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sullivan. >> welcome to. >> power lunch everybody. >> as walmart. >> whacks the market. >> we're. >> going to. >> dive into. >> what the retailer. >> said that has some concern. plus how saudi. >> arabia could. >> become the. diplomatic go. >> to in peace talks and why it could impact the oil markets. and does president trump really plan to cut defense spending? we have got a rare and exclusive interview. >> with the. >> ceo of lockheed martin. >> on a week when those stocks have really been under pressure. so let's start with stocks under pressure today for sure. the dow just off session lows down 600 points about 1.3% s&p faring better down about half that much similar for the nasdaq. and walmart is the worst percentage decliner on the index, but it's only taking less than 100 points off it right now. so it's not the major story the walmart shares. that is a major story down 6.5%. but look goldman also down 5%. that's having a bigger point impact. so is amex jp morgan. those companies are all lower as well. those three names in fact are accounting for roughly half the dow's losses today. also keep an eye on the cruise lines getting crushed

today. commerce secretary howard lutnick, in an interview called him out as an example of companies that avoid u.s. taxes. royal caribbean is down about 8%. all the losses are big. these three are among the best performers in the s&p 500. over the past year, rcl has nearly doubled and quickly keep an eye. also, japanese yen two month high against the us dollar. bank of japan is expected to continue hiking rates. brian. those higher bond yields have been kind of an important upward source of pressure on global bond yields. >> and we should, by the way the royal caribbean, norwegian they're all welcome on the. is that a fair thing to say. >> yeah we've talked we've had great chats with them. come any time we'd. >> love to. they want to come on and talk about this. you've got a muffin. we're ready to go. all right. we have got a lot to do this hour. but let's begin with the biggest retailer in america that is walmart. after a monster stock run over the past two years. walmart losing money for investors today, down more than 6%. here's an rbi for you. walmart. the single worst performing retail stock in the market today, falling more than

five below or dollar tree. the big question though for you, where does walmart and maybe the american consumer go from here? well, it's a big question. we may have some answers and some clues from the earnings and call around at cnbc's melissa repko. joining us now with more on walmart. melissa. >> so walmart. >> today, like you mentioned, is. >> feeling the pressure. and it's important to zoom out here because walmart has seen such a tear with its stock. and really what's dragging down the stock in this case is its forecast. it's forecasting a slower profit growth going forward. and that's what investors don't want to hear. it's important to note that i spoke to a walmart cfo, john david rainey, and he said there has not been a fraying of the consumer. that is not what's driving their guidance here. instead, they're just taking more of a conservative approach. and walmart is known for that. in the past, it tends to set somewhat of a lower bar so that it can clear it and kind of play more of that prudent approach over time. that being said, you know, he it definitely has raised some alarm bells because

walmart tends to be the bellwether. and we have a bunch of other retailers on tap with their earnings. >> is this a tariff story in any way? >> no, actually john david rainey mentioned they did not factor in tariffs to their forecast. so that didn't play a role at all. worth also noting that two thirds of what it sells is made or grown or assembled here in the us, mostly because of how large their grocery business is. >> so if that's not a direct impact, is it a weak consumer or is it just the january is a weird month, but they're talking about later in the year, though. >> they are. and what he said is really their one month in and they're playing it safe. and so it's not so much to read into the consumer, but that they'd rather on the side of caution here. >> yeah. makes sense. although again, maybe they're maybe they have some insight into that that the rest of us don't. >> they did interestingly mention january was a weaker month because of the wildfires and because of weaker weather, but it still was a strong for them, the strongest year over year comp in the quarter. interestingly, maybe because it was easier a year ago. so

they're not noticing a slowdown in patterns. and in fact, they're noticing a bit of an uptick with general merchandise, which is the kind of discretionary stuff that people buy outside of the grocery aisle. he also spoke about how, you know, if he was to describe the us consumer in a word he said, steady. so that might be something that investors may feel happy to hear. >> i feel like they're the new apple. like they always come out and say something cautious. the stock goes down. all these stories are about the consumer. and then the shares go up 30%. >> the stock's been soaring. it's doubled in. it's more than doubled in two years. >> the question is also are they a victim of their own success because they have been on such a tear? the bar keeps getting raised, you know, and investors want to see even more impressive growth. so that's tough to compete against. >> and the stock trading what do we say 40 times earnings. maybe someone told me costco is at 60 now. so these multiples are getting. everything's fine. yeah. >> one of the interesting storylines today though is that for the first time, amazon has surpassed walmart when it comes to quarterly revenue. and so that's another little interesting story here. as

amazon surpasses walmart, walmart is trying to imitate amazon in a lot of different ways. one of the biggest ways is that it's trying to make money outside of retail. it's doing things like advertising, it's third party marketing. >> voodoo. >> exactly. >> they're becoming a meet a media mogul, maybe too strong of a word, but walmart's push into television and media and advertising is maybe one of the most underrated retail. and i'm doing air quotes from the radio retail stores in america right now. >> the way they've tried to do that most recently is even partnering with paramount. and that's a big perk for their walmart plus program, which answer to amazon prime. so if you say that imitation is the sincerest form of flattery, they're doing a lot of it and they're looking at amazon in many ways. the other way they're doing it is competing for upper income shoppers, and that's what's driving the majority of their share gains. >> and amazon imitated costco in the first place. so that's how the games played. >> land man and a whopper junior kelly, that's a friday night for you, melissa. >> thanks. not all gloom for

retail. some other retailers are actually seeing some pretty big gains over the past three months as well. check out tapestry. ralph lauren, urban outfitters, walgreens kind of discretionary as well. here with the roundup is stacy widlitz, president of s.w. retail advisors. so, stacy, what say you? what have we really learned today? well, i think. >> from walmart the. >> biggest and melissa. >> she. >> nailed it. she got. >> it all. >> but i think the one extra. >> thing to add in here. >> is certainly. >> that walmart continues. >> to gain. >> share across all incomes, but specifically higher income. this is a new walmart. and as brian said, of course, going into these higher margin other categories like advertising that have legs and i would say, you know, a four and a half comp on top of last year's four is nothing to be disappointed about. and certainly, yes, walmart is cautious. they guided six below below 6% below the street. that's how the stock is trading. but i'm still incredibly positive on the stock here. >> what do you make of these moves in some of the more discretionary names like a

tapestry or ralph lauren and so on? >> yeah. so tapestry and ralph have been absolutely on a tear and a little bit two stories, but a couple of things they have in common. you know, during covid inventories were lean. we didn't have any product. everybody was paying full price. and for names like tapestry and ralph, we said, okay, when is this going to end? when are when are promotions going to come back? they have not. for ralph and tapestry, average selling prices are up 10 to 12% this past quarter. that's incredible. so what they have proven once and for all and put all the naysayers to rest, is higher. operating margins for these two companies are sustainable. and the other thing they've been doing is pulling back on general headline promotions. ralph lauren deleted a bunch of promotions in december. that was your first clue. so i think they're both intentionally shaping their business to a sustainable, higher margin at this point. >> yeah. henry ford said, what? you can get a model t in any color you want as long as it's black, right? because it was basically you have one choice.

and i feel like where the retailers got smart and you know, stacey, my wife, my lovely wife has worked in consumer products for almost 30 years, where the idea that everyone would just over inventory and then discount, you'd kill margins. covid changed all that. and you heard me say to melissa that maybe this walmart push in the media is an underrated story. i think right up there has to be that some not all. some management teams have figured out we're not going to discount any more. and if you want discounts, go somewhere else. >> yes. and also we've gotten so much better at managing inventory. look at walmart. their inventory is up 3%. their sales are up five. so by nature they're controlling the controllables. they're not allowing for these big discounts. and you know, also these other brands that we talked about tapestry and ralph, you know, they're pulling back from wholesale. coach only has 11% exposure. now it's super low. so they're controlling their destiny. ralph lauren has been shrinking it. and for the second quarter they went

positive in wholesale for the first time in a very long time. so again like you look at these models have they changed since covid and they have staying power. >> is there a management team you just really love? >> ralph. i mean, i think they're doing a phenomenal job. tj, i think both of these companies have just shown that these are buy hold. you know core holdings. and again of course walmart and costco. i mean these are the these are the core names. yes you can say the multiples are high but you know the dividends are going up, the earnings are going up. and then you look at some other names, you know, that have been very shaky like abercrombie. they haven't reported anything negative. but we have seen promotions rolling back in. so there are brands that have been able to hold their operating margins and not go back to promos. and there are others that they're still big question mark. is it sustainable? >> real quickly, stacy, before we let you go, what about nike? you know, speaking of, you know, trying to transform the big

splashy deal with kardashian, they've never done something like that before. >> yeah. and it's a great headline. and skims have done this with some other brands, but i don't think it's going to move the needle on nike. we've had a sell rating on the stock for a long time. and, you know, i'll tell you right now, the data that we collect shows that the percentage of apparel on discount at nike remains way up year over year. so skims is great. kim kardashian wins again. >> kim wins. i don't want to say nike loses. that would not be fair. stacy, for now, appreciate it. thanks for joining us today. >> good to. >> see you guys. stacy widlitz s-w retail. >> all right. coming up. why all roads now apparently lead to riyadh. helima croft will join us live from saudi arabia next.

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high five. five years? -nope. comcast business 5-year price lock guarantee. powering five years of savings. powering possibilities. comcast business. luxury resale. shop now with code tr20 for 20% off. terms apply. >> all right. welcome back. all diplomatic roads lead to riyadh. at least right now. the u.s. and russia holding ukraine talks in the saudi capital. and key energy players also meeting now regularly in riyadh to talk about oil and opec and output, in a way, riyadh for oil has become the new vienna where opec is based, which is why our friend and cbc contributor helima croft is there right now and she joins us. i know it's very late or your flight's in a couple hours. either way, we do appreciate it very much. how how has saudi arabia become sort of this hotbed of diplomatic talks?

and is it clear what they might want? what is the government of riyadh want from this new world stage? >> i think. >> saudi arabia wants no trouble in the neighborhood. i think they want a situation where they can de-risk these major conflicts. and what's interesting is we talk about saudi arabia and riyadh potentially being the new vienna when they have energy meetings here, but they really have emerged as the new switzerland as you as you pointed out, you know, secretary of state rubio is here, foreign minister lavrov from russia, having the first substantial us russia dialog since the russian invasion of ukraine. president sisi of egypt is in saudi arabia now as they come up with a collective response to the gaza crisis and the trump proposal to take gaza, the arab league has to come up with a counteroffer. they're discussing that now, and there's conversation about the fact that saudi arabia may play a role in crafting a solution to the iran crisis, trying to get a new deal

between washington and tehran that would stave off a potential israeli strike on the iranian nuclear facilities and potentially provide a path for sanctions relief for potentially both russia and iran. so a lot going on in riyadh at the moment. it's more than just an oil story. >> all of this is happening at the same time that saudi arabia and the us. i guess i'll call them negotiations. we're talking about potentially $1 trillion, 500 billion to $1 trillion investment by saudi arabia in the united states. at least that's what president trump has talked about. but ukraine not happy. they're not they were not invited to these talks. as you frame it in the commodity markets for oil and everything that you and your team do as good or better than anybody out there, do you see it impacting output and prices? >> so these. >> are. >> two really. >> important diplomatic stories for the oil market. so if you could get a russia ukraine end of war scenario, everyone is starting to think about what

does that mean. does that mean we have the sanctions placed on russian energy removed? are russian molecules flowing back into their original home in europe? that is what is under consideration. but what is important is you mentioned ukraine was not at the talks, europe was not at the talks, and europe just imposed additional sanctions on russia targeting the black fleet tankers targeting, you know, ports that are involved in the russian energy trade, taking banks out of swift payment system. and so the question is, is europe going to be compelled to remove their sanctions if they don't like the terms of the agreement? president trump certainly has the power to pull back u.s. sanctions, though there is some congressional review process. but can he really compel europe, which is impose the bulk of the energy sanctions, to remove their measures? and do they have to have a seat at the table? no. and so i think we have to separate oil from gas. oil has

been subject to the most onerous eu sanctions gas. that's more an individual country and russia decision. so is there a path back for individual member states to start taking russian gas? potentially. but oil is basically under eu sanction. and so that i think is going to be more challenging to remove those measures. >> and here's the dirty secret is that germany for years, for decades relied its entire business model was based in part on cheap imported pipeline russian gas. the nord stream and nord stream got blown up. but as we highlighted a couple of weeks ago, the government of denmark quietly allowing russia to do some environmental work on the nord stream. see where that ends up. could you see a day, halima, when and if. >> this war. >> is over, let's just hope on terms that ukraine would agree to. i want to be very, very clear right where germany goes back to pipeline russian gas. >> brian, the issue is many european countries have faced

deindustrialization because of higher energy costs. and i would pay very close attention to the outcome of the german election. do we get a new government in germany that says it is in our economic interest to take cheaper russian pipeline, gas, or not be solely dependent on it, but are allow some flows to return as opposed to investing in a massive, expensive lng infrastructure build out. so again, i would be paying very close attention to the outcome of those elections. gas, i think, really does hang in the balance in a way that oil, i think, is a longer term issue, whether those barrels return. but gas, i think, is a live issue. >> the front runner, mertz, i believe, is he more hawkish on russia or more dovish? >> well, i think the question is now i think it really becomes an economic argument right now. and as i look at, you know, industries moving to the united states for access to cheaper energy, i think that is a really

important economic issue at home. and again, depending on the terms of the deal, again, will there be a push to resume some russian flows for economic reasons? i think there is a case to be made for that. >> well, is it always a case to be made for having you on riyadh, saudi arabia? it's kind of where all the diplomatic roads end and airlines have met up. helima croft i know you're going there now, so i appreciate your time. thank you very much. >> thank you so much, brian. >> okay. >> she called it the new switzerland. interesting. >> there's a lot going on. and halima sent a picture. there's the russian plane. is there? marco rubio. is there, egypt is there. there's a lot happening. europe and ukraine not there. so that's that's critical. >> of course, but it is the place to be for these talks. speaking of energy, our next guest thinks it has the highest 12 month return potential of any sector. right now it's mr. carter worth. market navigator is next. >> crypto watch is sponsored by

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join now. terms and restrictions apply. >> i didn't. >> let's get a quick check on the markets. they're down. they're down. the nasdaq is down 6/10 of 1%. the dow is down 557 points 1.25% which is not nothing. but we've had worse. now generally we've seen the markets go down bizarrely don't you. this year we have seen the markets go down pretty much only on mondays and fridays. tuesday, wednesday, thursday. we've been up. what's today? >> it's thursday. it's friday eve. >> so thank you. but i don't think the market's supposed to go down today. oh that's that's. >> a good one. >> market doesn't care what it's supposed to do. does. >> past performance doesn't dictate future performance. >> he said that before. >> can you tell i used to be an ra? >> that. that is very true. dominic. that's dominic chu, by the way. and it's time for market navigator. >> yes. let's talk about what we're going to navigate through today, brian. because energy stocks are over focused. they're off to a hot start in 2025. the sector is trying to recover

after being one of the weakest sectors in the last 12 months. so our next guest thinks that energy is poised for an upside breakout and could be the biggest winner in the next 12 months for the entire s&p. joining us now to make sense of all of it is carter worth. he's the founder and ceo of worth charting, a guy who looks at those charts and those patterns for a living. and he's got the spectacles on today, which means he's probably paying particular attention to all those ticks up and down. so take us through what the energy thesis is from a technical perspective, and why it's in your mind due for that big upside breakout. >> sure. >> thanks, dom and brian taking a break from the context. >> but yeah. >> so look, this has been a dud. as i well know, the past ten years, in fact, the sector is up a mere 1,015% with the s&p. has doubled and obviously a massive underperformer over the. past three years. >> but i think that's ultimately the opportunity. >> it's a high beta sector. >> and yet a very. >> small sector and. only 3.2% of the s&p. but let's get to it. let's look at a chart or two and

see what we can figure out together. and so what we know of course is it's a very important sector. while small. but all of the charts would indicate that this. >> sort of. >> stall, this period of going nowhere is. >> likely at an end. and so. >> what you see here is a two panel. >> the top. >> is the s&p. 500 energy sector itself. and the bottom is the energy sector's. relative performance to the s&p. >> so we've been going. >> up. >> 22 2324. albeit barely. >> but the relative performance is almost straight down. now let's look at this same two panel chart another way second iteration. and you'll see here as i've annotated that the presumption is energy on top is going to. >> break out from this 2 or 3. >> year range. and then. >> that would. >> also i would see a concomitant. move in the relative performance. so let's zero in if we could on just the top panel and look at what is a chart of the s&p 500 sector

itself. and you'll see here on this next iteration that what we have is. >> a classic setup for something that's had. >> a big move. i mean. >> a massive outperformer since the. >> covid low, having been a disastrous underperformer going into covid. but now. >> after three years of sideways to my eye by my work is poised to break out. >> okay, so that relative outperformance could lead to, again, outsized gains for the broader energy sector. but are there places in particular that you go to specifically that could be the outperformers even within that possibly outperforming sector? >> yeah, i mean, two favorites, exxon, by virtue of the fact that it has been so dormant, very similar to the sector itself, but is really a safe haven asset within the sector. >> and the largest. >> and. then lng, liquid natural gas, a nice symbol. >> there for cheniere. >> and the presumption here is that this, having been one of the strongest stocks recently, has dipped almost 20%. and the dip looks to be a buying

opportunity. >> all right. so is there anything that we could say policy wise. i mean you're not a policy fundamentals guy necessarily. but what would happen in your mind that could make this whole thing go off the rails? >> i don't know. i mean, i'll default to what you just said. it's just not a part of my work. there are a lot of people spending. >> time on politics and policy. >> and studying opec and studying that. >> and i know one of those people. >> you're one of them. >> i think we and we just talked about it with helima. but could i answer your question a little bit weird. as a question? i would say this what could make it go off the rails? but helima just talked about, if we see an end of this war, which let's all hope we do, by the way, and an end that both sides would agree to, that if russia comes back online, the sanctions go away. trump is talking about drill, baby drill. could we see 40 or $50? oil and natural gas fall a ton because suddenly now there's so much more supply on the market that would impact both of

carter's names, exxon and cheniere, for very different reasons. >> all right. there you go. so again, carter, thanks for the charts. and brian, thanks for the fundamentals. >> i'll be on fast money tonight 5 p.m. actually i'm hosting the show tonight. >> working hard. >> what are you doing? >> i hosted it last night. i was holding the seat i. >> was holding was fantastic, by the way. i loved. every minute of it. >> thank you. >> i posted it last night. he said. >> yes, he did. >> yeah. >> melissa melissa is enjoying some. well, where is. >> melissa by the way? >> well deserved time gets time off. >> who works harder than her? >> not a lot. you do kelly. >> you do? no no, no. meantime, palantir is having another down day. it's on pace for its worst two day stretch since may of 2022, but it has still quadrupled over the past year. we'll get our traders take in three stock lunch next.

three stock lunch next. >> market navigator is sponsored knock, knock. #1 broker here for the #1 hit maker. thanks for swingin' by, carl. no problem. so, what are all of those for? ah, this one lets me adjust the bass. add more guitar. maybe some drums. wow, so many choices. yeah. like schwab. i can get full-service wealth management, advice, invest on my own, and trade on thinkorswim. you know carl is the only frontman you need... oh i gotta take this carl, it's schwab. ♪ schwaaaab! ♪ have a choice in how you invest with schwab. it's a smart move to get a second opinion. you do it when you're looking for a contractor. you definitely do it with medical advice. so why not with your stock market investments? we can help you see opportunities you may be missing. at hennion & walsh it only takes a second to schedule your free second opinion. so what's there to lose? speak to hennion & walsh.

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>> welcome back to power lunch. i'm pippa stevens with your cnbc news update. the full senate voted moments ago to confirm kash patel as the next head of the fbi. the 51 to 49 vote places him at the helm of an agency he has fiercely criticized in the past. he faced criticism during the confirmation process over his unwavering support of the president and his lack of experience. a source familiar with the situation says new york governor kathy hochul will not remove new york city mayor eric adams from office, at least for now. she is set to announce this afternoon that she will instead impose strict guardrails on his administration. it comes after adams was indicted last year on corruption charges and as the justice department seeks to drop those charges in a bid to help the federal government on immigration enforcement. and new york state attorney general sued 13 vape makers, distributors and retailers today, saying they are

fueling a teen epidemic. the complaint, in part, accuses popular brands including puff and elf bar, of continuing to sell banned flavored products in the state. the lawsuit seeks hundreds of millions of dollars in damages from the companies. kelly, back to you. >> we'll keep an eye on those names. pippa. thanks. and it's time for three stock lunch where we hit three different movers and give you the insight on how to trade them here with our trades today is sylvia jablonski. she is ceo and co-founder of defiance etfs. sylvia. good to. sylvia i should say good to see you again. got to start with palantir. two day big decline. the ceo alex karp has been selling a lot of shares. has people wondering of course, about what's going to happen. down 7% today on concerns about defense spending as well. what do you do with it? it's still up 300% in a year. >> hi, kelly. >> thanks for having me. >> well, i. >> think you. >> know this this news about alex karp. >> they had. >> a $10 million plan. he has about 1.8 left. and then we heard about. the cut in defense spending about 290 billion. i think that this is short term

news, right? i think the sale is just that he's over overconcentrated in one stock that has made him incredibly wealthy and others incredibly wealthy, and they're diversifying, and they have a unique proposition here. they're at the cross section of i, of government of data and analytics. they're the premier ai defense company. you know, they're they're involved with elon musk's x.ai. he's involved with the president. i think that's a good place to be. partnerships with anthropic drones. you know, this is the defense ai company. and i think that any for palantir is a for me. i'm a buyer here. >> oh what about hasbro soaring on some good results and a $1 billion savings plan. so your take on hasbro. >> yeah. >> the little. >> pawtucket rhode island company here i think look they they hit it out of the park with earnings i think that's great. they have a good story here. they're they're going to you know take 50% out of china i think that helps. they're they're projecting single digit profit growth inclusive of tariffs and things like this for

me. you know i look at it last year it was 15% versus s&p 500. so underperformed that 22.3. they're up 8% versus four. so they're doing well. this is a company in which i think i would take the gains today i you know i kind of love what they did with the earnings season. but i'm not super excited about single digit growth. had the company fallen on earnings because of the single digit growth i probably would have bought if it was, you know, an 8 to 10% dip. but take your gains here, be happy with it and wait for a dip. >> that brings us to carvana, which is dropping today, but very similar story to what we mentioned earlier. it's up 350% in a year. analysts do want a little more clarity at the company's forward guidance. it's down 14%. what are your thoughts? >> yeah, and i think this is this is another one another momentum play that's taking it on the chin a little bit today. so you know they have gross margins are down per vehicle by about $1,000 or so. i think the outlook is a little bit unclear in terms of you know, they gave positive guidance but without any kind of detail around it.

but i like this company. i think it's another tech company. yes, they're in the world of used cars, but they use ai, they use e-commerce, they use technology to do this cheaply and efficiently. they're revolutionary, disruptive in the sector. and i think that this is a company that's here to stay. so it's another one that i would buy on the dips. and q4 looks pretty good for this company, right? i mean, revenue's up 46% or so, you know, in that income is good. i think that there again, just any kind of disruptive technology and an old traditional industry, i think has some legs to come in our future. >> all right, sylvia, appreciate it. today. sylvia jablonski with defiance etfs. >> all right. coming up. is donald trump really considering a cut in defense spending. a rare and exclusive interview with the ceo of defense giant lockheed martin. >> nothing stands still. not technology, not the market, and not franklin templeton. we've

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robinhood hims and hers. they're all down today. apple is down 13%. robinhood his and hers down six and 7%. of course these stocks have soared over the last year or so. important to keep that in mind. also watching bitcoin today. it is getting back toward $100,000 per bitcoin 98,305. president trump reiterating his plan to make the us a global capital of crypto. >> and coming up, our exclusive interview with lockheed martin chairman and ceo jim taiclet. looking forward to that. stay with us. >> in a world of uncertainty and disruption, how will your investments stay resilient? we've been navigating change for 125 years, always looking forward, anticipating risks and trusted to manage over $1 trillion in assets worldwide. solving for the needs of

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to buy that stock... for exactly the amount she wants... no fees or commissions... what will gina do next? gina has roller derby at 6:00 pm. i'm there. get started investing for as little as $1. talk about easier investing. but late yesterday, defense secretary pete hegseth told the pentagon to get ready for budget cuts of maybe as much as 8%. markets likely anticipating this as the major defense names are down 15 to 20% since the president was elected in november. that includes lockheed martin, down about 20%. and the ceo is with morgan brennan. now for a rare exclusive interview. welcome to you both. morgan. all right. >> kelly, thank you. >> and jim taiclet. >> of lockheed martin, it's great. >> to have you on.

>> welcome to. >> you. >> as well. that's exactly i want to start because the trump. >> administration is looking to cut the budget. >> it's looking to set its. >> priorities for military modernization. we know that from a statement. >> from. >> the pentagon today. >> what do. >> you. >> expect and. >> how are you positioning. >> for it? >> well, we're. >> expecting morgan. is similar to other. >> presidential transitions where. >> the new incoming. >> administration wants. >> to. >> look at. >> the priorities. >> of. >> the. >> prior administration, see what the. alignment is. with their. >> own priorities coming. >> into office. >> and then make. >> adjustments as they see fit. >> so this is a. fairly typical. process that our industry goes through. the way it was described. >> in the government's public statements was. >> it was going to be a realignment of resources. and so we expect to be in a really great position for that realignment. but given the kind of missions that. >> we. >> can execute, the kind. of capabilities we have at our company, and the kind of partnerships we're building with tech companies and others in the ecosystem to deliver on that, all of that. so i'm pretty very optimistic, actually, about

streamlining government. processes along the way and getting more efficient. so we look at all of this as positive and a good environment to work in. >> okay. >> speaking of. >> getting more. efficient defense stocks and. >> government it stocks have been under pressure. >> since the election. >> analysts point to doge. >> is wall. >> street. >> right to. >> see. >> doge as a threat? >> i actually don't think it is a threat. and morgan, you and i have had numerous conversations over the last four years that i've been in this role, after having about 20 years in the telecom tech industry, that i've been advocating for systemic change on how the government and industry broadly interrelate when it comes to national security. and i think that doge also the president's new team, a bunch of people with new ideas and an open mind, including the president himself, will enable us to finally get that systemic change going in this country and among our allies to have a more effective and efficient national defense. so i'm i'm encouraged by this, and i'm looking forward

to working with them. >> and you and. >> i've had these conversations. >> 5g 21st century war. >> fighter, some of the. >> commercial partnerships. >> you've. struck with. companies like. microsoft and nvidia to. >> to. >> name a few. so it does raise the question if we're talking about systemic change, what does that change actually need to look like? >> and how much does. >> lockheed's business model. >> need to change. >> alongside it? >> there are very specific. i'll just highlight two of them today. very specific policy changes that if they're made in government industry, will be able to become more effective. and more broadly, participating in these national defense missions. so one of them is creating a standards body for an open architecture system based on the 5g concept, similar to what we do in telecom. it's called 3g ppe. that's the acronym in telecom 5g, and love the government to adopt that concept and implement it by convening the companies that are in the aerospace defense industry and the tech industry

and telecom startups to create a standards body where we all can participate, plug and play with the newest and best technology as it evolves on both the software and hardware side. so that's one of those two. >> so we've. seen see, we've seen. >> it raises the question about competitive landscape. now we've seen palantir is now the most valuable. >> defense contractor in. >> the public markets. >> you've got angel industries. >> spacex a flurry. >> of other defense. >> tech startups that are raising. >> seamlessly endless amounts of capital. >> in the private markets. is there. >> a changing of the guard. >> how to think about this. >> competitive landscape. and what it means for lockheed? >> well, i would suggest that palantir and rolls and others investors, including spacex, they're just trying to get ahead of the systemic change. and i'm talking about which is reducing. here's the second part of the discussion. so the standards body, open architecture, 5g

based internet of things system is one, as i mentioned. secondly, there needs to be an adjacent acquisition system in each of the armed services in the pentagon. for digital services, there is an acquisition system that everyone is well aware of. it's long cycle. it could be faster, it could be more efficient. but even if you left that alone, the system that buys aircraft and ships and submarines and big satellites, we still need to create, we should improve it. but we still need to create a digital services system, an acquisition process that aligns with that bigger process, maybe pulls about 5 to 10% of the defense acquisition and r&d budget over to these services and buy like the tech industry sells long term contracts. subscription business model, no cost based pricing. and those kinds of attributes of how the

tech industry interrelates with each other and with other industries. we need to bring that to the pentagon. and that's the second big systemic change that's needed that will enable the companies that you just talked about and ours and northrop and boeing to all be participating on this faster, more iterative software track where we can either partner subcontract to or from any of those companies, and we'll be able to work together to put the big platforms together with the best software. and that way we'll have the most effective national defense. so i think this is really critical, and i welcome these companies and their investors and their talented people into this ecosystem so that we can just create a better deterrent to armed conflict among great powers. that's what we really want to do. i'm glad they're around. i'm glad their investors are here. >> you know, lockheed has. >> dozens of production sites around the country. you employ. many thousands of workers at. those sites. that doesn't even include all the suppliers that are funneling. into the many weapons.

>> programs that. you have your hand in. >> if you have. >> a. >> defense budget that. >> at least here in the. >> us. that's under pressure. >> if you have a shift in business model and a shift towards more tech and. >> more software. >> what is it going to mean for production? what is it going to mean for jobs? >> we've tried to get ahead of these trends ourselves. and so inside our own company, morgan, all of those big platforms that, you know, that we make and you see on the map here, palmdale, california, we make the latest stealth aircraft, fort worth. we make we build the f-35, greenville, the f-16, marietta, the c-130. this is just our aeronautics group, as you show on the chart. but within that and within the other four businesses we have in our company, we've been creating that 5g architecture. we've been creating our own standards. and so we'll be able to interconnect all of those aircraft and lots of other systems like radars and satellites into this kind of architecture. so we'll still have to produce these big,

sophisticated systems, because they're the only ones that are competitive against the threats, whether it's china, russia, iran, certainly on the side of china and russia, they are off to the races on fifth generation aircraft. they're building them. they're trying to come up with the sixth generation, as are we. and so we've got to stay in that competition because there's really no effective counter when you're trying to get air superiority to a fourth or fifth generation fighter jet that i'm aware of today, that we can just feel it instantly. that isn't along the lines of those kind of aircraft. so we're going to have to do both. build the aircraft, build the big platforms, accelerate the technology. that's digital has got to be a big part of this, and it is in our company. okay. in fact, we've got a thousand ai scientists in our own company working on this. we need to get a big tent together with all these companies that you've been talking about and others that we can have contribute to all this,

but you've got to have those platforms to compete. >> okay. >> geopolitical landscape. >> you just touched on it. it's shifting rapidly in part. >> because of trade. >> policy, in part because of foreign policy. case in point, what we're seeing play out in real time with ukraine. if we get a resolution to that conflict, what will that mean for lockheed? and i ask that knowing that you. >> supply a lot of missiles. >> and missile defense and indirectly, f-16s to that conflict. >> yeah. >> i do hope personally and even professionally, that the ukraine war can be ended quickly and fairly. what the outcome of that war, even if it ends tomorrow, which we all hope will happen, it just heightens the need for the ability to the defense production system to scale and be able to produce what we need to. it accentuates the need to have faster turnaround times on digital technology, which ukrainians are doing even overnight, and it also emphasizes the need to have

partners, international partners that you can team up with. and we have them like germany, uk, australia, italy, others where we co-produce and work with them to get their best technology involved in their talent and their employee bases, involved in producing what we all need to do to defend ourselves and to deter further armed conflict. so i hope the conflict ends fairly and quickly. but the lessons from it, i think, are, for better or worse, are going to live on. we need to get more effective at national defense. that's the real lesson, i think, of the ukraine war. we just weren't ready four years ago, 3 or 4 years ago, to really meet a challenge like this. okay. and that's the big learning. >> yeah. and certainly we've seen this. >> surge in. >> international demand. >> for defense products. >> and that's been. >> a piece of your sales. it's been. >> growing particularly quickly. >> just speaking of missile defense. >> iron dome for america. we have the executive order out. we know there's legislation that's starting to percolate around this as well. do you plan to

participate in that competition and where do your products fit in? >> well, we absolutely plan to participate. we're offering to lead a national team to help the government organize industry to make this iron dome concept a reality. and our company specifically will contribute some very big pieces of this. we think the first one is satellite sensing of missile launches and tracking. that can be done from space, and we do it from space today. other companies do too. so how do we get ours and those assets together in the most effective way? all right. the second big, big piece of this is command and control systems, which we build for the us government and others. australia just basically put in command and control system for their version of iron dome. that will include all of these kinds of capabilities. we've already done this in australia. we're doing it in guam and in the pacific. okay. i think we can help lead that as well. so and. >> we got. >> to leave it. you know. >> we got to leave it there. jim

taylor of lockheed martin, thank you so much for joining me, guys. back to you. >> always great morgan. bye. >> great interview morgan. thank you for bringing it to us. we are back right after this. are back right after this. >> catch the power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis, help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley. ♪♪ with powerful, easy-to-use tools power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley when i started walton goggins goggle glasses, i had no idea what i was doing. but godaddy airo does. using ai to build a logo, website and social content. so i can let the world know, if your goggles ain't goggins, they don't belong on your noggins! mile away. welcome to

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