Nvidia China Probe, Allstate CEO Tom Wilson & Blue Origin Data Centers

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0:43It's one way we honor and give back to those who have served and still do. Learn more and verify now at Lowe's.com slash military. 10 % discount can't be combined with another offer. Exclusions, terms, and conditions apply. Loyalty programs subject to terms and conditions. Details at Lowe's.com slash terms. Subject to change. Good morning. Welcome to Morning Call. I am Frank Holland in for Morgan Brennan, who's in Washington, D.C. this morning and about to be joined by a very special guest. Morgan, good morning. What's on tap? Hey, Frank, it's good to see you this morning. Yeah. In just a few minutes, I'm going to be joined for an exclusive interview by Tom Wilson, the CEO of insurance giant All States.

1:21We're going to talk about trust and the role of business and society. We're going to talk about the state of the insurance industry, what all of this means for the broader economy right now as well. He's joining me from the B20 USA Summit. This is hosted by the U.S. Chamber of Commerce. First time we've seen this conference held stateside since its inception. You're going to have a flurry of CEOs here today and tomorrow. Thousands of attendees. I'll be on stage throughout the day as well. And we're going to be rolling out coverage throughout the day on CNBC. So in addition to Wilson, I'm going to be joined by Suzanne Clark, the CEO of the Chamber of Commerce later this morning, as well as billionaire investor Ross Projr, who's also the chairman of the chamber and among other things, one of the most prolific real estate developers in the world and a big proponent of Texas and investments in Texas.

2:09So there's gonna be a lot to get to and a lot of conversations throughout the day. But all of it starts, Frank, in just a few minutes right here on Morning Call. All right. A lot to get to, Morgan. We're gonna see you in just a minute. Thank you very much. And again, you're gonna be coming up with the Allstate CEO in just a few minutes. Want to turn our attention to the markets now. Checking U.S. stock futures. After really a monster day for Wall Street yesterday, they saw the S &P post its best day since April, surging more than 2%. The Dow and the Nasdaq also coming off sharply higher session.

2:35Taking a look at futures right now, you can see the picture here, you can see the S &P's up fractionally right now. The Dow looking like it's going to open up much higher. Take a look at the Nasdaq, though, pulling back a bit, just fractionally lower. Also, taking a closer look at the Dow, that index is coming off its third 1 ,000-point swing in four days, the most in such a short period of time since going all the way back of March 2020. Remember, that's the pandemic days, the early days of the pandemic. You're seeing the moves right here between yesterday, Friday, Thursday and last Wednesday.

3:05A lot of volatility in the markets. We're also watching treasuries this morning, taking a look at the action there. See you right now. The 10 year coming in at four point eight. Keep in mind, about a month ago was about five and a quarter right now at four eight eight. This is investors await today's October overinflation report. Core consumer prices expected to rise slightly to 2.7 percent compared to this time last year. Also looking at energy with Brent falling to right around 90 bucks a barrel for the first time since August. Taking a look right now, you're seeing Brent at 89.71, just below 90 bucks, pulling back about 3 percent.

3:37WTI accrued the U.S. benchmark trading at about 84.38. Also want to go overseas right now. Green Arrow is across Europe and Asia as well. Ian King is in London with much more on that.

3:51Good morning, Frank. Yes, Asian equities have climbed today as a decline in oil prices, as well as a rebound in tech stocks on Wall Street has boosted the mood. The South Korean KOSPI index has risen by nearly 5 percent, while Japan's Nikkei 225 has also gained. Investors have also been digesting key earnings from SoftBank and a sales update from TSMC. Well, SoftBank posted its first net loss in almost two years as it registered a$3.7 billion write-down for a US data centre project. The Japanese conglomerate reported a loss of 1.1 trillion yen, that's around$7 billion, for the second quarter against a 2.5 trillion yen profit in the same period last year.

4:32Meanwhile, TSMC sales jumped by nearly 60 % year-on-year in October, the world's largest contract chipmaker benefiting from strong demand for advanced semiconductors. Meanwhile, here in Europe, sentiment is largely positive, as you say. Brent crude has just gone below$90 a barrel for the first time since August. Traders are hoping for a de-escalation in the U.S.-Iran war. Also in focus, those all-important U.S. CPI numbers out later today, which could offer clues towards the U.S. Federal Reserve's future rate decisions. Frank, back to you. All right, Ian, thank you very much. Ian King, live from London.

5:03Turning now to the latest in the developing spy drama surrounding NVIDIA CEO Jensen Wong, President Trump says the FBI is looking into Wang's affair with the Chinese businesswoman who is alleged to be a spy for Beijing. The president telling reporters at the White House yesterday he was amazed by the allegations. And he has spoken with Wang, one of his closest allies in Silicon Valley. I didn't hear about it then, but a lot of people have heard about it. And Jensen totally denies that he had. I asked him today because I did speak to him today just to see if he's feeling all right. How you doing?

5:35And I asked him about that. And he said he had absolutely no idea that the person in question was a spy. NVIDIA shares they closed down more than four percent yesterday after the board opened an internal probe into whether Jensen Wong had been targeted by a foreign intelligence effort. Wong telling employees he has been unfaithful to his wife without disclosing any other details about the affair. In Washington, House Democratic leader Hakeem Jeffries says Congress needs more answers on NVIDIA. The Democratic leader is calling for restrictions on chip sales to China that is part of a Senate bill to become law as part of the annual defense bill.

6:13NVIDIA shareholders also moving quickly to sue the company and Jensen Wang yesterday in a proposed class action suit, accusing them of defrauding investors by concealing his ties with a suspected Chinese spy. Let's talk much more about the potential fallout for NVIDIA, its stock and what it could mean for all the competition like AMD and Broadcom, as you can see here. Both of them coming off Blockbuster Days yesterday. Joining us is Paul Meeks, head of tech research at Freedom Capital Markets. He is also a CNBC contributor. Paul, good morning. Thanks for joining us. Good morning, sir. All right.

6:43So the price action we saw yesterday with Broadcom and AMD, we saw big jumps there. Do you think that's a trend that continues as we continue to see these probes into to NVIDIA and Jensen Wang? So that's a good question. I think we'll continue to see bounces in these stocks because they had been oversold the last couple of weeks, the last couple of months. I don't think that they should be bouncing or really in fact will bounce based on the belief that NVIDIA's loss, if it is a loss at all, is the other's gain. I think the demand is so voracious for data centers. Even after the election, that won't change.

7:24And capital will somehow find that demand. Data centers will be built. And because demand is so strong and supply is so scarce, I think they will all continue to do well. Not necessarily based on any share gain of the competitors from NVIDIA. All right. I think the consensus is that one of the reasons NVIDIA is under pressure is obviously the investigation. And this is the alleged ties to a Chinese spy, but also the thought that maybe some of these sales that NVIDIA has been booking, some of their revenue may be going to China. And that that stream of revenue could be cut down or just cut off altogether.

8:03Wouldn't an AMD and a Broadcom face similar risk? They also face export controls from the Commerce Department. Are there similar concerns that maybe some of their sales are also going illegally to China? Yeah. I don't think folks have stepped that far out on the limb with that call. Well, we'll have to see. And then, of course, we'll see what happens with the restrictions vis-a-vis the U.S. and China over time. But I think it would be given an end to the conspiracy theorists to think that they're all burying sales to China and that would cause some kind of further fallout. I just don't see it.

8:41Straighten us out, Paul. We don't want to go into any rabbit holes on this one. I do want to go back to the stock story here. So you see AMD as being one of the key beneficiaries. Why AMD in particular? So I think AMD is a beneficiary because AMD has actually made some technological leaps. And so they're more competitive with GPUs. And Frank, interestingly enough, blast from the past, we've seen that data centers need old school CPUs. And of course, AMD, maybe it's happenstance, maybe it's foresight, has a nice blend of business between GPUs and CPUs. And CPUs are desperately needed in data centers too.

9:26So they will gain some share, not necessarily in the CPU side at NVIDIA's expense, because at least now it's more of a GPU play. But we'll have to see what happens. Paul, I want to ask you about the broader tech landscape right now. NVIDIA seems to be a kind of a funding machine for so many other parts of the AI landscape and the AI build out. Why are these other companies rising as NVIDIA is under pressure? Well, I think hopefully that this blows over. Hey, cheating on your spouse, horrible. If there is a situation where Wong was culpable with a Chinese spy, that is, of course, a deal breaker.

10:11Even though he seems to be pretty cozy with the Trump administration, maybe it's not necessarily an issue on the federal level. But of course, we don't know what's going to be found by the internal investigation being managed by the board. But we'll have to see what happens. I actually think that this is a pretty good buying opportunity in some of these names, because even a company, Frank, like NVIDIA, this stock was relatively weak even before this story broke. And right now, we're trading at about 11 times next year's earnings, and earnings are expected to grow 70%. So it could be setting up to be, in my opinion, a good buying opportunity, not only in Vidya, but in some of these other names, probably including AMD as well.

10:59You know, Paul, to your point, Vidya share is actually down about two and a half percent year to date. Paul Meeks, thank you very much. Appreciate your time. Thanks, Frank. All right. We got a lot more to come here on Morning Call, including Morgan's exclusive sit down with the Allstate CEO, Tom Wilson, live from the Chamber of Commerce's B20 Summit in Washington. Plus, big earnings movers ahead of the open, including Take-Two ahead of its highly anticipated Grand Theft Auto game release, GTA 6, coming out. And later, mixed Middle East messages from Washington and from Tehran. Got a very busy hour still ahead when Morning Call returns.

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13:02Welcome back to Morning Call. Let's get back down to Washington and our Morgan Brennan sitting down with a very special guest, Morgan. Hi, Frank. That's right. I'm here at the B20 Summit in Washington, D.C. This is hosted by the U.S. Chamber of Commerce. And joining me now is the CEO of Allstate, Tom Wilson. It's great to have you here. Thanks. All right. A lot I want to get to with you. But first, let's start with what you and I are going to be speaking about on stage a bit later this morning. And that is this notion of trust, which I know you're very passionate about. You've been rolling out initiatives regarding why trust matters to markets, why trust matters to Allstate and how you're going about this.

13:38Well, first, trust matters because it's kind of the foundation for everything. So whether you look at society and you talk about like Lockheed, they all thought you need trust. But trust is also really important for businesses. Obviously, your customers have to trust you, the government. You have to trust the government. Otherwise, you don't vote. And I also think it gets lost a little bit that it's important for individuals that if you don't trust other people, you're not going to try new things. You're not going to really be who you can be. And so we need to, and trust is down everywhere around the world, all institutions.

14:10And so we need to do something about it. What does that look like from your purview? And how do you roll out those initiatives and actually stoke that trust? Well, we started with, first, we sell trust, right? Like people give us their money. They trust we'll be there when something bad happens. So we said, you know, like a rising tide raises all boats. We have to raise this tide. And so we said, okay, well, how do we do it? And we spent a better part of a year saying, how did we get here? And there's no real answer. Like, there's no one or two things. So we said, okay, well, we can't figure out how we got here.

14:41How do we get out of here? And there's really two things you can do. One is to improve relationships between individuals on something that you have a common cause around. And the other is to be more positive storytellers because we're just awash in the sea of negativity. And every time you hear all the negativity, it causes you just to doubt a little bit. And that doubt creates mistrust. I like to refer to it as the post-postmodern era that we're living in right now. It gets to a bigger, I think, topic, and that is the role of business in society, where and when and how business weighs in on societal matters.

15:16How do you see it? Well, are we articulate? I'll say we have four people we have to help. We have to do a better job for our customers, have to make money for our shareholders. We have to help our employees have more opportunity, and we believe we have to improve communities. Now, we're an investor in America, so we have a giant investment portfolio. And so, like, we're long America. So, like, all those things kind of fit for us. You obviously have to make tradeoffs amongst those. Like, you can't help everybody all at the same time. So I think business needs to get in on those kind of things. When we choose what to get in on, we have something called a societal engagement framework.

15:51And we say, okay, do we know anything about this? That's kind of a yes or no question. Do we think we can actually make a difference? and then we get into and so in things like trust we say we know something about trust we think we can make a difference and it's important to our business if it doesn't fall through those three yeses then we just don't get involved when i hear you say you're long in america investing in america do things like midterms shift how you think about those investments no uh we're we're well we feel good about the economy where it is today um and america works So we're regulated at the state level, and if you want to call it a blue wave, it's also at the state level.

16:32But what matters to us is just people you can work with. And so when you're regulated at the state level, you're always making a deal with somebody. So what would be an example? We work on affordability. We want our insurance to be affordable. And because we're cost plus, we've got to control costs. So in Florida, the Republicans pushed through tort reform. We were able to lower our prices by 6 % for customers. In New York, Governor Hochul's taken a stand to do something on litigation reform as well. If we can do that, we can lower our customers there. So it doesn't matter to us which party you're in.

17:07We're just, do you have the same objectives we do, which is to help give our customers good protection at a lower price? Speaking of prices, on a day we're going to get a key inflation reading, CPI, in just a couple of hours. What are you seeing in terms of pricing and insurance, whether it's on the homeowner's side or auto insurance? Auto insurance prices have started to come down. they went up dramatically after the pandemic because the cost of cars went way up so price to use cars went up 60 % in 18 months and that's if you're helping somebody get a new car that's your cost of goods sold so auto prices went up a lot right after the pandemic 22 23 kind of came off low on 24 this year they're going down because those costs have started to come down homeowners continues to get more expensive it's come down a little bit this year but it's because there's more severe weather the storms are bigger it's also because people are building houses in the places where they're exposed to storms and people have bigger houses so homeowner prices continue to go up and that's a problem for affordability so we're trying to figure out how do we help people manage their expenses yeah and we've talked about a lot on morning call the year that has been despite despite a pretty mild hurricane season it's been a year of record-breaking weather both here in the U.S.

18:23and around the world. I want to ask you about autonomous driving. You know I was in Florida at the UPSummit last week, got to test drive cybercabs. It seems like whether it's that company, whether it's Waymo, the rollout is picking up steam right now. What is it going to mean for driving, for auto insurance, for what we see on the roads? Well today the technology is helping people have fewer accidents. So frequency has been coming down in accidents for a decade because, you know, it's the side view mirror that lights up when you're about to turn and you don't know somebody's in your blind spot.

18:55So as it progresses, it's just going to take a while to get into the system because if you think of the United States, we have about$4 trillion invested in our cars and trucks. And so nobody's got$4 trillion to go buy all new autonomous vehicles so it operates in the system. It is going to operate, though. It is going to get better. And so for people like us, we find other ways to help serve our customers, whether it's homeowners, we insure TVs, we insure furniture. Like we got all kinds of stuff we're doing. So we're not bothered by it. We're actually leaning into it and working on like mobility intelligence.

19:30Speaking of new technologies, AI, how you're using it, how you're deploying it, especially since last week with earnings, one of the things you announced was agentic AI rollout for your customers. Well, thank you for paying attention. I try. Yeah, so, I mean, first, generative AI can do a lot of things that are tasks, right? Emails, do computer programming, and everybody's kind of doing that. What we're doing is building something we call Allstate's Large Language Intelligent Ecosystem, which I wanted to name, so I call it Alley, because it's something we manage. And it's going to be agents talking to agents, and we're going to be able to do work for our customers faster, better, and cheaper.

20:11and so we're building Allie and we announced we're doing a personal agent agent, which will be kind of like Muse, but it will also work with people like Muse and Spark and others because people don't want to do a bunch of stuff themselves, but the general purpose personal agent agents aren't going to be good at everything. We're good at insurance, so we can help them be better. Okay, final question for you. I realize you don't play in this market, but I'm curious your thoughts on it. things like insuring data centers. How do you just see more broadly, how do you see an insurance market and new technologies and the role of insuring some of these new technologies evolving?

20:49Well I think the new technologies are going to make us better as an insurance industry. So for example, we're investing in quantum computing and so it solves these really hard problems. And so a really hard problem is how much should you charge a customer who lives in a particular area that's got this kind of shingles when and there's hail once every 10 years. That's a really hard problem to do with traditional compute. With things like quantum computing, it really helps you. Artificial intelligence enables you to do your job better. Now, ensuring that, I think nobody really knows what the regulatory structure is, and we've got to figure that out.

21:24People talk about regulations, and basically it's just rules and structure. Like, it's not, you don't have to be against it. Like, we're regulated everywhere. It's just we need some rules and we need some structure. And I feel like business needs to step up on two ways. One, we have to let our voice be heard is what do we think is right? Like the large language models are really smart, but like who made them in charge of insurance? Like nobody that I know of. And secondly, then we have to figure out how do we use it to create more jobs? It gets right back to the beginning of this conversation, which is trust, establishing and reestablishing trust.

21:55Tom Wilson of Allstate, it's great to have you here. Thank you, Morgan. Appreciate it. Frank, I'll send it back to you in studio. Morgan, thank you very much. And great to see Tom Wilson. Also, I think a lot of people liked what he was saying about trying to keep rates low. Morgan Brennan, much more from you coming up in just a bit. Straight ahead here on Morning Call, the space rate heats up as SpaceX rival Blue Origin revamps its rocket engine plans and looks to outside investors to achieve its orbital endeavors. What CEO David Limp has to say about all of it, Morning Call, coming up right after this.

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23:33I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

23:58Welcome back to Morning Call. Market flash on shares of AST Space Mobile facing some pressure after Q3 results missed expectations. Shares up just fractionally right now, however. The company also maintaining its revenue outlook for the year. The company's CEO revealing AST is working with Google, an existing investor, Meta and other tech companies on satellite-based AI. We're going to have more in the quarter when the CEO joins Morning Call coming up this Thursday. Also, watching shares of Rocket Lab pulling back after earnings from the company's, quote, defining quarter missed the mark. Revenue topping expectations hitting a record.

24:29Rocket Lab raising its base price for its neutron mission, citing tightening industry launch capacity. On the call, CEO Peter Beck reiterating the potential defense applications for orbital data centers. Beck will have more on that when he joins Morning Call on Friday. Shares of Rocket Lab, you can see, pulling back just about 5 percent. Orbital data centers, a big topic of conversation right here a morning call recently. Morgan Brennan is back with much more on that. Morgan. Yeah, that's right. So both former Virginia Governor Glenn Youngkin and ARK Invest Kathy Wood raised this very topic of data centers in space right here on the show on Friday morning from the UP Summit.

25:07Both made the case that, especially in the wake of the midterm election outcome, that this is going to be an even bigger post. You're going to see even more demand for these AI data centers in space and the build out of all that infrastructure. It's also something I discussed with the CEO of Blue Origin, Dave Limp, from this very same event. Now, Jeff Bezos, space company, is building something called Project Sunrise. This is a 56 ,000 orbital data center satellite constellation. Have a listen. The real work isn't the satellite. It turns out that a data center satellite isn't that difficult to build as compared to some of these other satellites.

25:47What is very difficult is getting the cadence of heavy lift launch. And so to get us ready for that, we're doing two things. We're building more pads. So we have the one pad that we're repairing and we're building three more out here at the Cape. But in addition to that, we're building a factory to produce much higher rates of rockets. So the factory that we just broke ground on about six months ago, it'll produce 150 rockets a year to give you a sense of the scale that we're building up to. In terms of these data centers in space, obviously, there's a lot of chatter here on Earth, speculation here on Earth about what the process to build out terrestrially is going to look like or not look like in the coming months and coming years.

26:29Do you think this just propels the case and the economic case for data centers in space? Yeah, it's hard for me to kind of weigh in on, because I'm not building terrestrial data centers on, you know, how hard and easy it's going to be. The thing I do know, though, is that human beings are going to want more intelligence. And data centers with this modern AI are directly correlated to intelligence. And so, and the other thing I'm certain of is that terrestrially, we're never going to be able to get to a point that we could build a terawatt of data centers. Gigawatts, yes, but terawatts, very, very difficult.

27:06And so if you're going to do that, you have to do it in space and you have to get started. I personally am much more optimistic that space will be viable sooner. I think as we get the cost of launch down, it pencils out much earlier than many people think. But we will see. But we're all in. We believe in it and we think it's going to be the future of how compute is done. now deploying that constellation that's going to require lots of launch capacity so limp telling me that blue's new glenn rocket is on track to return to flight very soon if not by the end of the year then due to weather it's going to be in the first days of january that they're targeting a launch a rapid turnaround after that may launch pad explosion now he like rocket lab says there is huge demand for launch services which is why blue origin is also developing new hardware new technologies for its rocket to bring more capacity online.

27:59They announced a new rocket engine, Northstar, that is more powerful, costs about 25 percent less than the current booster engine and can be assembled in a day. And they also announced a new third stage for the rocket to enable missions that are going to go farther into space with a lunar customer already signed up. I also asked Limp about the state of fundraising efforts, the first that will bring in outside investors. It's not your typical series a our target it was to raise ten billion dollars and and it's gone incredibly well I'm actually so I knew we have a great story I obviously believe in blue to the bottom of my heart but I was really excited to see the response from investors were well oversubscribed we're just finishing up the round now and I would anticipate we'll announce it over the next couple of weeks.

28:52But it's been a great process. And now we're off to the races. And speaking of lunar efforts, watch the space stocks, because we saw huge moves higher in trading yesterday after NASA announced at the same event a flurry of new lunar initiatives, including$10 billion in new contracts that eight companies have been selected to compete for. Names that viewers of Morning Call know well, Firefly Aerospace, Intuitive Machines, iSpace, Lockheed Martin, Northrop Grumman, Voyager Technologies, SpaceX, and, well, Blue Origin. Full conversation is on CNBC.com. We cover quite a bit of ground bottom line, Frank.

29:33Blue Origin is ramping up operations and doing so aggressively coming into 2027. So one to watch. All right, Morgan, great interviews there. We'll be looking throughout the day for your interviews coming from the B20 Summit. Morgan Brennan, thank you very much. All right, still on deck here on Morning Call. Relief at the pump. Retail gas prices do something for the first time since July. Plus, strong words were embattled NVIDIA CEO Jensen Wong from one top cyber CEO. His full comments and real-time industry reaction when Morning Call returns. I'm Frank Holland in for Morgan Brennan. Welcome back to Morning Call.

30:05We're checking U.S. stock futures after a monster day for Wall Street yesterday. They saw the S &P post its best day since April surging more than 2 percent. Take a look. The Dow and the Nasdaq also coming off sharply higher sessions. Right now, looking at futures, you can see the S &P up fractionally. The Dow up more than 130 points. The Nasdaq pulling back down more than 100 points right now in the pre-market. We're also checking some of the morning's latest headlines. inaccurate details of Anthropik's upcoming IPO reportedly being circulated to banks briefly before being retracted. That's according to Reuters, which says a company representative sent a copy of a securities filing showing Anthropik's plan to sell about 867 million shares at a price range of$70 to$80 each, raising just under$70 billion, the top of the expected range.

30:49Mixed messaging on the Iran war from Tehran and from Washington. President Trump saying there is positive momentum towards ending the war after talks with Qatar's prime minister, but Iran's top security official says the U.S. needs to stop putting out fake news about imaginary talks. The price of retail gas falling below$4 for the first time since July. According to AAA, the national average for a gallon of regular now sitting at$397. That's compared to$436 just a month ago. Diesel now sits at$615 a gallon, down from$628 a month ago. Voters in California rejecting a first-in-the-nation tax on billionaires' wealth.

31:25The Associated Press determining that no had received enough votes to win. In fact, Governor Christopher Waller leaving the door open for a rate hike at the central bank's policy meeting next month, possibly hiking as much as half a point. Speaking this morning in London, Waller adds he's leaning towards the rate increase even if this week's inflation data comes in softer than expected. All right, turning back to shares of Nvidia, taking a look at the action on the chipmaker right now this morning. Been watching it all day long. Right now you can see it's up about 1.5%, bouncing back from a decline yesterday.

31:55This is we continue to hear industry reaction following revelations about CEO Jensen Wong's relationship with an alleged Chinese agent. The big questions here, would he knew or did not know? And what, if any, succession plans may be in place? Should he be forced to step down? CNBC senior technology correspondent Arjun Gopal joins us now live from the Web Summit in Lisbon, Portugal. Arjun, good morning.

32:21Yeah, good morning, Frank. Look, Web Summit is one of the biggest tech conferences in Europe. And here, of course, all anyone wants to talk about is this NVIDIA story, is this Jensen Huang story, because of how central AI is to this conference and to the participants here. And of course, how central Jensen Huang and NVIDIA is to this broader AI story, not only because of the GPUs that NVIDIA sells, the power of this technology, but also the fact that NVIDIA is a prolific investor in lots of different AI companies, including some of the ones who are exhibiting here and who are attending this event.

32:55And I was on stage last night at the opening of the Web Summit with a panel, and one of the panelists who I was speaking to was Matthew Prince, the CEO of Cloudflare, and I asked him for his take on this Jensen Huang saga and how much importance investors should be putting on it. Let's listen in. I think the longer-term question for NVIDIA is going to be some of the things they've done in order to really cement their position. They've done a lot to control access to memory. They've done a lot to control access to actually data center space. They've used that in order to kind of leverage their position and where they are in the marketplace.

33:30And I think in the process of doing that have funded a lot of this kind of, again, maybe it's not overbuilt, but maybe it's built at a price which isn't the right price that is sustainable over the long term. That was a really interesting perspective because it's something I've not heard before. And Matthew Prince is framing it in the sense of NVIDIA has become so central to this AI story. And it is invested in a lot of different companies. And he's questioning those investments, saying, well, at what price were those investments made? At what valuations? And ultimately, you know, what does that mean for the market if there's any kind of wobbles when it comes to valuations or any kind of jitters, as we've seen at points over the last few days in the public markets around some of these AI stocks as well, Frank?

34:14So, Arjun, you're over there talking to tech leaders in Europe. Here in the U.S., we often talk about this competition between the U.S. and China when it comes to AI. Is there any reaction from tech leaders while you're there just about the idea that maybe somehow China has a leg up based on espionage or the alleged espionage that we've been talking about?

34:35So less around the espionage, but it's fascinating you mentioned China, China, Frank, because actually just behind me, there are a number of robotics companies all from China. You got Ubitech, Agibot. These are some of the leading players out there. And of course, when we talk about AI and Jensen Huang has spoken about the uses of AI, physical AI, robotics is an area that many see being a very prominent area. And as it stands, I mean, China pretty much dominates this market right now. So there's a big discussion that continues to take place about the position of Chinese tech versus American technology when it comes to artificial intelligence, not just in the models, as we've sort of seen spoken about between Chinese open source and the frontier labs in the U.S., but also the applications of those technology with robotics being one of them.

35:23And, of course, the big U.S. player that wants to make a big mark on this market is Elon Musk with Tesla and Optimus. But as it stands, I mean, the Chinese having a big show here in Europe with robotics and some of those applications around AI, Frank. All right. Arjun Kapal, live from Lisbon. Arjun, always good to see you. Thank you very much. All right. Jensen Wang's possible China ties, adding new question marks to what's expected to be a high stake meeting between President Trump and Chinese President Xi Jinping later this month. Our Eunice Yun joins us now on the CNBC Newsline with a look ahead and also with what she's hearing on the ground.

35:57Eunice, thanks for joining us. Thanks, Frank. Well, President Trump has expressed support for Jensen Wang. He told reporters overnight that he had asked Huang about the woman, that the NVIDIA chief said he had no idea she was a spy, and that the president said he believed Huang. When asked if he would raise the case with President Xi Jinping next week at APEC, President Trump said that he didn't think so. Huang was expected to join President Trump as part of his business delegation to APEC. The NVIDIA CEO's participation, though, as you could expect, looks less likely. The South China Morning Post today reported that the big name joining President Trump next week is Tesla's Elon Musk.

36:39Musk and Huang had accompanied President Trump on his visit here in May with the aim, along with other CEOs, to resolve sticky business issues with Beijing. Expectations for next week's delegation have been scaled back, though. The Trump administration has also been downplaying the possible results of the Trump-She summit. Analysts are now describing it as a courtesy call, possibly with some progress made on tariff reductions on what they describe as 30 for 30. So it's like 60 billion dollars worth of goods under a framework called the Board of Trade. And the expectation is that the main deliverables, which would be tariff reductions, as well as an extension of the of the Busan truce, will be kicked to the next expected fourth Trump-shee summit for this year, which would take place at the G20 in Miami.

37:31Now, there is another important development that we are watching, and that's whether or not President Trump, Xi, along with Russia's President Putin, will hold a three-way meeting. The idea originated with the Russians. President Trump showed support for it. And the Chinese only recently signaled that they were open to the idea. However, analysts say that the U.S. and China are still very far apart on how this event should proceed and the topics. The Chinese prefer a very scripted event, are not as keen to discuss nuclear disarmament, but this is an important topic for President Trump. And, Frank, as you know, President Trump also likes to present himself in a very unscripted way.

38:11I think you're putting that delicately, Yunus Hu. Yunus Hu on the CBC Newsline, great to see you as always. Thank you very much. All right, straight ahead here on Morning Call. The Morning Call crew teeing up the trading day ahead and why one member says the yo-yo moves in the market will not be easing anytime soon. We are back in just a moment.

38:56We get the latest look at small business optimism coming up in just a few minutes. Also awaiting the latest look at inflation with CPI before the opening bell. We'll also hear from four Fed officials across the day, and we're watching for earnings from CoreWeave, StubHub and Firefly Aerospace. We're also following some breaking news this morning. The information out with new details around alleged Chinese Nvidia spy Alice Wong. The reporting from the information says that Jensen Wong's ties to Alice Wong facilitated at least$7.5 billion in NVIDIA chip sales to China. The report adding that Alice Wong's sister and her husband built what is now being described as, a labyrinth of companies spanning China and Singapore to acquire NVIDIA chips.

39:37And those companies include Megaspeed. So certainly we'll talk a lot more about this story coming up throughout the day. But again, new headlines crossing from the information about Alice Wong, the alleged Chinese spy, allegedly facilitating about$7.5 billion in NVIDIA chips to China. All right, it's time for your morning call sheet. The crew members today, Victoria Green of G Square Private Wealth, also a CNBC contributor, Robert Schein of Blank Schein Wealth Management, and Joyce Wong of Vanguard. Thank you all for being here. Great to see you all. Great to be with you, Frank. All right, so I think we've got to start with what we're seeing in the markets today.

40:08We're seeing the Nasdaq pullback just a bit, but the Dow moving up over 100 points. Robert, I want to come to you. You're saying this pullback's a buying opportunity. Is it a buying opportunity across the board? Are there certain places you want to pick? Obviously, you want to be selective. Obviously, the volatility has increased, but the earnings are still the underlying rock bed of this bull market run. We believe it's going to continue. The volatility last week is just going to provide some great opportunities for investors moving forward. All right. We're going to go to NVIDIA one more time.

40:41Vicky, I want to come over to you again. Just read those headlines. We're going to also be looking for kind of the stock reaction from NVIDIA. The idea here is that the information is reporting that Alice Wong, the alleged Chinese spy, facilitated somewhere around$7.5 billion in NVIDIA chips to China. Obviously, that's against export restrictions. What does that make you think about tech, the fact that we have this overhang of NVIDIA, one of the most important and consequential companies in the tech sector, facing this scrutiny? And there is at least potential for Jensen Wong to be removed as CEO.

41:09Absolutely. And it is ugly and messy situation. And I think it continues to get uglier and messier. We're going to have so much more who knew what when, who did the government know, what did NVIDIA know, what did Denson know. All of that laundry is going to get aired out, and it's going to be gross. And NVIDIA has one of the worst succession plans. It has no succession plan. So the market's sitting here saying, second largest company, what is going on with it? I think you've got a whole bunch of headline head risk, a bunch of risk then going into earnings next week. But look at yesterday. Markets can rally without NVIDIA.

41:36Markets can continue to go on. We have other winners when there are losers, like AMD and And Broadcom both did quite well yesterday. Yes, they're important. The structural integrity of the market does not just depend on this one stock. And we are seeing the breadth come to rescue us a little bit as NVIDIA has stumbled here. And it is, without a doubt. It's an ugly, gross airing of dirty laundry here. And it's likely going to get worse on the headline risk before it gets better. You know, very quickly, because I want to get to Alice. But I don't know if you're an NVIDIA shareholder or not. I forgot to ask you before.

42:03But did we ignore a bunch of red flags? I mean, this is not the first time that we've seen these kind of situations happen. It's not the first time a CEO of a public company has had an affair. Obviously, the spy allegations are a big risk. We're watching it carefully. We do own NVIDIA. Certainly, our growth in core portfolio would gladly offer who doesn't own NVIDIA in their portfolio. The cost of not owning it versus the index was so high. I look at it that this is a risk, but at the same point, I don't see this as a systemic risk necessarily to the company just yet. Now, obviously, if you get into allegations of fraud and lying and cheating and avoiding sanction, this gets a lot harder of a road for Nvidia.

42:41For right now, I'm willing to say, look, this is a horrible personal mistake. Not uncommon for CEOs. I mean, Amazon survived Bezos. Microsoft survived Gates. Gates was an ugly situation there. Now, companies that are strong fundamentally can't overcome CEO headline risk. It's just going to be an issue next week at earnings, I think. Throughout the day here on CNBC, we'll talk about these red flags and Alice Wong, Jensen Wong, and this dynamic. But we want to move on for that for just a moment. Joyce, I want to come over to you. CPI is coming up today. What are your expectations? So the estimates show a slight uptick.

43:14What do you think that means for the Fed going forward? What do you think that just means for the economy in general? Yes. So at Vanguard, we do believe that CPI today might come in a little bit higher even than the consensus expectations. But when we look at our internal research, we believe some of the effects that are causing CPI to be elevated are expected to peak in early first quarter, and the tariff effects are going to start to ease completely out of the picture by the second half of 2027. So we do believe that this does take a little bit of pressure off of the Fed to make several hikes.

43:53We believe there is one hike priced in in 2027. Can I ask, are bonds still attractive? We've seen yields pull back a bit, specifically on the 10-year. I pointed out it was about five and a quarter a month ago. Are these yields still an attractive entry point for bonds? Absolutely. So you have to think about the income component of bonds, which is still extremely attractive. You have to go back to pre-global financial crisis to get yields this attractive in high-quality bonds. And you're getting that diversification effect back. So last week, when you had the equity market volatility, bonds did their job.

44:27All right. Robert, I want to come over to you. You gave us some stocks you like, Amazon, Visa, and Estee Lauder. At the same time, you're saying we need broad-based participation for the S &P to hit your price target of$8 ,000. Is there any one sector in particular outside of tech and comm services, of course, that you especially think is going to lead this rally to get us to$8 ,000? I don't know about lead, but most attractive right now is consumer discretionary. This year, they've been beaten up, but mid-year, they're starting to show that the signs of the consumer, the economy's strong, the consumer's strong.

44:56That evidence is playing out on a lot of the consumer names that I gave you. So we believe that we see this broad-based, basically, resurgence of earnings. And the 493 are going to have more earnings moving forward than the MAG-7. We haven't seen this in quite some time. So that broad-based approach is actually very encouraging for the markets to move forward. So, Vicki, do you have that same confidence in the consumer that it will continue spending after the holiday season? I do. We have a couple different plays. We've got Ulta that we really love. We love the beauty play. I think Amazon's also a great play there.

45:26We love the pet spend play. I think pets are now a huge part of the family. I think discretionary is great. I tend to say health care is going to be a wonderful place to be outside of technology. We think also with what's happening with the blue wave, we could see more and more health spending happening, a little bit more money in people's pockets. So for me, yeah, I think the consumer, it's really hard to bet against the U.S. consumer as well. Like for me, I'm all team USA still. Joyce, I want to give you a last word. Inflation. Are we cooling? Do you still see it accelerating going from here?

45:52What direction is it going? I think it's going to be a bumpy ride. So that's why we are trying to shift the focus away from just looking at the next month's print. It's going to be important to look at it over the horizon. We got to end the conversation there. Thank you all. When an intruder approaches a home, they expect a camera. What they don't expect. Stop. This is simply safe. Police are on the way. Using smart AI cameras, live U.S.-based agents help deter intruders in under 30 seconds. Don't just record a break-in. Stop it from ever happening. Plan starting around a dollar a day. Right now, get 70 % off your new system with professional monitoring at simplisafe.com.

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