Closing Bell Overtime: Rising Yields Test the Market 9/25/26

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1:28up 1%, the Nasdaq Composite up 2%, and the Nasdaq 100 gaining more than 3%. Those Nasdaq indices closing just below record highs that they hit on Tuesday. Those gains in tech coming despite bond yields jumping. The 10-year gaining 20 basis points just this week, sitting near a 19-year high. And that was the TLT ETF. That has the TLT ETF that tracks bond prices falling to its lowest level ever, dating back to the fund's inception in 2002. So let's get the first word on the close now. And, you know, I don't know if you started the week and you said all the things that were going to happen, if you would have guessed that stocks were largely fine.

2:05Yeah. Stocks, as defined by the big cap indexes, largely fine. Absolutely. And the reason is there was just enough of a push behind one or another of the big AI themes to actually make it work. If you look at the, you know, I love this ETF, the Q top, right? So there's the biggest 30 stocks in the NASDAQ. It's probably, you know, represents about half the S &P 500. It was up almost 4 % this week, over 4%. That's a month to date. So month to date, it's up 4%. And you see the equal weighted S &P down almost 3 to 4%. So obviously that's the spread. So we have a very narrow market. It's keeping the S &P 500 kind of, it's able to hang around the basket a little bit.

2:47In terms of yields, I don't know if they've been absorbed or they're just being kind of the pressure is just being felt below the surface. I think that's really what's happening. Yeah. And in yields, it's interesting that today the conversation seems to be going to they will probably drift higher until something breaks. Yes. And I'm not sure what that means exactly in terms of like what the different scenarios are. But that's kind of frightening. We mentioned five point three percent. That's largely mentioned as sort of the next test level in the 10 year yield. We are close there, but we've come this far and everything's been OK at the surface.

3:20And if you're going to go down the list of things that might have broken, I mean, small caps have faltered. You do see the volatility within the Treasury market is really ramped. And that sometimes causes a little bit of hedge fund stress. We haven't necessarily seen that credit spreads. You know, they flared up a little bit, but not to a point where you'd have to worry. And I guess this enables people to say, well, rates are doing what they're doing because the economy has this momentum, the capex demand, all the rest of it. So until that's disproven, maybe we're OK. Also today, you can't ignore the fact that just these sort of tentative headlines about maybe you get some progress in Iran.

3:53And it's like, let's not get too negative, right, into a weekend when you could have, you know, an outbreak of peace in the world. Absolutely. So let's get more on today's market moves. Christina Parks and Neville is here with more. Hi, Christina. Hi, guys. Well, I want to start with Meta. The shares losing today, just closing shy of$2 trillion in terms of market cap. But the Muse AI agent lifted optimism this week. So Meta did see a gain of roughly 12 percent. We see down over 3 percent today. It's its fifth straight week up. That's over 30 percent just in the month of September alone. On the other hand, though, we have Microsoft.

4:25It's been an AI laggard, the second worst Mag 7 stock this year, outperforming only Tesla. But today, the stock actually popped almost 4 percent on hopes it beefed up. It's beefed up co-pilot will drive AI monetization. Other AI build out stocks gained today. Bloom Energy leading the S &P 500. It was down yesterday as Oracle raised concerns about a data center project in New Mexico. Akamai also higher after announcing a big deal with Anthropic. And then you had Credo Technology higher for the ninth straight day. Energy, the worst performing sector today as oil falls. Devon, APA among the losers there.

5:01But energy was not the worst performing group this week. That's utilities down roughly 4 percent on the week and 9 percent on the month. And since it's a Friday and maybe you guys relaxing watching CNBC bar trivia. Three years ago, there were three U.S. tech firms with an S &P 500 market cap of one trillion dollars. How many today? Silence. Ten. If you're wondering, the first entrance on that list was Apple back in 2018. Apple closing at an all time high actually today as well. I don't know what kind of bar you're going to. Well, I'm not right now, but soon. So much fun. And maybe in a week. Also, Lilly is one of the trillion.

5:37Oh, yeah, that's right. Maybe the one non-tech, along with Berkshire Hathaway. Christina, thanks. You guys knew the answer. You didn't yell it out. We'll see you, Christina. Bye. Christina mentioned energy stocks falling along with oil. Once again, the market's reacting to reports of progress and talks with Iran, maybe overreacting. Pippa Stevens has gotten more Pippa. Hey, Melissa, so oil is down 2 percent today and shedding 8 percent on the week after Iran asked the U.S. to return to the peace deal from the summer, with the foreign minister saying, the conditions Iran is asking the U.S. to meet are nothing new and the same as what was in the prior MOU.

6:08Now, CBS reported earlier that technical experts were being sent to New York for negotiations, citing Al Jazeera, which Iranian state media later said was false. Now, Iran did say they could open the strait within seven days, which is a divergence from the prior 60-day runway, which Kepler attributes to the financial pressure Tehran is feeling, prompting them to compress the possible timeline. The country's oil on water outside the blockade is down to about 15 million barrels, which at the current pace would clear as soon as early October. Meantime, Politico reporting just now that the White House is weighing alternatives to an outright ban on diesel exports, which could include passing it down to the state level.

6:46That comes after a number of industry organizations warned the White House it would raise prices rather than lower them. Diesel futures reversing earlier declines on that, although still down on the week after traders bought Arbop and sold diesel since a ban would have led to stock builds for distillates but cuts for gasoline. Guys? You know, Pippa, I know that a lot of analysts out there are trying to figure out what the impact of that diesel export ban would be. And it would be temporary, I think, is what most agree on. But the timing of it would be very important because it would coincide theoretically with harvest season, which could provide some relief in terms of the diesel users being farmers.

7:23That's right. And so when you look at kind of the thinking behind this and the idea that it would create immediate relief, but not a longer term relief, it is now the busy harvest season through the middle of the Midwest. And those are some of the places that are feeling the pinch of higher diesel most acutely. those are also some of the states you think about, Iowa, Nebraska, etc., that also have very competitive races here coming up ahead of the midterms. But I think one thing that's important to note is that we don't have a framework for what this would actually look like. There's also been reports that it could be something that's more of a quota or on a voluntary basis, and there's no precedent for that.

7:56So whether or not this would be able to be implemented immediately, that is also very much open for debate here. But it's certainly the case that we're going to see the ripple effects. When I was in Iowa this week speaking to farmers, they said that with diesel where it is right now, they're going to be deferring things like big, you know, equipment purchases or even smaller projects like even painting up their barn. They just are not going to have the same level of cash to do those types of projects. And so there is no flexibility to reduce diesel demand right now, given it is the harvest. And so that is certainly, you know, where where consumers in the country are feeling at the most right now.

8:29No doubt. Pippa, thank you. Well, the major average is finishing a volatile week in the green against a persistent climb in treasury yields. The market is now pricing in a 64 % chance of a rate hike in October, according to the CME FedWatch tool. So how should investors set up their portfolios moving forward? Joining us now is iCapital Chief Investment Officer Sharnali Basak and Vital Knowledge Founder Adam Kristofuli. Good to see you both. Happy Friday. So, Sharnali, we were talking earlier, the bond market seems to be sort of hunting for where the pain threshold is, whether it would hurt the economy or the stock market.

9:04Or maybe it's searching for that place where buyers of bonds are excited to come in. Are we close? Listen, I think when you look at the government bond market, people are still very, very afraid to catch a falling knife. Nobody really knows what that low is. And there's a very high correlation, as we know, to oil prices. And then when we look at the 10-year, what's remarkable about this to me is that when you look at the 150-day moving average of the 10-year, these are not such rapid moves historically. But they are pretty rapid moves when you compare it to the last three years. So I think that that rise and rates, you know, we were at 5.1 just earlier this week.

9:38We passed 5.2 again today. We have raised our range recently to as high as 5.3. We're talking about whether we have to raise it to 5.5. And what is the danger zone? What is the breaking point? The good news is that there's still a healthy growth backdrop against all of this. And we think as long as that lasts, we could be OK. But we can't ignore here that there's still a lot of levered players in the market that will feel that pinch if we get closer to 5.5. I mean, once upon a time not so long ago, a high bond yield signified a strong economy and good growth. I mean, you wanted yields to go higher along with stocks.

10:14This makes sense by historical standards. So why should we? Are you worrying about that pain threshold as long as we reach it sort of on a steady, slow pace as opposed to a spike higher? So, yeah, I think there definitely are some positive reasons why yields have spiked, one of which is just we have a very robust economy right now. We saw that in the flash PMIs on Wednesday, which were scorching hot for September. But I think there are also more negative reasons that yields have been jumping, including elevated inflation, the spike in oil, fiscal imbalances, fiscal and sustainability. I think all those more negative attributes are contributing.

10:46And it's not so much the level as it is just the speed with which yields have surged. So it's too fast? I mean, yeah, I definitely think. And you kind of have seen that beneath the surface in the equity market. where the equal weight S &P, the Russell, which are more sensitive to yields than the capital capitalized S &P, has underperformed pretty notably in September. Yeah. And, Shanal, I mean, the correlations have flipped, right? So you had the 2010s and the 2000s where a rising bond yield, because the economy was gaining pace, was compatible with stocks doing better. Now, when inflation is kind of the main enemy of the bond market, it sort of has gone the other direction.

11:21You mentioned also the correlation with oil. So are we now just sort of locked into these tracks where it's just a mechanized trade, self-reinforcing in this way? Something we're talking about a lot at the desk is that we're looking at a situation where now you're looking at oil prices elevated, kind of at a rate here that was worse than 2022. And so the longer this goes on, the worse it is, especially for areas like diesel. You've been talking about it and that spillover effect into the real economy. Now, we expect two more rate hikes this year. But what happens is, and I don't think enough people are talking about that tail risk of demand destruction that we might see into the tail end of this year, given such a K-shaped economy headed into the midterms with no more fiscal space to spend.

12:03And that diesel cost, I mean, you know, Torsen Slok over at Apollo is making the argument that diesel, because of where it's used, is going to pass into the core. So we are going to see that it's not just going into the energy line. So it's not ex-food and energy. It will go into the core and we will see it there. And Kevin Warsh is going to have an even bigger problem. Definitely. And I think you heard that from all the South Side conferences throughout September. Management teams across the board talked about how they have seen an incremental, they have seen increased inflationary pressures, and they plan on either passing it through to customers or cutting costs.

12:33You know, they're not just going to sit idly and absorb that into margin. You know, you mentioned the kind of damage below the surface, Adam, in terms of the equal weight and the majority of cyclical sectors are struggling. There's a way of viewing that as hyper rational. Right. This is the market that's saying we're going to have a targeted impact here of what's happening with yields and oil. They've discounted maybe some tougher times, which also leaves room for attention release at some point if you get a little bit of help on oil and rates. No, definitely. I mean, and I think that's one of the reasons why the market is held in well.

13:05It's that if you were to see a tweet come out and, you know, we agree to return to the June MOU, oil prices would slump and that would have a cascading effect. And you'd see just positive fallout everywhere. where yields will go down, inflation expectations will go down, Fed wouldn't have to be as hawkish, consumer sentiment would increase. And, you know, I think that that's the assumption that at some point, potentially soon, you know, the White House will decide that it's worth returning to the June MOU rather than continuing in the status quo. So if we have that release, Shanali, then does that money go into these sectors that have been rationally hit because they are targeted and they will feel the most impact, or will it lift everything?

13:42One of the more interesting things we've seen investors doing recently is flocking back into the Dow Jones Industrial Average. It's been a while since we've said that, but it just shows you how much people are looking for safety in this market. And when we think about that, there's two things about safety that are interesting, is that fixed income is relatively safer in the capital structure than equities. With higher yields, especially base rates, you definitely see a lot of people making that calculation. Does it make sense for me to save right now or does it make sense for me to add more equity exposure?

14:14And if I'm going to take more risk in investing markets, then do I do that through fixed income? And shocker of the years, private credit is becoming a conversation again because of the floating rate asset class quality of it. If you're invested in a large hyperscaler, the question now is, do I get in at eight, nine, even almost 10 percent? We saw SoftBank go at this this week or do I get into the equities and people are making that fixed income trade off? Shanali and Adam, thank you. Have a great weekend. You too. In a week where Meta dominated the headlines, Microsoft took the spotlight today, the stock ending the day higher by almost 4 % after announcing a revamped co-pilot AI agent that can do more than answer questions.

14:54A new version will bring together chat, work, and coding, and integrate into some of the most popular programs like Outlook and Excel. Let's bring in Oppenheimer analyst Brian Schwartz. He raised his price target to 570 from 515 this week on strong Azure and M365 demand. Brian, great to have you with us. So you know what's behind the price target increase. How do you sort of look at this new co-pilot and factor that into your forecasts? Hi, Melissa. Great to see you again. Thank you for having me on your show. Today was very supportive in terms of achieving my price target. Microsoft is a topic for us.

15:32today's announcement from Microsoft was substantial. And, you know, I'm an enterprise software analyst. My stocks have been extremely volatile for two years as institutional investors are trying to figure out AI winners, AI losers, as we progress through the AI era. And today's announcement from Microsoft helps push them deeper into that AI win category. And two things changed with the announcement to the narrative for Microsoft. You know, the first is this transformation of Copilot. So today's announcement transforms Copilot from simply being a point product, a chatbot, to now being an AI operating system.

16:15And that's meaningful. When you're an operating system, when you're a platform provider, that leads to higher engagement, greater monetization opportunities, and stickiness, defensibility against competition. And in the second way, and this is from my conversations with investors all day today, they now see a clearer route for Microsoft to monetize on heavy AI use. So with the new functionality introductions of co-work, of co-development, of autopilot, And with usage-based pricing, you know, those are all going to be monetized and paid for through consumption, through credits, through tokens. So now with Copilot, you can now pay a subscription fee, a monthly fee, to handle your daily routine tasks where these more compute-generated tasks, which are those items, again, co -work, co-development, and autopilot.

17:19Microsoft is going to be able to generate additional consumption revenue, and that's going to go right towards driving more growth in revenue for the M365 business, the Azure business. And it supports our investment case of acceleration of this Microsoft business over the next few quarters. Brian, how high a hurdle, if any, does Microsoft face in terms of having consumers embrace their app for non-work type purposes? Well, Microsoft's approach is that they want to be multi-model. So be open to all the model providers, including Muse. This is a change. Two years ago, Microsoft was standardizing on OpenAI.

18:11for models. Now, they're open to using any sort of model. And this is what's happening on the back end. You don't see it, but this is what Copilot is doing. It's Microsoft is partnering with all these providers, including Muse, including other consumer, you know, popular model providers like OpenAI and Anthropic. And so that's going to be their strategy and their approach and how they'll be able to tackle the consumer market by partnering with these other AI model providers. I know, Brian, that you cover enterprise software, but I'm wondering, you know, you saw Meta Launch Muse. And in that time frame, since Meta Launch Muse, Meta stock is up some 30 plus, 40 percent or so.

19:00And this week was a very strong week as well. Are we going to look back on this day and think this was the day Microsoft's stock re-rated? Like, is something changed in the narrative here where we have that clear monetization story? Great question, Melissa. And you may be right. Time will tell. You know, we are saying investors are focusing on that Azure business, the growth of that, as well as the M365. Those are the two biggest businesses for Microsoft. So the Azure business is growing in the low 40s, and it's guided to accelerate to the mid 40s here this quarter. If you see that business continue to accelerate closer to a 50 % growth rate at a$100 billion plus scale, that is going to drive a re-rating for Microsoft stock.

19:56And we will see that co-pilot will be one of the biggest drivers for that acceleration of that Azure business with this new functionality and capabilities that they announced today. Brian, great speaking with you. Thanks. Great seeing you again. Thank you. Brian Schwartz. The market's still trying to process the impact from Meta's Muse agents. Up next, two stocks, one dropped, the other rose. but analysts saying those moves may have been overdone. We'll explain next on Overtime. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture.

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21:16Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. There are three kinds of investors that listen to this show. Those protecting what they've got, those looking for solid returns, and those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, safety, timing. You decide what matters most.

21:57Stop overthinking what to buy and sell. Go to VectorVest.com slash closing bell. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. Let's highlight a couple stocks bucking their recent trend after analyst notes claiming the impact of Meadows Muse has been overstated by the street. Planet Fitness posting some gains today and snapping an eight-day losing streak. Shares getting a boost after JPM said the Muse-driven sell-off was overdone. Analysts pointing out that unlike most gyms, Planet has already begun offering click to cancel, so its churn level should be less impacted.

22:34We'll also say Muse's cancellation technology is not as autonomous as the market is assuming. Coming into today, shares have been on pace for their worst month since 2023. We're touching levels last seen in the depths of the COVID pandemic, the analyst saying, this author has been using news for quite some time and experimented with this. You still have to log in to the app or to the website. And so it's not as... To like the vendor's app. Yeah, I didn't realize that myself. I mean, I guess it makes sense. You have to have the credentials somehow. Right. But it was fascinating how the market just assumed, because it really is in some way the market's version of how much do this company's customers really love paying them for whatever they're getting?

23:14And if the answer is not very much or maybe they forgot they're still paying, then they're vulnerable. There was also a nugget in that note that more than 40 percent of Planet Fitness members don't show up in a given 30-day period to the gym. Right. So, you know, it's one of those things where a lot of people are loosely attached. But then again, the cost is so low per month that why not? They're probably like, oh, I might go back next month. Exactly. So I'll just keep going. Yeah. And the stock looks super cheap relative to how it's traded in the past. So we'll see if it matters here. Let's turn to another stock caught in the Muse market moves.

23:46Twilio is under pressure, as HSBC says the perceived benefits of widening Muse adoption are less positive than investors think. Analysts there writing, even in their bull case scenario, a tenfold increase in daily Muse users, Twilio adds less than 1 % to its full year revenue. Analysts also noting Meta's technology likely outboxes Twilio's ability to capture the highest value share of each Muse interaction. from downgrading Twilio stock to reduce on valuation worries after the Muse-induced run-up. So this is, you know, Twilio is kind of messaging software, right? So it's a lot of communication software.

24:21So it could be customer service, could be voice, you know, that kind of thing. And I guess the notion was Muse is going to be just swamping these communication channels with volume. And I guess maybe you can't really capture it that profitably. I mean, the assumptions were not just a 10-time scale, But 10 times scale up and assuming 30 percent of those users are using Muse exclusively, it still will only do like 0.2, 0.3 percent. I mean, it was something so nominal that it was shocking. So the analyst was very clear, you know, the markets are factoring in too much that we just don't know about.

24:55I mean, that's the bottom line. And I guess that's the thread for the whole AI trade in terms of trying to determine the winners. I mean, even when the market is kind of getting to an efficient place, it just sort of overshoots wildly on the way. And I think that's the argument here. Well, the high stakes U.S.-China summit wrapping up today. Up next, we'll get the views from Washington and from Beijing. Stay with us.

25:37Try Google Workspace with Gemini at goo.gle slash workspace with Gemini.

26:07827-5050. And live call 877-8HOPE-NY. MD, visit mdgamblinghelp.org. Offer not available in all states. Terms apply. See Fanatic's app for details. There are three kinds of investors that listen to this show. Those protecting what they've got. Those looking for solid returns. And those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash closing bell. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice.

26:43Terms at VectorVest.com. President Trump and China's President Xi Jinping wrapping up their visits today with a trip to the National Archives. Now, we want to get perspective on what each side got from the visit, filled with a lot of pomp and circumstance. He said, she said. Eamon Javers covering President Trump. Eunice Yun's got the view from China. So, Eamon, we'll start off with you. Yeah, Melissa, and before we get to Xi Jinping, who is wheels up on his way to Beijing now, take a look at this message that we saw posted by the president of Iran just after Xi Jinping took off. He said, I appreciate President Xi Jinping's thoughtful and responsible support for a return to the Islamabad Memorandum of Understanding and for resolving differences through dialogue and diplomacy.

27:27Iran shares this approach and underscores the importance of returning to that understanding, honoring the commitments already agreed upon, and creating the conditions necessary for serious, substantive, and results-oriented negotiations to move forward. So whatever happened between these two leaders today, and we don't have a lot of specific readouts, the president of Iran seems to be encouraged by China's position on the U.S. war in Iran. In terms of other deliverables, you raised the question, what do we see here? There hasn't been anything at all read out by the U.S. side. But we did see this comment from President Trump earlier today, maybe indicating some ag relief might be on the way.

28:06Take a listen. I think our farmers are going to be very happy. A lot of very positive things happen. But America is very happy about this visit, and I'm sure China is very happy also. Great things for both countries, and it's been just very, very productive. But for the most part, what you saw this week were events like this. You see Xi Jinping and President Trump going to the National Archives today. Another one of the sort of pomp and circumstance moments where they viewed some of the founding documents of the United States. We saw military bans. We saw Air Force flyovers. We saw marching and a lot of photos.

28:46And, of course, a star-studded state dinner last night. But in terms of those deliverables that you asked about, Melissa, nothing yet from either side. Back over to you. We do know, too, that Xi Jinping pressed Trump or asked Trump about sort of backing off supporting independence for Taiwan, which is a thorny issue. Yeah. One of the big questions is whether the United States will change its strategic ambiguity position on Iran from, sorry, on Taiwan from not supporting Taiwanese independence to overtly opposing Taiwanese independence. It sounds like a small rhetorical thing, but it is a very big deal in the diplomacy of the region.

29:29We'll see if the president gives Xi Jinping what he wants here. Clearly, this was a president who rolled out, literally rolled out the red carpet for Xi Jinping, was in a deal-making mode this week. We haven't seen anything announced yet. It's possible we still will see some announcements come out of this, but will there be anything specific on any front? You know, we're waiting to see. We are. Eamon, thanks. Now let's get the take from Beijing. Eunice Yoon joining us live from their units. Thanks, Mike. Well, President Xi is coming home to Beijing with more than just the bald eagle statue that was gifted to him by President Trump, but a message back home that he has helped redefine the relationship between the U.S.

30:16and China. The state media has been gushing with reports about how the U.S.-China ties are now at a new historical starting point. They're pointing to his comments that the two agreed to a constructive and stable strategic relationship and that this competition is going to stay measured. Now, the strategic stability is important in the Chinese perspective because it allows them to continue to pursue their own economic as well as technological agenda. And, of course, all the pageantry that Eamon was talking about was a big propaganda win. We've been seeing many images of the two together, often President Trump looking quite deferential.

30:58And then, as Eamon had just mentioned, that post where he described President Xi as a responsible leader. Now, it's unclear exactly what President Xi has had to give up. So far, the Chinese have not confirmed the AI hotline kind of concept, this notification mechanism that Secretary Besant had mentioned, though they did say that there were very high-level talks when it came to AI. And then with trade, the Chinese have again hinted that there was some progress made on trade, but they did not confirm the two-month extension of the trade truce. So one thing when you guys were talking about the the tour of the U.S.

31:44National Archives, there was some speculation among China analysts that possibly President Xi would ask to look at the records of that moment in 1979 when the U.S. had switched its recognition from Taiwan to communist China. China, possibly a move that would be seen as as as President Xi trying to get President Trump to loosen his commitment or at least the U.S.'s commitment to Taiwan. That didn't happen. And it looks as though some of those anything China related in terms of documents were actually cleared away. People didn't say exactly why. But either way, President Xi did get something. and that is that he continues to have a delay of this arms sales to Taiwan.

32:35And the expectation is that President Xi is going to continue to push for that at the next meeting in November and then possibly the next meeting in December. Yes, I was going to say, Yunus, of course, the president was sort of saying he's looking forward to again going to China in November and then meeting at the G20 with President Xi again. And it does from the Chinese perspective, is this kind of, you know, managed status quo sort of ceremonial interactions? That's enough for their purposes? I think at this point, yes, just because at the end of the day, it would appear that President Xi is attempting to neutralize President Trump, because if you have stability, you have inaction by the U.S.

33:22So at the very least, even though there isn't any action, like no concrete deliverables, the inaction is actually the deliverable in this case. Good point. Eunice, thank you. Eunice Yoon. Time now for a CNBC News update with Brandon Gomez. Brandon. Hi, Melissa. The Pentagon's public accounting of troops wounded during the Iran war reportedly increased by 37 this week without explanation from the Defense Department. That's according to The Washington Post, which says the increase includes 29 sailors and eight Marines. As of Wednesday, the number of troops listed as wounded totals 861, according to a Pentagon database.

33:58A federal judge once again postponed former FBI Director James Comey's arraignment over alleged threats to President Trump's life. The charges stem from a photo he posted on social media in May of 2025, which spelled out 8647 in seashells. The judge moved the proceedings to January, citing the seriousness of the case, pending motions and the defense's need for more time. And New Jersey Lieutenant Governor Dale Caldwell resigned today over sexual harassment and ethics violation allegations. An investigation found he made a romantic advance toward a staffer's friend, sought a promotion for a girlfriend and brought unauthorized guests to ticketed events.

34:36Caldwell told The New York Times the report is false, but said he was resigning so that he isn't a distraction to Governor Mikey Sherrill's administration. Mike, something's back to you. Hi, Brandon. Thank you. The average rate for a 30-year mortgage rising to 7.5%. It was below 7 to start the month. Up next, we'll discuss the damage that could do to the real estate market and take a look at shares of Circle. The stock falling after hours on news that CFO is leaving the company, but he will stay on until the end of the year unless a replacement is found sooner. The share is down 2.25%. We'll be right back.

35:11Welcome back to Closing Bell Overtime. I'm live from the Nasdaq market site. Stocks closing out the week with gains 478 points for the Dow. The S &P 500, the Nasdaq Composite, and Nasdaq 100 all up about half a percent on the day. When you look at the weekly numbers, tech standing out, the Nasdaq 100 popping 3%. The Russell 2000, however, was down for the week. Bond yields a big factor for the markets, the 10-year getting as high as 5.2%. That was a 19-year high, but pulling back just slightly this afternoon to under 5.17. Well, that rapid rise in rates leading the 30-year fixed mortgage to hit a two-year high.

35:46Is this the new normal? How it will impact the real estate sector? Joining us now is Tom Shapiro. He's the president and founder of real estate investment firm Brightshore Capital. Brightshore Capital manages$5.6 billion in assets globally. Tom, great to have you with us. Thanks so much for having me. And obviously, rising rates are a story around the world. We'll get to that. But here in the United States, Tom, is there a rate at which you think, you know, people step back into the market on the residential side? I mean, 7 % is super high. It's all an affordability problem. But do we have to get down to 5 % or is just a six handle good enough at this point?

36:21Well, I think we all have to put this in perspective, right? We're back 25 years now of where mortgages were. And in 21, we're at two and three quarters. You have a lot of people who are locked in to their mortgages. Two-thirds of the people who currently have mortgages are locked in below 5%. And 40 % of people don't have mortgages. So the question is two things. One is people don't own homes. What does it take for them to actually want to buy a home? And then two, for those who are in a house that, let's say, you've just had your second child and you want a larger home, like at what point are you going to just abandon it?

36:51I think people are starting to capitulate a little bit and saying, gee, we're here for longer. And so at some point, we have to do things. But we have a huge cohort, largest cohort of people in their 30s now. And at some point they're going to have to do something. But, you know, this is troubling. I mean, again, you know, it's all driven off the 10-year treasury. As you point out, it's started at 517. We haven't seen that since 2002. So these rates are not helping. Affordability is a very big issue right now. Now, as an owner of single-family homes and apartments, how does that filter into your business?

37:23I mean, are people therefore just, you know, more willing or required to pay up more in rent. Yeah, for sure. I mean, we're definitely seeing an uptick in our rental portfolio. We're very constructive right now in San Francisco. We bought a dozen buildings in the last six months. And we're very busy doing that. That's a lot to do with the tech and AI trade and what Lurie's done a fantastic job cleaning up San Francisco. So we have a big belief in the coast right now. So San Francisco, we've been constructive in New York. We're buying in New York right now as well. But it does affect it. I mean, while I'd say from a consumer perspective, you're seeing good demand.

38:03But in a lot of places like the Sunbelt, there's just been massive supply. And it's not being absorbed as quickly as people thought it would happen. You take Phoenix, for example. I was there, you went back three years ago, people thought 18 months, two years, we cleared through the supply. It really hasn't cleared. And we're still probably 12, 18 months from recovery. We go to markets like Nashville and Charlotte, a couple of months of free rent. And it's going to cause a lot of distress. So we're going to see a lot of opportunities in some of these markets. But I think we really have to be cautious because we have negative leverage, which is simply that it costs more to finance than you can buy an asset at.

38:38Is real estate around areas where there are data centers being developed? Is that a strategy for you at all? Is that panning out to be true? No, but what we are seeing is we're very active in industrial development. And where we're seeing the opportunity there is there's a lot of companies in the supply chain for data centers, those who make the racks and the HVAC systems, et cetera. And those are very busy. We just had a situation in Dallas where we built a big warehouse outside the airport, sat vacant for a little bit, and a data center adjacent company, not a data center company, took three quarters of the building.

39:15The next month, they called us back and said, we need the whole thing. So we're seeing throughout our portfolio right now a lot of demand for data center adjacent companies. Obviously, there's a lot of controversy over data centers. People don't want them. They don't create jobs. They suck a lot of power, a lot of question marks around it. But then on the other side, the demand for compute is insatiable. So for at least the next couple of years, we're going to see a lot of data center development. So that certainly is we're not necessarily building around it, but we are seeing the benefit of data center demand in general from a construction perspective and all that it's doing for the economy and for people in the supply chain of it.

39:53Yeah, obviously a ton of money moving in that direction. Tom, I appreciate the time today. Thank you. Thank you so much for having me. Appreciate it. All right. Micron shares nearly quadrupling so far this year. Up next, we'll discuss whether there is more room to run for the chipmaker ahead of its earnings next week. We'll be right back. Micron earnings are on deck next week. Despite a strong beat and raise last quarter, the stock hasn't moved much since then, up just 3 percent with a big drop and then some partial recovery, although we should note it is up more than 280 percent for the year.

40:25So will the company deliver? With us now to discuss is Harsh Kumar, BMO Capital Market Semiconductor Analyst. He raised estimates just this morning, has an outperform rating on the stock with a price target of$1 ,300. Harsh, good to see you. I imagine the big question among investors that you talk to is, you know, how long can we expect this extraordinary demand situation to last for memory products and the pricing power for Micron? Yeah, thanks, Mike, for having me on your show. So we're in the middle of basically simply put a super cycle for memory. And this cycle looks like it's going to have legs.

41:05You know, memory is extremely short. We talked to a distributor who characterized demand as roughly three times stronger than supply. But even if we look beyond that, there just seems to be insatiable demand for memory. And I think while the industry is desperately trying to catch up, I don't think we'll be at parity anywhere close to the middle of next year. And so that's the last data point that I have. But it's very conceivable and very likely that we may not be in parity for all of 2027, calendar, and even some part of 2028, for that matter. So I think we still have legs to go on this cycle.

41:43I found it interesting, Harsh, that you found that all categories of memory, DRAM, HBM, as well as NAND, showed an average selling price uptick for the August quarter. You're also expecting the same for the quarter afterwards. forwards. What are your forecasts now? Were these upticks greater than what you had expected? Are they in your forecasts? So they were a little bit better than what I had expected, which is why we ended up raising our numbers. So if you recall, last quarter, the prices rose up. What I would only describe it astronomically, DRAM was up 60 percent and was up greater than that.

42:17This time around, the big surprise came from server DRAM or DDR5. And I think what's happening is agentic AI, things such as MetaMuse, things such as other agentic applications are really driving the server super cycle. And that is causing memory for DRAM to go up. Also, HBM is on a contractual basis. So it's not possible to raise prices quite as aggressively in the middle of a contract. However, DRAM, as you know, floats a lot better to the market and the spot price. So that's what happened. We're thinking that for probably next year, flash might be the choke point and that might be the one that rises.

42:57Or NAND flash might be the one that rises the most next year. It's remarkable when you just sort of look at the stock price of Micron and go back a year. And you just see how it released higher in such a dramatic way. It was like it dawned on everybody. Not just that there was a shortage, but that the next phase of the AI build-out and AI usage was going to require that much more memory. I mean, what's the next turn of the dial on this? I mean, if we couldn't see that coming a year ago, what might not we see coming right now? So, Mike, it's the same turn of the dial. So remember, in 2023, Micron had negative 10 percent gross margin.

43:34Just let that sink in for a second. We're not talking that far ago. You know, a couple of years ago, three years ago. And so since then, AI comes along and the demand for HBM and the trade ratio of three to one, which is for every HBM die you make, you take away three times the surface area from DRAM. And so when that came into play and the aggressiveness of the AI that came in, it has all led to basically lack of supply and prices rising astronomically. Now, these factories or these fabs take two, two and a half, three years to make, and they cost eight to ten billion dollars. So you cannot just turn on the capacity.

44:14And that's part of the problem here. So the first tranche of capacity actually comes on in the middle of next year. And we'll see how that plays out. But I suspect we'll still be short. Yeah. Peak of Micron's share price was$1 ,255 exactly three months ago today. You got a$1 ,300 price target on a very modest valuation if those earnings come through. We'll see how it goes next week. Harsh, thank you so much for the time today. Harsh Kumar. Thank you for having me. Thanks. Coming up, OpenAI detailing new rogue agent activity. We've got the details next. OpenAI disclosing a new data leak by rogue agents.

44:51Mackenzie Cagallis has the story. Matt. So, Mel, there's been a new user data leak at OpenAI. with OpenAI putting out a blog post in the last few minutes disclosing that the company's AI agents leaked 53 images belonging to ChatGPT users and that it is still trying to determine the full extent of their unauthorized activity. Now, Reuters was first to report this, citing two people briefed on the investigation. They say that OpenAI is still uncovering these incidents two months after its agents broke containment and hacked hugging face. As of mid-September, OpenAI had identified roughly two dozen incidents of undesirable agent behavior.

45:26According to one source, the company says its investigation will take months on top of some incidents that already went undetected for months with outside researchers uncovering agents bypassing these security restrictions and accessing Australian government systems. Now, the investigation at this point, at least according to Reuters reporting, has been tightly controlled and shaped by company lawyers. OpenAI apparently disputing previous reporting that its lawyers discouraged a broader investigation. And of course, this extends beyond open AI. You've got Anthropic, Google and Meta since identifying similar behavior of their agents following that hugging face incident.

46:04Guys. All right, Mac, thanks. Mackenzie Sigalos. On the earnings front next week, not much. We mentioned Micron. Yes. But on the economic front, there is a lot of data and plenty, especially the jobs number on Friday. And I'll be interested to see if the bond market is able to settle itself before the jobs number. In other words, you know it's coming. You don't know if it's going to have implications for the Fed. And until then, you know, if this kind of rotational act that the stock market keeps up, if it can really continue to preserve the S &P 500 near the highs, even as I was saying earlier, the median stock is down like 5 percent this month.

46:40Yeah. And oil, obviously, it had a down week. Yeah, that was interesting. Which is surprising and interesting. We'll see how the weekend goes in terms of development. It did come off the heist. Yeah, so that does it for Overtime today. Fast 20 starts right after this quick break.

46:56Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. And then another meeting. hit your booking point book with Southwest and enter airplane mode