Meta’s Rally Keeps Rocking… And A Major AI Safety Warning 9/24/26

20:41Melissa Lee:It doesn't matter. They suck. They've got an AI agent. These are all surveillance devices. What was that? Like, I'm saying, look at him. You want to look like that? You want to be that guy? OK, let's let's let's not let's not go there and let's not a personal attack. Let's just say the hardware is nothing. It is zero to their revenue. I don't think that is true, but right. But let's just you don't think they're losing money on the hardware until they get to a certain money until they get to. Right. But what makes you think they're going to make money on hardware? So this news came out a couple of weeks ago, if you remember.

21:16Melissa Lee:And we I think collectively we said this is going to move the needle for the stock. And it has to the tune of, you know, probably 27 percent or something. We led the show with the Muse launch. And so that was the correct thing to do. Let's say Thursday night I said, you know what, you've got to take profits in Facebook. That was$25 ago. And here we are basically taking it all time highs we saw last August. But it's not a straight line in the stock over the last couple of years. So you have to be willing to bet that you're going to get a better entry point here. Coming up, the latest developments out of the state visit from China, Xi Jinping.

21:46and how it will impact the next phase of the U.S.-China trade relationship. Plus, the headlines and announcements moving Corweave, Starbucks, Oracle, and Tesla. Don't go anywhere. Fast Money is back in two.

21:59Melissa Lee:This is Fast Money with Melissa Lee, right here on CNBC.

22:08Melissa Lee:This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Something amazing is happening in data management. Even though storage needs are constantly changing, companies are only paying for what they need now.

22:45That's because CDW customized an ever-pure, evergreen one, SLA-driven storage as a service solution.

22:52Melissa Lee:Delivering hybrid cloud storage that's easy to manage, efficient, and continuously evergreen. Simplify storage administration with ever-pure and CDW. Make amazing happen. Find out more at cdw.com slash everpure. Hey, Chicagoland! The Wayfair Store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for?

23:29Melissa Lee:Come see all that's in store. Visit the Wayfair Store today at Edens Plaza and Wilmette. Wayfair, every style, every home. Welcome back to Fast Money. President Trump and Chinese leader Xi Jinping holding high stakes talks at the White House today ahead of a state dinner with executives for some of the U.S.'s biggest companies, China's biggest companies as well. CNBC's Eamon Javers is at the White House with the latest. Eamon. Hey there, Melissa. That's right. Chinese President Xi Jinping. He left the White House earlier after a day of welcoming ceremonies here, but there is some serious business to take care of as well, although expectations are low for major breakthroughs on a host of issues.

24:07Melissa Lee:You can see them there on the agenda, trade, AI, etc. But clearly, China is feeling the pinch of the U.S. war with Iran, which has driven Chinese oil imports from Iran down dramatically. You can see it there, down from 1.4 million barrels a day to 534 million barrels a day in August. It has not eliminated them altogether. That's an important point. Now, Reuters reported today that U.S. and Iranian negotiators are exploring a phased deal to reopen in the Strait of Hormuz and end the U.S. naval blockade. And China may end up being a key power broker in those talks. We'll watch for that. But the most significant news of the day came on social media as President Trump announced that, contrary to much of the speculation before the meeting, neither he nor Xi Jinping want to make any significant changes to AI policy.

24:54Melissa Lee:The president wrote, A big day with President Xi of China. Super intelligence, that's the president's name for artificial intelligence, will be a big topic of discussion. but I want to leave it exactly where it is. That's China's position also. Our guardrail is the Department of Justice. Xi Jinping weighing in on AI in his remarks, saying we have both the capability and responsibility to develop and manage AI for good and ensure that the development of AI is always under human control and serves the well-being of the people. Melissa, we're expecting an all-star list of executives here at the White House tonight for state dinner in the East Room, including, we believe, Tim Cook, Elon Musk and Sam Altman and a long list of others as well.

25:37Melissa Lee:Melissa, back over to you. All right, Eamon, and we are also getting some new reports on the Strait of Hormuz. Yeah, our colleagues at MSNOW reporting just within the past couple of moments on a new statement from the Iranian foreign minister about these talks. The Iranian foreign minister confirming that the Iranian side has made a proposal for reopening the Strait of Hormuz to the U.S. side, and they're waiting for a response. Here's his statement. This is from Iranian Foreign Minister Saeed Abbas Aragachi. He says, we have introduced a plan to the United States through the intermediators that if certain conditions are met, the Strait of Hormuz will be open at the end of seven days and talks will be restored.

26:16Melissa Lee:The conditions we have asked the U.S. to meet is nothing new, nothing more than what was already in the Islamabad MOU, which was signed by the U.S. president. He goes on to say here that the Iranian side is not in any rush. They understand that the U.S. side might need to wait until after the midterm elections. So they say they're prepared to wait it out. Now, the president, President Trump, has said he believes the Iranians are stalling until after the midterm elections. So obviously some diplomatic miscommunication there, to say the least. But clearly there is some progress in these negotiations, at least behind the scenes.

26:51Melissa Lee:Melissa, back over to you. All right, Eamon. Thank you, Eamon Javers. We are seeing Brent just take a slight dip at this point, but still at$100 a barrel. Let's bring in China expert John Rutledge, chief investment strategist at Safanad. John, great to see you in person. Good to see you, Melissa. Nice to be here in New York. You think China has the upper hand? I do. I think this is the Rodney King summit. It's like, why can't we all get along? You know, that's really what both guys are saying. And we have big differences. Iran is one of them. Iran is not going to be solved. Iran is now a permanent tax collector for the Straits of Hormuz and on the other side of the Arabian Peninsula as well.

27:28So that's a real problem. But as we see, the bond market's not liking what's going on here. It's because we're losing trust. And trust is what you sell when you sell a bond. You sell trust that it'll be in the future paid. Right now, our reputation is shrinking around the world. So some might say yields are going higher because U.S. growth is so good. And you're saying yields are going higher because people are selling bonds because they don't believe in the U.S. It's the demand. Some bonds are frozen, just like houses are frozen with 2 percent mortgages. If you have a bond that's got a 2 percent coupon, you can't sell it right now.

28:05You have to book the lot. And so that's that's not going to go away. But growth is strong, but it's weird. It's weird in the sense that half of its capex for one thing, which means it's standing on its head. The other half, half of that is rich guys who own stocks, which will die if the other thing dies. So three quarters of growth is a thing that's precarious right now. Inflation, you saw what's happened to diesel oil. Diesel oil is in every cost of everything at Walmart. And so inflation is showing up in the rates. Trust is showing up in the rates. And, of course, growth as well. The growth is real right now.

28:45So if China has the upper hand, then what comes out of these talks? I think this is theater. It's theater ahead of the midterms. They'll announce they're going to buy a few more airplanes from Boeing. We'll announce something. We'll announce that they're going to let us have some more rare earths and minerals so we could build magnets for our computer industry. And I think that's really all you get. Although these two guys, they get along OK on camera. So it could be it could be a lot worse. But the fundamentals are not there. Iran is backing both. Excuse me. China is backing both Iran and Russia into the Ukraine.

29:28And as far as I can tell, there's nothing happening here that's going to fix either one of those two situations. If you don't get them fixed, you don't get fertilizer, food prices, diesel prices and all that, which is what is draining the draining people's pocketbooks. and is also, I think, what shows up in the midterms. So that's what he's worried about. So I agree with you completely on theater. And even if they did announce something, sometimes the implementation doesn't actually happen as well. But let me just push back for a little bit on bonds and the trust that you talk about. That's happening, though, around the world.

29:59Yeah. So, I mean, if everyone's losing trust, then we haven't sort of lost any sort of relative trust. No, that's a very good point. Typically here, the deficit gets all the blame. Deficit's a big number. But in America, we've got$600 trillion of assets. Only 5 % of those assets are treasuries. That pie grows 7 % a year for the last 100 years. So if today people own$40 trillion of treasuries, they don't own that many. Next year, they're going to want to own 40.07 treasuries, which is another$2 trillion. Deficits are relevant here. This is a demand story. But as you said, it's a demand story and an inflation story.

30:42and the inflation is worldwide. I mean, what's happening in the Gulf, and we didn't even mention El Nino yet. It hasn't shown up yet in the prices, but it's going to hit the food prices through the fertilizer chain as well. John, we've got to leave it there, but it's great to see you. Nice to see you. Very nice to see you. John Rutledge. Legends. Yeah. First time, I think.

31:01Melissa Lee:I believe in. I arrived. Yeah. Thank you for coming here. My pleasure. My pleasure. That is, I think, the debate about the bond market is for good reasons or bad reasons. I mean, obviously, people like me that think it's for bad reasons. I could understand the argument that yields are going up for good reasons. Right now, that's what the stock market is saying. Coming up, several single stock moves catching our attention in today's session. The headlines moving Corweave, Starbucks and Oracle next. You're watching Fast Money Live from the Nasdaq Market Side in Times Square. Back right after this.

31:41Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader. A limited number of ETFs are subject to a service fee of$100. See details at Fidelity.com slash commissions. Fidelity Brokerage Services, LLC, member NYSE SIPC. When you partner with CDW, you get more from your devices with solutions purpose-built for your toughest tasks.

32:15CDW experts are creating seamless workplaces using HP's suite of PCs, printers, and peripherals, so remote teams can work flexibly and designers can display their brilliance, all while keeping your customer data safe. Make amazing happen. Learn more at cdw.com.hp.

32:37Melissa Lee:Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just$5. Only at McDonald's for a limited time. Price and participation may vary. Promotion pricing may be lower than meal pricing. Blowing up. Welcome back to Fast Money. Stocks closing well off their lowest levels of the day, though the Dow still fell more than 160 points. S &P, Nasdaq, and Nasdaq 100 all basically flat. Eli Lilly shares up over 2 % after the company said its once-weekly injection for type 2 diabetes received FDA approval.

33:10Novo's comparable offering was approved in March, was launched in the U.S. last month. An Oracle dropping after the company sent a force majeure notice tied to its New Mexico data center project in order to protect itself from higher expenses. The project had faced regulatory hurdles and local opposition. Shares of Oracle down nearly 30 % this year. Karen, what do you make of this? So I don't know what to make of this particular thing, except to say that the cost of building these centers is going to get higher. Right. If you see, we don't know if it'll be actually ultimately enforced or not, but somebody is going to need to pay for that insurance going forward when they cut these new deals.

33:48Already rates are higher. And if you add additional conditions onto that as well, we're just going to see more expensive data builds, which might constrict the building.

33:57Melissa Lee:Well, not only that, if they don't deliver the compute in the time in which they've contracted to do it, they could lose the contracts. And so, you know, the market has already been pricing that in. You know, go back a year when they got that OpenAI contract and investors, you know, it didn't take long for them to just say, all right, this is not likely to happen. And they're still saying it now. Coming up, growing fears around privacy and the capabilities of AI. Why our next guest is calling for OpenAI to be shut down. And why he's ringing alarm bells on a crime spree. Details and fast money returns.

34:26Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast.

34:31Melissa Lee:We're back right after this.

34:42Welcome back to Fast Money. Wall Street may be applauding the rollout of Meta's Muse AI agent, but news of more hacks and cyber attacks in the AI space is raising alarms. Our next guest says it may be time to shut down one of the biggest players in the space. Joining us on set, NYU Professor Emeritus Gary Marcus. Gary, great to have you with us. You're talking about open AI. I'm talking about open AI. Shut them down. On what grounds? Why? They have systematically been scofflaws in various ways. We won't go into the copyright stuff and so forth today, but they've had this problem with hacks, which has started in May.

35:18It was entirely foreseeable because you take these unreliable things called large language models, you put thousands of them working together on a problem, you give them permission to roam the internet, learn credentials, of course it was going to cause problems. So they started doing this maybe, I don't know, a year ago, I don't know how long. We started seeing incidents in May. They didn't report them. Then other incidents came out. The one that just came out yesterday, and actually there were probably several that came out yesterday, was with hacking the Australian in government. Like they're systematically doing this.

35:49Some of this could be probably prevented with basic cybersecurity hygiene, but they haven't shown themselves to be competent of this. There's some information today that suggests that they're involved in some Bitcoin related version of a hack too, as recently as like a week ago. Like they've had months to deal with this. They haven't really dealt with it. But guardrails could be the answer. that guardrails are far from shutting a company down. Well, I mean, one issue is whether the federal government is willing to do any. I mean, they're doing stuff that at least looks a lot like computer crime.

36:23If I did the stuff that they did, if I hacked the Australian government, I would get a knock on the door, right? And, you know, some people have gone to jail for that. But as far as I can tell, the feds have chosen not to investigate them at all.

36:36Melissa Lee:Gary, you wrote a post on Marcus A.I. and that's your substack this morning, And I think this is part of the conversation that we're having right now. But you highlighted a video of Jensen Wong, CEO of NVIDIA, with Ezra Klein from The New York Times. And, you know, Ezra's asking a couple of questions. Pretty simple. And he basically said, well, if you have these things going rogue and they're creating crimes, you shut them down. That's what Jensen said. Right. What would that mean for the ecosystem? Because he's basically saying what you're saying. I mean, it was surprising to hear it from him.

37:04Ezra Klein interviewed him for his New York Times podcast. And I think Jensen doesn't want any new laws and realizes that we do have product regulatory regimes, right? Like, you know, we took the Ford Pinto off the market because this gas tank exploded. This is sort of like that. Like, there could be real harm coming from this. So far, I don't think there's been any severe harm. But we see that these systems can, you know, hack infrastructure, which could lead to, for example, a power grid going down that could take down a hospital and so forth. This is not a laughing matter. a reasonable thing to do is to take an unreliable product off the market.

37:38We have seen, I think, six incidents so far. They've also been slow to report them. So there may be many more. We don't really know how many. That's a reason to say not we're taking you off the market forever, but we're going to take you off until you fix this. That's a reasonable thing for a government to do. And Jensen acknowledged that, maybe not quite understanding the circumstances. And then the amazing thing is like the day after Jensen gave this interview, or maybe it was just a few hours after, Then we heard about the Australian act.

38:05Melissa Lee:About 17 years ago, too big to fail made its way into our lexicon, right? To Dan's question, are these companies now exactly that, given how important they are to the entire ecosystem of the AI trade? I wrote a tweet in January of 2025. I said the countdown to too big to fail starts now. And just wait, and they're going to say, what about China as they accept their trillion dollar bailouts? And I think that's where we're headed. There was a post today on Twitter from David Sachs, who was the AI czar for a while, and he was basically trying to preemptively blame the Democrats, saying that if all these enormous investments fail, it'll be the Democrats to blame because whatever, they want regulation or something like that.

38:51They're already positioning themselves. They know that these investments are actually problematic. The biggest problem is the price war. So everybody's building the same thing. and what happens if everybody's building the same thing? Of course you get a price score. So prices are down by like a factor of 1 ,000 or something like that. Anthropic caught up to OpenAI. Google caught up to OpenAI. Now a bunch of Chinese companies have caught up to OpenAI. And so except for NVIDIA, which is selling shovels in a gold rush, the rest of them don't really have profit margins. There's like one profitable quarter for Anthropic maybe, but they were subsidized during that quarter.

39:28OpenAI, by their own predictions, are going to burn like$300 billion in the next five years or something like that. Like the economics don't really make sense, especially when you have this price war where there's no technical moat. They're all kind of building the same thing. Gary, it's a pleasure to speak with you. Always great to see you and get your analysis of things. Gary Marcus, NYU. I mean, it is an interesting idea. If you said you are responsible, because you always wonder who is on the hook if there's damage done, right? Who is on the hook? If you made them responsible, they'd probably clean things up.

40:00pretty fast.

40:02Melissa Lee:Yes, but it goes back to the original comment you made about their cyber fixes here, potentially, which leads you to the cyber names. It's not coincidental that Palo Alto Networks made an all-time high earlier this week, and these names have been going higher despite valuation. So yes, you're right, but that's why these stocks are rallying, I think. So yeah, if you were BP, right, if there was some sort of BP accident, we saw what happened to the BPs of the world. It's interesting, you know, what are they potentially liable for? Does that have any part of the delay for them coming public? Of course.

40:39Melissa Lee:100%. I mean, like the whole ecosystem slows down dramatically. It wouldn't just be, you know, wouldn't stop with open AI. You know, the other point is... But you would be rushing to do that. Rushing if you were they. But if you're an investor, why would you backstop? That's ultimately what you're doing. And just last thing with EVs, you know, they still have full self-driving or supervised full self-driving on Teslas. You are not allowed to take your hands off the thing. So this is there is precedent on this. Much more fast money coming up.

41:11We've got a news alert, the latest twist in the MGM saga, the Wall Street Journal reporting that the casino operator is now considering a bid for Barry Diller's People Incorporated. That is after Diller withdrew his bid for the company just yesterday. So what do you make of it? Well, it's interesting. I haven't seen this. It's almost a Pac-Man defense, although MGM had or people had dropped their bid for MGM for financing. They do. People does still own 27 percent, I think, of MGM. So the MGM would be buying back MGM. There's that for the reasons that I guess that Barry Diller wanted to buy them.

41:49Maybe that makes sense for MGM to merge with people. It's interesting. I don't know what to make of it. I don't own either. But this will be fun to watch. Can I break some news here on this show? You can always break news.

42:02Melissa Lee:Tim Seymour is going to be the sexiest man alive in 2027 People magazine. I mean, just look. Get a close... I thought you were going to say you're the last guy who still gets People magazine to your house. What are we doing here? Take the camera off me, please. Come on. What's going on here? All right, let's get to Costco quickly. Shares are fought despite beating revenue and profit estimates for its fiscal key. For a company got a 15 cent boost from tariff refunds, which it says it reinvested in increased member values like lower prices. Conference calls start at the top of the hour here. Tim, when you make it, Costco.

42:38It's OK. So I'm ready to do something here. Costco, to me, is not cheap, yet it's extremely resilient. And in a world of higher gas prices, people are going to places like Costco to do whatever they can do to save. The membership flywheel is extraordinary, but the problem is that the membership flywheel is growing at a slower pace. I think it's a little under 4 % on a year over year. So this is the last couple of years we've started to see membership wane a little bit. You get to a place where it's really been so good. I think Costco will be resilient, but I think Costco and Walmart, which I'm long, I'm not long Costco, have some headwinds here.

43:18I just think there's a combination of the consumer that is fatigued and even that different consumer that more, call it the upper part of the K, that's shopping here. I do think that there are margin pressures. And I think as long as gas prices stay high, it's nice for them that gets them into the stores. But ultimately, what we've seen with Walmart is that multiple is not sustainable. It doesn't mean it has to go back to historical levels, but north of 35, no. Up next, the surge in the 10-year yield now pushing mortgage rates to a new eye-popping level. Breaking details next.

43:56Welcome back to Fast Monday. The surge in yields over the last two days pushing rates on a 30-year mortgage to levels not seen in years. Diana Olek's been running the numbers this afternoon. Hi, Diana. Hey, Melissa. Yeah, the average rate on the 30-year fix just hit 7.45 % this afternoon. That according to Mortgage News Daily. That is the highest since April of 2024. Now, I know you may have seen headlines from Freddie Mac this morning that rates had just crossed 7%, but that's an average backdated over a week. So rates really began shooting higher this week, as you said, with the bond sell-off.

44:31The rate moved higher this morning on Fed comments, higher oil prices and stronger economic data. But then bond yields surged again this afternoon. So Matt Graham, the COO of Mortgage News Daily, ran his survey again and found it had jumped 19 basis points just from yesterday. He said there was, quote, no obvious catalyst this afternoon. Explanations require concocting narratives and then defending them. There's no objective, irrefutable way to connect the dots today. Sellers decided to sell a lot, he said. Now, remember, we were at 6.75 % just at the end of August. Melissa? What an increase. Diana, thank you.

45:09Diana Olick. I mean, it sounds like a screeching halt, potentially, to transactions in the pipeline here.

45:14Melissa Lee:It's amazing how well home, not well, they're resilient to home builders. And just for clarification, we love Diana. It's her space that we're not particularly fond of in terms of the stocks. I just want to make that clarification. By the way, Home Depot's at a multi-year low today, which is fascinating. Karen? I wouldn't call it fascinating. I call it sad, painful, things like that. It's understandable. Right. It is so directly tied. I am still long, which has not been the right place to be. But at this point, staying long. All right. Up next, final trade.

45:56All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.

46:06Melissa Lee:You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money Disclaimer, please visit cnbc.com forward slash Fast Money Disclaimer.

46:53See details at Fidelity.com slash commissions. Fidelity Broker Services, LLC, member NYSE SIPC.