SOTS 2nd Hour: Navigating $110 Crude, The Case for EV Stocks, & DHS Developments 3/27/26

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1:00I'm Sarah Eisen with Michael Santoli. We are live from post-9 as always of the New York Stock Exchange. David and Carl are out today. Markets under pressure again in the early trading here coming up on today's show. We've got Bank of America's head of commodities with us as Brent Crude tops $110 a barrel. Talk about just how high these prices could go. Plus do surging gas prices tied to the war make EVs actually more attractive. We're going to ask former Tesla president and current GM board member John McNeil and our predictions markets rife with insider trading. We've got new details on report showing coordinating trading activity around major events including the US strikes on Iran. First up though markets are under pressure here in early trading. We've got the S&P down almost a percent and the NASDAQ down one and a quarter percent staples and energy are looking best back to August levels roughly speaking later August in the S&P 500. We do have some breaking economic data though Rick Santoli has it for us. Hey Rick. Yes thank you Mike.

2:01This University of Michigan March final read now let's put an asteris here. On the original mid month read it most likely was survey period from about mid February to around March 9th and the final period doesn't really extend the date it kind of fine tunes it so we probably caught about nine or ten days of the conflict which started on February 28th and on the mid month reads they pretty much said the organization that a lot of the readings already reflected some down grades in terms of the levels because of what was already incorporated with the conflict. Having said that there's a bit more deterioration. Our mid month read on the headline was 55.5 it now moves to 53.3 that would be the lowest of the year last time we found a lower number would be decent of last year on current conditions mid month read was 57.8 it moves down to 55.8 that would be the lowest reading since January of this year and if we look at expectations mid month read was 54.1

3:06moves down to 51.7 the lowest since round thanks giving up last year. Now let's go to the inflation reads and one would suspect if you fine tuned and you included a portion a small portion of the conflict we should see these go up and indeed they did. 3.4 mid month read turns into 3.8 3.8 would be the highest since 4% in January of this year the five to ten year read and this would make sense didn't really change 3.2 was mid month read 3.2 is where it remains interest rates considered this it couldn't have happened at a weirder time the conflict started on the 28th to 27th were cycle low yields 3.38 in a two year it's now at 395 on a ten year the 27th that closed 394 it's now at 4.44 so that really was a knee jerk huge break neck reaction to some very low

4:08yields when the conflict began Sarah back to you okay Rick Santelli thank you very much think it just adds more fuel Mike to the we're not going to do anything at the Fed we're not going to be cutting we're not going to be you know necessarily hiking although those you know you're ahead inflation expectations climbing largest increase since April 2025 I mean that that will they'll take note of inflation it always mirrors gasoline prices on the one year and then beyond that it probably moderates and that's probably what's behind the sentiment decline that we saw as well just more color declines we're seeing across age and political party and then consumers according to University of Michigan with middle and higher incomes and stock wealth actually saw the big drops in sentiment because we saw you know gas prices oil prices rise and stock prices fall today what I prepared for you in the chart is just how much has changed because of the war in the way the market is pricing in the Fed and you know we've been talking about how they've been the Fed is on hold

5:10right now well look at look at how much it's changed you know from end of June to you can see the yellow line this is the Fed the ECB the Bank of England and the Bank of Japan and the changes there that's the percentage like the hit of Hikes correct and look what's happening at the ECB they're predicting three hikes I mean it's above 75 basis points there at the ECB the BOE as well I mean they've got more singular focuses here on on inflation but even Japan they're pricing in two hikes in Japan this is thanks to standard charter Steve Englanders chart and at the Federal Reserve you know we're not they haven't fully priced in a hike but I think more information like this we'll get more data next week we get consumer confidence on Tuesday another read we get retail sales as well on Wednesday and then the big jobs report on Friday if jobs are kind of status quo then you know this is a Fed and we heard this from Fedshire Powell last time he spoke that's more worried about information. Although status quo is you know tens of thousands of jobs lost as we had last time who knows what happens I mean look 10 year yields up about half a percentage point

6:15this month so since the war started effectively that's partly fed it's partly real yields going higher I know there's people talking about all fiscal concerns about the war I don't know how much to pay attention to that in the near term but the net effect is oil up yields up dollar up volatility up financial conditions tightening equities try to keep their composure in that environment they've been grudging in this decline but at some point it just becomes too much weight that's why we've been breaking these potential support levels that's why everyone keeps saying well maybe we get it we need a panicky flush in stocks before you know we reach some lower perceived level of a policy put just in terms of what else the Fed is going to be looking at these inflation expectations you could look at the market based measures five year five year for instance which we've been watching and you know it's elevated it's come up it's nothing extreme but this is just the month to date look and then the 10 year rate is not as extreme as well I think it's important for them to look long-term and not just short-term where there's elevated inflation risk around higher gas bases if you want to hear though the case for cuts even in this environment Stephen Myron fed

7:20federal reserve governor who has dissented at every meeting in favor of deeper cuts or cuts will be our guest exclusively on Monday he also just has been talking a lot about balanced sheet shrinkage yes he has yeah in fact maybe we get into more of that as we talk about the broader markets it's bringing Rebecca Patterson senior fellow at the council on foreign relations and former chief investment strategist at Bridgewater Associates she also co-hosts a new weekly podcast on global macro events called the spillover congratulations on that good to see you Rebecca so how are you assessing the situation here obviously the duration of this pause is not really calm to markets because there's a cumulative effect of the supply disruptions and in fact the complications that come along with this war yeah I think this the reaction over the last 24 hours is completely different from the previous pauses which were seen as more hopeful to bring an end to the conflict and a reopening of the strait and I think investors are increasingly realizing I think one of you use this word recently it's cumulative yeah right so it's not linear things are

8:24building up and the longer it goes the longer the duration the greater the supply chain risk to the world so the duration is an issue April 6 is a long time from now if the strait is closed for that amount of time so there's duration there's breath there's breath that the conflict do we see missiles going towards a NATO country do we see the hoodies trying to close the red sea that would make it significantly worse and then there's breath of how things are hit I was every day I find new little things to understand this war and yesterday I was alerted to the keel institute a think tank in Germany they're showing you all the goods that go through the strait we think energy and now we're understanding fertilizer I didn't appreciate that almost a quarter of aluminum alloy goes through the strait almost a quarter that's a huge supply chain risk for things like auto production if you have a cold beverage perhaps you drink from a can air fuse lodge etc so there's helium for semiconductors I mean there are a lot of industries that are going to be affected by that so that's the breath and then finally the policy response which you just were talking about

9:26Sarah in terms of now the market is looking for hikes on an inflation risk relative to a growth risk and I'm starting to wonder if we're going to see some dysfunction in the US Treasury market and we get we get a bit of a fed step in on that why where's the dysfunction well we we are seeing more tails on the bond auctions right they're not going to smoothly but with a little bumping yeah but more importantly I think we're seeing market depth deteriorate quite quickly and it's early days I'm not saying something will happen in the next week but if we keep going down this path the fed will step in even if it's in a tightening mode to add liquidity to the system to protect smooth market functioning and the last time we saw that was 2022 in the UK when we had tactical QE for financial stability reasons again I think what kind of policy response could help this situation governments are limited right they can do stuff at the margins but with these budget deficits they have less fiscal room to maneuver than they did during COVID so I'm looking out

10:28to see if the fed steps in if the Treasury market keeps deteriorating it's a very small move it's early in the morning but yields on the short end actually have come in a little bit and I I think we I'm always alert to this idea that the market sort of prices the inflation risk up to a point where it says actually the growth effect is going to be more magnified and all of a sudden bond you'll start to come in because that's what's more important are we approaching a moment like that I think the hard thing this time for the Fed to do a bazooka ease to come to the rescue to help growth is that inflation has been now running above the Fed's target for five years right and so if they lean too heavily on that side of their dual mandate are they accepting a higher inflation level does that undermine their credibility in any way does that lift longer term inflation expectations so I'm not saying they won't do that Mike they've I don't even know I don't even mean if it's a Fed necessarily a Fed impact but more like you know as a safety bed if we're going to have growth risks let's lock in these yields yeah it's it is interesting to me that all those

11:31things that normally get a safety bed bonds gold none of that's working right now right what about the view that that they can still cut I mean they're still parts of the economy that our weak housing has been horrible that's one where they can if they can try to have an impact you know there there isn't there's still a case even with these elevated inflation fears around oil again you have a dual mandate right so if if core PC is running 3.1% and the jobs picture isn't great but it's not deteriorating right that employment rate at 4.4 is low we know the number of jobs you need to maintain that is roughly zero now and if you look more recently even with the conflict starting unemployment claims both initial and continuing our holding steady I know but it does get back to this whole short term long term question about what the impact of this war is going to be I mean it feels like you have to have you have to have a view on that right whether oil prices are long term longer term inflationary or short term but how do you have

12:31confidence in a view as a policy center if you have zero idea how long the conflict lasts if this thing is done in a week or two weeks that has very different implications for inflation and growth versus if it goes into the summer but so then you could make a mistake exactly which is why you want to move slowly which is why you might not want to react today with a cut if you don't have data to support that view at some point in markets in terms of figuring out what it means for your portfolio we do get to a point where as much as we have these what ifs and it could go wrong questions out there the market has priced a pretty bad scenario and it pays to just sort of add risk close your eyes and assume there's going to be you know a squeeze or resolution are we anywhere close to that I mean I think it depends what your time frame is what kind of investor you are but with having little confidence on the timing of this and how bad it could get from here if you're adding I think you're adding to things that have structural supports so for example defense stocks for example maybe renewables you know I think if you learn anything from this crisis

13:36it's that companies are going to be thinking even more about resilience about near-shoring reshoring having different types of energy they can rely on so there are probably some investments you can make even with a longer term horizon that are probably going to do well as an outcome of this conflict Rebecca thanks great to meet you guys thank you new report out this morning is outlining some potential concerns around insider trading and predictions markets amen jabbers has the details for us amen good morning Sarah the blockchain analysis firm trm labs is out with a fascinating new report in the past hour they're looking at massive growth in the prediction markets and raising what the firm calls market integrity questions around potential insider trading on the war in Iran first the big numbers trm found that monthly trading volume which was around 1.2 billion dollars in 2025 began to accelerate sharply in September and by early 2026 grew to nearly 21 billion dollars per month in these markets now that doesn't

14:39appear to be just the same users betting more money it's unclear here a little bit but trm says the number of individual wallets interacting with polymarket limitless opinion market and predict dot fund increased from 462,000 in January 25 to a peak of about 837,000 in February of 26 but because a person can own more than one wallet not exactly clear how many people are actually participating in these markets and then there's this suspicious trading trm says it identified four wallets that turned roughly 40,000 dollars into 872,000 dollars by betting on US military action against Iran in January and February of 2026 all four trm says entered markets price between 10 and 80 cents per share implying 10 to 80 percent probability and redeemed at a dollar when the market resolved trm says these four wallets had largely never traded before and then came in at similar times to place a bet on when the US would strike in Iran after collecting their

15:42winnings trm says all four swept their balances and haven't re-entered the market they say this behavior raises quote questions about potential coordination or shared information interesting guys that it's a relatively small dollar amount here that they're looking at 40,000 dollars turning into 800,000 dollars in this market that that you might give you a sense of the type of player who's behind it but because the blockchain is anonymous it's difficult to figure out who the individuals actually are. Yeah amen it's interesting because those who advocate for prediction markets and the usefulness of having them actually provide you know wisdom of crowds information about the future part of the selling point is you will have informed traders involved and therefore there is good information content in the market pricing and also because it's sort of been placed under futures regulation it's difficult to define what an insider is or somebody who has an obligation to keep information confidential so it gets tricky in terms of how we're going to

16:45have to sort of set the rules of this. Yeah I mean in securities market you know the in securities markets the insider is defined as somebody who has a fiduciary obligation to keep that information secret like an officer of a company for example but what if you're a member of the 82nd airborne and you've just been deployed and nobody knows that yet can you hop on your laptop and make a bet I mean they're national security implications of that of geopolitical foes around the world now that geopolitics has become one of the top trending topics in these prediction markets can foes watch for spikes in activity around certain outcomes and say okay we see what the United States is doing and those are real questions and the legality of all that is really murky right now but if you're the US military if you're the White House you probably want to know who it is who's making these bets in the market and what kind of information they're trading off. So who's trying to is that the CFTC job to discover that? Yeah I mean at this point it's the regulatory structure is really unclear I mean the Trump

17:46administration has kind of rolled back a lot of the regulatory scrutiny of crypto is a general matter and these prediction markets operate in a realm where it's not entirely clear who's going to be the person to say you know we need to see we need to send you a subpoena and see who these individuals are. It's not clear if the individuals can be determined often when you're looking at individual wallets the only way to figure out who the real person is behind that wallet is to do a whole history of transactions and find out any place they interacted with the real economy and then subpoena that bank or that entity. In this case though TRM says these accounts didn't really do anything other than this one trade and then vanished and so it might be really impossible for anybody even a regulator who wanted to to get to the bottom of it. Well it's only going to fuel those that are calling for more regulations around prediction markets which is a hot topic now thank you. Right and the question there is you know is this kind of what we would think of as insider trading is that a bug or a feature for the prediction markets. Yeah a huge question

18:52Amin Javers in Washington here's our red map for the rest of the hour when we come back Bank of America's head of commodities gives us his latest forecast on where oil prices are heading as Brent today tops $110 a barrel. Plus we'll talk to a former Tesla president and current GM board member John McNeil about how global chaos is making EVs look a lot more attractive to consumers and potential progress in the fight to fund the DHS. We've got the latest after an overnight vote in the Senate and what comes next from here when swap on the street comes right back. Trading at Schwab is powered by Ameritrade giving you even more specialized support than ever before like access to the trade desk our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check need assistance no problem get 24 seven professional answers and live help and access support by phone email and in-platform chat that's how Schwab is here for you to help you trade brilliantly learn more at Schwab.com slash trading. The ticket lady Jennifer of Coons well many thanks good sir here is my discover card

19:58they accept a discover at Renaissance fairs yeah they do here discoverers accepted at the places I love to shop get it with the times with the times you're playing the loot yeah and it sounds pretty good right discoverers accepted at 99% of places that take credit cards nationwide based on the February 2025 Nilson report before we had AT&T business wireless coverage our delivery GPS wasn't the most reliable once our driver had to do a 14 point turn to get back on route a 14 point turn an influencer even live streamed the whole thing not good for business now with AT&T business wireless routes are updating on the fly and deliveries are on time and the influencer did get us 53 new followers though AT&T business wireless connecting changes everything Brent oil topping $110 a barrel again after Chinese ships were turned away from the straight of poor moves this as President Trump extends a pause on attacking Iran's energy

21:01facilities to April 6th and the Pentagon reportedly weighs sending 10,000 more combat troops to the Middle East joining us now is Bank of America's head of commodities and derivatives research Francisco Blanche Francisco how are you thinking about you know Brent at 110 and whether that's sufficiently pricing in the risks here hey sorry I would like just to maybe start off by some basic oil math here we've come into this war with a pretty large amount of oil in transit which was the result of sanctions on Russian Iranian oil in the fourth quarter so we held roughly 300 million barrels of oil floating around that have been of course as you know and sanctioned and then we've released 400 million barrels that's about 700 million barrels remember this 20 flowing through Hormuz so we have about 35 40 days to to wrap up this this conflict if if that doesn't happen and again we are on day 28 today I believe or 29 so as we get in deeper into the conflict

22:05we are going to run out about buffer so so answer to your question is two three more weeks not price them we are pricing in really as we go we are pricing in a war still in the 4 to 6 week window that that President Trump indicated at the very beginning in our view some people were wondering why why oil didn't sell off when the president extended the window for attacking the power plants in hopes of negotiations which he said are going well well the reality is as I mentioned we are chewing through the spare buffer that we have coming into this conflict and and that buffer is going to fade away quickly so the market obviously is it's pretty anxious there is also the perception that maybe when when the conflict is over we may not go back to a hundred percent volumes through Hormuz remember the Houthis have actually captured bubble and that for a long period of time we just have nine million barrels a day flowing there

23:08and then when the conflict and and gas has started we came down to roughly 4 4.2 so we lost more than 50% of flows through bubble mandate in the red sea and again that was done with relatively basic technology so I think the concern is that this conflict might just keep going and even when we come back you will not get a hundred percent so so the oil market is very focused on how things play out and and and also the other part of the answer is the physical market is still extremely tight we have seen record oil and jet fuel prices in the east this crisis is east of sues hasn't really infected the Atlantic basin yet Francisco where are we on the demand destruction curve here I know parts of the world we're already rationing they're in shortage but when does that start to really bite well well my listen your your former speaker I think that a really good job Rebecca talking about a little bit the the the impact on on on center banks inflation I think

24:16that that we need to see the mandationing for a simple reason that to your point there's no supply so places that don't have supply they're already entering four day work weeks three day work weeks trying to move people stay back home work on zoom and so on so we don't really know how much flexibility there is in the system relative to pre-COVID let's say when we don't really have that work from home type and possibility but the reality of the matter is countries that don't have the fuel already in the process of rationing it and and and the rest of us are going to have to to get there very soon once that that ticking clock that I mentioned at the beginning runs out which is probably like a setting about 10 days or so so we'll see the mandationing and it will be painful and it will require I think very very high prices and and also I think it will require countries to really work together to try to find ways to mitigate it that's that's where we are at today it's it's an enormous hole is the biggest gap in energy supplies the world's ever seen if it doesn't come back soon if in a month from now

25:21what's your best guess are we going to be higher or lower on prices well I think it depends on the escalation nature of war if we escalate from here on if if those troops that are heading to the Middle East are are going to go for a ground invasion or some other kind of military action and the worst one going we're going to be a lot higher if on the other hand with the escalated there is some some kind of a ceasefire I think will be lower but potentially not much lower for the reasons that I'm talking about we don't know how much oil will flow back once the ceasefire is in place because Iran has shown the ability to impose some some level of strategy in terms of of targeting energy infrastructure and the straight itself so I think will be lower if we have escalated but I don't think we'll be getting back to 60 bucks a barrel or even 70 anytime soon Francisco thank you for joining us Francisco Blanche had a commodity research at Bank of America still to come though latest from Washington ahead of a house vote as soon as today to pay TSA

26:24agents and potentially reduce weight times and airports plus developments in New York's battle to tax the wealthiness key leaders square off over budget plans but first netflix raising prices again just how much you'll be paying when squawk in the street returns you know what they say early bird gets the ultimate vacation home book early and save over 120 dollars with burba because early gets you closer to the action whether it's waves lapping at the shore or snoozing in a hammock that overlooks well whatever you wanted to so you can all enjoy the payoff come summer with burpos early booking deals rides and shine average savings $141 select homes only oh could this vintage store be any cuter right and the best part they accept discover except discover in a little place like this i don't think so Jennifer oh yeah huh discovers accepted where i like to shop come on baby get with the times right so we shouldn't get

27:26the parachute pants these are making a comeback i think discoverers accepted at 99% of places that take credit cards nationwide based on the February 2025 nilson report 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 welcome back 30 minutes here into the hour here are three big movers were watching video game software company unity searching after issuing preliminary q1 results shares are still down about 50% this year amid broader pressure on the software space netflix raising prices across all of its streaming plans for the first time since January last year so ad-supported plans are now going to 899 a month from 799 the standard plan jumps two dollars

28:32to 1999 from 1799 and then the premium plan is now 2699 up from 2499 cyber security names are getting slammed today fortune reporting that in thropic as acknowledged a new high power AI model which gets higher scores on quote software coding academic reasoning and cyber security though warning it could also pose risk if hackers use the model to run cyber attacks something that creamer was particularly negative about just the the pummeling of stocks like a crowd strike or palo out on on every little update from previously previously considered better position in other software and it's part of the process of a pullback or correction is chasing people out of perceived havens do want to look at the IGV that we're basically at the lows from a couple of months ago or in February so we'll see if that ends up being a retest of those lows it reminds me of have talked about this before the kr e regional banks in 2023 after silicon valley bank you had this really messy process of them trying to bottom we'll see if if they bottom then they eventually did it

29:34took months to actually have an upturn so we'll see how that's what's going to happen in software there will be trades over the course of months yes we'll see how it's all right time for a scene to see news update angelica pebbles has that for us hi angelica hey mike president trump plans to announce new support for farmers at a white house event today the measures will reportedly include new guidance on farm equipment regulation and increased government loan guarantees farmers have been hit hard by tariffs and the iran war back in december president trump announced a twelve billion dollar federal assistance package according to a new writer's report the u.s. can only tell with certainty that it has destroyed about one third of iran's missile arsenal sources tell writers that the status of another third of the arsenal is less clear but that bombings likely damage destroyed or buried those munitions and underground bunkers or tunnels and savanna got three will return to co-anchor the today's show on april six as investigators continue to search for her eighty four-year-old mother nancy who is in missing now for nearly two months got three told hodokatby in her first interview since the radio began that she believes returning

30:39to work is part of her purpose right now so we're all be interested to see what she has to say guys Sarah backed over to you okay thank you angelica after the break the senate reaching a deal to fund the dhs with some carveouts i'll tell you what you need to know and how quickly this could actually solve the big delays at airport security lines plus our surging gas prices a tailwind for electric vehicles home or test the president current gm board member john mcneal ways in on that don't go anywhere welcome back the senate passing legislation to fund most of the department of homeland security in a late-night session but the deal is far from finalize let's get to Emily Wilkins in Washington with the latest timely hey mike well yeah the senate moved on their legislation last night that would fund all of the dhs except for ice and parts of customs and border patrol but it still has to get through the house and as we are starting to learn this morning it is looking like things are going to probably not be done today now no final decision has been made yet but we are starting to hear concerns particularly from republicans of the sort of the right

31:42wing house freedom caucus saying they have lots of concerns about what the senate passed they want it to include that elections reform bill the save act and it doesn't sound like they'd be voting for it today now in the other hand it does seem like you do have democrats who are willing to come and support this bill take a listen to what senate minority leader chuck shumer actually said last night on the floor this could have been accomplished weeks ago if republicans hadn't stood in the way democrats held firm in our opposition that donald trump's rogue and deadly militia should not get more funding without serious reforms and we will continue to fight for those reforms so that sentiment that shumer said that democrats were holding firm that is true for some of the house democrats that we have heard from today but the problem is is that usually there's a process that allows this bill to be put on the floor quickly and republicans and democrats to vote together however because of the rules of the house that can't happen today because it's a friday could have

32:45happened on a monday a Tuesday a Wednesday this means that lawmakers might actually be in over the weekend or have to come back early next week to actually wrap this thing up and fund the department of homeland security unclear of course if there's some sort of path forward that leadership can find no final decision has been made yet but then of course the other big question at president donald trump said last night that he would sign an executive order to fund tsa agents give them their paycheck cut down on some of those lines at the airports but it's not clear yet if trump has signed that bill at this point and so i think a lot of questions about exactly what airports are going to look like for the next few days guys what do you think will be the the ultimate longer term impact from the assembly because i mean this is pretty i mean pretty pretty dramatic and traumatic for a lot of people i mean sir what what you've seen over the last i'd say number of months right is that the guts government shutdown governments get shut down again and again and

33:45again it is over a leverage point that ultimately beside who initiates the shutdown maybe doesn't get what they want but this is what we've seen for a number of years here we've seen republican shut the government down over things they ultimately didn't get now we saw democrats shut the government down over wanting to make reforms to ice and the fact of the matter is that a lot of things that democrats were holding the line and pushing for are not going to be in this bill and ice sure it doesn't get funded technically in this legislation but remember it got millions and millions and millions of dollars in that giant bill that lawmakers passed last year and so ice really doesn't need the funding right now to do its job so it's not 100 percent clear what exactly is going to change on the ground and in sort of the day today for ice yeah and i just wonder if they can figure out how to carve out like these tsa agents and not put them through this again on either side thank you Emily Emily Wilkins we appreciate it up next former Tesla president current GM board member john McNeil his read on what surging gas prices actually mean for the

34:46eb market stay with us oil prices expected to remain elevated for months due to the Iran war and that could have secondary impacts on electric vehicles gobin sacks publishing a note this morning on the war as a potential quote critical turning point for electrification support with renewed interest in battery eb's let's bring in john McNeil former Tesla president founder of dv expenditures he's also author of the algorithm it's a brand new book on elan musk's business strategy but also that on general general motors you're on the board of lulu lemon you're on the board of um so first of all just on the the oil price bike yeah how much do you think that that makes it more alluring to buy an eb i think as as you could guess is the longer this extends the more compelling eb's get and so goldman and cowon and others are pointing to a potential hardening of demand for eb's as a result of this conflict and um and that could very well be the case JD power came out a couple of weeks ago and said that 97% of people that drive eb's aren't going back

35:48and the but that's like a longer term decision it is it is it is but the in the use market used eb's sales went up 28% last month so like we're already seeing it in the use market which is actually bigger than the new market yeah actually i mean there's a real world experiment which is called the state of california where price gas prices have been high forever and it's like a third or something of new cars exactly yeah yeah and we have that same dynamic in other states like Colorado and New York so you're seeing they you're seeing a pretty strong steady eb demand there was a big pull forward last fall when the when the incentives came off and nobody really knows what what where demand is going to settle i don't think for the next couple of months honestly we had a six or eight month pull forward but i don't think anybody foresaw these oil prices either sure b-y-d-2 has had a pretty nice run they have in in china and obviously globally yes some of these other countries need oil more than we do and that's right that's right not only do they need oil they need natural gas they need nuclear and so the all the energy infrastructure

36:50is stretched in places like europe and you see significant eb demand and penetration there so i do think that's a that's an experiment we can look at in real time are the legacy auto makers ready if we do see that demand shift i mean now that they've just kind of said okay maybe we were too ambitious in getting eb capacity out i think it depends on which legacy auto maker talking about their general motor generally so general motors is pretty uh is in a good position because they designed eb's from the ground up that are pretty compelling cars their competition Stellantis and Ford just took regular gas cars and put an electric drivetrain in them and those weren't compelling vehicles so they've written off basically all those uh all those efforts and GM is like sitting now with a demand set that is pretty favorable if the market moves to gas they've got compelling brand new product if it moves to eb they've got brand new compelling product so your book the algorithm hypergrowth formula that transformed Tesla Lulu general motors and SpaceX yeah what what does what are some of the the biggest takeaways on on some of those

37:51companies which are in very different different spaces and have had different trajectories they have what i tried to do is step back and uh in step back from all the noise around elan and say 20 or 30 years from now what are people going to be writing about uh this person who turned out to be such an unbelievable industrialist and uh and there are several principles that he follows weekly that drive these weekly uh innovation pace in SpaceX or Tesla and so we've tried to bring those to places like GM and Lulu lemon so he determines the two top issues that are existential to the business and so Tesla right now that's autonomy and its robotics he shows up every Tuesday and all he's working on his autonomy and robotics and meeting with those engineering teams and so every week those engineering teams bring their a game and they make forward progress on a weekly basis because they're presenting to the CEO who is expecting to see that forward progress Mary Barra now does that at GM she meets weekly with the key engineering teams and moving this weekly pace forward

38:52i think that's probably the most powerful secret ingredient of his of his approach there's an alternative or at least maybe a corollary cynical take on that not that that method is suspect but that the real talent of elan musk is hyping his company to investors to the point where they give him the capital and the time to get this stuff sorted out if we're talking about a trillion and a half valuation for SpaceX at this point i don't know what that's based on aside from people want to own a slice of elan i think that's right it's a proxy for owning a slice of elan it's a it is SpaceX is a business with essentially a positional monopoly they own 90% plus market share of of launch they own 99% of satellite internet so you've got a very strong position to build off of but i think you're right there's a lot of hype typically in a must-stock yeah because there's a lot of retail investors that want in no matter what the price how do you bring that to lululemon which you're on the board of but does not currently have a CEO that's right stock has done not done a lot and growth has ground to a halt in the u.s and so what we've done is we've we've elevated two really

39:54key leaders the person that led international let all the growth in china and a really talented cfo so andre and mega running the company now and what we've tried to orient them around his speed and really declutter stores get our new product forward in those stores and really start to drive the product innovation engine and so if you walk in the stores today i've walked in soho yesterday and meet packing they look completely different than they did 45 days ago so the team is operating at speed while we as a board are searching for a CEO while chip wilson founders yeah you know complaining about the board and launching a fight while Elliott management is also in the stock right trying to trying to get you to hire their candidate that's right you know there's a lot of noise around there is a there is an interesting board they're exactly there's been no quiet day for the lulu team and the board lately but we are we're doing what a board is supposed to do and that is the most important part the most important role board has is hiring and firing a CEO and so we've got to find the right CEO to do this business now we're in the

40:55process of hiring one and we're writing the thick of that process okay well camey posted we'll do thank you john congrats on the book the algorithm john nicknial all right still ahead we could be on the cusp of a new era of ipos with potential listings coming from as we were just saying SpaceX open AI and anthropic we'll talk to an early investor in anthropic whose company manages more than a trillion dollars in assets but first the battle to tax the wealthy comes to new york as Bernie Sanders rallies this weekend in the Bronx we'll talk about what's at stake for the city's richest residents next york city the latest battle ground in the fight to raise taxes on the wealthy robert frank joins us with more shocking not so shocking but the levels are going to shock some people that's because the battle over taxing the wealthy has come to ahead right here in new york state legislators and the governor are squaring off over plans to raise taxes on high earners before the budget deadline of april first so that is coming up fast senator bernie santer centers will headline the quote rally to tax the rich in the Bronx on Sunday

41:58legislators in albany are joining new york mayor mom donny and a call to high taxes on high earners to close the city's budget gap now the legislature wants more than five billion in tax hikes those include the following a point five percent statewide surcharge on the top tax bracket so the rate for those making more than five million year would go to ten point eight percent the rate for those making more than twenty five million year that would go to eleven point four percent so the top combined city state and federal rate for new york city toprunners would be over 52 percent they're also calling for a hike in the corporate tax rate a special new york city tax hike for financial center firms a higher city business tax and higher tax of the sale of properties valued at more than five million dollars they call that the mansion tax now governor hogal saying she doesn't want any more taxes on the wealthy since the tax base has already been eroded by the wealthy new yorkers moving to florida i have to look at the fact that we are in competition with other states who have less of a tax burden on their corporations and their individuals

43:01and i would say remote work changed everything we'll see how long she can hold out here against rising political pressure in that rally on Sunday now for more in all the states that are proposing tax likes on the wealthy you can sign up for the inside wealth newsletter at cbc.com slash inside wealth it's notable that center Bernie Sanders is there i think it shows you that it's not just a new york local issue i mean they're trying to make this the the platform of that part of the democratic party yeah i mean this has become the unifying principle for the state democratic parties you look at california you look at walking to the state you look at virginia you look at michigan all these states wrote island all of them now pushing for higher taxes and high earners and you can understand it look with the top of the economy doing so well with the rising stock markets until the past few weeks and the rest of america facing an affordability crisis it is a powerful message the question is whether it actually solves something in a state where we don't have a revenue problem in the air state you know revenues are coming in two billion dollars more than expected because of these high strong stock markets we just had bonuses pay out higher than expected that's

44:06two hundred million an extra revenue that we didn't expect so the revenue has been good what they want is more programs right what's interesting you know is of course new york city has never been attacked sufficient place to live if you're wealthy so it's almost like just exactly where that equilibrium is or where the limits are especially when they especially when they're so strict as you've pointed out many times on making sure you can't just move away on paper yeah and we've seen the number of people in new york who make a million dollars or more double over a decade so but but there are people leaving but net net we're still adding because the money is more technology are making so much more so you're right it's it's at what point do the people leaving and the people who aren't coming the wealthy aren't or starting businesses here start to outweigh the wealth creation that we have in New York if he doesn't get it from local I mean there's no way to get it yeah there's no way and they're good and he's already trimming spending to his credit he's looked for savings but they're looking for five billion dollars

45:09and so the question is how they're going to make up that shortfall and also they're already draining the reserve fund the rainy day fund at a time when things are really good on the revenue side so if the economy turns south and the markets turn south new york is going to take a big what she's focused on the migration yes he is mom don he's not scared of that he does not appear to be he hasn't said much about that specific issue but but you would think especially with his proposal on the estate tax yeah especially he doesn't seem concerned about yeah maybe should be we'll see thank you Robert thank you Robert Frank all opinions expressed by squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television radio internet or another medium you should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion such opinions are based upon information squawk on the street participants consider reliable but neither CNBC nor its affiliates and or subsidiaries

46:11warrant its completeness or accuracy and it should not be relied upon as such to view the full squawk on the street disclaimer please visit CNBC.com forward slash squawk on the street disclaimer let me ask you something is your money doing everything it can for you I don't know how would I know is it automatically saving for special events and keeping you posted on his progress leg at Huntington Bank oh no is it tracking your spending so you can make the best choices at the mall nope or setting limits on your teenager's debit card definitely not then it could certainly be doing more yeah sure sounds like it let's get more from money switch to Huntington Bank welcome eligibility requirements apply some features may require a enrollment