Closing Bell: The NFL's Growth Strategy, Debate on AI Safety Heats Up 9/10/26

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1:16Welcome to Closing Bell. I'm Scott Wapner, live at Post 9. Here at the New York Stock Exchange, this make or break out begins with rates, the Fed, oil and stocks, and whether they're all on a collision course in the weeks ahead. We'll ask our experts over this final stretch what's really at stake for these markets now. In the meantime, I'll show you the scorecard with 60 to go in regulation today. It's all playing out, as you see in the stock market. We're red across the board. The PPI came in a little lighter, but July got revised higher, and some of the internal components that play into the PCE were hot.

1:46all playing a role in the markets today. Most sectors, as you see, are negative. Let's talk Apple shares, though. They're a big winner today following its big iPhone event. Highs of the day, better than 3 percent. We're also watching Oracle. It's red ahead of its earnings in overtime. That's a critical report. We'll have a report ahead of just what to expect there. It does take us to our talk of the tape, the road ahead for stocks as potential potholes loom large. Let's welcome in our headliner today, the Wharton School professor, finance wisdom Tree chief economist. Jeremy Siegel, welcome back.

2:17It's nice to see you. Good to see you, Scott. So what do you make of what's transpired here? You know, oil's up, yields are up, the 10-year 490. Is that what's at play today? Let me tell you, I would not want to be Kevin Warsh next week. It's damned if you do, damned if he doesn't. If he does raise rates, which I think the market really is saying you need to, you know, President Trump can throw a fit. I mean, you know, he said, if you don't lower rates, I'm going to throw a fit. So if he raises rates and if he doesn't, you can see. Well, listen, one of the things we always have said, the market tests new Fed chairs.

3:07And I think this is the test for Kevin Walsh. The market, 10 years moving towards five. The futures are all signaling you should raise. I think he would love to be able to hold off until after the midterms and try to keep some confidence with Trump. But it's a very, very difficult situation. What's he going to do? What do you think he's going to do? Oh, boy, I'm right on the borderline. I think he's going to bite the bullet and raise rates, because if he doesn't raise rates, I think there might be four or five or maybe six dissents, which would be, you know, unprecedented. Now, let's say we are going to get the CPI tomorrow.

3:58That might give them some comfort. So a few more days of some data there. Waller has sort of put a line in the sand saying, well, if it's 0.2, I might, you know, say it's OK to keep the rates. If it's 0.3, maybe then we've got to raise the rates. But, you know, we have to take a look at the commodity indexes, of course, what's going on in oil and most importantly what's going on in the bonds, they say you just have to raise rates. And so I think that's the bottom line. OK, if you're right and they do, what's the market going to do? Well, I think the market will first shutter and you'll see a sell off.

4:37And if, as I expect, that long bond reacts positively, saying, OK, the Fed is credible at fighting inflation, we're going to get a recovery in the stock market. So I think it'll be a first kind of a cold shower. Oh, wow. But we needed that. And, you know, let's get it over with. You know, 25, 50 basis points on the short end. You know, if they do one this time and one in October is, you know, not the end of the world and would put the market on notice that the Fed still is serious about fighting inflation. I mean, maybe it would force the bond vigilantes or convince them to sort of sit down. And I think so.

5:26Otherwise, they're going to be screaming at the top of their lungs. Yeah, I think there's a legit concern about that. That's why it's so highly anticipated next week and truly uncertain as to what's going to happen. I'm wondering, most of the notes that are coming out from strategists on Wall Street or observers who are well thought of, Citadel's Scott Rubner says his highest conviction right now is that the highs are in for the month, that you've got seasonal weakness, you've got the blackout window of buybacks mid-month, You have option expiry coming at the third week and then the quarter all ending.

6:04And that's all a transfer of risk and not in the right direction, I might add. Those are my words, of course, not his. Is that how you see it, too? Is now the time to be cautious? Yeah. I mean, you know, we know about the month of September. I mean, look at oil continuing to rise, diesel rising even more. As we know to records, gasoline futures signaling another 20 to 30 cents, potential rise in gasoline. This is not good for consumer sentiment. You know, going forward, you know, range bound is, you know, probably the best that we can expect over the next several weeks. Of course, at the end of the quarter, then, you know, we get another earnings cycle that does begin.

6:53And, you know, we'll see how that plays out. But until then, with rising oil prices, hard to see any, you know, really true upward movement in stock market prices. I mean, you make you make you make the interesting point that, you know, there's an air pocket between sort of now and then. There's just when you don't have earnings, which have been the story beginning, middle and end of it. You don't have anything to hang your hat on other than the fact that you're fixated on the bond market. You watch yields go up. You're fixated on the oil market. You watch prices go up. And then you watch positioning move around and get more cautious.

7:29Sort of feeds on itself, doesn't it? Yeah. I mean, all those things, too. And we do know, you know, stock prices as any asset are discounted at these interest rates. So, you know, that, you know, bonds are competitive. I mean, I don't in my opinion, in the long run, of course, I think that stocks still have a huge edge on bonds. even with the 10-year at 5.3. But nonetheless, it's certainly more competitive than we've seen it in quite a long time. And you really need that earnings push to continue to justify the type of gains we've seen in stocks. So even sideways for the year, which would give you, what, a 10 % gain, 12 % gain S &P, is, you know, looking at what I thought in January is not something that's that bad.

8:21It's, you know, when you say it's more competitive than we've seen it, you're talking about the competition between bonds and stocks. Competition between bonds and stocks, yes. You got yields to a point where they're now, you know, super tempting with a lot of cash on the sidelines or in money markets or what have you. It's been difficult to get that cash to move kind of anywhere. Are we at that moment? If we go 5 percent 10 year, is that the moment that that sends buyers into the market? Well, I think, you know, I actually think, you know, going over 5 percent, which will get a lot of headlines, is a lot of signals.

9:00And it's a lot of signals to our government about, you know, there is worry about long term deficits and debt. I mean, that is ultimately, you know, what is, I think, driving those long-term rates up, the Fed has to stand against it. You know, it did not stand against it, you know, during the period with Jay Powell, during the big deficits that we had during COVID, and we saw what the result is. Now we're getting deficit, not as big, but almost as big, the Fed has got to make a stand this time to really convince the bond market that we're not going to let that 2020-2022, you know, 8 % rate of inflation materialize again.

9:52Wow. Professor, we'll talk to you soon. I appreciate the time, as always. Professor Jeremy Siegel at the Wharton School. We'll bring in our panel now, CIBC's Chris Harvey, CBC contributor, our requisites, Bryn Talkington. Good to have you both. Chris, start with you. Fed's got to take a stand. You heard the professor says he thinks they should go. He thinks they will go. You think that? I'm not sure. So I'll tell you after CPI tomorrow. CPI runs hot, they'll go. CPI runs cooler in line. I have a hard time believing that they can go. But if they don't go, they're going to have to signal why and what's going on.

10:26Otherwise, they're going to have a bond tantrum at some point in time. So markets telling you, hey, they need to go. Warsh built expectations that they will go. But I just don't see enough on the ground unless you get a really hot CPI. What about the professor's take? They're sort of darned if they do, darned if they don't. Yeah, that's a problem. So lots of things about the Powell administration I didn't like. But one of the things they did a really good job at is they kept optionality. They kept everything open. Here, what Warsh did, he painted himself into the corner. He didn't feel like he got enough credibility.

11:01He didn't feel like the market believed that he was hawkish enough. So he came out very, very hot in Jackson Hole. Now he's got to kind of follow through. And Bissette didn't do him any favors by not really managing the buyback very well. That said, if you don't get CPI hot, I don't see the kind of why now, right? Why other than the market's forcing you to do it? The underlying fundamentals, the underlying, the recent reports don't tell you, I got to go now. Brynn, this market's going to be on edge for the next better part of the next week, don't you think, until we actually hear from the Fed?

11:38100%. I think the market's going to be on edge until midterms. And we've discussed this before, but since 1962, in every midterm between the end of August and November 4th, we've had about a 12 % to 13 % drawdown as a median. So I think investors should expect that drawdown. And I think that to what everyone said, you know, the Kevin Worsh said that he wants the market, the bond market to signal him. And with the two year at what, 453 rates are already risen on the short end. And so to me, it is a precarious position because you don't want to have and they don't want to come out and do one 25 basis point.

12:21That doesn't that's not really the way the Fed has historically run. They go into a rate tightening cycle or a rate easing cycle. So to me, I think it is a threading the needle here of what type of cycle will we be in over the next 12 to 18 months. And ultimately, that's going to decide what the market does. One rate cut or one rate hike is not going to do anything. It's really the signaling of what the longer term trajectory is, which I think is very unknown right now because we have so many cross currents. Traditionally, no, it wouldn't do anything. Just one move other than if you think they're embarking on a very short credibility cycle where one does do the job.

12:57enough to settle down the bond market from getting two away from the Fed. But let me ask you this. So two months to the midterms, you think we could be unsettled between now and then. Long-term story intact. We start to get earnings that remind us why we're here in the first place. Two percent or whatever it is now away from that all-time high on the S &P. Does that mean you'd be a buyer? Should we be buyers on any weakness that comes over the next few weeks? Oh, 100 percent. And that's what the history tells you, that if you buy during this midterm drawdown, like over 95 percent of the time, with the exception of 2002, that was a wonderful entry point.

13:40And so I think sell calls, dollar cost averaging, earnings are good, AI build out is going to continue. And so I think take advantage of this volatility because this will pass. because we do all understand Iran is a really big issue around energy, around oil. And I don't think we're going to have a forever war. And when that dissipates, that's going to be very deflationary. And so I'm in the camp of take advantage of the volatility. I love selling calls. If you don't do that, dollar cost average. I will say this one thing. We have not been buyers of long duration bonds forever. You go out 10 years, you can get on a taxable equivalent basis.

14:19well over 7 % on muni bonds. And so I'll be interested to see if cash buyers come out and actually from a tax equivalent yield come out and start looking at muni bonds, which on a long-term basis off really good return. This is one of those moments, don't you think, where as an investor, if you're thinking longer term, you've got to see the forest through the trees. You do. So I'm going to talk out of both sides of my mouth. So watch this. So tomorrow, I think there's a potential for a pretty good pop. Everyone's getting really defensive. Everyone's running for the hills. The probability the Fed's going to hike is there.

14:53If you get a cooler CPI, suddenly things change like that. You get a pretty big pop. We would sell into that or we'd reposition the portfolio to take off some risk for the short term. I don't think you're right. There's 2 % off the high. Is there enough there to put new money to work? No, not yet. What we want to do is we want to tread water. We want to be a little bit more defensive. We want to wait for the opportunity to come up. and in weakness, in all likelihood, yeah, we tell folks to start putting new money to work, but not right here, not right now. Where would opportunity knock the most, do you think, if your scenario plays out?

15:27Yeah. So what we're looking at is we're looking at a lot of the communications names, which are some of the bigger hyperscalers. We're also looking at some of the alt managers because we think they've been oversold. They've traded down recently, and we just want to get a little beta where we think the risk reward looks pretty good, And those are the two areas that come into focus. What do you make of the, if you want to call it the resurgence in the mega caps over the last, you call it month. Yeah, it makes a ton of sense. Since earnings, really. That trade's come back. For us, it makes a ton of sense.

15:56You've had rates going up since the end of June, right? So small caps have underperformed. What you're seeing is a move back to large cap. You're seeing breadth beginning to narrow. You're seeing industrials underperform. And that's what you would expect. You're seeing utilities underperform. That's what you expect in a rising rate environment. You should expect larger cap, less cyclical, and more tech selectively. All right, we'll leave it there. It's good to have you back. Thanks for being here. Bryn, thanks to you as well. We'll see both of you soon. We're just getting started here. Coming up next, the NFL goes down under in its biggest international push yet.

16:34We're live in Australia straight ahead. Plus, what the new season means for the betting boom. We have an exclusive with DraftKings CEO Jason Robbins coming up as well. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC.

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18:25All right, welcome back. Hours away from kickoff now down under in the NFL's most ambitious international trip to date. Our Alex Sherman joins us now from Australia with all that is riding on this game for all of the parties involved. Hi, Alex. Hey, Scott. Yeah, you know, when I came down here, I was a little skeptical about the whole process of coming down to Australia. Are people here really fans of the NFL? Australian rules football is very big in Melbourne, but is the NFL, does that carry over? It's so far away. So I actually asked a handful of people on the streets of Melbourne and just ask them, are people really excited for this?

19:08Watch this. Oh, for sure. We definitely have guys at work. I mean, we're a school of sporty people, and they're always talking about American sports, everything that NFL and basketball really get more popular at our school. 100%, I reckon there's a real buzz around the city at the moment. I've got friends that live in Perth in Western Australia, and they're like flying in for it. 100%. 100%, yeah. What do you attribute that to? Probably just the internet, to be honest. Lots of people more looking up clips and streaming. So obviously small sample size there, but that message even beyond those people that we spoke to of social media kind of resonating and making the NFL more popular was a common answer.

19:53I sat down with NFL Commissioner Roger Goodell, and I asked him, look, are you looking for short-term results here where you suddenly see a pop in Australian popularity regarding the NFL, or is this the long game? And he answered, no, no, no, it is a commissioner's responsibility to play the long game. Listen to what he told me. You have to be thinking about all of these things going out five years, and if you're not, you're being irresponsible. So whether it's media or whether it's labor, whether it's our international plans or other strategy, what we're doing with stadiums, all of that is taking a 5-, 10-, 15-year look, And it's critical to do that.

20:35And Roger Goodell is going to be the commissioner of the NFL a little bit longer. He just signed a four-year contract extension, taking him through the year 2030 and into March of 2031. He's already been the commissioner of the NFL for 20 years. Scott. Where are you live from, Alex? Just checking. I am live from Melbourne, Australia. Melbourne, not Melbourne. That is one of the things I learned here. And by the way, I'm right next to the Melbourne Cricket Ground, which is where tonight's game between the Rams and the 49ers will take place in just a few hours. All right. Awesome. Thanks for joining.

21:16Appreciate that. That's Alex Sherman. In the meantime, the start of the NFL season, always a big deal for betting platforms like DraftKings. Our Contessa Brewer with that company, CEO Jason Robbins, joins us now. Hi there. Hi, Scott. And really, this is the season for DraftKings and its competitors. Jason Robbins joins me now from Boston. OK, so, Jason, tell me, how was it the lead up to last night and kickoff on a Wednesday night? Well, it's the first Wednesday game, so we didn't have a lot of comparisons. But overall, I thought it was really great, great matchup game. Obviously, it didn't have a ton of scoring, but it's usually good for the books.

21:54So overall, great start to the season and really looking forward to tonight and the weekend. There is a serious trend emerging where sportsbooks are stagnating and the prediction markets are soaring alongside the onslaught of NFL. H2 Gambling Capital told me that they estimate that the sports event contracts could actually pull$2 billion away from the legal sportsbooks in the United States. You have both. You have sportsbooks across the nation. You're one of the big giants. and you have a nascent prediction market business. What are you seeing? Well, I think the notion that it's pulling volume from sports books is a complete myth.

22:35I've seen so much data on this, both internal and external, and absolutely zero that I have seen points to anything like that. I think prediction markets are exciting growth because they're opening up so many new states like California, Texas, Florida, Georgia, that we haven't been able to offer sports products, at least beyond fantasy, and maybe horse racing in before. So now we can offer sports predictions in all of these states. It's almost half of the U.S. population that we weren't previously offering Sportsbook to. So, you know, to me, that's a pretty clear reason why it's growing so quickly.

23:08Obviously, Sportsbook has been launched in many states, but many of those states have been, you know, seven, eight years now since they launched. And I think, you know, obviously very different when you have states that are experiencing their first full NFL season where there's a truly competitive sports prediction market. OK, well, part of the reason is because in Florida, for instance, you don't have a gambling license. Sports betting is legal there, but only through Hard Rock, which is owned by the Seminole Tribe. H2Gambling Capital said that they think the NFL handle in Florida alone will fall 12%.

23:42Do you think you're pulling away Hard Rock's customers onto your prediction platform? It's very hard to say. I mean, I don't have access to Hard Rock's data. I can tell you from what we see in our own data in the markets that we operate in, we have seen zero discernible cannibalization. So, you know, I would stand to reason it's probably not super material in Florida either. That said, you know, we obviously feel we have the best product in the market. And that's probably a big reason behind why we've been able to retain our customers so well. OK, give me a sense of what you really think about prediction markets, because you have the business.

24:22But then, for instance, when Nevada gets a win in the Ninth Circuit saying that it can enforce its state gambling laws against Calci, with whom CNBC has a commercial relationship, DraftKings stock pops. So there's clearly an investor optimism around prediction markets going away. you know that's been one of the things that uh we've we've marveled at here is that we feel that prediction markets are overall a very good thing for us sure there's some new competition but we feel very good about as i said earlier the fact that it's having very little to no discernible impact on our existing business and so really what it does is it opens up this huge new incremental tan and even within the states that you are seeing you know that have online sports book A lot of the volume there is coming from sharps and professional bettors who are doing market making and things like that.

25:15It's a different audience than what we're really focused on from the retail entertainment perspective. So, you know, those are basically the people that are making the markets instead of DraftKings, right? So there is a market for that for sure in a lot of these states. But I would say within the retail, you know, core customer base, we feel very good that we are not seeing any cannibalization. So we think it's a huge new incremental opportunity. The fact that the market doesn't believe that I can't control, obviously always interesting, though, to see something when you feel like it's good news and you get a negative reaction to stock and you feel like it's bad news and you get a positive reaction to the stock.

25:51It's always, you know, gives us a chuckle here. But we think over time the facts will play out and people will figure it out. I just want to remind the audience that you have refrained from offering sports event contracts in states where you already have a gambling license and offer sports betting. Last night after the kickoff for the NFL game, your competitor, Underdog, has surrendered its fantasy sports licenses in seven states. The regulators there said you cannot have a fantasy license if you're offering prediction markets. Are you experiencing the same sort of regulatory pressure for your fantasy business as well?

26:28And in what other, because I heard even from a payments processor, they're getting regulatory pressure about customers, clients of theirs that offer both sports betting and predictions. We've been really respectful and had very transparent, open dialogues with all our regulators. And I think we have great relationships with them. And so I feel very good that we have approached this in a way that they will view as being a good actor. And, you know, we've received feedback as such. To date, we haven't been involved in any of that litigation. We haven't had any issues like the ones that you're describing that Underdog had.

27:06And I think it's because of the approach that we've taken. We've always said that the most important thing is that we treat our licenses like gold. It's obviously where we generate almost all of our business revenue from. Predictions is certainly an exciting new opportunity, but we're going to focus on it in the places that we don't operate licensed products. Yeah. Jason Robbins, good to see you. I know that football season is exciting for you and for your team. Thank you for giving me some time. Thanks for having me. Scott, it's exciting. But what you're seeing is with all of these sportsbook operators, they are really trying to differentiate themselves and push forward their product and make sure that they have something that helps them stand apart from the competitors.

27:47I appreciate that interview. Contessa, thanks so much. Contessa Brewer coming up. AI's biggest threat may not be a bubble, but the technology itself. billionaire Paul Tudor Jones sounding the alarm. Plus what Y Combinator CEO just told CNBC about this issue. You don't want to miss that next.

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28:52Listeners can get an exclusive 20 % off IXL membership when they sign up today at IXL.com slash 20. Visit IXL.com slash 20 to get the most effective learning program out there at the best price. The real cost of a break-in isn't your valuables. It's the feeling that your home stopped being safe. SimpliSafe keeps danger away from your family with three layers of protection. One, smart AI cameras and live U.S.-based agents help stop intruders before they break in. Two, we sound the alarm at points of entry. Three, our agents request emergency response. Plans starting around a dollar a day. Right now, get 70 % off your new system with professional monitoring at simplisafe.com slash sxm.

29:31Outdoor deterrence plans start at$49.99 a month. Visit simplisafe.com slash licenses for alarm license information. We're back on the bell. Add billionaire investor Paul Tudor Jones to the growing list of those warning about the potential perils of AI. Mr. Jones writing an op-ed in the Wall Street Journal today saying AI may become the third superpower. Quote, the threat is real, he wrote, while referencing the potential of self-improving AI. Meantime, the president and CEO of Y Combinator weighing in on this topic this afternoon during an interview with our very own Kate Rooney. She joins us now to tell us more about what Gary Tan said.

30:08Hi. So, Scott, good to see you. We are at Y Combinator's Demo Day. So for those who don't know, this is a startup incubator that's famous for backing names like Stripe. They backed OpenAI, Airbnb, a lot of big names in Silicon Valley. And this is the next generation of founders here and startups that we've been talking to this afternoon, as well as Gary Tan himself. He really does have a bird's eye view on what is going on in AI. And, of course, did have thoughts on this entire debate around some of the doomsday scenarios. He pushed back on some of that rhetoric. Here's what he said. I think that we need to be focused on science fact, not science fiction.

30:48Why aren't we grounding this conversation in what is actually happening right now? I mean, the cybersecurity risk is real. And the policy and the way both Democrat and Republican lawmakers should be looking at this is actually the lens directly coming out of what is happening right now. We don't need to be responding to a science fiction sort of fantasy about what's going to happen. And Scott, that does align with what Jensen Wong, NVIDIA's CEO, said at the Goldman Sachs conference. Today we're seeing headlines that he poured some cold water on what he described as the hysterical rhetoric around AI fears.

31:28And again, the worst case scenario, human extinction level events that people are now saying is possible with AI. Speaking of that, we did also get news this afternoon. Anthropic put out about a 100-page report on this. Part of that was this risk of bioweapons. They said they have blocked possible efforts to build biological weapons with Claude, using Claude. And it is a real threat. I mean, we talk about this, but Anthropic outlining really how this is happening and the steps that they've taken behind the scenes to shut this down. But I will say, this is about as optimistic as a group as you can get.

32:01I mean, these are the founders that are using AI every day. They're saying that they're able to build startups in a much leaner, cheaper way. We're seeing a lot of former SpaceX folks. And I would say the theme out of this and what folks should pay attention to in terms of what the next thing is in AI, it's physical AI. So it's robotics. We're seeing a lot of drone and defense startups out here. One person told me it's because they want to do what they feel like is defensible against anthropic and the AI labs. What they can't basically, what can't be copied by an anthropic. That is physical hardware.

32:32And that's what we're seeing out of here. Finally, Scott, one more comment from Gary Tan I think is interesting. He said none of this in terms of AI and the impact on society is going to happen overnight. He said it's going to take decades to permeate through society, which is interesting and I think a much longer timeline than maybe we would have thought a couple of years ago. So he's sort of saying there's time to figure this out. Kate, I appreciate that very much. Thank you. That's Kate Rooney. Now let's bring in big technologies. Alex Kantrowicz, he's also a CNBC contributor. Welcome back.

33:02Have we drifted too far into science fiction and away from science fact? I think we have. I mean, this idea, so the idea that some of the X and even current anthropic employees are advancing, that there's a 10 percent chance of AI wiping us out over some time. Like they're advancing these probabilities like it's rooted in science and it's rooted in math. It's not. It's numbers that are made up and just speculation based off of what's going to happen. And remember, today's technology can barely order you a pizza. So I think we need to hold our horses a little bit in terms of what has spun out of it, which is that AI poses a risk that is, you know, a lot of people are taking this as it's likely to harm humans and it's likely to wipe us out.

33:40And so certainly this story has sort of left containment, and it's now spread into places like Washington and governor's mansions across the United States and could be a turning point where we end up seeing, you know, pauses or kill switches debated in a much more serious fashion than they have been to date. So the idea that even some on the quote-unquote inside are raising these alarms at a time when they're also the industry, tech itself, is being criticized for the amount of distrust that's out there in the public domain now. How does tech reconcile with all of that? I think it's trying, at least some within that industry are trying to be out there a little more like Jensen Wong, as Kate was talking about at the Communicopia conference.

34:34Brad Gerstner was in the room, had to have been because he posted on X with a photo about Jensen's comments, calling that an anthropic researcher's comment, outlandish and, quote, deeply untrue, said the comments were wrong, arrogant and ignorant of all the work being done. That's how Brad Gerstner paraphrased part of what Jensen had to say. So those on the inside are raising some alarms. Those on the inside are also trying to come to the rescue to sort of tamp down the hysteria. What do you make of that? Well, on the risk side, you're looking at a perfect storm here, Because AI was unpopular coming into this week.

35:14People didn't like data centers. They don't like this idea that AI is going to take your jobs. The idea that AI might kill you or your children wasn't even part of the discussion. And now it firmly is. So all the worries about the government getting involved and stopping the progress that were manifesting up until now, now they're even worse. Now they're even more concrete. Meanwhile, you have so much money that's been plowed into this. You know, whether it's NVIDIA's market cap, whether it is the open AI and anthropic IPOs that are imminent and looking like they might be at two trillion dollars for all this to work in many ways.

35:47A lot of this needs to go perfect. And when you start to have these worries injected, it starts to take that perfect pathway and disrupt it. And so that's why you're seeing Jensen and Brad Gerson are amplifying this. The industry is going to push back on this extremely hard. But there are legitimate concerns, right? I mean, Paul Tudor Jones is not a hysterical human being. He's a measured, thoughtful person who's seen a lot over the years, obviously, and specifically, it seems, talking about self-improving AI and suggesting that the threat is real. Now, if you read his op-ed and then you see what Anthropic itself posted a couple hours ago, we published this.

36:28I'm reading directly from them. We published our most detailed threat intelligence report to date. It covers how people tried to misuse Claude for cyber attacks, influence operations, surveillance, biology and building weapons and how we found and stopped them. We disrupted every operation in the report. That's great. Thank God. We don't want it to get to a point where they can't. But that just shows you the risks and the kinds of things that people like Paul Tudor Jones, not hysterically, are talking about. Yeah, and I'm not saying there's no risk. There's definitely risk. I mean, even with the hugging face incident that we've seen come out over the past month, some of this stuff is extremely concerning.

37:07And we've seen the power of these AIs to work together in swarms, like the open AI effort that solved the millennium problem. My only request to the AI industry and for the dialogue is that there's got to be a way to separate some of the things that you're seeing with the extrapolations that are going on. Because we saw the hugging face incident happen, does it mean that AI has a better chance of wiping out humanity? I wouldn't say so. Let's try to be, and I'm just talking about when people are talking about this in public, and it goes to the researchers, it goes to everybody, including Paul Tudor Jones.

37:42Let's make sure that when we're going to say statements about what's going to happen, like recursive self-improvement hasn't proven that it's going to be the case, AI approving other AIs, but we don't have any evidence that that is going to come. So as opposed to saying it will certainly come and it's going to be a third superpower, inject some doubt in there. It's possible. And if it does happen, here's what we might want to do. But I would much prefer that type of tone as opposed to it will definitely come and therefore this is what we must say. Briefly, what does it mean from a regulatory standpoint?

38:12The idea of somebody having to regulate all of this or the self-regulation that others say can easily be done from the industry itself? How do we reconcile that? Well, you know, it's very different from the tech clash that we saw where we had federal agencies that, you know, sort of the FTC and the DOJ that were looking at the power of big tech and trying to rein it in and ultimately ended up doing nothing. Because from a regulation standpoint, self-regulation in many areas is sort of out of the way. Because you now have local municipalities, free market conservatives in Texas, saying we don't want to go ahead and support the building of data centers in our neighborhood.

38:55So this could happen slowly but surely on a local level and then eventually spiral into something bigger. And again, when you think about how perfect the path to IPO needs to be for open AI and Anthropic, that could certainly block that perfection and put obstacles that will make it harder for this momentum to continue. We knew we needed your insights today. Thanks for coming by. Appreciate that. Alex Kanchewicz joining us, the former Anthropic and open AI researcher, Jacob Coxon, by the way, who sounded the alarm on AI this week, will be live on CNBC tomorrow. That is 1130 a.m. Eastern Time. Certainly one not to miss.

39:30up next. We track the biggest movers as we head into the close. Pippa Stevens is standing by with that. Hi, Pips. Hey, Scott, two chip stocks are in the green on an otherwise down day for the sector. The names to watch coming up next.

39:45All right, we'll tend to the bell back to Pippa Stevens now for the stocks that are moving into the close. What do you see? Well, American Eagle Outfitters is tumbling some 15 percent despite posting a Q2 beat. Comparable sales for the quarter fell more than expected, and the company expects operating income for the current quarter to come in below street account estimates. Those shares are down 46 percent so far on the year. Meantime, Skyworks and Cuervo in the green while the broader chip sector falls. The two semiconductor names supply components for Apple's iPhones and are likely getting a boost following Wednesday's iPhone 18 and foldable iPhone unveiling.

40:16Skyworks and Cuervo announced a merger last year. And Skyworks, the CEO, said in July he is optimistic that it will close within the calendar year. Those shares up nearly 11 percent. Scott. Thank you very much. But the Stevens coming up next. What to watch for when Oracle and Adobe, they report in overtime. We'll take you in the zone next.

40:41We're now in the closing bell market zone. Mike Santoli and Maryland Bank of America's Marcy McGregor here to break down these crucial moments of the trading day. Plus, Oliver Rennick always standing by live from the CBO global markets in Chicago. Options action coming up. Seema Modi has set up for Oracle and Adobe. Those critical results are in overtime. Michael, you first. You know, the stock market, Scott, keeps processing these very dramatic moves in other asset classes into relatively muted activity. Now, it's definitely struggled to get out of its own way recently. Today's low in the S &P goes all the way back to late May.

41:15So you're talking about a three or four month trading range at this point. Arguably, maybe equities are underreacting or at least just that beneficial rotation is keeping a real flush from happening. I do think also it's kind of suspended to a degree ahead of CPI tomorrow. So I think that the hope is it gives certainty in one direction or the other on the Fed. If there's anything like a cooler number, obviously, you know, bonds could get some relief there. But, you know, nobody has a high conviction to bet on that today. Yeah, you got less than five minutes. I mean, until your show, you guys, that's, I'm assuming, where you're going to be tackling pretty heavy, plus the earnings coming up in OT.

41:54All of that, plus the earnings. We also have the CEO of Freeport, Mac Moran, coming on. It was a pretty big day for copper as well today. Yeah, Freeport was getting hit pretty good, the last I saw. Good stuff, Mike. Thanks. That's Mike Santoli. Oliver, CBO, what do you see? Options traders are pounding what they've seen as a vulnerable area of the bond market, Scott. It's been weeks. The high-yield corporate ETF, HYG, sees a lot of bearish flow. And today, at least one trader doubled down on deeper selling for the ETF. They used four legs each with 37 ,500 put contracts, three of which look like clear bearish positions.

42:32They bought$1.5 million of the 77 strike puts expiring November 20th, about$800 ,000 of the same strike in October 16th, and 375 ,000 of the 72 strike puts expiring in November. Remember, HYG is only down 2.5 % this year, roughly. But this is a$2.5 million bearish bet that things are going to get worse for corporates over the next one to two months as Treasury yields blow out. Oliver, appreciate that. It's Oliver Rennick. I'll go to SEMA now. I'm just looking at Oracle SEMA down 5 % going into this number. Yeah, and Scott, investors want to know how rising political backlash against data centers is impacting the company's pipeline, specifically a site in New Mexico where OpenAI is a tenant.

43:16The state has raised concerns around water and air pollution. The question really for Oracle, does management characterize this project as on schedule? And is this issue isolated or illustrative of a broader challenge facing the AI infrastructure buildout? Comments could have implications for other AI players like Nebius and CoreWeave, the hyperscalers, Amazon and Microsoft that are pouring billions into data center development. Scott, this report does mark roughly one year since Oracle surprised the market with that$300 billion OpenAI deal, which sent shares up by 36 % in one day. Investors will want an update on its relationship with the AI Lab, as well as its latest financing plans, right, following that$20 billion equity issuance plan.

43:57Well, watch for that. Seema, thanks so much. That and Adobe, of course. Don't forget about that. We'll see Seema again in overtime. Marcy, I'll pivot to you. I'm looking squarely at WTI right now above 102. Brent pushing 109. Got yields moving higher today. Time to be cautious about that or not? I think we're going to have some weak September seasonality here in equity markets. But the reaction has been fairly muted. As long as fundamentals are intact, and I mean earnings, and we're seeing earnings momentum continuing, not just in the second half of this year, but into 27. Earnings revision ratios are now above one.

44:33Globally, all-time highs in Japan, five-year highs in the U.S. That tells me a story that the fundamentals are intact. So I would fade some of the noise. We keep saying follow the trend lines, not the headlines, because that's what really matters here. Dip buyer you would be? Would you urge people to be because the trend's still intact in terms of earnings? Absolutely. I just think this is a little bit of a loss of momentum in a rotational market more than anything. So September weakness, we know it's notoriously a weak month. I would be a dip buyer here. Once you get through midterms, you tend to get market strength into the end of the year and, frankly, for the next 6 and 12 months historically.

45:11What areas of the market look the most attractive to you if they were to lose a little bit more momentum? I like U.S. equities, large and small. I know small caps have held up pretty well, not in the last couple of days, but have held up pretty well despite the loss of momentum here. And I would look outside of the U.S., emerging markets specifically, if we are overly concentrated in U.S. markets, think EM. In the U.S., if you're overly concentrated in tech, I would think dividend-paying stocks. I like financials for deregulation, loan growth, NII growth. And I like health care. This has been the one sector that has been lagging on the earnings side.

45:51We see a recovery coming. And then industrials. That's a story about CapEx and backlogs, but also aerospace and defense. Talk to you soon. Thanks for being with us. That's Marcy McGregor joining us. The bell's about to ring. You can see on the right-hand side of your screen. We'll be red across the board. We're led lower by the Russell. That backup in yields is certainly having an impact there. A story dominated today by oil and yields and stocks paying a bit of the price with those higher moves on the inflation data. More coming tomorrow. Let's see. I'll see you then. Let's send it into overtime.

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