“Big Short” investor’s AI warning... And a key inflation report on deck 8/11/26

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0:32Mazda has been named Consumer Reports' safest new car brand. It starts with our approach. Every Mazda comes standard with proactive safety features. So you're more aware of what's around you, more focused on the road ahead, and ready before problems ever start. Mazda. More of what matters most to you. Go to mazdausa.com to learn more. Consumer Reports does not endorse or promote any product. Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap. Call it the genius of Jensen. The day after NVIDIA announcing a massive deal to a number of the street's biggest firms, we were asking, what does it all mean?

1:17Steve Eisberg, a big short fame, and the traders ready to break it all down for you. Plus, losing its tread. Another sneaker maker getting hammered today. Shares of On Holdings down over 20%. its worst day ever? Is it time to just sideline and sell the entire sneakers sector? We'll debate later on. We're going to go inside Kava's results, do a little options action on Cisco and find out why is the Chartmaster ready to ditch value for growth? Huh. Good question, Carter. Hi, everybody. I am Brian Sullivan in for Melissa tonight coming to you live as always from Studio B right here at the NASDAQ and on your desk, the aforementioned Carter worth.

1:57We've got Karen Feynman. We've got Dan Nathan and we have Julie Beal as well. Big hour ahead. Thanks for being with us. Let's begin with the day after the day. 24 hours ago, over$23 trillion in assets under management was sitting around this very table. NVIDIA's Jensen Wong flanked by David Solomon of Goldman Sachs, John Gray of Blackstone, the leaders of KKR, Brookfield Apollo, and Larry Fink of Black Rock was there as well. The big announcement, a half a trillion dollars of investment in AI infrastructure and maybe the creation of an entirely new asset class. Well, the market today, at least NVIDIA, kind of yawned.

2:40NVIDIA closing a touch lower. But where was the action? It was in the stocks of most of the financial backers. They rose today in a fairly big way for most, Not all, but many of them. The announcement kind of thin on specifics regarding rates and how the lending facilities will all be constructed when this does, if this does kick off. So we want to know, based on what we know, what should you out there, all of you listening and watching, think about yesterday's big AI summit, which happened right here on CNBC, right around, by the way, this very desk here at the NASDAQ. And what does it all mean for the health, if anything, of the AI trade?

3:22Dan, Nathan, a lot of questions there. Sure. So just take it anywhere you want, because nothing's happened yet. But no doubt, this was a big announcement. Yeah. I mean, listen, these arguments are probably pretty consensus at the moment. I think a lot of the folks that were sitting around that table right here yesterday at 4 p.m., I think they all have a lot of good reasons. I mean, they have trillions of dollars of good reasons. They see an opportunity over the next 10 years, right, to monetize these investments. And, you know, to do so, you've got to lay the rails right now. That's the view here.

3:52And so you think about all these big hyperscalers, they use their cash flow first. Then they started using their balance sheets. Then they started raising debt. Then their debt levels got probably higher than we've ever seen for companies like that. They started selling equity. We've had IPOs. We're expected a couple other big IPOs. So at this point, you're just going to need consortiums like this to do these off balance sheet sort of vehicles. And, you know, we know this already. A lot of these hyperscalers have not wanted this debt on their balance sheet. So when I look at an announcement like this, I look at all these luminaries, I say to myself, there's a single point of failure, though.

4:25OK, so we've always said this about NVIDIA. This whole thing has to keep surrounding NVIDIA or they keep having to throw the cash out to the ecosystem, backstopping a whole heck of a lot of smaller companies so they can buy their chips, big companies so they can buy their chips, investing in the companies and giving the capital so they can buy their chips. And now it's turned its way into open AI. And we spent a lot of time over the last 18 months talking about how they've thrown around hundreds of billions of dollars in deals, essentially, to build compute for them. And when you think about all of the interconnectivity of this stuff, at some point it goes really bad.

5:01I think that's a consensus view. I think a lot of folks feel that way. The problem that I have right now is so much of the GDP growth here in this country, so much of the S &P 500 earnings and thus the results of the S &P 500 at all time high are really tied to this. And I could take it overseas a little bit. Think about the economy in South Korea. Think about the economy in Taiwan. If there is a pullback. What am I thinking? If there is a pullback, Sully, and we just saw, you know, the KOSPI in South Korea almost get cut in half because it's Samsung and SK Hynix. If you think the stock markets are leveraged to that, just think about how the economies are.

5:35And I think that's probably what we're in for in 2027. Just any little hiccup and you're going to see it go from the markets to these economies. OK, Karen Feinerman, two points on the financial side. Number one, a lot of big names around that table. One name that was not there was your best friend, Amy Diamond. Comment on that. But also, is this a way to pass the buck literally and maybe figuratively to Wall Street and thus ultimately to retail investors so they can avoid the criticism of, well, are these circular financing deals? So I don't know, pass the buck. I mean, I get what you're getting at.

6:09But to me, a lot of different things are going on with that announcement. The creation of a whole new securitization class of assets that could be securitized. And what that revenue stream. Oh, and they will be. And they will be what that revenue stream could mean for the Goldman Sachs of the world in particular. You know, just securitization fees and then trading. And then, I mean, you can see why they'd want to do that. It's not so crazy to me. And the analogy was made for, you know, if you look at GM, there's GM finance. And GM finance is the purchase of cars. And I don't know if you would find that a circular transaction.

6:43But that's the way it's been done for, I don't know, 30, 40 years now, maybe, give or take. And that functions. That works. Then there's NVIDIA creating what you call their very central piece of the puzzle. And others are trying to compete for that. But it is interesting that he was the only one there of the chip side, right? And so that's a very interesting place to be. I think it sort of extends the story a little bit longer. We'll see. We'll see how it actually plays out. But it was fascinating to have all of them come together like that. So follow up. A lot of the asset managers that were around the table, not Goldman.

7:20OK, they're up 44 percent a year, but you got KKR Apollo. They're different than Goldman. But you think about like a John Deere, right? You think about like farmers. OK, John Deere sells tractors to farmers, finances the farmers. The farmers may sort of sell the receivables on their corn to buy the John Deere tractor to harvest the corn. To me, this deal, I know it's a lot more complex and we say NVIDIA and compute and AI. But this deal, to your point, I think on GM, isn't that original? We're creating a new asset class just like they did 100 years ago with lean hog futures or oil trading. I don't think it's that.

7:58And this is the asset class, I think, that the market reflected today will be big. Right. So I think what you I mean, I'm confused. Are you saying this is sort of them pretending? I'm actually confused by my own comment. So it's fine. So then I understood you. Your point about GM, you know, GM started the financing back 100 years ago, right? And they did it so people could buy their cars, right? They were pretty expensive. And you know what happened 10 years after they started laying into consumers? The market crashed. And then we went into a depression. And I got to tell you, there was – Can you – are you connecting those dots?

8:29Yeah, I am. Okay. You read Andrew's book of the ARS, 1929, The Crash. If you read that book in the 10 years into the lead up of The Crash, all this stuff was going on. All of it. Go read it. It's like a thousand pages. Yes, although margin was very much central to the collapse. We're not talking about margin right now? I mean, look what just happened in South Korea. I'm talking about stocks owned on margin. That's what I'm talking about. We're seeing that right now. We have margin levels. We totally agree. No, I know. But, like, I'm telling you guys, you could take his book and you could change the names, and it's the same thing that's going on.

9:00I mean, like, that's it. I mean, so, and it's all there. Come on. You're a student of history. Get in there. It's always the same. We always change the names. Sitting there. That is a quarterback story. Julie Beal, you've got to jump in here. Hold on. Hold on. I just want to let her know that we didn't forget about her. Okay. But your point is that it's a cliche, it's not even worth bringing up, but history repeats. We know this. You can change the names. That's the nature of this. But I think the most interesting thing is how well those stocks performed today. KKR, the leading stocks within the S &P 500.

9:29Of the whole segment, by the way. Correct. And I went off some rant. Because it gets down to when the bell goes up at 930, what are you buying, what are you selling, right? We're called fast money and so forth and so on. But KKR and OWL and ARIES, if you look at all stocks in the S &P 500 financial sector, the top five or six were all of these players, which is very important. And it looked like they're headed higher. They're bearish to bullish reversals. Julie Beal, what's your what's your take on us? I mean, we got Steve Eisenman sitting down here. Is this a 1929 moment all over again where we're creating some asset class that's ultimately going to implode and cause the destruction of humanity?

10:02Or is this something that we need to reduce some of the risk and fear around NVIDIA and all these people with this idea of sort of vendor financed business? Right, because whenever we do financial engineering with complex structured products, it always turns out well, right? I don't I don't like I think that's always been the case. I sense sarcasm. No, I mean, look, I think that the struggle that we have is I don't really think that the bottlenecks in AI are so much about financing, right? I think that there's been plenty of opportunity for companies to raise capital and there's tons of appetite.

10:36It doesn't really feel like the bottleneck. To me, the much bigger bottleneck is, do we know exactly what the economics are for a lot of these businesses such that we want to continue to support them? And also, will we continue to have a lot of friction in terms of building new data centers, getting enough turbines? To me, the real impediments to further adoption of AI are the limits of all of us in terms of being willing to put it into our workflows and the physical constraints of building out the infrastructure. They're more meaningful to me than what's going on with the financing. Well, I think the interesting thing, Julie, and those are great points, a quick follow-up with you would be this.

11:15How did this all come about? I would love to go maybe behind the scenes. Maybe it's Andrew's follow-up or epilogue, Dan, where you could say, did Jensen call the banks? Or did the banks call him? Somebody got those people in a room a while ago. This all didn't just happen yesterday. They got them in a room and they said, we need this. And my question, I guess, I wonder is, what is the need that this new asset class and this new eventual product or products will meet? I think that that's actually really central to the idea that there is so much engineering happening right now by NVIDIA and Jensen in terms of what are the ways that we can juice and increase demand, broaden it, make it as big and substantial as possible.

11:59And I think some of the engineering around how do we make the chips more efficient might be better served so that it's actually we can prove better returns. But I do think that it makes all of us pretty uncomfortable to have such an intense full-court press in terms of how do I come up with new ways to increase financing. It doesn't really feel like it's to the benefit of markets broadly. Well, let's broaden that out. It's a good conversation. I like kind of a meaty discussion on an August 11th night. Let's bring in one of the big short investors, Steve Eisman. He is now the host of The Real Eisman Playbook Podcast, also former senior portfolio manager at Neuberger.

12:37Berman, you heard all this. You're kind of sitting there. I didn't hear that. Yeah, you're not patched in. I'm not patched in. Point is this. Let's go back to kind of maybe we're using the car analogy. Let's go back to houses. People used to buy houses with cash. They would save up. By the way, not that long ago they did that. Then, of course, you create the 30-year mortgage, which is great because now you can borrow money to buy a house. Prices go up. But then people, I don't know if you heard about these CDOs and CLOs squared. Do you know one thing about that? I heard about it. you heard about that a little bit.

13:08Anything about what we know, we don't know a lot, about what we know from last night and that news alarm you? No, nothing. First of all, it's not a new asset class. Everybody should just calm down. I agree with that. It's a securitization of an AI data center that produces revenue. I mean, people have been securitizing stuff that generates revenue for 50 years. So I don't think it's revolutionary. What I think it's important is that all these hyperscalers have been funding the AI data centers out of their own cash flow and raising debt and now in some cases raising equity. And given that this is$500 billion, it's possible that the free cash flow of the hyperscalers will start to improve.

13:58That's all this means to me. Let's say NVIDIA is the home builder, right? NVIDIA is here effectively as the home builder. And the home builder 50 years ago went to the banks and said, we need some instrument that enables people to borrow money so they can buy more homes, right? Because we don't want to take all the financial risk. So I don't know a lot about Wall Street, except I do know this. And everybody's jumping here. All these firms that we just talked about whose stocks, yes, Carter went up today. Most of them went up today. They're going to make a lot of money off this product, yes or no?

14:29Oh, definitely. Like the banks did with mortgages. They'll make fees. They'll make interest income. I mean, their revenue is not going to double, but, you know, it'll improve. So in that way, is it a new asset class? It's not a new asset class. It's a securitization of something that produces revenue, period. Yeah, I mean, the last time we— I mean, you can secure—people securitize songs. So if you can securitize songs, you can securitize an AI data center that, God willing, produces revenue. Right. Or a song. Or a song. So, Steve, isn't there an issue, though, with just the way in which we're seeing these products securitized, what they're going into?

15:10You talk about the ability for these data centers to make money and ultimately be a payoff. But when you think of the mismatch and duration to some degree, because in these SPVs, as you know, a lot of these companies like Meta, for instance, you know, they have four year leases of these things. They own no more than 20 percent of them. They can get out for a whole host of reasons. If there is overcapacity overbuilt and there will be at some point in the not so distant future. Isn't there going to be some issues with these products? And like what what could go wrong in your eyes? Like I get it.

15:41Lots of things get securitized. A lot of things go bad. I don't think this is where the problem is. The hyperscalers are making lots of revenue, but their free cash flow has deteriorated dramatically. But even that is not the issue. The issue is, to me, that something like 70 % of all AI revenue for Microsoft, Amazon, Google, Oracle, is from Anthropic and OpenAI. Period. Just those two. And then if you dig down even further, it's 70 percent of AI revenue. It's 25 to 35 percent of their cloud revenue. So. The futures of these massive companies, in a sense, are a bet. That open AI Anthropica is going to succeed.

16:33Private companies whose financials until they go public are hidden to almost everybody. wealth and hidden. B, we know that they lose billions like it's water. So to me, the Achilles heel of this whole story, if there's going to be an Achilles heel, is if something bad happens to anthropic and open AI. And I think the argument about what that could be is the Chinese open-end model, open-weight models are much cheaper. And if they start really taking a lot of market share, and it sounds like from what I'm hearing that they're starting to, you could have a big price war. And then we have a problem.

17:19That, I think, is the Achilles heel of the story. That's something I'm monitoring. But the issue is, you know, as everybody knows who short stocks, Carter, timing is everything. You know, that story could happen. But it could be a year from now. And until then, you know. And it may not. And it may not happen at all. But even if it does happen, it could happen a year from now. And between now and that year, the hyperscalers are going to still be spending money like crazy on NVIDIA chips. So when you hear Andy Jassy talk about AWS and the spend and talk about, you know, not hard numbers, but some sense of return on capital, what they expect from it, does that, what could go right?

18:01I understand what you're saying. What could go wrong? You know, having a very cheap influx of Chinese models that just does something like it did to our steel or to our solar panels, let's say. What could go right that would? What could go right as Anthropoc and OpenAI somehow do well? Or others knew. Or other people show up and take up the slack. And then it'll be OK. So I'm not willing to make a call yet on this because I think it's so binary. and it may be even with it being binary, it's so early. You know, when I showed it subprime paper, the nice thing about it, the nice thing, so to speak, was I had a thesis that mortgage underwriting had deteriorated.

18:47But that was just my thesis. What gave me the confidence to actually do something was that I subscribed to Moody's securitization database. And Moody's securitization database provided you every credit statistic imaginable on every securitization every month. So you could check. And as long as there was still massive deterioration every single month, you'd pat yourself on the back and you'd say, I'm still right. There's no if, anthropic. But that's where this is good. Hold on. I know we've got to go. It's not where this is good because if it creates that liquid market, won't we get those kind of databases that you're talking about?

19:25Add some transparency to a market that is, for the most part, largely untransparent. Well, it would be nice when Antropic goes public. Thank you. Opaque. It would be nice for Antropic to go public so we can see real numbers and then see every quarter how they're doing. And, you know, until then, it's just anecdotal. Before you go, because it's your wheelhouse, of course, where are you on the banks in the sense that equity has made a low on March 30? Right. The S &P is up 20%. The BKX is up 30 and BAC is up almost 40. Do you think some of these are quite extended here or do you think there's room to run?

19:59I think on a valuation basis, they're all expensive relative to history. But if the cycle continues a lot longer, they'll probably march higher. But I wouldn't be buying them here because of how expensive they are. Hey, Steve, going back to this NVIDIA deal, right? So it's only NVIDIA. To your point, you just made it. It's interesting right now. We have Google with TPUs. We have Amazon with Tranium. We have AMD with Radian. I mean, everything's got it. And, you know, I think it's interesting, though, that finally the competition is here for NVIDIA. And now all of a sudden you get all those folks around the table.

20:28These are the brightest people that we have in finance the world over. And these guys, NVIDIA, are going to be providing the last 25 percent backstop. It almost seems like they're the last ditch, sort of. It's like the Alamo, like for these guys. And they've got to be there. And so to me, it seems like, again, a single point of failure, because if you do see a pullback, you see less demand. And NVIDIA has to start backstopping this stuff. If you do see, let's say it's the Chinese models, it's also Chinese memory. It's also, you know, like a whole host of things coming from China. There could be some real problems real quickly because then NVIDIA starts reaching into their cash flow, which they generate about 50 billion a quarter.

21:09You sound really negative. You know what? Because everybody is so positive about it. And to me, it just seems silly. I'm not so positive. My point is that I know what I'm looking for, and it's not here yet. And if it shows up, I'll be happy to say, here we are. But until then, it's supposition. And it's real money right now. And if it does ever go bad, Dan, we're going to coin it G-P-U. I know. We won't. See, I can't try it here. Steve Eisen, thank you very much. Thank you. You're the only one I like. All right, coming up, sneaker investors need to do a little bit of soul searching. We're going to give you the results that routed on holdings for its worst day ever.

21:57Some of the other names that are getting kind of caught up as well. Fast Money back at 2.

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23:35The stock is up 13.5 % right now. Revenue doubled in the quarter. Christina Parsonneboulos, to quote the great Karen Feidemann earlier, what went right? Revenue. Backlog. Lots of things. Record revenue. And after selling off the day after earnings for five quarters running, the stock may be finally getting rewarded or may be getting rewarded up double digits after ours. Let's see if it holds till tomorrow. But CoreWeave buys AI chips for data centers, rents out that compute to companies like IBM. It also sells the software and developer tool, so it's not just a landlord for AI. The company is saying they see margins expanding into year-end.

24:11The catch, though, is debt. A heavy interest bill still pushed Corrie to a net loss of$626 million, though that came in narrower than Wall Street feared. Backlog grew to$104 billion, with more than$25 billion in new commitments added early in Q3 this current quarter, though the pace of growth is slowing. On the call, the CEO stating pricing and margins for their Blackwell and Vera Rubenskews are setting new highs, while pricing for prior generation chips is or at above where it was years ago. So that's also a bullish term. And they said that their near-term capacity remains effectively sold out.