Closing Bell: AI's Regulatory Divide, Dynasty Partners with Anthropic 9/15/26

0:00I'm Mike McNerney, Equity Investment Strategist. Markets move fast. My mission is to provide market insights to our clients that help turn uncertainty into opportunity. Janice Henderson, investing in a brighter future together.

0:30They are so essential. And then have all your friends buy essential oils. Are you more of a geranium or lavender fan? Don't look her in the eyes. Guard against wild money moves with PNC Bank. Brilliantly boring since 1865. All right, guys, thanks so much. Welcome, of course, to Closing Bell. Scott Wapner live from Future Proof in Huntington Beach, California. Two stories, top of mind here, pretty much like they are everywhere. What's happening on the AI front and whether the Fed really is going to raise interest rates tomorrow? We'll ask our experts what they think on both accounts. We'll also speak to financial advisor Cheryl Penny of Dynasty.

1:09His firm named a design partner for Anthropik's new move into wealth management. Before we get to that, let's show you the scorecard here with 60 to go in regulation. We have been mostly red. So much focus remains on that 10-year note yield moving above 5%. That is the highest level since 2007. Yes, we're watching oil and all things energy as well. They are very much the driving forces of the trade in the market today. Our talk of the tape is what the markets are going to do no matter what the Fed does tomorrow. On that note, I'm joined here at Future Proof by Tom Lee. He is Fundstrat's head of research, a CNBC contributor.

1:48So very good to have you here today. Thanks. Great to see you, Scott. All right, so what do you think the Fed's going to do? Well, the market is pricing a 91 % chance of a hike, so I'd say that's a safe assumption. The Fed will hike. The question in their minds is really going to be how the market reacts to their action. How do you think the market's going to react? I think a hike, because it's priced in, is actually a relief. It's like a Band-Aid being pulled off, and I think there's a good chance that future hikes get priced out. In other words, it's a one and done and it leads to a rally in yield.

2:23So yields fall. And I think it's the start of a big stock rally. OK, we'll get back to that in just a moment. I had BlackRock, CIO of Global Fixed Income, Rick Reeder, on with me earlier today on halftime. And he, too, said the Fed probably will hike but shouldn't. I wouldn't because I think there's you're not going to really do much. I mean, talk about moving the funds rate 25 basis points. Are you really going to do anything for inflation? What's driving inflation today is interest rate insensitive. Obviously, you've got war, you've got energy price, you've got education, insurance costs, health care.

2:55It doesn't really do much. So what I do it, what it does adversely impact, look at the housing market that's frozen. Mr. Reeder also told me how he thinks that stocks will react and bonds for that matter. Listen to what he told me about that. I think the one day change is pretty hard. I think people need to see the Fed moving. And I think as long as you get, I think Josh said it, which I think is right, as long as you get behind it, I think the equity market will have an OK time with that. It sounds to me like you're in agreement with Rick. They will, but they shouldn't. Yeah, I agree with Rick that it's probably ceding to market pressures, not that the Fed thinks that's the best course.

3:39Goldman had a great study showing that there's four things distorting PCE today. 1.7 percentage points are coming from portfolio fees, flash memory, tariffs, and energy. In six months, just without Fed intervention, that's dropping 100 basis points. So PCE is set to drop anyways. I don't know if the Fed really needs to accelerate that process. But you're still pretty positive on how you think the market ultimately will react. Yes, and part of it is expectations. You know, the market's been anticipating and sitting on the sidelines because of a hike. I think it does take out future hikes, so that's yields falling.

4:17There's a lot of pessimism already, and people have to keep in mind, 25 basis points really doesn't hurt the stock market, but we have a ton of cash on the sidelines, and we've been down many days in a row, so I think it could be a very big rally that starts. About 5 % on the 10-year. That's a problem, isn't it, or no? I mean, round numbers are a problem. I mean, we were at this level in 2023, and the economy didn't break. When we look back to 1930, between 4 % and 6%, P.E. is positively correlated with higher yields. So actually, arguably, P.E. should be expanding until about 6 % on the 10-year.

4:54So I think that we don't like seeing 5 % because I know it's stress, but history shows the U.S. economy can handle that. What if I think, as some do, that earnings are in the process of peaking, and now when you have the backup in yields that that in and of itself challenges the multiple. Therein lies another issue. How would you respond to that? Well, a couple of things. One is, you know, if even if the rate of change of earnings growth or revision slows, but we're still growing 10 percent organic, we should be closing in on a 20 P.E. But investment spend at GDP, a lot of that's housing, which is depressed, isn't at cyclical peaks.

5:36So to me, I think there's still a big lever to pull that housing, which is private investment, could go up a lot. That could add$30,$40,$50 to S &P earnings. So I think we're not really at peak earnings yet. But we haven't had the big pullback that you've told our viewers you still thought was coming and could be Fed-induced. How do you square all of this? Well, the factors that make us think of big pullbacks coming are still in place. You know, market tests, the Fed, margin debt, IPOs, leverage. But there's pessimism today. And I don't think markets peak on pessimism. So I think that we still have a substantial rally into the end of the month.

6:16And then I think when people flip bullish, that's really when all these other headwinds could come together. What about the midterms? What kind of risk do you think there is around the midterms? Again, it'll be a risk-off period because people don't like binary outcomes. So they're going to just sit until we have the elections. But gridlock, which is what markets are pricing, you know, a Senate and a House flip to Democratic, is actually a good scenario for markets because stocks tend to do better when there's gridlock. And you think that still holds true? Yeah. I think post-midterms, because this year has been very challenging, and I know it's not been fun for a lot of viewers, I think the fourth quarter could be one of the biggest rallies, and I think it continues to next year to one of the biggest rallies of our lifetime.

7:00What's a real number, do you think? We're at 75.85 on the S &P as we have this conversation. There's not that much of the year left. What seems reasonable to you between now and then? I think we could easily be above 8 ,200 by the end of the year. And that's because tech is going to be doing a lot of heavy lifting. The Mag 7, as you mentioned earlier today, are starting to come back to life. And the software names, which have been important names to be held, are doing better. So as long as the AI trade isn't extinguished, which we don't expect, I think it's going to come out of this correction, we've got a big rally into your end.

7:34So the AI trade obviously is a key topic of conversation kind of everywhere you go, especially after the events of this weekend. What do you think the fallout is, if anything, for the trade itself? Well, this weekend's a reminder that AI is central to U.S. growth and the global economic growth. And I think it's appropriate to be worried about sort of the guardrails because this is literally creating a new economy and new ethical concerns and new safety concerns. But we're actually in good hands. These are really thoughtful companies, and I kind of applaud the idea that maybe we should put ethical boundaries or limits on what's happening.

8:13The story, obviously, around AI safety continues to play out. There are more headlines yet again today from those either warning about the technology itself or declaring the concerns about it overblown. Our Kate Rooney has more on that. Hi, Kate. Hey, Scott. That's right. Well, there are now some different camps starting to form around whether to slow down AI and then how to do it. So first you have the AI labs. Anthropic in that camp. CEO Dario Amadei really kicked this off with an essay on Saturday calling for an AI slowdown. Sam Altman also tweeted his support for that. So those two in agreement and Elon Musk piled on.

8:51He agreed with those two and at the All In Summit this week unpacked some of those comments. He said when people from Anthropic and OpenAI are telling you that their models are very dangerous, we should believe them. He called for a peer review of the most powerful AI models and suggested that competitors actually keep track and check in on each other's models. So as he put it, instead of grading your own homework, you would at least have to grade a competitor's homework and then raise alarm bells if they do actually see concerns. You also had Jensen Wang, NVIDIA's CEO, on stage at that very same event, saying that companies should take safety seriously, but they need to draw a line between concrete risk and then talk of human extinction.

9:32He did call some of the rhetoric irresponsible. He also said slowing down could cost the U.S. its lead over China, and President Trump is very much in agreement there, called some of the fears around this a, quote, hoax. Also called, physically called, Jensen Wang on stage. They were on speakerphone. And so a lot of new voices on this ongoing debate, Scott. I think everybody, at least here, Kate, is thinking about what this means for Anthropic going public and whether this discourse around AI safety will in any way hinder that or at least push it back. From your reporting, are you hearing anything of the like from those maybe not within Anthropic itself, but on the periphery who are worried about an IPO being pushed off?

10:20Scott, it's the question of the week. I've talked to a ton of current investors in the company and people close to Anthropic who say the plan is still very much to list. They're saying that in part, this could actually help add transparency. They think an IPO for that reason is a positive, although it makes it a lot messier. than a week ago to flip an S1. At the same time, there's so much noise around safety. Dario Amadei has made multiple public appearances as well. He was at Dreamforce earlier on stage with Mark Benioff. I talked to somebody who took another tech company public and has gone through this process and said the calendar is also everything when it comes to these IPOs.

10:56So they're running up against midterms. There's a sort of a shot clock for them too, that they, even if everything goes well, there's some external factors that may start to become an issue if they slip into the end of this year. Although, from what I'm hearing, the motivation is still very much to get out and be the first ahead of OpenAI. Kate, thank you very much for that. That's Kate Rooney out in San Francisco. Speaking of shot clocks winding down, the clock definitely winding down on the Clarity Act and the cloture vote taking place in the Senate. Tanea McKeel joins us for the very latest.

11:27What do we know? That's right, Scott. The Senate just voted to block the Clarity Act from advancing, dealing a major blow to the crypto industry's push for this comprehensive market structure framework. The bill got 50 no votes versus 49 yeses, and this leaves, sorry, 52 versus 49 yeses. And this leaves the bill stalled on Capitol Hill after months of negotiations that were aimed at building bipartisan support. The failure on the floor likely means crypto will have to wait until next year for clear rules of the road. The executives and investors that I've been talking to do, we've been talking about this bill for many months, Scott.

12:00The legislation, although it would lend certainty and help attract long-term capital, a lot of the industry has resigned itself to the possibility that regulatory momentum may have to be built outside of Congress through the SEC and CFTC. So while it would be great, the industry, you know, disappointing day, but it will persist. Scott? Tane, I appreciate that. Tane and McKeel. Guys in the control room, can you give me a Coinbase? Can you give me a Robinhood? stocks that are, you know, feel like they're so levered to the crypto story just to see how they might be moving. And it's good to have Tom Lee here, obviously, as well, to react to this.

12:39What's your first reaction? I mean, it's a disappointment because, you know, it'd be great to have in law, you know, giving the authority to CFTC and SEC. But the failure of this act doesn't mean it won't happen next year. That's really what most expect is that it's going to pass next year. But more importantly, the rulemaking can just take place, you know, individually. So the CFTC SEC starts to write the rules, states weigh in, and we eventually have a framework anyways. Does it change how you would think about, you know, the related stocks? Your firm's been talking a bunch about Robinhood lately.

13:16Yes. Yeah, we're still very constructive on Robinhood. You know, I think it is a next generation financial platform. Robinhood has already done innovative of things like tokenizing stocks. They built the Robinhood chain. They didn't need Clarity Act to do these things. And the failure passage doesn't change their efforts. So I think the industry still moves forward. But of course, it's a lot easier if we had rulemaking because then all of the big banks, which many supported the Clarity Act, kind of now have to wait. Does it make you in any way less bullish on the crypto story? It doesn't because, for instance, even with the sell-off today, Ethereum is up 56 % for the quarter.

13:55It's the best performing macro asset at a time when the four-year cycle in crypto is ending. You know, in Korea, there's people are rotating out of AI stocks into crypto. So I think crypto has a lot of tailwinds and probably a lot of FOMO into year end. All right. And the other story we're obviously following is regarding Apple. We can take a look at those shares as the company rolls out its revamped version of Siri. Mackenzie Sigalos has been following that story, and she joins us now with more there. Hi there. Hey there, Scott. And the early reaction to Apple's new Siri is basically it finally works.

14:28The clearest improvement is personal context. I've been using it to find things buried in my texts and emails, pull up details from my calendar, and basically make sense of what's already on my screen. That is a meaningful step up from the old Siri, but battery life and speed are a big complaint, with some personalized searches taking up to 15 seconds to return an answer. And once you move into more complex questions or multi-step tasks, Siri still trails even Gemini, even though Apple is using Google's models, to help power parts of the experience. So the consensus, at least so far, is that Siri is much better integrated with your iPhone, but still less capable as a general-purpose AI assistant.

15:07And access remains heavily gated, with many users sitting on a wait list. Apple is still also calling this a beta and says that some cloud-based features will have daily usage limits. We've asked how much runs locally versus in the cloud. Apple has not broken that out, but Tim Cook did acknowledge last quarter that the company is still figuring out how much compute it will ultimately need for this. Scott? Mac, thank you. That's Mackenzie Segalis. We watched Shares of Apple today. Now let's bring in Dan Ives. He's here as well of Yorkville Ives. Of course, Tom Lee is still with us here at Future Proof.

15:40Let's talk to you first. Good to have you, of course. Apple, finally. Here it is. What do you think? Look, it's a renaissance. I mean, I think it's just starting after a few years of really no AI. Now they finally got it right. And it comes down to like they're not going to be an anthropic, not going to be open AI. But if you look at what they're doing, they have an install base that's unrivaled. And I think investors are taking notice. You go back to the launch of the new iPhone combined with foldable to now we see on the AI side. They will be on the consumer AI highway. They're essentially going to be a toll collector.

16:16Why is the stock down today, you think? Look, I think investors always have these sort of knee jerk reactions. There'll be some skepticism that there'll be bugs in it. It's not ready to roll out prime time. Because it's a beta form. Because it's beta. But the reality is that if you look where we are today, relative to six months ago, relative to three months ago, way ahead of expectations, especially given the sneak bit in the investor. And if you look at Ternus, you've got to give him, you know, call it an A, A minus in terms of what he's done the last few weeks in terms of really starting off as CEO, filling almost impossible shoes with Cook.

16:52Was your confidence at all shaken over the weekend in the durability of the AI trade? You know, over the weekend, and we talked about it, I was, I think a lot of it, in my opinion, was yelling fire into a crowd theater. Going back to late last week with the Anthropic researcher, and then what you saw in terms of the nervousness that, you know, I think going into this week. In my opinion, it doesn't change my bold thesis one iota. Because the reality is, is that the trillions of dollars are going to be spent. You can't put the genie back in the bottle. And if Anthropic and OpenAI, they want to pull back, guess what?

17:27Meta, they'll accelerate. Software companies, they'll accelerate. And that's why I think you see software names, even cybersecurity that's outperforming. And it just keeps coming down to China's not slowing down. And if China is not slowing down, the U.S. is not going to slow down. That's the reality, actions versus words. And cyber feels to me like it's its own category here. There are obvious reasons why CrowdStrike had one of its best days ever on the back of the events of this weekend, trying to put all of software into one basket around a cybersecurity move. That feels like a bit of a stretch, no?

18:05Look, I think part of it is you go back to the SaaS apocalypse, the view that Anthropoc is going to eat cybersecurity's lunch. If you go back to the RSA conference and everything that CrowdStrike power out their face, I think investors are recognizing and you're seeing it play out. The second, third, fourth derivatives are playing out across AI. But as me and you have talked about on the data center side, like a lot of this, it was a PR black eye created by the tech companies themselves. Because you cannot say that you're going to take all these jobs away and electricity bills are going to go higher and just embrace AI.

18:38So I think some of that is definitely now trying to curtail and trying to take steps forward. But that's going to take time in terms of, you know, especially on the PR side. If you had both Anthropic and OpenAI, the key frontier labs public right now, how would you view them? Would you be more negative? Does slowing the pace, as some suggest, and what they're going to need to do as a result cause an increase in spend, a hit to margins, like some are suggesting? How would you rate them? Well, first, it's separating between what they're saying they're going to do and in the reality, can they slow down?

19:20Because I think they recognize they could try to do this sort of create an industry standard and everyone's going to slow down. But the reality, I think we've seen the last 48 hours, no one else is going to slow down. I think for Anthropik and OpenAI, if they were a public company, it would be head-scratcher in terms of the way that they actually did this. But the reality is for the enterprise, what they're going after, the value is going to be in the data. And it speaks to sovereign AI in our whole view. They're not just going to be the only two in that sort of two-horse race. Others are going to catch up.

19:55But they have a huge lead. And I just think it was a reality check for them. But it doesn't change. At the top of the mountain, it's anthropic and open AI's world. Everyone else is paying rent relative to the model player. But you don't think in any way it slows down the speed on the highway? I mean, this is going to be an autobahn relative to what we see on AI. And if they slow down in the left lane, they'll get passed by across tech. And I think what Jensen talked about yesterday, as the godfather of AI, I think him and Nadella had some of the best comments, is that you have to, I think, separate between maybe some of the nervousness or yelling fire into a crowded theater versus the reality.

20:39Because trillions of dollars are going to be spent in AI. That's not changing any iota. And now it comes down to Anthropoc and OpenAI. They're going to need to sort of curtail, going back to what they talked about this weekend, relative to what's happened in the industry. You agree with everything you've heard? I get the sense that you don't necessarily. Well, these are long-duration assets. If they were publicly traded, they would be correcting sharply. And I think in the secondary market, they're already down more than 30%. But in a way, as you guys are discussing this, it makes me realize they're also trying to take control of the narrative again.

21:14Because we already know the states were opposing data centers, and they didn't find good reasons to greenlight this. I think by the companies saying, hey, we want to make sure this is good for society, it probably helps the case for AI. So in some ways, I think in the future, it makes it more likely you're going to get more data centers. You really believe that, that when you have the people leading the frontier, so to speak, suggesting that this is potentially more dangerous than we realized or this is moving too fast in a place that's making us uncomfortable when you have, according to some polls, of course, 70 plus percent of people not in favor of data centers, that they're going to look at all of these people speaking out and say, well, that makes me feel better.

22:02or doesn't it make them say, you see, this is why I don't trust this technology? So imagine a town hall meeting and the anti-AI folks have been saying this. They're like, okay, finally you're listening to us. And then the labs are going to say, yes, we understand this now, but let's try to make this good for your community. And I think this is probably a step in that direction. We talked about the labs, but what about for the hyperscalers? Is there any impact at all from this? I think they're going to view this as an opportunity to gain share. Because when you think about Anthropic and OpenAI, given the criticism and given what they've, and some of that is sort of self-created, I think the hyperscalers, I think Microsoft really being front and center, they're going to take advantage of this.

22:45I mean, these are opportunities right now across tech, across software, anyone that was behind to try to gain steam and try and narrow the gap. But to Tom's point, look, the data center issue, not just even just going to the midterms, but just the divisive that we've seen around the country. That's not going to slow down. They're trying to curtail it a bit, but it's going to be this sort of boxing match that you see community to community. But it comes down to AI will create many more jobs, but what they did initially in terms of that PR nightmare that they created, you can't just put the genie back in the bottle.

23:22Does slowing the pace help somebody else catch up? I'm thinking of what does it mean for a meta and some of the others that that you follow? Is there any impact whatsoever? I think for meta, this was a gift. And I think the stock reflects it, because if you think where meta was so far behind, they're just spending money like a 1980s rock star. You're not seeing the actual results. Now, all of a sudden, investors are starting to realize, OK, Zuckerberg's not slowing down. They're going to accelerate. So if anything, if there's winners, not just software and infrastructure, Meta's a winner here.

23:56And I think now they need to play it out. And I think Anthropic and OpenAI, I think the reality is they have a target on their back for good reason. They've done amazing things in terms on the model side, but everyone else is not going to sit in the right lane 45 miles an hour because they said slow down. All right, it's a perfect day to talk to you both. Thanks so much. It's Dan Ives and Tom Lee here at Future Proof in Huntington Beach. We also want to highlight that Tom's going to be speaking at the CNBC Digital Finance Forum. It's coming up in November. You can scan the QR code to request your invite or visit cnbcevents.com slash digital finance.

24:33To Christina Parts of Nebulos now for a look at the biggest names moving into the close. Hi there. Hi, Scott. Well, chip stocks back in the green after something yesterday. And then calls to slow down AI development, what you guys just talked about. NVIDIA up about half a percent after sliding over 3 % just yesterday. Qualcomm, Corvo, Skyworks. You can see all a big two erasing just yesterday's losses. Meantime, target shares pulling back a little bit despite Telsey Advisory reiterating its outperformance rating. Price target 182. You can see shares at 155 right now. The firm said it was encouraged by the CEO's strategies to improve sales and streamline operations.

25:07And yet you can see shares down still about 2 percent. And last but not least, Forge and Power Solutions surging after a blowout fourth quarter earnings report. The power infrastructure company saw revenue increased 94 percent year over year and also had a record three billion dollar backlog. And so that's why you're seeing shares up 11 percent, its best day since May, Scott. All right. Come back to you in a bit. Thank you, Christina Parts and Avalos. Just getting started up next. We're putting the financials in focus. Shares of JP Morgan on the move on some fresh comments from the bank's co-president.

25:39We'll bring you the very latest. We'll show you the stock. We'll talk about the space coming up.

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27:20No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. All right. Welcome back. Shares of JP Morgan getting a boost just a few moments ago on some comments from the bank's co-president, Doug Pinto. Leslie Picker following that story for us. Les, it is conference season. I presume this happened at one. Yes, that is a very good guess, Scott. JP Morgan co-president Doug Pettino sharing a bit of guidance at the Barclays Financial Services Conference that caused the stock to gain.

27:57Pettino saying that management confidence is driving, quote, a tremendous amount of M &A activity. He said absent some sort of major market disruption, they'd expect investment banking fees for the quarter to be up mid to high teens and markets revenue to be up by a similar magnitude. Pettino adding that revenue related expenses associated with outperformance will show up in their overall expense guidance, which they will share in earnings next month. You can see those shares of about point nine percent. Petno's comments, though, stand a bit in contrast to the ones we heard from B of A's CEO Brian Moynihan at this same conference yesterday, which poured a bit of cold water on the Wall Street side of their business.

28:35Moynihan saying sales and trading revenue will be flat year over year in the third quarter, noting the tough comp from last year. Moynihan also noted that investment banking will be down more than 10 percent. Those comments sent B of A shares pretty significantly lower yesterday, although they are gaining a little bit today. Citigroup CFO sharing guidance saying investment banking would grow in the low single digits in Q3. And Morgan Stanley co-president Dan Simkowitz also spoke at this conference and on our air, and he said that he thinks we're in the early innings of the M &A and IPO cycle with a lot of pent-up demand still.

29:11Simkowitz told David Faber earlier that he doesn't think the slowing of development among the frontier models means the slowing of financing, the build-out to meet AI demand. Scott. Okay. Leslie, thank you very much for that. That's Leslie Picker. We're also watching the private credit space today as the market braces for a possible rate hike. Robert Frank following the money force there in his latest Inside Alts. What'd you find, Robert? Well, Scott, private credit worries really faded this summer, but a rate hike tomorrow by the Fed could add new pressure. Companies that borrow with direct lending generally rely on floating rate short-term loans.

29:48So a hike in the Fed funds rate would increase their interest expense at a time when defaults are already rising. New data out yesterday from Fitch Ratings showing that the U.S. private credit default rate hitting a record 6.3 % through August and more could be on the way. Fitch saying so-called maturity extensions under stress. So that's basically pushing back the loan deadline. They accounted for nearly half of all default events. The good news, though, is that software borrowers appear to be stable. So little signs there of a SaaSpocalypse. The tech sector, in fact, had the lowest default rate among sectors at less than 1%.

30:26Healthcare had the largest, driven by private equity-backed roll-ups of healthcare practices. and that was followed by industrial and manufacturing. For more on the state of private credit and all your alternative investments, you can sign up for the Inside Alts newsletter at cmc.com slash Inside Alts. Scott? Robert Frank, thank you very much for that. More Closing Bell after the break.

30:59Hey, this is Jeff Lewis from Radio Andy. Live and uncensored, catch me talking with my friends about my latest obsessions, relationship issues, and bodily ailments. With that kind of drama that seems to follow me, you never know what's going to happen. You can listen to Jeff Lewis live at home or anywhere you are. Download the SiriusXM app for over 425 channels of ad-free music, sports, entertainment, and more. Subscribe now and get three months free. Offer details apply. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration.

31:40Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. If you're a parent and want to help set up your child for success, then IXL is right for your family. As an effective and affordable online learning program, IXL covers math, language arts, science, and social studies using interactive practice problems for kids from pre-K to 12th grade. Listeners can get an exclusive 20 % off IXL membership when they sign up today at IXL.com slash 20.

32:24Visit IXL.com slash 20 to get the most effective learning program out there at the best price. I'm going to ask you directly. Are you scared of dying in four years from a rogue actor manipulating Asians to misaligned weapons of mass destruction? No, I'm not. However, we do need to take safety seriously. And if it means we have to pace the frontier and slow down, absolutely, we're going to listen to our researchers and do that. But as the CFO, I need to then make business decisions around it. But no, I think that we are doing what we do well at OpenAI. We're pacing that frontier and taking that safety and alignment really seriously.

33:06Well, that was OpenAI's Sarah Fryer speaking with our Jim Cramer just moments ago. Jim joins us now from in San Francisco, where, Jim, you've really put yourself in the center of the conversation. And it's really remarkable to me to hear Sarah really echo or mirror what others have said now. There is seems to be agreement among the biggest leaders in this still developing technology that you do need to slow down at least a little bit. Well, I think, Scott, first of all, I've been watching your show out there and it's just dynamite. You guys had a lot of good ideas in the previous year earlier.

33:43I will say this. If there is a slowdown, and I think it's going to be a different kind of pacing for some things, it's probably already started. But what matters to me is these companies are making more money than people realize, and they're going to spend it on something else. So this wholesale sell of tech, I mean, you've got to be a little more discriminated because they have a lot of money, much more than they had a year ago. And I had Jensen Wong just now, and I've got to tell you, if there's a cutback, I don't see it. If there's an acceleration, I can tell you I do see it. But I know that doesn't go with the narrative, Scott.

34:16But I don't give a darn about the narrative. It's not going to make you any money. Well, that's why you need to go and you need to see and you need to talk to the people who really matter like you're doing. Has your outlook in any way, Jim, changed regarding any of the hyperscalers based on the events of this past weekend and what you're hearing from folks there? All right. So it's great. It's a great question because on Sunday, all right, I'm coming from the game, you know, the Eagles game. Sorry, I know because of Washington. And I just said, oh, my God. I mean, what am I going to do? I mean, it's going to be so bad.

34:51The 10-year, oh, my God, the 10-year and a little 106. And, like, you know, where do I hang myself? And then I realized, wait a second, wait a second. Why don't I go out and talk to the people who are actually involved? Rather than just read about it, why not talk about it? So I'm not saying that it was manic-depressive or bipolar. Well, maybe a little bipolar. But what I realize is that there's so much money being made and so many purchases being made and so much opportunity that it's entirely possible that a sandbox is going to have to change. And George Kurtz will make a lot of money from CrowdStrike because of that, as will make cash.

35:24But, Scott, it's not stopping. And those who sold, you know what, we're going to look back at them and we're going to say, you know what, what were they thinking? We're not going to say how smart were they. They knew to get out of America live or wherever it is that there's going to be some sort of the stand by Stephen King. It's not going to happen. These are engineering issues, Scott. And those who sold NVIDIA down from 228 to 2, I don't know, let's take it to 205. Let's be really negative. I think they're going to look back and say, that was my opportunity. I forgot about NVIDIA doing all such so many great things with so many different companies.

36:01So, you know, I'm much more optimistic than I was than I was 48 hours ago. Scott, when I was also caught up in the gloom. Speaking of NVIDIA, you do have an exclusive with Jensen tonight, which we're all looking very much forward to. Can you give us an idea of what you hope to get out of that? Yeah, I mean, he's talking about the power of how much money people are making already, how much money companies are making when you buy his GPUs or when you go through his full stack or you go for insurance, because, of course, now with Hugging Face, he's completed a full suite. It's about how much money NVIDIA has made with the infrastructure it's created.

36:42And I asked him right before, I said, I spoke to a trust in states lawyer. I'm trying to figure it out. I'll make a little extra money for my kids before 2030. And he laughed and he understood that the problem has blown up from being one of guys filing, you know, posting things, which were a little Stephen King like, maybe even a little more dire, versus the reality, which is that these are serious engineering problems that can be addressed and can be fixed. As George Kurt said last night on CrowdStrike, so I know it's easy to say, you know what, it's all over, but I would rather be a buyer than a seller.

37:16Oh, you're right in the thick of it. I forgot. The 10-year. I made more money when the 10-year was at six than I sure make now. All the 90s. Jim, we're so glad you're out there, really, in the thick of where the conversation is its most acute. Again, Sarah Fryer you talked to today. You've got Jensen tonight. I wish you well on Mad Money. We look forward to that interview. Look at that. Mark Benioff of Salesforce. Thank you. Mark Benioff of Salesforce as well. So Jim's going to lead that conversation again on Mad Money. Don't miss that. Still ahead from right here at Future Proof Dynasty Financial, Cheryl Penny, AI making its big move into wealth management.

37:59We'll discuss next.

38:25We talked earlier today on Halftime about Anthropic making that big move into wealth management by introducing Claude for financial advisors. Dynasty Financial was a design partner with Anthropic, along with Josh Brown's Ritholtz Management, a handful of others as well. Cheryl Penny is founder and CEO of Dynasty, joins us here at Future Proof. It's good to have you. So if I'm sitting at home and I see this news and I'm the client and I'm thinking, well, what does this really mean to me? Yeah. What do you tell them? Well, good to be with you, Scott. But first of all, what it's not, and I was listening to the last segment with Jim and Sarah Fryer, and Sarah's a great friend of mine.

38:58We're not here talking about AGI or ASI or the sprint towards singularity. We're really focused on a very narrow usage of AI, which I think is a massive game changer to wealth management, in particular to financial advisors. Scott, as you know, because I know you're friendly with a lot of financial advisors, most did not get into the industry to spend 80 percent of their work week on middle and back office items. They got into the business because they wanted to be with the end client advising people and being able to grow their business and help more people. So the integration of the technology that we're driving is going to allow advisors to have much more capacity to help more people.

39:39And I think what's sometimes lost in the technology focus is we're at a moment in time. When I started Dynasty 16 years ago, Scott, there were only 600 ,000 advisors then. Today, there's less than 300 ,000. So you've had significant wealth creation. You have fewer advisors to be able to advise those individuals. So technology now has to step up to help the advisors be able to serve more people. And to me, fundamentally, this innovation, the Dynasty AI operating system and partnership with Anthropic is really about empowering the advisor, not replacing the advisor, empowering the advisors to ultimately be able to help more people.

40:20Is it too cynical of a view to say, I hear you, but are we trending in a direction where if I'm the client, I am ultimately going to be asking a chat bot for advice about my portfolio or positioning rather than a human being? Well, first of all, I would say the market's always right, meaning the client is going to dictate what he or she wants at the end of the day. And I do not think for the foreseeable future that what the market wants, and I do hundreds of meetings a year with the advisors. We have 750 advisors that we work with at Dynasty, almost 150 billion of client assets on advisory. So I'm out with clients all the time.

40:59They want to meet with other individuals. There are a lot of important points in your life where you want to talk to someone who has empathy and understanding of what it is that you're dealing with. A bot isn't going to tell me as an entrepreneur, having founded my own company, that it's time for me to sell the business. Or if I'm dealing with a sick loved one or I'm going through a divorce or whatever it might be, that advice, I think, for the foreseeable future is going to come from an individual. But once the advice has been given, the middle and back office, the execution, the implementation, more and more of that, Scott, is going to be done by robots and by digital capability.

41:41Feels like the earth is moving in this space. Yeah. And not just because of the Anthropic announcement, obviously. Vanguard, Altruist, things like that. I mean, how would you describe what you're seeing on the front lines of wealth management? It seems to be a tremendous moment in time around alignment. And I think you see different organizations that have similar values, similar worldviews are starting to align. One of the things I think is so powerful about what we're announcing this week in partnership with Anthropic is you have the biggest players in the industry that are coming in line and lining up alongside of us.

42:18You have the largest asset managers in the world with BlackRock, the largest custodian in the RIA space with Charles Schwab. some of the biggest players in alternative investments like iCapital, the biggest platform company in the space dynasty, all coming together in partnership with Anthropic and saying, if and when we get this right, we build this integrated layer of intelligence on top of the tools that advisors already have, it's going to make them massively more efficient. They're going to run more profitable businesses. But again, I come back to most importantly, they're going to be able to help more people.

42:53Cheryl, it's good to spend time with you. Thanks for being here. Thank you. It's Dynasties. Cheryl Penny here at Future Proof. Up next, Meta rolling out a new subscription service today. We'll have that and much more inside the Market Zone next.

43:11All right. We're now in the Closing Bell Market Zone. Mike Santoli and Nuveen's Sarah Malek are here to break down these crucial moments of the trading day. Oliver Rennick standing by live from the SIBO global markets in Chicago. Julia Boorstin is watching Meta as it rolls out a new subscription service. Michael, we'll begin with you as we await the Fed and we stare at a 5 percent 10 year. Yeah, you can actually see the suspense building across the markets as we wait for the Fed, maybe wait to see if if this run in oil has any quit in it. And we are at those levels, you know, that seem to be these pivot points, right?

43:46Five percent treasury yields. Feels like The S &P 500 is spending a little too much time at the lower end of its range here for comfort, still trying to make that bet that it can rotate its way to stay afloat and administer the damage to the parts of the market that are really hurt by rates like consumer cyclicals and all the rest of it. It's been working so far, but it feels a little bit fatigued. We'll see if tomorrow gives a spark or any sense of resolution as to what comes next in terms of follow-on Fed moves or maybe see if it brings a bid into the long end of the Treasury curve. Sounds like you're setting the table pretty well for what's going to happen in overtime tonight, yeah?

44:26For sure, yeah. We're going to hit it on the stock and bond and oil side. We have Savita Subramanian from B of A as well as Paul Sankey talk about oil, and we'll hit it all. Yeah, interesting. I mean, Savita said one of the lower targets among the strategists on the street. So I look forward to that conversation very much. That's Mike Santoli. You'll see him again coming up in just a few in overtime with Melissa Lee. Let's go to Chicago. Oliver Rennick is watching the options market. What do you see? Hey, Scott, today's biggest trade in the VIX was very bizarre. Somebody bought more than five million dollars of one 10 strike puts in October and one million of the one 30 strike puts in November.

45:07On the surface, it's a trade that makes close to no sense. But I asked around, and the prevailing thesis is that this person is likely either long calls of the same strike, but more likely long futures in an effort to capitalize on what is about a 50 cent wide spread between VIX options and futures in October. If it sounds complicated, that's because it kind of is. But the bottom line is it looks like right now market makers across asset classes might be having some disagreements on how to price volatility ahead of likely higher interest rates tomorrow, which, remember, all else held equal generally make puts cheaper, calls more expensive, Scott.

45:48All right. Nice check of the options market. Oliver, thank you very much for that. Let's go to Julia Borstin now with more on Meta. What do you see? Well, Scott, Meta is launching a suite of AI-powered subscription services for consumers and for businesses as it works to monetize its massive AI infrastructure investments. Now, offerings start with a$2.99 a month premium WhatsApp subscription, and they go up to higher-end offerings for Meta's big push into the enterprise, with a$15 a month subscription that gives access to a Meta business agent, while the highest-end offering starts at $499 a month, which gives Meta's business agents to teams at scale.

46:26Now, Meta's enterprise offerings now put it in OpenAI and Anthropics Arena of selling powerful agentic tools, which means it also opens up Meta to some of the same risks that those two companies have been discussing of AI agents going rogue or being manipulated. No word yet from Meta about how it plans to ramp up its AI trust and safety efforts in that department after layoffs in the past year. Scott? Julia, thanks so much. Julia Boorstin on Meta. Sarah Malik sitting next to me here at Future Proof Huntington Beach, California. It's good to have you on. Good to see you. At this point, are we just like, all right, let's just get tomorrow over with already?

47:03Just tell us what's going to happen. Well, the markets are going to remain on fragile footing for three reasons. One is tomorrow's FOMC meeting. Second is higher oil prices that are causing this increase in treasury yields. And third is questions over AI investment. I think the main driver for markets is going to be these higher yields because they're a headwind not only for long duration tech stocks, but they're a headwind for equities. For tomorrow's FOMC meeting, we'll see what happens. My view is that we get a hike and the real question is going to be, is this the beginning of an elongated hiking cycle or one and done for the Fed?

47:34Does that make a difference on how you see the stock market reacting? Let's just go on both scenarios. First off, if it's one and done, what do stocks do? That's probably the best scenario. I think if the Fed hikes, it's actually increased credibility for the Fed. And the market actually at this point is going to like the hike. They may not want to hear, though, that a lot more hikes are baked in. If the Fed doesn't hike, I think we're going to become more worried because we know that oil prices are spiking. We don't see an end in sight for that. And yields are going up so fast at this point that a hike might actually be a relief.

48:04But we probably don't want to hear that we're going to get multiple hikes at this point. We want to hear that the Fed will stay data dependent. You feel like the upside in the stock market is capped in some respects in the near term? I think it is capped in the near term because of these issues like the Fed, higher oil prices. So we need some kind of a catalyst to help lower either oil prices or yields. And finally, the AI trade. There are questions right now. How are we going to price in a little bit potentially lower investment for these AI companies? My view is that demand is going to stay strong for AI.

48:35We already had some data center bottlenecks. So all of that together means that we may in the end not have that much incrementally less growth for these AI companies. I have the catalyst for you, though. earnings. The problem is, is that we don't get to hear about earnings until October. Yeah. We're just in the midst of still the middle of September. All we have to rely on right now are some conferences, the Goldman Sachs Communicopia Conference, their consumer conference. We're going to hear a little bit more about the consumer. My view is the consumer continues to trade down. It's why we like companies like Ross Stores.

49:06But you're right. We don't have that earnings catalyst to help the markets. We just have some negative headwinds. That's why there is likely a lid on the upside for now. What's your favorite sector right now, given everything that you said, now this intense spotlight on AI and tech, long duration assets because of yields? What do you think? So my favorite from a portfolio allocation point of view is global equities, because it keeps your foot in the tech trade, but you're not so concentrated into it. And you can benefit from some of the other regions of the world. In a higher inflation environment, if the economy can stay strong, and we did see a rebound in payroll numbers, I'm looking more at industrials, material stocks, some of those areas eventually, which may get even more relief if oil prices roll over.

49:46As I mentioned on the consumer, I think consumer can still work. But consumer in these types of scenarios tends to trade down. So a company like Ross Stores that has strong comps and consumer that still wants to spend on discounted branded retail, Ross Stores is in the sweet spot. Sarah, we'll leave it there. Thanks for being with us here. Thank you. Nice to see you. That's Sarah Malek as we count down to the closing bell. It's going to ring in about 30 seconds. We will be in the red today. All that focus on the 10-year note yield, though, hitting 5 percent. It's the highest level since 2007. All of it in play tomorrow with that Fed decision.

50:22We will be live in Los Angeles tomorrow for both halftime report and closing bell. Of course, Jeffrey Gundlach will still join us following the Fed Chair's news conference. I'll see you then into overtime.

50:40Hi, I'm Roman Mars, host of 99 % Invisible. It's a podcast about all the thought that goes into things most people don't even think about. You're going to see stories everywhere. Follow and listen to 99 % Invisible wherever you get your podcasts.