interesting behavior in the options itself. Right now the options are pricing about an 11 percent move. So about $18 move around earnings and that sounds like a very big reaction to earnings but that's actually pretty standard for Oracle I would say. If we look at the realized moves from the past three earning cycles those reactions range from about 8.5 percent to 10.8 percent. So that 11 percent range is not terribly unreasonable. But what I think is important to note for Oracle is that just a year ago it had a 35 percent rip to the upside following very good earnings report. I think you're a physicist by training. I am not a physicist but when you said 5-8 percent and 11 percent I thought to myself well the 11 percent is more than double the low end so there is some

46:20pretty significant volatility priced into it. It's pretty significant. Yeah it's pretty significant but for Oracle itself it's just a very volatile name. So it actually kind of lines up with what we've seen sort of the last three quarters. But I think to that point that September almost a year ago that really big move to the upside that we saw from Oracle really blew past investor expectations and this is the stock has had kind of a habit of doing that. So that's something that's important to note and then the other factor as well is that CPI prints the day after earnings. So these are kind of factored into that 11 percent move but not terribly out of character for Oracle I would say. Yeah I mean we had Amazon Microsoft. Those were 15 percent move versus for multi-trip. This is why we can't get rid of earnings season. If we go to twice the year reporting. Is it a season like fall? Yeah it's my favorite season maybe. I'm not a pumped. Earning season sweater. I'm running for the fire. I'm running for the fire. Yeah. Pumpkin latte. And I guess there's always these questions. I don't know if there's any insight on this. Is the move a move to be faded? I mean that's probably asking too much of kind of the one

47:20day move or maybe of the way that they might trade in conjunction with the earnings reaction then kind of looking out a week or so. Right. Oh that's a good question. So and it's actually pretty interesting to see how like the options themselves are kind of trading right now. When we're looking at calls and then puts so calls which really give you that upside exposure and then puts which kind of give you that downside protection. And so what we're seeing around earnings is that calls are trading a lot richer than puts which means investors are basically paying more money to get that upside exposure versus the downside protection which is kind of the opposite of what you normally see in equities markets right. Usually you see people paying more for the downside protection as opposed to the upside. So that being said that's a trend that we've seen really the last couple earnings cycles. We see that kind of accelerator with with oracle specifically. We've seen kind of those calls trading richer where especially this has picked up in the last two weeks. So we've had nice momentum from the stock and it seems like people might potentially be chasing that or they don't want to miss out on another big upside rip which you know it has had a recent history of doing.

48:20Makes sense. Yeah. And in the wake of aster especially Julia Banks. Thank you so much. You could see of Julia. Thank you. Yeah. He holds and this marks on us. Only $599 is whole senior. A bill for a limited time of participating restaurants tax on included not valid for use within a combo or in combination with any other offer or discount.