Closing Bell Overtime 10/5/26

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1:08I'm Melissa Lee, along with Mike Santoli. Stocks higher across the board with tech once again, seeing the biggest gains, the Dow up less than 100 points, S &P 500 two-thirds of a percent, NASDAQ Composite gaining one percent or so. Big tech especially leading the way. NVIDIA hitting a new record high on That's climbed to within a few percent of$6 trillion market cap. Meta and Microsoft gaining as well. Only Apple was really left out of the party among the Mag 7, but it often trades counter to that group. It comes as bond yields are continuing to rise. The 10-year touching another 24-year high, around 5.35 percent over the course of the session.

1:43And we've got some big moves internationally. Brazil soaring on election news, but the ETF tracking France continues to slide down more than 10 percent in the past two months as its debt problems worsen. much more on these stories. But now let's get the first take on today's close. And obviously, the stickiness of 5.3 percent and the ability of tech to remain the defensive area of the markets continue to play out. It's pretty remarkable and emphatic in that way. You know, sometimes I always say in markets, a blister can turn into a callous. Right. So the higher rates, you know, kind of irritates us first and then you build up a bit of a resistance to it.

2:17I'm not sure that's what's going on. I think it's more, as you say, the brute force of expected tech earnings and the enthusiasm for the AI theme is overcoming that. The New York Stock Exchange, you had like 1 ,300 stocks up, 1 ,300 down. It's another one of these days. I do think that some of the concerns and macro concerns coming into the week, like France, like even U.S. high yield spreads, they calmed down at least for a day. So it was kind of like, okay, we don't have to worry about that on top of everything else for today. But I will be interested to see how this proceeds from here. These sort of first Monday of the quarter business, I don't know if that was just an extra push because everyone's expecting a strong fourth quarter for stocks.

2:54I mean, you said for a day, because it looks like what's going on in France is not going to abate anytime soon. And the other piece of the picture today is the dollar index hitting highs that we have not seen since April of 2025. And obviously that has an impact on rates here. So the stickiness of 5.3 percent, you know, we saw this in spite of crude trading lower today. But it's that pull of the global bond yield, the macro picture, that's really having an impact. Definitely. And it is financial condition tightening by a different name when you see the dollar go up like that. So, yep, still some tests to be passed.

3:25But today, the market managed to march a little closer to those old highs. Let's get more on today's biggest movers with Seema Modi. Seema. Hey, Mike, let's talk about chips. Semiconductors flattening out after five weeks of gains. But there were bright spots. Cerebris up 9 percent after OpenAI CEO Sam Altman reassured investors of the company's partnership with the semiconductor firm. But Intel lagging after Elon Musk posted that TerraFab is in discussions with Taiwan's semiconductor on a chip fabrication plant, a potential disappointment for Intel that has been working on its own chip manufacturing process in Arizona.

3:58It comes ahead of Marvell's investor date, which kicks off tomorrow. That stock, by the way, has more than tripled so far this year. Western Digital Seagate recouping some of Friday's losses tied to a report that claimed Toshiba was planning to expand its capacity in the storage market. We saw Western Dij up 6 percent. Today's leading sectors, though, materials and energy notable given oil's underperformance. We saw also in real estate Lennar shares decline following broader discussions on interest rates. And that short seller Hunter Book report raising some unconfirmed concerns. A few days ago, we're looking at Lennar ending the day down nearly 7 percent.

4:34Melissa and Michael. Oh, Seema, thank you. Treasury yields still hovering near multi-decade highs. But stocks have been pushing higher with the Nasdaq at a record in the S &P 500, just shy of its own former peak. So are rates a real headwind for equities? Joining us now is Roosevelt Bowman, Bernstein Wealth, Private Wealth Management, Senior Investment Strategist, and British Karana, Fixed Income Portfolio Manager at Wellington. Welcome to you both. So, Roosevelt, I mean, by one way of looking at it, you know, we're doing all this in stocks despite what's happening in yields. by another angle, you know, I guess it just creates more flows into the parts of the market that drive the index, which don't really have much to do with rates.

5:14So how would you play it from here? I think the way we're playing is really understanding what's driving yields higher. A number of market participants have looked at that it says just a fiscal story. And it's really, in our eyes, a multivariable story. It's one of the main drivers is really that U.S. economic growth has just outperformed consensus expectations repeatedly throughout this year. There's no doubt the fiscal angle is a part of this, but growth is really the key driver and why you can sort of sustain some of those gains in parts of the index that are not as sensitive to rates. Do you see 5.3 percent as sort of the line in the sand?

5:48I mean, do you think that, to Roosevelt's point, you know, the economy is doing well, and so therefore rates are going higher, but we also have the global pull of bond yields around the world and what's happening there. And those are sort of idiosyncratic stories when it comes to France, when it comes to Europe, et cetera. So where do you see yields going? Yeah, I mean, I agree that the main driver of yields has been growth thus far. And I think we're getting to levels on bond yields that the risk reward looks very attractive. So let's take a 5.3 percent treasury. So imagine if yields sell off 100 basis points from here.

6:18If your time horizon is long enough, you lose about 2 percent over the next year. And yet if bond yields rally 100 basis points, you make close to 13 percent. So that risk reward is starting to look quite attractive. Yes, growth is strong. But I do think, you know, we could start to be at a point where if yields move higher from here, financial conditions are going to tighten. We are starting to see that in the high yield markets. If you look at the junkiest of the junk debt, triple C debt, yields have moved from 10 percent to start the year to 14 percent. So the market is starting to differentiate at these high level of yields.

6:49And, Roosevelt, we've seen segments of the market that are exposed to higher yields, higher oil really underperformed profoundly. I think coming into this month, there's been this bull case that said, well, tech is still tech. And that's where the earnings growth is. And that's where the kind of A.I. excitement is. And also the rest of the market maybe is even washed out or, you know, oversold, if nothing else. So within it, how would you orient your portfolio? For sure. I mean, I think one area that we find to be really attractive is health care and less about the macro story of any potential slowing and more just really, really attractive valuations because it's been a sector that's been ignored with all of the kind of fervor around the AI trade and anything attached to it.

7:29And we don't think that's completely separated from AI. There's certainly medical innovation. A lot of drug discovery has been the main focus. But even using some of that AI to help and improve the efficiency of some of the findings, improving patient and caregiver information flow, that's also helpful in health care and just a cheaper way of getting access to some of that innovation without paying kind of some of the eye-watering prices that you're seeing in other sectors. But, Roosevelt, in terms of, you know, just a broader view on one's portfolio, I mean, Bridge lays out a pretty compelling case for investing in, say, a 10-year yield.

8:05So at this point, you know, when you take a look at some of the sectors that have really been pressured by higher interest rates, do you say, you know what, maybe it is time to flip over to bonds? You know, I think our argument would be to maintain that allocation, not necessarily to move out of equities, but just to say that, hey, duration does look more attractive here than it did before, especially in kind of high quality bonds and municipals, and that the balance of risks, especially when you look at headline inflation, probably going to outpace wage growth over the next couple of quarters, then that's an attractive setup where you could see consumption coming a little bit lower, yields come down, and a benefit to bonds.

8:40And, Bridge, there was a little bit of an exhale when we got the somewhat softer than expected jobs number on Friday. And we're starting to reduce the odds for an October Fed rate hike. What are you thinking of this as? Is it a tightening cycle? Is it just kind of a we did one hike as a gesture just to say we're on the case and now we're in wait and see mode? So I don't think they're going to hike in October. We had weak PC data, weak jobs data as well. So I think that takes off October. I do think this is a hiking cycle, and that's what's priced into the bond market. You have close to 85 to 100 basis points hiked more.

9:13And I think the reason is, as Kevin Walsh was saying, the medium-term outlook for inflation has deteriorated from a few months ago. Growth is really strong, and inflation because of commodity prices is also a little bit more sticky. That being said, I do think that the labor market is probably not as strong as the Fed thinks. If you look at private payroll growth, it's only at about a half percent year-over-year growth. So we have weak labor supply, but we also have weak labor demand keeping the unemployment rate low. But that's not a lot of nominal income moving into the economy. And so I would argue that policy rates is probably not the best way to get inflation under control.

9:48There's other things the Fed can do to do that. In terms of things that could push yields higher or maybe put a cap on yields, how do you view the midterms and that a divided Congress obviously could be better for fiscal responsibility? And so therefore, is that a factor in your outlook? I think it is. I mean, if you look at 2018, 2022, divided government was an important catalyst for the bond market because the market's very quick to price in and say we're not going to have the same amount of fiscal spending that we've historically had. And so I do think that it really matters. You know, we'll see, especially given dysfunction in Washington, I think there's going to be very difficult to get similar fiscal packages passed.

10:25And also a lot of the fiscal stimulus was front loaded to the beginning of the year. So, you know, the one big, beautiful bill spending is actually going to move into contraction in 27 and 28. So one of the other things that have kept bond yields high, that's going the other way now. Roosevelt, you mentioned health care as an area that maybe is obviously less expensive than some. But, you know, valuations have really come down even among the AI hardware type food chain stocks. And, you know, semis aren't where they were back when Mag7 even looks less expensive. Is that just the market's way of saying, you know, earnings growth is going to decelerate or do you think the value is being surfaced there?

11:01You know, our view is that it is investors having a more discerning eye on some of that, the MAG7 names and kind of what's the actual return on investment of all of this kind of data center build out. I think that's where we've more shifted to some of those end users that are benefiting from the models, in some cases becoming better, and in other cases, quite frankly, becoming cheaper. And so you think about some of the consumer stocks or credit card companies that are using AI models effectively to improve the efficiency of their transactions, to improve their cybersecurity. You know, that's just one area that we see as attractive.

11:32And sometimes it's just moving away from the AI theme altogether, looking at some of the brokerages that are taking advantage of the fact that retail trading is twice what it was about 10, 15 years ago. As long as there's volatility in transactions, that's great for our clients and owning those stocks. And so that's also another way, I think, of finding value in this market that's away from what's the return on investment on the data center. But in terms of companies that are using AI and reaping those returns, is that an investment theme or is it still way too early for that? Oh, I do think to that point, Melissa, absolutely is definitely an investment theme, even with some of the adoption.

12:07I think to the point that you're alluding to, adoption is slower than maybe what the headlines are suggesting. But some of those companies that have effective uses for AI are doing well and outperforming their competitors. So we don't think it's too early. We want to exploit those themes across different sectors, for sure. And then finally, on the AI build out to the extent that it's now, you know, companies borrowing heavily to do it. Is that a concern? Is that still OK? Is the market able to digest as much as that as they'll give? I mean, I think you are starting to see the bond market push back on the size of issuance that we are seeing.

12:41I mean, we expect$2.3 trillion of investment grade debt this year. And I also think the level of yields is making credit less attractive in the sense that if you can earn 5.3 percent on a 10-year treasury, you know, you really need to spend yet another 70 basis points or so to invest in investment grade credit? Why take credit risk when yields are already so high on treasuries? And so I do think there is that crowding out effect of credit markets. Once again, it's very early. We're just seeing high yield spreads move above 300 basis points for the first time in months. But it is starting to be the case that higher yields are tightening financial conditions.

13:16Thanks to you both. Really appreciate it. Roosevelt, Rich, good to talk to you. Thank you. SpaceX shares getting back to a key level they haven't seen in a while. Thanks to a positive note from an influential analyst. Plus, executives of the new Paramount Skydance Warner Brothers company are starting with a hole they need to dig out of. And we'll explain next.

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14:14Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No 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. This holiday, all plans, even unlimited, are just$15 a month. A holiday deal this good obviously deserves an enormously expensive holiday song, like all I want. Right. Okay, we can afford that.

14:48You know what? Forget the music budget. We're going to stick with whatever's in the public domain. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three months,$90 for six months, or$180 for a 12-month plan required. $15 per month equivalent. Taxes and fees extra. New customer offer for initial plan term only. Greater than 50 gigabytes may slow when network is busy. See terms. Want to go over to Chicago to show you Forever Human AI. Ringing the closing bell at SIBO, ending the regular trading day for options. Humans doing it. Forever Human AI. Yeah. Shares of SpaceX continuing to rise today up 15 percent in a week.

15:23The stock closing above its debut day closing level for the first time since July 2nd. Morgan Stanley's Adam Jonas saying today that the stock looks cheap and getting cheaper. He argues that those shares are expensive on any trailing metric. They look cheap on forward numbers. The company could also be getting a name change. In a post on X this week, Musk said no more A.I. S.I. It's better. And then followed up by saying he would change the name from SpaceX AI to SpaceX SI. By the way, those gains recently in SpaceX as well as Tesla have returned Elon Musk to trillionaire status in case you were worried about Elon Musk and his trillionaire status.

16:02There you go. Yeah, you want to go out the extra the extra place there on the zero. You know, I think it's called Space Exploration Company. So he has to change the name beyond just like the nickname of it. if he's going to do it. The Adam Jonas note was not just cheap on forward numbers, but but dividing by growth rate. So it's a sort of P.E. to growth or E.V. to EBIT to growth kind of, you know, I mean, to me, it's all like, look, it's a two point two trillion dollar market cap. It's still consuming capital, not throwing off cash flow. And it's a little bit of a tough thing for, I think, people to get their hands around analytically, even though we can talk all we want about how huge the opportunities are.

16:45Yeah. I mean, he's mentioned it in the context of other AI enablers and their enterprise value before interest in taxes, et cetera. If you take that on your basis, to your point. But again, it's like, how much do you stretch that? How far out do you go? And do you go out to all the promises that they make in the future? Exactly. Well, it's kind of like compared to Amazon, because it has such an enormous existing business, It's not going to have the growth rate that SpaceX, which has a relatively small business relative to its market cap. And also a lot of that was acquired and recently built. So, you know, it's obviously kind of semantics, but the market liked it today for sure.

17:25You know that about it. And also responsible for a huge chunk of the Nasdaq 100's gain, because remember, it is in the Nasdaq 100. Right. But not in the S &P 500. Well, the Paramount Skydance merger with Warner Brothers Discovery set to close tomorrow, more than two years after it was first announced. First order of business for the new company and its new executive team bounced back from what looks to be a huge box office bomb. Digger starring Tom Cruise. Julia Boorstin joins us now with more on this one. Hi, Julia. Hey, that's right. Warner Brothers Digger starring Tom Cruise bombed at the box office, grossing just eight million dollars domestically with a C plus cinema score.

18:00It is expected to lose around one hundred and fifty million dollars. Now, this big loss speaks to challenges ahead for the new Skydance as it incorporates Warner Brothers into Paramount. Now, the co-CEOs of Warner Brothers Studio will not be included in the new leadership team at Skydance. After the studio had a milestone box office and 11 Oscar wins last year, this year the studio's results have fallen off a cliff with the disappointing performance of Supergirl and The Bride. Now Skydance's new leadership team, which previously ran Paramount, which is in seventh place in terms of domestic box office share this year, has a big challenge.

18:38This team has to produce and release 30 films a year, which is part of CEO David Ellison's commitment to close the deal. As Ellison's new team works to tap into the value of intellectual property like DC Comics and Harry Potter, Ellison is partnering with a co-CEO, Enon Kreese, who previously ran Mattel and has experience with cost-cutting. Mike? It's remarkable. You mentioned Warner Brothers having had a great 2025. This year, it almost felt as if they pulled forward maybe some of the releases. And when it comes to Digger, I mean, obviously it's a previous regime greenlit these things, but it's the kind of movie that probably was a bit of a mismatch for a$150 million budget or something.

19:21Yeah, look, we've seen some of these big swings that the team that ran Warner Brothers made in the past really pay off. If you look at one battle after another dominated both the Oscars and also had box office success. Those big swings, sort of these auteur driven movies worked for them last year, but have not worked as well this year. And if you look at a movie like Supergirl, there's so much interest in this DC Comics franchise, how to make the most of it. So I think there's going to be a big focus from Ellison and his team to really try to turn DC Comics into a real growth engine for the company.

19:57And we'll see in terms of those budgets. I mean, Tom Cruise usually delivers, but not this time. Usually delivers when he's got like a gun and he's exposing muscles and doing some sort of super action kind of stuff. Not in this sort of role, but not aged up in an art. Exactly. Yeah. Maybe it's the prosthetics. It's the prosthetics. Julia, thanks. Julia Borson. Speaking of entertainment, shares of Sphere Entertainment, a big loser today, having its worst day in more than a year. Craig Hallam downgrading the stock, saying Wall Street estimates are overly bullish and saying demand for the Wizard of Oz show in Las Vegas is softening faster than expected.

20:35You made this very good point, as you always do, Mike, that Wizard of Oz is exactly the kind of show that you go to see in Las Vegas. I mean, simple as that. I think what I said was not really bachelor party fair, but maybe my view of what Vegas is about is a little bit out of date as well. But also maybe if they did Wizard of Oz set to Pink Floyd's Dark Side of the Moon, which, of course, is supposed to link up with it. I mean, not to give away these ideas, but. But you are. I mean, that's genius. See if we can get the right. That is genius. But it is, you know, the sphere, it's kind of interesting because it's not like you can diversify around a lot of different types of content.

21:07It's kind of like it has to be. This is what's running now. And we'll see. had a great run though, that stop. It's been a good year for the market, better for tech than the other averages, but on pace for its fourth straight up year, well, seasonal patterns help lift the averages even higher into year end. Over time, be right back.

21:28Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No 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. To realize the future America needs, we understand what's needed from us. To face each threat head on.

22:03We've earned our place in the fight for our nation's future. We are Marines. We were made for this. This holiday, all plans, even unlimited, are just$15 a month. A holiday deal this good obviously deserves an enormously expensive holiday song, like All I Want. Right. Okay, we can afford that. You know what? Forget the music budget. We're going to stick with whatever's in the public domain. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three months,$90 for six months, or$180 for 12-month plan required. $15 per month equivalent. Taxes and fees extra. New customer offer for initial plan term only.

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22:44two corporate deals to tell you about ch robinson buying rxo for 5.8 billion dollars the deal adds to ch robinson scale and third-party logistics and diversifies its customer base the other big deal coming in software ptc rising 33 percent as francis schneider electric for 205 dollars a share or 22.6 billion dollars key banks saying the transaction makes strategic sense and is a good outcome for PTC shareholders. All right. Well, we keep hearing, of course, from Wall Street that the fourth quarter tends to be one of the strongest periods for stocks. And it even is true in a midterm election year.

23:19So it's always good to compare. This is this year's Dow Jones Industrial Average path that is taken in blue right here. And the orange is Ned Davis Research, what they call the cycle composite. So it blends together the annual seasonal patterns, the presidential election cycle patterns and the decade pattern. Believe it or not, there's a 10-year pattern. So years ending in six, goes back 125 years, boils it all down. Years only ending in six. Well, no, that's right. Years ending in six. So that's one of the cycles. So it's the decade, it's the presidential, it's the annual. It blends it all together.

23:50So if it was a perfectly typical year, this is what the Dow Jones Industrial Average would look like over the course of the year. Now, look at the difference in scales. It's only up 5 % in absolute price terms. We're up, you know, obviously, you know, close to double that already. I want to just point out, though, look how much it diverged in the first part of the year. Events will overcome these patterns every time. If there's a big enough one, that clearly was the Iran war. So while it's encouraging that the kind of natural tendency of the market is to get a bit of a lift in the latter part, we didn't really have the overall weakness in the middle of a midterm election year that we often do.

24:23So it's not clear if we kind of paid for the fourth quarter rally the way we often will. This only goes back for this year. If we go back even more, then is there a better correlation? Each year it's going to kind of reload. So it's only really taking a snapshot of this year versus what would be the typical textbook year. All right. Fair enough. Time now for CNBC News Update with Mackenzie Cigalos. Mac. Hey there, Mel. The World Health Organization says the health risk to the general public appears to be low after a Russian lab worker at a plague research institute died from pneumonia of an unknown cause.

24:58Authorities in Siberia quarantined a hospital following the death and are monitoring the workers' contacts. President Trump said this afternoon the U.S. is ready to help Russia. Pennsylvania has now reported more than 1 ,000 measles cases, making it the largest measles outbreak in the U.S. in three decades. Officials say 200 people in the states have been hospitalized and five people have died from the highly contagious disease. And Italy's prime minister is following the lead of Taylor Swift, Matthew McConaughey and Jimmy Kimmel in seeking a trademark for her voice to protect against AI generated deepfakes.

25:32Her application includes a four second audio recording of herself saying, I am Georgia Maloney, which is the title of her autobiography. Maloney has previously warned of the danger of deepfakes and has urged online users to verify content before sharing it. Guys, back to you. All right. McKenzie, thank you. Coming up, Sam Altman says you have to take the bad to get the good with AI. And another big meeting of the top companies trying to figure out how to do all this safely. We'll talk to the former CIO for the White House about AI safety. Stay with us.

26:09Welcome back to Closing Bell Overtime, live from the Nasdaq market site. Stocks closing higher today. Just a small gain for the Dow S &P 500 up two-thirds of a percent. NASDAQ up one percent to a new record closing high. NVIDIA also hitting an all-time high. Chips were emotionally strong. Surreper's shares jumped on positive comments from Sam Altman, while Intel fell on comments from Elon Musk. One after-hours deal to tell you about, McKesson and a private equity firm, CD &R, are in talks by Option Care Health for more than$5 billion. According to reports, Option Care Health shares jumping more than 20 percent.

26:41That company provides infusion services such as IV fluids and medications. OpenAI CEO Sam Altman continuing to raise eyebrows over AI safety concerns in a new interview. Speaking with Politico's Decoded podcast, Altman saying, quote, We believe that the world should accept some bad things happening for the benefits of this technology and people having the agency. Altman adding, I think people will do tremendously orders of magnitude more good stuff than bad stuff when it comes to AI. That interview coming as executives from OpenAI, Anthropic, Google and Meta testify during a New York City council hearing on AI safety.

27:18Ashley Kapu joins us now for some perspective on where this hearing went and perhaps, you know, what the industry response was. Yes, thanks, Mike. I'm here outside City Hall where the hearing is stretching into its fifth hour. A couple highlights to call out for you so far. Jacob Coxon, the researcher from Anthropic, who resigned last month and ignited a fierce debate over AI safety, testified this morning calling out AI's risks and accusing AI companies of engaging in reckless behavior. Council Speaker Julie Menon then asked the questions in a fierce Q &A with these executives where she was really demanding concise answers, asking about liability, what happens if agents go rogue, and pressing for clear and concise answers from these folks.

28:07And what were some of those clear and concise answers? Was there anything that sounded fresh relative, perhaps, what the industry executive said at the White House last week? She was really looking for answers about who is liable if something goes wrong and what happens if these executives could quantify the risks of AI causing catastrophic harms. Now, a lot of these executives could not point to specific numbers. OpenAI's representative said, quote, I don't know, which prompted Menon to say that that was a flippant response. So it definitely drew some laughs and some scoffs from the attendees in the room.

28:44But she was really trying to get to the root of these issues and press these executives to deliver some clear answers here. What is the New York City Council hoping to get out of this, Ashley? Are there proposals on the table? Are there actually measures that they are weighing? or is this just for a matter of public awareness and accountability? Yes, at the start of the hearing today, Speaker Menon said she was really hoping to kickstart a conversation and to better understand AI's risks through this hearing. She also wanted these executives to weigh in on prospective legislation that the city council could enact and hopefully spark some other conversations in other jurisdictions and even at the federal level.

29:22But really, this is about learning more about these risks and igniting conversations and seeing where we go from here. All right. Ashley, thank you. Ashley Kapu outside of City Hall. Could the heightened scrutiny over AI labs actually result in tighter security? Joining us now is Teresa Payne. She's the CEO of cybersecurity firm Fortalice. She is also the former White House chief information officer. Great to have you, Teresa. Thanks. Thanks for having me on. You know, there was a lot of criticism over this notion of self-policing and where, you know, we promise we're going to abide by this. It's morally binding.

29:55But have we actually already started seeing this? I mean, OpenAI withholding its model for a while. I mean, are we are we seeing the frontier labs be more careful? They would rather do that maybe than than face regulation. Yeah, I mean, we have to be careful what we wish for with regulation because we may not like it when we get it. But one of the things that I think is encouraging, I'm seeing some little baby steps taken. Also, this testimony today is sworn testimony. So, you know, you've got sunlight and transparency. Even if we didn't get answers, not having an answer is an answer. And, Teresa, how are we to think about the nature of the threat and whether it's entirely new?

30:38You know, you hear about these kind of, you know, these agents or teams of agents going rogue, jailbreaking. you know, doing deceptive things relative to what they were instructed to do. But in practice, isn't it simply kind of unauthorized access to various other networks, which is something that, you know, we've had to deal with for a long time if you're a company or a government? You're bringing up a great point here. The way I look at this, though, what's different is we are seeing the hacks happen at machine speed, whereas before it was at hacker speed. So you had a person who maybe wrote programs, maybe had bots, but you still had to have orchestration by a human being.

31:18Now what you're seeing is you're seeing the programs actually spin up their own basically nefarious agents to solve a task. So that's where this gets different. We still have the same old problems we had, by the way, for security. We haven't fixed all of those. And now we've layered on something new, different, novel and working at machine speed. I'm not sure if you got a chance to take a look at what NVIDIA is offering in terms of its answer to this all. You know, one component of what they're offering is they'll find what's going on. And the other component is sort of like an AI agent jail where they will sequester those rogue agents.

31:59Is that realistic? Could that be the solution? It'll be one of many solutions. Just like our cybersecurity today involves having multi-factor authentication. It involves having alerts and monitoring for anomalous behaviors. There's going to be multiple things that have to be put into play here. But NVIDIA is on the right track. I love the idea of governance is built in, security by design, safety by design being built in and basically holding itself accountable. I'd love to see more come out of the other companies where they would say, you know, we're building for safety. We're building for security.

32:36We're building for resiliency. So I'd love to see more from them. Chances are we're going to have to take some of the regulation we already have on the books and start applying it. For example, if an employee at a keyboard hacked into another company from their company computer, the company and the employee would be hauled in for questioning, most likely, by the FBI. Just because a software program did it doesn't mean the laws on the books don't apply. So we've got a lot of discussions that we need to happen. And so I think this hearing in New York is a great start. How do you think about the existential threat discussions around these companies coming from inside of Anthropica and elsewhere?

33:18Do you feel like they're sincere? Are they hyperbolic? Are they somehow self-interested? And should we take them seriously? It could be a little bit of all of the above. But yes, we do need to take them seriously. When you have security researchers, you know, and what I believe they are seeing is if we don't put governance and guardrails on, if we don't see more attention to secure by design and safety by design principles, rolling these advanced models out without those governance and guardrails, without the safe and secure by design, you can't bolt in safety and security after the fact. It has to be built by design, governance and guardrails, make sure it's there.

33:57You know, think about our cars today. We don't add on seatbelts. We don't add on brakes. They're put on when it's designed in the factory. That's how we have to be thinking about the software engineering here. You mentioned vulnerabilities on top of vulnerabilities in terms of sort of, you know, we already had some vulnerable systems out there. And so this just sort of adds to the whole thing, magnifies the problem. Are there certain sectors or areas that you're most concerned about? I mean, in the context of what could go wrong, what are you as a cybersecurity expert most worried about? Incredibly worried about critical infrastructure.

34:34There's a lot of very smart, hardworking people thinking about energy, water, transportation, health care and banking. But those were under attack to begin with, was sort of the kind of the old school who knew it was going to feel quaint. and sort of the old school attacks that we had, I do know there are a lot of smart, hardworking people within those critical infrastructures who are thinking about as AI is used to attack them, how are we preparing to actually see it coming and basically be able to protect and defend ourselves? And so there's a lot of work going there. Just the question is, is like, who's going to go faster?

35:11Is it going to be the good guys using AI trying to battle the bad guys using AI? Yeah, that's absolutely the critical question. We'll be watching it. Teresa Payton, thanks so much for the time today. Thanks, Melissa and Mike, for having me on. All right. You're welcome. Brazil's market booming, having its best day in more than six years. Up next, Fast Money's Tim Seymour on what's behind today's surge, whether there are more gains ahead for that market. And here's a look at some S &P 500 stocks hitting 52-week lows today. Lululemon, Charter Communications, Lowe's, PepsiCo, and Rollins among them.

35:47Closing bell overtime live from the Nasdaq market site. We'll be right back.

35:54Citigroup is turning high on the hog. Harley-Davidson, that is, the firm upgrading the motorcycle maker to a buy from a neutral, increasing the price target to$33 from$31 on rising retail sales and improving dealer sentiment. Harley shares have had a pretty good ride this year, up more than 30 percent, that Wall Street is cautious in the stock, according to facts that just a quarter of analysts covering the company currently have a buy rating. A lot of this is predicated on a turnaround story and that the turnaround story hasn't yet been priced in. I mean, it does face other things like tariff pressures, et cetera.

36:25Tariff pressures, arguably demographic headwinds. But, you know, I think the argument on the bullish side is just that sentiment is washed out, as we said on the sell side, and earnings have been totally rebased. Even, you know, Citi raising its estimates for the earnings power of like, you know, between$2.50 and$3 a share. That's what they earned in 2019. So it's really just been this kind of go to the brink and come back from it. And on that basis, maybe the stock doesn't seem expensive. Well, another strong performer today, Brazilian assets after an upside surprise in the first round elections there for right wing candidate Senator Flavio Bolsonaro and his allies.

37:00The Brazil ETF, the EWZ, posting its best day since 2020. XP and Nubank, Two large Brazilian companies that also trade here in New York sharply higher. The Brazilian real strengthening versus the dollar as well. Joining us now is Tim Seymour, Seymour Asset Management CIO and a fast money trader. Tim. Great to be here. Exciting day for Brazil. The market was starting maybe to give some inklings that it saw the prospect of this coming, but obviously it wasn't all priced in. Prediction markets were pretty good on this one. And as you've noted, the real was starting to make a move. And if you think about Bolsonaro relative to Lula and you think about, frankly, emerging markets overall, currency moves are sometimes 50 percent of your overall move.

37:41And today, I mean, you know, a five percent move in a currency is extraordinary, even in a world where we've seen a lot of volatility. So, yeah, interesting, interesting times for Latin America as a whole. There's there's there's an EM argument here. There's certainly a Brazilian argument. And then if you're talking EM, the other half of this is what's been going on in Korea. So you kind of have like your barbell trade in emerging markets right now. In terms of the move, though, was this it? Because most of the time when this happens, that person wins the runoff. And so did we price everything in at this point?

38:13I don't think so. And I understand emerging markets and sometimes Brazil can really trade cheap, but it's trading nine times forward. There's an argument that Brazil could really re-rate here. And if you think about it often, where will that come? That will come from a sovereign credit rating. That will come from at least where interest rates come. We see the move in the currency. You know, Bolsonaro is all about austerity and DREG. And these are things that I think could take Brazil significantly higher. I don't think you have to go too much farther than the ETFs. But I think, you know, Banco, Itaú, Amlong, Petrobras, Amlong, and Idevo.

38:43So these are two core. We're overweight Brazil. I think you can stay overweight Brazil. And I think it's a time that Latin America as a whole, as we know, has been moving to the right. And I think that's part of what investors need to figure out. Still not a huge weighting in the MSCI, even the EM index. But I think there's more to go. The the celebration of the Argentina election and some of the maneuvers after that, it didn't exactly continue on in that direction. Right. No, I don't think it's fair to compare the economies. And I think the the the economy in Brazil is really an economy of consumption.

39:17There really is a middle class. There is a homebuilders. There's a banking industry. There's also an argument that that Argentina hasn't really been as tactical as they should have been when interest rates were lower. There's a lot of criticism that they didn't go into the market and do a sovereign issue. So, yeah, it's easy to say that this was a great day. I don't know that you have to feel like, boy, I need to jump into this trade tomorrow. But I think investors should be looking at Brazil. And again, I would just bring it back to Petrobras as a company. I've been investing in emerging for 30 years.

39:44Petrobras, even in election cycles that worked in your favor, wasn't necessarily what you wanted to invest behind. I think this is now a company that has got capital discipline, that is generating free cash flow, that is actually going to continue to re-rate at a time when we know what's going on with oil prices. You could do your numbers on Petrobras at 75 bucks a barrel, and this will be a 10 percent free cash flow yield. You mentioned the weighting in the MSCI emerging markets ETF Brazil, that is, and that being a small part. So what would you would you rather do a focus, you know, EWZ or do you want to go EEM and get the heavier weight of like a South Korea?

40:19I think investors, I think they should own a little bit of everything. And again, I think a lot of times if you think about the last six months, we've wanted the anti-AI trade. And that's why I kind of almost call it my barbell. I have my growth over here in Korea. I have my income and my value in Brazil. And I think that makes a lot of sense. But it's no longer strictly the case based on what you said before about how it's a consumption economy. It's obviously more developed. It's not really a one-fool in commodities play either. No, it's not. And I think you can make an argument in Brazil and you can make it across EM, as we've obviously seen in Korea.

40:55Some of those same exciting trends that you want in the rest of the world, that you want in the United States, are things that are going on in that part of the world. I mean, NewBank is a digital play in the banking world, which is a massive company. I'm also along that. I think it's a case where you are seeing some of those exciting trends. And deregulation will be a big deal. Tim, thank you. Thank you. All right. Well, GM has been all in on electric vehicles, but the automaker is now announcing a major shift in strategy. We've got the details straight ahead. Plus, why one Wall Street firm says prediction markets could be a win-win for DraftKings, which has been crushed over competition fears.

41:28Closing bell overtime live from the Nasdaq markets. I'll be right back.

41:38DraftKings, a big winner on Wall Street today. Bank of America upgrading the stock to buy from hold. The analyst there writing that prediction markets could be a greater opportunity than a threat to DraftKings, noting that DraftKings' own prediction market product is gaining momentum. Rising competition from prediction markets has hit DraftKings' stock hard in recent months. Despite today's gain, shares still down more than 40 percent this year. I guess the argument is kind of the damage is done, at least in terms of perception of its impact on the business. And even if prediction markets kind of go away or are curtailed, DraftKings is a better position than those that are right in there as prediction markets as their core business.

42:17Yeah, it was interesting within the note they said that a key test would have been World Cup FIFA and the betting there. And whether or not, you know, that peak in volume that we saw across predictions markets and sportsbook, whether or not that would really deteriorate sort of the base. But they found that people who bet on sportsbooks, they prefer sportsbooks. They stick with it. So there's a stickiness. There's a sort of casualness to the prediction markets better that's not there with the DraftKings core. Yeah, the other thing, long term, I just wonder if any of these sports betting operators has much of an edge besides marketing spend.

42:50But, you know, cheap enough stock, it can work. Top General Motors executive says the automaker is planning to introduce hybrids into its lineup amid lackluster electric vehicle demand. Phil LeBeau's got all the details here. Phil. You know, Melissa, this is a statement from the head of the propulsion division at General Motors to our colleagues at CNBC dot com, essentially saying, look, we know the market is moving towards hybrids. We'll get there when that remains to be seen. And by the way, they have hinted at this, talked about this for some time. So this is not a major policy shift in terms of EV or hybrids are coming because everybody's been saying for some time, OK, when are we going to see these hybrid market has been red hot.

43:30The latest data from J.D. Power shows that almost, almost 20 percent of the vehicles sold in the third quarter were EV or hybrids, EVs, about 7 percent of the market. And there you see the ice market share continues to erode here in the United States. Not dramatically, but it's eroding nonetheless. The hybrid leaders, it's long been Toyota. Hyundai has been ramping up its hybrid production, as has Honda. Ford has a sizable hybrid production unit in terms of vehicles that it sells. The bottom line is this. As you take a look at shares of General Motors, it will come out with hybrids or they say they will come out hybrids at some time.

44:08The speculation has been that maybe we'll see them by 2028. But at this point, they are not giving any specifics in terms of timing or the models that will become hybrids. And just for a point of reference, take a look at shares of Toyota versus General Motors in the last year. The reason I'm showing you this is that the strategy for Mary Barra and her team at General Motors, it has worked in terms of focusing on internal combustion engine vehicles, trucks, SUVs. That's been really where they've made their money. And because they've been making that money and returning so much to shareholders, shares of GM right now, even though they've sold off in the last month and a half or so, they are close to their all-time high.

44:50In terms of mix, though, have we seen, Phil, any impact of prolonged higher gas prices on what people want to buy? I mean, are we seeing an uptick in EV sales or, you know, a trade down to smaller, more fuel efficient cars? You definitely are seeing a trade down to smaller models. Full size SUVs are not as popular as midsize SUVs. There's one example of where people are saying, I don't need this big of a vehicle. I'll go with a little smaller vehicle. EV sales, the end of the federal tax credit means that things have changed a little bit. But you are starting to see a bit of an uptick. Not enough to say that there's people moving into that market dramatically, but a bit of an uptick there.

45:30And hybrids are hot. And look, that has played to Toyota's advantage. Nearly one out of every two vehicles sold by Toyota is a hybrid. Certain vehicles that are very popular, like the RAV4, you can only get as a hybrid. You can't buy an internal combustion engine vehicle. So that has helped the market shift more towards hybrids. And I think that trend continues for the foreseeable future. Yeah, it does make sense for a lot of folks. Phil, thank you very much. So we have, you know, this kind of dissonant day where we actually saw a lot of parts of the market do well, even though you had yields pushing to those new highs.

46:06Not going to get a ton of economic data this week that's going to change the story. We'll still hear from more Fed folks and all the rest of it. But for now, I almost wonder if people are kind of holding on, waiting for earnings season to start. It feels like it, though. Certainly, it feels like it. Yeah. We'll watch semiconductors, of course, 10 % off of all-time highs here. Yes. And the Max. And we're a weak spot today outside of NVIDIA, for sure. It's going to do it for overtime today. Fast Money starts right after this.

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