Morning Call 10/29/26

0:00When you fill up a 76, you're ready to go to that music festival you see posted about each year but have never been to. And you're ready to go to a sunrise yoga class before work and go dog sitting and try to get the zoomies under control.

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1:19Morgan Brennan: Good morning. I'm Morgan Brennan coming to you live from the Charles Schwab Impact Conference here in Boston for a very special hour of Morning Call. You've got about 6 ,000 attendees here at this conference this week, all investment advisors. And what's in focus? It's markets, it's economy, it's trading and investment, and how folks, more and more folks on a daily basis, are engaging with these markets. So we've got coverage all day long. It's going to start right here on Morning Call with my exclusive one-on-one with Charles Schwab, CEO Rick Worcester. In just about 30 minutes from now, we're talking everything from 24-7 trading, retail activity, IPO pipeline.

1:58Morgan Brennan: rates so much more crypto AI. It's going to be a big and robust conversation. You don't want to miss it. But first, I'm going to send things back over to CNBC HQ. Dom Chu is going to kick off things with today's market action and what we're seeing in the futures market and elsewhere. Dom. Yeah, thanks so much, Morgan. So right now, U.S. equity futures are very mixed, and it's because of a lot of earnings results that we're going to talk about a little bit later on in the show. But for right now, the Dow is implied higher by the outperforming 308 points, the S &P down by about 15 points applied at the opening bell, and that tech-heavier NASDAQ trade down 310.

2:33We'll have more on that later on in the show. On the Treasury side of things, in the wake of a Fed decision, or maybe no decision on interest rates, a holding steady of it, you got the 10-year note yield at 4.991%. That was kind of right where it was right before the Fed announcement came out of here. And then the two-year note yield at 4.675, and the 30-year long bond, 5.326 percent. Energy price is also a key focus as well. We are seeing a little bit of movement to the downside. U.S. benchmark West Texas Intermediate,$101.20 off one and a half percent. Ice bread crude futures, the world gauge just a hair below$114 per barrel, down about one and a quarter percent as well.

3:12Turning now to our top story and big results from big tech pouring in after the closing bell with more expected this afternoon. We're going to start with shares of alphabet, sinking right now ahead of the opening bell and on pace for its worst post-earnings reaction in corporate history as a public company. You can see here we're now down just about, you know, eight or nine percent. The search giant is seeing its first double-digit miss on earnings and revenue in almost four years, even as cloud computing revenue comes in ahead of Wall Street expectations by some two billion dollars. Now, search and YouTube sales, though, coming up short as AI chat and agents now appear to be eating into the company's lucrative search ad business.

3:54This is the second sales miss for search in as many quarters, but the company is still hopeful on that subject. It's worth noting that the strong growth in AI mode queries had an impact because of the lower monetization we were seeing in AI mode. To be clear, we feel very good about our trajectory here. Our ad experiments have shown promising results, And we're now scaling ads within both AI overuse and AI mode to more users and more queries, including, as I mentioned, international markets and multi-turn ads in the U.S. All right. Alphabet's capital expenditures plans are also disappointing, if you want to look at it that way.

4:29Almost$4 billion below what the street was expecting. Now, despite the mist, the company's cash burn is still red hot. Free cash flow is now negative by more than$9 billion. So that's the story on Alphabet. it. Switching now to Microsoft, a top and bottom line beat for its quarter. Just like Alphabet, the company is seeing strong performance in its Azure cloud division, topping estimates by nearly a billion dollars thanks to growth in its AI agents business. Now, Azure is Microsoft's single biggest earnings driver in the entire company. Those numbers are offsetting weakness in devices and consumer, where sales fell by 3 % year on year.

5:07Same CapEx story, though, here as well. Almost $5 billion below consensus. Now, on the back of those results and lower than expected CapEx numbers, weakness again in the neocloud sector. Lower spending by hyperscalers means less cash to fuel bottom lines at places like CoreWeave, Nebius, Iren, and others. As you can see here, the ripple effects are anywhere down from 4 % to 6.5 % on those neoclouds. That's something that came up in conversation with Treasury Secretary Scott Besant on CNBC just yesterday, saying he's not worried about the business or its debt loads. I don't think it's problematic at all because we're seeing that that's the the neoclouds are a small component of the overall ecosystem and we're still seeing the financing getting done we're still seeing that the deals get done and we're also seeing companies like Meta decide to finance with equity.

6:07All right so that's Alphabet and Microsoft. Finally, there's Samsung moving lower overnight in Asian trading, despite third quarter overall profits jumping nearly 800 percent and chip profits surging 15 fold compared to a year ago, thanks to strength in AI chip demand. Now, the company says its memory chips are sold out through next year and it expects supplies to remain tight through the year 2028. A far more conservative outlook than rivals SK Hynix, which see a supply squeeze well into the year 2030. If you take a look at the rest of the chip complex outside of Samsung, which is down 4%, you can see here NVIDIA, Advanced Micro, Taiwan Semi, SK Hynix, Broadcom, all amongst those shares that are down anywhere from about half to 2 % to 3 % lower on the day as well.

6:52Now, let's see how Europe and Asia are shaping up in the wake of all of that. Ian King is in London with that trade from across the Atlantic. Ian.

7:02Hi, Dom. Well, Asian equities gave up early gains as investors continue to digest tech earnings with those weaker expected than expected numbers out of alphabet weighing on sentiment. The South Korean market came under particularly heavy pressure as those worst unexpected guidance from chip giant Samsung you just referred to disappointed traders. Well, here in Europe, the mood is slightly more upbeat as major indices seem to shrug off disappointing tech earnings, with investors instead laser-focused on today's key European central bank decision. Shell hiked its quarterly buyback to$5 billion versus last quarter's $3 billion figure after adjusted earnings virtually doubled on the year to$10.8 billion, coming in above expectations.

7:45Meanwhile, the crisis at Volkswagen deepened in the third quarter, operating losses at the embattled carmaker more than quadrupling to nearly 6 billion euros as sales revenue fell by more than expected. Morgan, back to you in Boston.

8:00Morgan Brennan: All right, Ian King, thank you. Well, let's keep the conversation going around big tech. And let's bring in Richard Claude, technology portfolio manager at Janice Henderson. Richard, it's great to have you back on the show. I got to start with Alphabet. What was your reaction to the print we got? Yeah, look, you know, as previewed, you know, very mixed, you know, the search side, you know, missing and ultimately overall, you know, revenues and profits missing. But, you know, very much a tale of two stories because that cloud business is incredibly strong. Margins are strong. You know, they gave some very good updates on the AI side, you know, Gemini 4, you know, back to the frontier, Argon and Carbon doing well, you know, tokens, you know, up, you know, very, very strongly.

8:37And, you know, very much saying that that search side and that move to AI, you know, that bear case of, you know, chatbots are going to disintermediate them. They're saying this is very much in their control. They've got the engagement. They're starting to monetize. We've just not seen the catch up as that query growth has shifted over to the AI side.

8:52Morgan Brennan: Yeah, it's interesting because to your point, I mean, cloud revenue more than doubled. That certainly seems to be powering on all cylinders here. You are seeing more AI adoption as well. And they talked about that on the call last night too. Similar situation at Microsoft in terms of some of that monetization of all these AI investments within the cloud business as well. Why do you think it's such a big, stark reaction to Google and Alphabet here? I mean, how much does free cash flow matter, where Microsoft has actually been a lot more cautious in terms of how it's hanging on to those numbers and what it's deploying?

9:26Exactly. And the market's been debating this, particularly as yields have gone higher, you know, the quantum of CapEx and the financing of it. And obviously, neoclouds are at the actual epicenter in the canaries in the coal mine. But, you know, even debates for an alphabet where, you know, again, you need to see the core business, you know, keep running very nicely to fund a lot of this capital spending. Now, it is, but obviously just at the margin, you know, obviously it was below expectations. So people are more concerned about that. I don't think anyone's concerned that they're not going to spend a lot of capex and they won't be able to finance it.

9:54And actually, you know, as well as the results, we had Oracle yesterday at their analyst day, you know, giving some very stark updates as to, you know, actually being free cash flow positive earlier than people think, being able to generate 30 billion of free cash flow going into their fiscal year 29. So this debate will keep running. But as you say, on the cloud side, we're definitely seeing some great return on investment. And that's why these companies are rationally thinking about, you know, spending more as we go into next year and beyond.

10:18Morgan Brennan: How does this set us up for Amazon after the bell today? PROBABLY A BIT SIMILAR TO THE GOOGLE SIDE. SO THERE WILL BE A LITTLE BIT OF CONCERN THAT JUST GIVEN THAT ADVERTISING SIDE HAS BEEN A BIT WEAKER, IS THAT PURELY THE AI SHIFT? THERE'S A LITTLE BIT OF MACRO IN THERE OR CONSUMER IN THERE. SO AGAIN, PEOPLE ARE GOING TO BE FOCUSED AS THAT E-COMMERCE BUSINESS HOLDING UP IN THE FACE OF SOME OF THE PRESSURES WE 'VE SEEN WITH OIL PRICES HIGHER AND PETROLE AND DIESEL PRICES HIGHER. BUT AGAIN, I THINK IT WILL BE A SIMILAR STORY THAT, AGAIN, ON THE other side on the cloud side and AWS is going to be going phenomenally well.

10:47Backlogs going to be great. Margins are going to be great and they're going to be spending a lot of capex as well. Obviously, particularly them and Alphabet very exposed to Anthropic and again, we've seen very strong growth there as well. So, you know, this is all intertwined and ultimately the whole ecosystem has to be healthy. The end customers playing the cloud guys have to be healthy. Those cloud guys, if they're getting the return on their capex, they'll keep spending with the semi-companies.

11:10Morgan Brennan: Yeah, I mean, it's interesting to see how choppy this earnings season has been for tech players and anybody who's skewed to AI. Case in point, I mean, ServiceNow, that stock is down 18 % right now pre-market. Huge move for one of the biggest software players when it comes to AI adoption and the data layer. How does it speak to what we're seeing in terms of deployment, application, and again, the volatility from quarter to quarter? THE MARKET IS STILL PRETTY JITTERY AROUND EVERYTHING HERE. WE 'VE HAD A STRONG ROTATION OUT OF THE SEMIS INTO THE SOFTWARE COMPLEX AND WE 'VE SEEN BIG MOVES FROM THOSE NAMES IN THE LAST THREE MONTHS.

11:49EXPECTATIONS ARE HIGHER AND WITHIN THAT SAS COMPLEX SERVICE NOW IS SEEN STRONGER OR BETTER POSITIONED AI PLAYS. MISSING AND GUIDING A ACCELERATION IS NOT WHAT YOU WANT. THAT IS A MORE CROWDED POSITIONING IN THE NAME THAT EVERYONE LIKED IN THE COMPLEX and then you're just getting that deceleration that's going to feed the fears around some of that disruption from AI. But, you know, as you're talking about, you know, it's talking about 0.5 or 1 % miss and yet you're getting such stark reactions to it. Again, that's not particularly healthy because it doesn't help people re-engage with these names.

12:22But again, I think it's just much to do with the violent reaction and sort of rotation that we've seen in the last few months from semis over to software. So the bar is just a lot higher in software land today.

12:32Morgan Brennan: All right, Richard Claude, thank you. It's great to kick off the hour with you and sort of sum it all up in terms of what we're seeing across the tech ecosystem. We're going to have a lot more to come here on Morning Call, including my exclusive with Charles Schwab CEO Rick Worcester. Plus, we've got reaction to Fed Chairman Kevin Warsh with former Cleveland Fed President Loretta Mester. That's coming right up. What the central bank could look like in the new year and later. We've got much more earnings from Ford to FedEx, plus a data center deal that may be in the works. A very busy hour still ahead when Morning Call returns.

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14:34In 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated. The rest will be regular FOMC policy setting meetings. And I expect that in 2028, we'll have two meetings dedicated to discussions of strategy and six for setting policy.

15:00Morgan Brennan: Well, that was Fed Chair Kevin Warsh yesterday speaking with reporters after the Central Bank kept rates on hold, signaling that in years ahead, it will reduce the number of rate-setting meetings in favor of focusing on broad monetary policy strategy. Joining me now to weigh in on that and more is Loretta Mester, adjunct full professor of finance at the Wharton School at the University of Pennsylvania and the former president of the Cleveland Federal Reserve Bank. She's also a CNBC contributor. YEAR. IT'S GREAT TO HAVE YOU BACK ON THE SHOW. I MEAN, I WOULD ARGUE THIS WAS A HAWKISH HOLD BUT THE BIGGER NEWS WAS THE FACT THAT THEY'RE REDUCING THE NUMBER OF POLICY SETTING MEETINGS.

15:36Morgan Brennan: YOUR THOUGHTS? WELL, YOU'RE RIGHT. EVERYONE KNEW THAT WE WERE GOING TO HAVE A PAUSE AT THIS MEETING FOR A CONTENTAL BANK THAT ISN'T DOING FORWARD GUIDANCE. THEY KIND OF GAVE US A LOT OF forward guidance of the intermittent period. I mean, I think the move to having six active meetings a year for policy studying isn't that big a deal, honestly. You remember before we went to two-day meetings at every Fed meeting, there were two meetings a year where the Fed really looked at bigger issues. So yes, we won't have a vote on interest rates at those meetings, BUT IT'S NOT UNPRECEDENTED THAT THE FED LOOKS AT BIGGER ISSUES.

16:18Morgan Brennan: WHAT DID YOU THINK ABOUT SOME OF THE COMMENTARY WE DID GET FROM CHAIR WARSCH, YOU KNOW, TALKING ABOUT THE FACT THAT THE BOND MARKET WITH THE RUN-UP IN RATES IS DOING SOME OF THE WORK FOR THE FED RIGHT NOW. HE ALSO REJECTED THE IDEA THAT, AND THIS HAS BEEN A DEBATE ON CNBC COMING INTO THIS MEETING, AND EVEN NOW IN THE HOURS AFTER THIS PRESS MEETING, REJECTED THE IDEA THAT RATES CAN'T GET AT THE THE AI BUILDOUT BOOM. HE SAID INTEREST RATES CAN GET IN THE CRACKS AND THEY CAN AFFECT DIRECTLY OR INDIRECTLY ALMOST EVERYTHING. THERE'S BEEN SUCH A DEBATE ABOUT HOW MUCH THAT'S TRIGGERING OR PROPELLING INFLATION HERE.

16:54YEAH, I MEAN, I THINK IT'S HARD TO ARGUE THAT THE AI BOOM IS NOT ADDING TO AGGURATE DEMAND. SO THAT IS SOMETHING THAT CAN in effect with its policy rate. In fact, that's how raising interest rates actually restrains eventually inflation. So I think he's right about that. You know, I think what's a little disappointing is we didn't really get a good sense from the chair about why they decided, given all the evidence, given the strong demand and given high inflation, and given that he did tell us that they focused on price stability at this meeting rather than labor market, that they didn't move the interest rate up again.

17:31I mean, so, you know, everyone's anticipating we'll get a move in December. So what's the argument for pausing in October? And I was disappointed we didn't get more insight into why they made that decision. I think he's right in the sense that they do have a tool that can get inflation back on a downward path to 2%. And remember, he's been the one saying that it's not enough just to get inflation on that downward path. It has to be done in a timely way. And we didn't get any real insight that they're doing anything differently than they did before by adding the word timely to the strategy or to why they want to be what they want to be doing going forward.

18:12So I found it a little disappointing that we didn't get more insight on that decision. THAT IS A PART OF IT. IT IS A PART OF IT. IT IS A PART OF IT.

18:18Morgan Brennan: DO YOU THINK WHAT IS IMPLIED THERE IS THIS NOTION OF AN ENERGY SUPPLY SHOCK THAT IS TIED TO WHAT WE ARE SEEING WITH CONFLICTS IN THE MIDDLE EAST AND ELSEWHERE? YEAH, I THINK THAT IS PART OF IT. REMEMBER, THAT IS EXACTLY THE KIND OF REASONING THAT WE HAD IN 2021 WHERE WE DECIDED TO PAUSE FOR A LITTLE BIT TOO LONG, I WOULD SUGGEST. I was on the committee then, and I think this period is very reminiscent of that. If you have a series of supply shocks, eventually they're not shocks. They're just feeding into constrained supply. We have very strong demand. That imbalance is what's fueling inflation, and the Fed can do something about that.

18:58And the real question is, why did they decide in October just to wait for more data when we knew from the last summary of economic possessions that the committee is ready and expects to be moving rates up again. So why not in October? So we'll have to just wait and see what the other Fed speakers are going to be saying now that, you know, at the end of this week when the blackout period is over, about what their view of the economy is.

19:25Morgan Brennan: Well, and it is interesting. I mean, we're getting the PCE inflation reading today. So a day after that Fed decision, too. And it does sound like we're going to get a lot more data here before December as well. And, oh, by the way, a midterm election next week. I DO FINALLY JUST WANT TO GET YOUR THOUGHTS ON TREASURY SECRETARY SCOTT BESSENT COMING ON CNBC YESTERDAY. HE BASICALLY SAID GREAT CONFIDENCE IN CHAIR WARSCH TO STEER THE FED BETWEEN THE RIGHT COMBINATION OF GROWTH AND INFLATION. ALSO SAID, AND I THOUGHT THIS WAS INTERESTING, THAT NOT, IT WOULD NOT NECESSARILY BE A MISTAKE IF THE FED HIKES AGAIN.

19:55Morgan Brennan: I MEAN, THERE HAD BEEN THIS BIG DEBATE IN THE MARKET EARLIER IN THE YEAR AROUND FED INDEPENDENCE AND CREDIBILITY. I JUST WANT TO GET YOUR THOUGHTS ABOUT THE TREASURY SECRETARY'S COMMENTS AND THE TIMING OF THEM? WELL, I THOUGHT IT WAS, HE WAS GOOD NOT TO WEIGH IN ON A PARTICULAR DECISION AT THAT PARTICULAR MEETING. IT IS, IT IS UNUSUAL TO HAVE A TREASURY SECRETARY SO CLOSE TO A FED DECISION COMMENT ON THE DECISION. I DON'T FAULT CNBC FOR ASKING THOSE QUESTIONS. IF I HAD HAD THE TREASURY SECRETARY ON MY SHOW, I WOULD HAVE ASKED THOSE QUESTIONS AS WELL. BUT I DO THINK HE WAS CAREFUL. AND IN THAT SENSE, I THINK THAT THAT WAS FINE.

20:34YOU KNOW, THE FED HAS TO BE INDEPENDENT OF ALL POLITICAL CONSIDERATIONS. I WAS GLAD THAT CHAIR WARSH REITERATED THAT POLITICS HAD NOTHING TO DO WITH THE DECISION YESTERDAY. AND HAVING EXPERIENCED THOSE MEETINGS OVER MANY, MANY YEARS, I TOTALLY AGREE THAT THERE WAS NO POLITICS IN THAT ROOM YESTERDAY. THEY TALKED ABOUT THE ECONOMY AND THE ECONOMY AND THEIR VIEWS IN THE ECONOMY DROVE THAT DECISION.

21:00Morgan Brennan: Well, and that certainly seems to be the read-through to the bond market this morning. Loretta Mester, great to have you on, as always. Straight ahead. Done deal. A delivery tie-up that could go down as soon as today, plus the end of an era for a storied law firm after weeks of turmoil. We've been covering this story all week. We're going to bring you the latest. Morning Call is back after this. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more.

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22:16Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box. That smile they can't hide. Knowing you chose exactly right. Because the right gift can bring a lifetime of meaning. A promise, a milestone, a memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers.

22:53Welcome back to Morning Call. Let's check out some of these morning's latest headlines. Shares of Lumentum popping in the pre-market on reports that chipmaker Marvell is in advanced talks to buy the data center supplier, which could come as soon as next week. Lumentum, with a market value of more than$80 billion, is backed by NVIDIA. Lumentum shares currently up about 6 % in the pre-market trade. Sources tell CNBC DoorDash has moved to buy Instacart could come as soon as today, following speculation last week when the information first reported that Instacart was eyeing a possible sale. No comment from DoorDash.

23:28Instacart also declined to comment as well. Instacart shares up about 6.5 % in the pre-market trade, DoorDash down 1%. Now, an update to a story we told you about just yesterday. After weeks of turmoil and a mass exodus of top partners, law firm Weil Gottschall says it is winding down operations after nearly 100 years in business. The firm, known for handling high-profile bankruptcy cases like General Motors, Enron, and Lehman Brothers, says the decision comes after careful review, adding staff will continue to receive pay for 90 days along with their 2026 bonuses. Meanwhile, Utah is filing criminal charges against Calci and its co-founders, alleging it illegally promoted its services in the state despite its strict anti-gambling laws.

24:15Kalshi says it will fight those charges using the same game plan from its Arizona case. CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment. Following a report from President Trump's Twitter clone, Truth Social has signed deals with Bloomberg and high-frequency trading firms Susquehanna and Jump Trading for faster access to the president's posts to the tune of between 60 and 100 thousand dollars per month. Truth Social announced the fast access product back in July. And for the first time since their founding 57 years ago, the Milwaukee Brewers are World Series champions, beating the Tampa Bay Rays four to one in game five of the World Series last night.

24:58This was the first series since 1991 between teams in the bottom half of payrolls with the Brewers ranking 19th and the Rays 25th out of 30 Major League Ballpark teams. So Milwaukee, they're, I guess we'll call them Milwaukee's best. The Brewers win the World Series. Well, still on deck for the show, Morgan's one-on-one with Charles Schwab CEO Rick Worcester. A can't-miss conversation when Morning Call returns heading back to Boston after this.

25:26Morgan Brennan: Good Thursday morning. Welcome back to Morning Call. I'm Morgan Brennan coming to you live from the Charles Schwab Impact Conference here in Boston. 6 ,000 attendees. Coverage all day long. That starts with my exclusive one-on-one with Charles Schwab, CEO Rick Worcester. That is coming up in just a few moments here. But first, I am going to send it back to CNBC HQ. Dom Chu previewing the market action and what we're seeing in futures and elsewhere. Dom. Thank you very much, Morgan, for that. Now, let's check on that U.S. equity futures picture because right now we are seeing a mixed result. The Dow's implied higher by roughly 335 points.

25:59The S &P down by about 14 implied at the opening bell. And that tech-heavier Nasdaq 100 trade implied lower by roughly 315 points. Now, big tech results are in focus on driving a lot of that Nasdaq trade as well. You can see here Alphabet shares are down 10 % in the pre-market trade so far. Meanwhile, Microsoft is up 3.5 % on those earnings results. Samsung and Korean trading down about 4 % and then Amazon Intel coming up later on today. On the Treasury side of things, check out what's happening with the 10-year no yield, because we're pretty much just where we were ahead of the big Fed rate decision yesterday, where they held rates steady.

26:35The current 10-year no yield is right below 5%, 4.995. The two-year no yield, which some traders use as a proxy for future Fed policy, 4.681%, and the 30-year long bond, 5.328%. On the energy front, we are seeing some weakness in oil prices this morning. U.S. benchmark West Texas Intermediate off by about 1 percent or about$1.06 to$101.72. Ice Brent crude futures, the world gauge off about two thirds of 1 percent,$114.53 there. So now with that in play, let's get back out to Morgan Brennan in Boston, who's at the Charles Schwab Impact Conference in Boston and is joined by a very special guest in a CNBC exclusive.

27:18Morgan.

27:20Morgan Brennan: WE ARE GOING TO BE ABLE TO I AM JOINED BY CHARLES SCHWAB, RICK WORSTER. IT'S GREAT TO HAVE YOU HERE. A LOT TO GET TO. WE WILL GET TO QUITE A BIT THROUGHOUT THE REST OF THE SHOW. I WANT TO START WITH A GENERAL MARKETS QUESTION. WE ARE COMING OFF A FED DECISION. HAWKISH HOLD, WE ARE IN THE MIDST OF EARNINGS SEASON including some mega cap tech names that are dragging down the Nasdaq. In general, you look across the market right now. What are your thoughts about this moment, this cycle that we're in? Well, the market is strong. We're at or near all-time highs. Our clients are as engaged as they've ever been.

27:54We've seen 10.8 million trades a day on our platform this year, which is 45 % higher than it was last year. We're seeing record engagement, and I think that's reflected in the markets.

28:03Morgan Brennan: In terms of that record engagement, what do you think is driving it? Is it this bull market narrative, or is it something else? I THINK CERTAINLY THE BULL MARKET IS PART OF IT, BUT WHAT'S REFRESHING TO US IS THAT PEOPLE OF ALL DEMOGRAPHICS AND AGES ARE PARTICIPATING IN THE MARKET. WE SEE RECORD OWNERSHIP OF EQUITIES. YOUNG INVESTORS ARE GETTING INVESTED AT AN EARLIER AGE AND BEING ACTIVE WITH THEIR MONEY AND THEIR FINANCIAL PLANNING. AND THAT'S WONDERFUL TO SEE. THE EARLIER PEOPLE GET INVESTED, THE BETTER FINANCIAL LIFE THEY'RE GOING TO HAVE. AND WE'RE DOING EVERYTHING WE CAN TO SUPPORT THEM. WE TALK SO MUCH.

28:32Morgan Brennan: And I found myself having this conversation with a Fortune 500 company that's, you know, the head of a consumer company yesterday. We talked so much about the state of the consumer economy, C-shaped bifurcation, et cetera. But when you see growing levels of retail investor engagement, what does that actually mean for the state of the consumer moving forward? Well, I think it's a great thing for the consumer because one of the challenges you mentioned is the K-shaped economy. And those people that have been invested in stocks have benefited from the fact the market's been on a tear. And so things like inflation, when gas prices go up or home prices go up, the fact that you've been an investor helps you be a little insulated from that.

29:08So our mission is to help every American be an investor, and we've got a long way to do that. There's still lots of Americans that don't invest. We've just launched teen accounts to try to draw people in earlier, make it a part of their life. And the more people make it a part of their life, the more insulated they are from movements and inflation.

29:24Morgan Brennan: You put out a report here this week about what you're seeing in terms of sentiment and trends with younger investors. What are you seeing? BUT WE SEE LOTS OF THINGS. THE NUMBER ONE THING WE SEE IS HIGH LEVELS OF ENGAGEMENT. THEY ARE INVESTING EARLIER. THEY ARE EDUCATED. THEY ARE USING AI TO HELP THEMSELVES FIGURE OUT WHERE TO INVEST. BUT THE MAIN THING IS THEY ARE HIGHLY ENGAGED AND WE LOVE TO SEE IT. WE ARE DOING EVERYTHING WE CAN TO PROVIDE RESEARCH, EDUCATION TO THEM. WE WANT THEM TO BE LIFELONG INVESTORS AND SO FAR IT SEEMS LIKE THEY WILL BE. YEAH. I WANT TO GET INTO THE AI PIECE OF IT A LITTLE BIT MORE IN JUST A MOMENT HERE.

29:54Morgan Brennan: BUT GIVEN THE FACT THAT WE ARE COMING OFF OF A FED DECISION, WE 'VE JUST SEEN THIS HUGE RUN UP IN RATES IN GENERAL THIS YEAR. TO USE YOUR OWN WORDS, YOU HAVE A VERY CLEAN BALANCE SHEET. BUT WHAT DOES THAT MEAN WHEN YOU SEE HIGHER RATES? WHAT DOES IT MEAN FOR TRADING ACTIVITY ON THE PLATFORM AND WHERE PEOPLE ARE PUTTING MONEY TO WORK? WHAT DOES IT ALSO MEAN FOR THE COMPANY ITSELF? WELL, MOST IMPORTANTLY FOR OUR CLIENTS, IT MEANS THEY HAVE THE OPPORTUNITY TO GET YIELD FOR, YOU KNOW, NICE YIELDS IN THE MARKET FOR THE FIRST TIME IN A LONG TIME. And we've seen our fixed income volumes go up dramatically.

30:21And the level of client interest in fixed income has surged. So that's exciting to see. And our clients who have been invested in equities are now starting to think about, well, maybe I should have some fixed income to go alongside that. In terms of our business, rising rates is generally healthy for our business. Net interest margin is one of the ways we make money at the company. And so healthier fixed income rates is generally good for our company. But what's most important to us is how it impacts our clients. And at the moment, it's been a good thing for them.

30:49Morgan Brennan: Okay. What do you see driving it, the moving rates? Well, we certainly see two things. Inflation has been stronger than expected and perhaps more persistent. And second, the economy is really strong. And those are the two things I think drive rates. The real rate of growth and then inflation and both are strong. And so I would expect the rate market to stay pretty high until something happens. Charles Schwab was participated in the SpaceX IPO. WE SAW A RECORD AMOUNT OF ALLOCATION OF THOSE SHARES TO RETAIL INVESTORS. NOW WE'RE LOOKING TO ANTHROPIC IN THE COMING WEEKS AS WELL. HOW DOES THAT SPEAK TO THE SHIFT THAT WE WERE JUST TALKING ABOUT IN TERMS OF RETAIL INVESTORS AND MORE PEOPLE ENGAGING IN THE MARKET?

31:26IT'S AMAZING HOW MUCH WEALTH HAS BEEN CREATED IN PRIVATE MARKETS IN THE LAST DECADE. ONE OF THE THINGS WE 'VE BEEN FOCUSED ON IS TRYING TO DEMOCRATIZE ACCESS TO PRIVATE INVESTING. WE BOUGHT A COMPANY CALLED FORGE AND WE CLOSED ON THAT DEAL. So that allows retail individuals to buy shares of people like Anthropic or companies like Anthropic and SpaceX. So we're trying to bring that access to everybody. Same with retail alternatives to be able to invest in leading private equity strategies and venture funds and things like that. We want the everyday retail investor that wants access to that to be able to have it.

32:01And that's been a real area of emphasis for us.

32:03Morgan Brennan: Will you participate in the Anthropic IPO? We certainly hope to. YOU KNOW, WE HAVE THE BIGGEST TRADING BUSINESS IN THE COUNTRY. OUR 10.8 MILLION TRADES A DAY THAT WE SUPPORT IS FAR BIGGER THAN ANYONE ELSE'S. SO WE CERTAINLY HOPE THAT ANTHROPIC MAKES US A PART OF THE IPO. WE KNOW OUR CLIENTS THAT GOT ACCESS TO SPACEX WE'RE QUITE DELIGHTED. AND THEY 'VE BEEN HOLDERS OF IT. SO WE HOPE AS COMPANIES THINK ABOUT HOW TO ALLOCATE IPO SHARES THEY LOOK AT HOW OUR CLIENTS ARE HOLDERS. WHEN YOU SEE ALL THESE BIG MEGA IPOs COMING TO MARKET, WE'RE EXPECTING MORE NEXT YEAR AS WELL. DOES IT MARK A SHIFT, A FUNDAMENTAL SHIFT IN TERMS OF THE MARKET, IN TERMS OF CAPITAL RAISING, THINGS LIKE THAT, OR ARE THESE EXCEPTIONS?

32:42WELL, IT'S BREATHTAKEN, THE SIZE OF THESE COMPANIES, BUT I DON'T THINK IT'S AN EXCEPTION. IF YOU LOOK AT THE NUMBER OF PRIVATE COMPANIES AND THE AMOUNT OF MARKET CAP IN THE PRIVATE MARKET, IT'S GONE UP DRAMATICALLY THE LAST DECADE. AND INTERESTING, AT THE SAME TIME, THE NUMBER OF PUBLIC COMPANIES HAS COME DOWN. AND SO THAT DYNAMIC HAS BEEN IN PLACE FOR A WHILE, AND WE'RE TRYING TO BRING ACCESS TO OUR retail clients to help them participate in this growing wealth and private market.

33:08Morgan Brennan: Okay, Rick, stay with us. We're going to take a quick commercial break, and we're going to have more of this exclusive conversation with Charles Schwab's CEO, Rick Worcester. That's going to be back in just a few minutes. Welcome back. We are live at the Schwab Impact Conference here in Boston. Schwab CEO Rick Worcester is still with us. And, Rick, it's great to continue this conversation right now. We were just talking about IPOs and retail investor engagement. we were also talking about AI. And I want to get into that more specifically, what it means for Charles Schwab as you roll out this, you know, Charlie assistant.

33:39Morgan Brennan: And also as you think very, I think, thoughtfully in terms of the rules and regulations and guidelines that you're putting in place when it comes to engagement around AI and trading and bots that can or cannot access Schwab. Yeah, AI is a huge growth opportunity for us. It's also helping us serve clients in new and different ways and making our experiences with them more efficient for them. So AI is a big ACCELERATE TO THE COMPANY. WE WANT TO FIND WAYS FOR CLIENTS TO BE ABLE TO USE AI SAFELY ON OUR PLATFORM TO DO RESEARCH FOR OUR ADVISORS THAT ARE HERE AT THIS CONFERENCE TO BE ABLE TO PREPARE FOR MEETINGS AND GET SMART ABOUT THE NEXT CLIENT CONVERSATION THEY'RE HAVING.

34:14SO I THINK AI IS GOING TO HELP US IN LOTS OF WAYS. WE'RE REALLY FOCUSED ON MAKING SURE THAT'S A SAFE AND SECURE WAY. SO WE DO BLOCK THE UNAUTHORIZED AGENTS BUT WE CREATE PATHWAYS IN FOR APPROVED AGENTS THAT ARE OPERATING IN A controlled environment that we can authenticate and make sure that the experience is controlled.

34:31Morgan Brennan: What goes into the approval of agents and what would it take for you to have more confidence in terms of approving even more? Well, the way we'll work with agents is we bring them into our MCP servers. And what that allows us to do is to control the authentication process. We can also create the experiences they can have access to. And so that gives us greater control over WE'RE NOT ACCESSING SOME OF THE MOST RISKY TRANSACTIONS THAT PEOPLE MIGHT UNDERTAKE, LIKE WIRING MONEY OUTSIDE OF THE FIRM. AND SO THERE ARE THINGS, CONTROLS THAT WE CAN HAVE IN PLACE WHEN WE LET AGENTS IN IN THE PROPER WAY, AND THAT'S OUR FOCUS.

35:04AND OUR CLIENTS ARE THRILLED WITH THAT BECAUSE THERE'S CERTAIN THINGS THEY WANT TO BE ABLE TO DO, BUT THEY ALSO CARE A LOT ABOUT TRUST. OUR INDUSTRY IS FOUNDED ON TRUST, AND THEIR MONEY IS REALLY IMPORTANT TO THEM, AND THEY WANT TO MAKE SURE NOTHING NEFARIOUS HAPPENS.

35:17Morgan Brennan: We're hearing the term Black October, and we've seen some financial services firms impacted by cyber activity this month. How are you thinking about that? How are you investing for that? What does that mean from a cybersecurity standpoint and AI era for financial services? Well, we're investing heavily in cyber protection. We have access to two of the leading frontier models that identify where we might have exposures, and our technology team's all over working through any of those issues. We feel really good about where we are. It's always been a high priority for us. And so we start from being ahead.

35:52And the fact that we years ago created APIs and MCP servers has given us the ability to allow clients in with AI in a more safe and secure way. So we feel really good about where we are. At the same time, you can't rest. It's a cat and mouse game. And we always got to be on our defenses here.

36:09Morgan Brennan: How does cryptocurrency factor into all this and blockchain technology? I THINK BLOCKCHAIN TECHNOLOGY HAS AN EXCITING FUTURE AND WE 'LL SEE WHERE IT GOES. I THINK IT'S QUITE POSSIBLE THAT FIVE OR TEN YEARS FROM NOW A LOT MORE OF THE FINANCIAL INDUSTRY OPERATES ON THE BLOCKCHAIN AND WE WANT TO BE READY FOR THAT. THE WAY I THINK ABOUT IT AND THE WAY I TALK ABOUT IT INTERNALLY IS THAT IT'S A LITTLE BIT LIKE ELECTRIC VEHICLES AND GAS. WE'RE NOT GOING TO MAKE A DECISION TO BE ONLY ON ONE. WE WANT TO BE READY FOR BOTH TO TAKE PLACE. AND SO IF TOKENIZATION TAKES OFF, WE 'LL BE READY. THERE ARE PROS AND CONS TO TOKENIZATION.

36:42WE ARE GOING TO BE READY. WE ARE GOING TO BE READY. WE ARE GOING TO BE READY.

36:44Morgan Brennan: I WANT TO GET YOUR THOUGHTS ON WHAT WE ARE SEEING. I KNOW YOU ARE INVOLVED IN SOME OF THIS. PREDICTION MARKETS NEAR 24-7 TRADING. YOU ARE INVOLVED IN THAT TOO. YOU ARE SEEING LEVERAGE PRODUCTS COME TO MARKET, PERPETUAL FUTURES. IT IS A DIFFERENT MARKET WITH DIFFERENT TRADING MECHANISMS THAN WE HAVE SEEN IN THE PAST. AT LEAST THAT'S SORT OF MY SENSE OF IT. I'M CURIOUS WHAT YOU THINK AND HOW IT'S CONTRIBUTING TO VOLATILITY AND HOW IT'S CHANGING IN GENERAL THE FACE OF FINANCIAL SERVICES. WHAT I SEE IS WE HAVE REALLY THOUGHTFUL TRADERS THAT SPEND A LOT OF TIME THINKING THROUGH HOW THEY WANT TO INVEST, WHAT THEIR GAME PLAN IS.

37:18WE HAVE TONS OF RESEARCH AND EDUCATION AND COACHING THAT WE PROVIDE THEM SO THAT THEY CAN TRADE IN THE WAY THAT'S MOST EFFECTIVE FOR THEM. AND SO WE SEE A GROUP OF INVESTORS THAT COULDN'T BE MORE ENGAGED IN THE MARKET AND THEY'RE DOING IT IN A REALLY THOUGHTFUL WAY. And we want to offer them the tools that they want. So we do believe in options and giving them the different vehicles they want to be successful. And we do everything we can to support them with education and research so they can make thoughtful investment decisions.

37:44Morgan Brennan: Is there a world in which midterm elections could change any of this conversation looking at 2027? The thing about elections is they create uncertainty and the market doesn't love uncertainty. And so what we observe is that when you get past midterm elections, the market tends to be strong. In fact, I think 19 of the last 19 midterms, the market has gone up following the midterm. And so we'll see if we go for 20 in a row here. But we view it as get past the midterms, things become less uncertain regardless of the outcome. And that's probably beneficial to markets. All right. Rick Worcester, it's great to be here with you in Boston at the Schwab Impact Conference.

38:19Morgan Brennan: Thank you. It's such a pleasure to be here with you. Thank you. Well, straight ahead, we've got the morning call crew teeing up the trading day ahead as well. We're back after this. Here's what to watch today. Weekly jobless claims, the first read on third quarter GDP as well as PCE numbers for September. Another busy day of earnings. We've got results from Caterpillar, Eli Lilly, Merck, Amazon, Intel, SanDisk, and Starbucks, to name a few. Well, it's time for your call sheet. Crew members today, Mike O 'Rourke of Jones Trading, Gilbert Garcia of Garcia Hamilton, and Drew Pettit of Roundhill Investments.

38:51Morgan Brennan: GREAT TO HAVE ALL OF YOU HERE. DREW, I'M GOING TO KICK THIS OFF WITH YOU. I DO WANT TO GET YOUR REACTION TO WHAT WE JUST HEARD FROM RICK WORSTER AT SCHWAB, SPECIFICALLY ABOUT THE MARKETS AND COMING OFF OF A FED DAY AND IN THE MIDST OF HYPER SCALER AND OTHER EARNINGS RIGHT NOW. THERE'S A LOT PACKED INTO THAT QUESTION AND, YOU KNOW, A TON OF NEWSY ACTION THIS WEEK. LIKE, LITERALLY, AT THE END OF THE DAY, I DON'T THINK THE FED MATTERS FOR LARGE CAP, SO WE CAN KIND OF THROW THAT OUT. I THINK THE AI TRADE RIGHT NOW AND PEOPLE HAVING CONFIDENCE IN CAPEX SPEND AND FINANCING IS THE MOST IMPORTANT STORY FOR BIG CAP AND MARKETS.

39:28DOWN CAP YOU CAN SAY THE FED MATTERS AND THAT REALLY WAS A BIT OF A NOTHING STORY YESTERDAY. I THINK INFLATION WILL PROBABLY MATTER MORE AND THAT'S WHERE THE SENSITIVITY IS FOR THE CYCLICALS RIGHT NOW.

39:41Morgan Brennan: OKAY. MIKE, I WANT TO GET YOUR THOUGHTS ON SOME OF WHAT I JUST TALKED ABOUT WITH SCHWAB'S CEO AS WELL. AND SPECIFICALLY THE WAY THE MARKET AND THE STRUCTURES THAT ARE IN THE MARKET ARE CHANGING FINANCIAL SERVICES RIGHT NOW AND CONTRIBUTING TO VOLATILITY AND JUST SOME OF THE DYNAMICS WE'RE SEEING AND WE TALK ABOUT EVERY DAY. YOU KNOW, I WAS JUST I'M REALLY INTERESTED TO SEE WHERE THE TOKENIZATION GOES. YOU KNOW, I 'VE SEEN SOME COMPANIES HAVE TRIED TO GO OFF ON THEIR OWN. SOME BROKERS, I SHOULD SAY. AND THEN I 'VE ALSO SEEN SOME COMPANIES OPT OUT SAYING THEY THEY DON'T WANT THEIR STOCKS TOKENIZED.

40:18WE KNOW THE BLOCK CHAIN IS IMPORTANT, IT WOULD BE AN ADVANCE FOR CLEARING AND THINGS LIKE THAT. IT'S GREAT TO SEE THAT SWAB IS WELL POSITIONED TO TAKE EITHER PATH, WHICH ARE THE WAY THE TECHNOLOGY TAKES US. I THINK IT'S AN INTERESTING TECHNOLOGY. I THINK IT'S PROBABLY THE FUTURE OF THINGS LIKE CLEARING. AND THEN IT MAKES TRADING OF OTHER ASSETS AND OTHER INSTRUMENTS IT'S A LOT OF PEOPLE THAT ARE OF PEOPLE THAT ARE GOING TO GET A LOT OF PEOPLE THAT ARE GOING TO GET A LOT OF PEOPLE EASIER ONCE WE HAVE A STRUCTURE SET UP. IT WILL BE INTERESTING TO SEE HOW THIS UNFOLDS. IT'S ACTUALLY, YOU KNOW, WHEN YOU THINK ABOUT HOW QUICKLY AI IS UNFOLDING, TOKENIZATION SEEMS TO BE TAKING A LOT LONGER.

40:56Morgan Brennan: GILBERT, I WANT TO GET YOUR THOUGHTS ON ANOTHER INTERVIEW that happened on CNBC in the last 24 hours. And as Treasury Secretary Scott Besson, on the heels of that Warsh press conference at the Fed yesterday, he was asked about AI and whether he's concerned about impacts of that build-out on the credit market and elsewhere. And he said, basically, with neoclouds, et cetera, that he's not right now. But how closely are you tracking that, especially when we do see the likes of Amazon raising more money this year than actual companies, THE DEBT MARKETS? WE ARE WATCHING IT CLOSELY, MUCH CLOSER THAN WE EVER HAVE.

41:34THERE ARE A COUPLE THINGS THAT CONCERN US. NUMBER ONE, OBVIOUSLY THE MAGNITUDE OF THE DEBT ISSUANCE IS HUGE. NUMBER TWO, THEY ARE REALLY RUNNING OUT OF FREE CASH FLOW. SO IT WILL BECOME HARDER AND HARDER FOR THEM TO REALLY SHOW ANY REAL RETURN OF INVESTMENT, ET CETERA. AND THE OTHER THING, IF YOU ALREADY LOOK AT THEIR DEFAULT THE BEST OF THE BEST OF THE SPREAD, THE SPREAD ON THE INSURANCE SIDE, THEY ARE ALREADY GOING UP SIGNIFICANTLY AND GROWING UP ALL YEAR. MANY OF THE NAMES ARE NOW EITHER DOUBLE OR ALMOST TRIPLE WHERE THEY WERE AT THE BEGINNING OF THE YEAR. EVEN SOMETHING AS SAFE AS ORACLE IS NOW TRADING ALMOST AT DOUBLE B TYPE LEVELS MEANING BELOW INVESTMENT GRADE AND THAT IS JUST THE BEGINNING.

42:15SO WE'RE WATCHING IT MUCH CLOSER THAN WE EVER HAVE.

42:20Morgan Brennan: OKAY. DREW, WANT TO GET YOUR THOUGHTS ON THAT, ESPECIALLY AS WE DO CONTINUE TO MOVE THROUGH EARNINGS HERE. AND WE ARE SEEING COMPANIES LIKE META NOW TAPPING THE EQUITY MARKETS, TOO. YEAH, A LITTLE BIT OF A DOUBLE-EDGE SWORD, RIGHT? WE'RE WALKING A TIGHTROPE. YOU NEED FINANCING, YOU NEED DEBT ISSUANCE TO GROW THE AI BUILDOUT SO COMPANIES THAT ARE TIED TO IT CAN ACTUALLY KIND OF HIT THESE LONG-RUN EMBEDDED GROWTH EXPECTATIONS. BUT THERE IS SOME GOOD NEWS IN THE BOND MARKETS, PLURAL, HERE ON PURPOSE. YEAH, THE BONDS IN CDS ARE TELLING YOU DEFAULT PROBABILITIES GOING UP. BUT FOR A LOT OF THESE COMPANIES, IT'S STILL INVESTMENT GRADE.

42:57LET'S THROW ORACOL AND CORWEAVE KIND OF ON THE SIDE HERE FOR NOW. BUT AMAZON AND THE HYPER SCALERS, YEAH, IT'S NEGATIVE FREE CASH FLOW FOR NOW. BUT THEY CAN LITERALLY FLIP ON FREE CASH FLOW BY DIALING BACK SPENDING. WE KIND OF HAVE SEEN THAT SHIFT OVER TIME IN THE MAG-7. But then the loan market, even for someone like a core weave, it still has loans that are trading above par. It's telling you that the assets underlying this are still really valuable. So two things can be true. Yes, it might be harder to make money near term or in the next three years. But longer term, these assets are still holding their value.

43:33So the AI build out in the stuff that's happening does have value still to a lot of companies.

43:39Morgan Brennan: it's interesting mike because case in point two examples this morning samsung record profit stock moved lower service now huge move to the downside something like 18 percent here pre-market despite what was a beaten raise and fourth quarter guidance that actually met street expectations how much is priced in here and how hard is how high is the bar and what does that mean in terms THE ROTATION INTO OTHER THINGS THAT ARE NOT TECH RELATED? WELL, I THINK OBVIOUSLY THE PROBLEM WITH SOFTWARE SPACE IS AI IS TURNING INTO A COMMONDITY TYPE INDUSTRY. SO WHERE AS A GROUP THAT USED TO PAY TRADE 20, 25 TIMES EARNINGS WENT TO 20, 25 TIMES SALES AND NOW ALL OF A SUDDEN IF IT'S COMMONDITIZED, YOU'RE LOOKING AT A SITUATION WHERE IT'S GOING TO BE A LESS THAN MARKET MULTIPLE TE ON THAT GROUP.

44:29I THINK IT'S A GOOD THING. WE KNOW EARNINGS, IT'S LIKE A TAKE-ALL TEST. EVERYONE IS EXPECTED TO BE EXPECTATION. MORE THAN 80 % OF COMPANIES USING EXPECTATION. SO IF YOU'RE RAISED, IT'S AN ISSUE.

44:47Morgan Brennan: MIKE, WE'RE GOING TO COME BACK TO YOU. WE'RE HAVING TECHNICAL DIFFICULTIES WITH YOUR AUDIO. So, Gilbert, we're getting a lot of economic data, including first read on GDP this morning, too, PCE. How much does the economic data matter to the broader conversation, especially when there are a lot of macro dynamics that investors are having to continue to track here, whether it's events in the Middle East or midterm elections next week or other things? I think the Fed chairman said it best, which is the accumulation of data or the information is going to be helpful to the committee. I THINK THAT'S HIS WAY OF SAYING, LET'S GET AWAY FROM WORDSMITHING, LET'S GET AWAY FROM ALL OF THE DOT PLOTS, AND LET'S GO BACK TO LOOK AT THE FUNDAMENTALS.

45:29I THINK THAT'S EXACTLY WHAT HE'S TRYING TO SAY. SO I THINK IT'S BEEN BRILLIANT HOW HE'S BEEN TRYING TO PEEL AWAY ALL THE OLD METHODS THAT THE MARKET'S BEEN FOLLOWING, YOU KNOW, WHAT'S THE FED SAYING, ET CETERA, TO GO BACK TO THE FUNDAMENTALS. IF YOU LOOK AT THE FUNDAMENTALS, THEY'RE REALLY NOT THAT GOOD. BELOW THE SURFACE, THEY SHOW A MUCH WEAKER ECONOMY THAN BEING THE OTHER THING I THOUGHT WAS INTERESTING IS HE'S GOING TO GO BACK TO FEWER MEETINGS WHERE THEY HAVE VOTES. I THINK THAT IS CRITICAL GOING FORWARD.

45:58Morgan Brennan: DREW, WE HAVE 15 SECONDS LEFT. FINAL THOUGHTS? AS LONG AS THE MARKET TRADES ALL THESE RISKS THAT WE'RE TALKING ABOUT IN LITTLE POCKETS RATHER THAN A CORRELATED SELL-OFF, I THINK THE INDEX IN VOLATILITY STAYS LOWER THAN WE EXPECT. OKAY. MIXED PICTURE FOR FUTURES THIS MORNING. WITH THAT, WE'RE DONE HERE IN in Boston at the Schwab Impact Conference, but you'll find more coverage throughout the day. In the meantime, thanks to the call crew. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box, that smile they can't hide, knowing you chose exactly right, because the right gift can bring a lifetime of meaning, a promise, a milestone, a memory in the making.

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