Fed Decision Preview, Cohere CEO Interview, Clarity Act Vote 9/15/26

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1:06The 10-year yield just touching its highest level in nearly 20 years. A good reminder, the bond market, not just the Fed, is driving your investment conversation. Welcome to Power Lunch, everybody. The big question for your money right now, is a Fed hike all but a done deal? This as oil pops again on some new reports around Saudi Arabia. You have to hear. And while mega cap tech still dominates the headlines, we'll look beyond the AI trade. Healthcare and energy have their own powerful catalysts, from earnings and innovation to commodity prices and global supply. Evan Siegerman of BMO Capital and Tyler Rosenlicht of Cohen and Steers are here with their best ideas.

1:42All right, big hour ahead. Let's start with the markets and your money. That Fed decision is now less than 24 hours away, and the market is all but betting and beating the Fed over the head with we demand an interest rate hike. Don't believe us? The CME FedWatch tool now putting the odds of a quarter point interest rate increase at 92.5%. But as big of a deal as that is, your next guests say the Federal Reserve decision tomorrow may not be the market's real problem. They're watching a 5 % 10-year yield, oil over 100 bucks a barrel, and a lot more. Let's bring them in. On set, Julian Emanuel, he is Senior Managing Director of Equity, derivatives and quant strategy at Evercore ISI.

2:23Also joining us, Robin Brooks, senior fellow in economic studies at the Brookings Institution. He has been all hot on the debt story lately. But Julian, I'm going to start with you. September is historically the worst month of the year for the stock market. The market is down this month, but given oil at 105, given a 5 % 10-year, given an interest rate hike, given increased problems in the Middle East, I'm actually a little bit surprised the market isn't down more. It really is trading very well. And look, if you look at it, the bull market turns four next month. It has been a constant push-pull between stress macro moments and earnings brilliance.

3:05And I mean, we just came off of a quarter, which you may end up clocking close to 50 % earnings growth. And even if that's the peak, which it likely is, and who cares, That's 50 percent is that next year's earnings trajectory still looks good. The market's in that push pool and earnings have kept stocks in afloat. So it's like a tug of war. You got one giant guy that's earnings on one side of the rope. And then you got a couple of smaller people on the other side. Right now, that earnings guy's been winning, has been pulling that rope to the winning side. Is there a point here close, Julian, where it flips, where earnings don't matter as much as the other stuff?

3:45So in our view, you are at the point in terms of both the 10-year yield and the oil price where we are on high alert. What breaks the tie and which way the rope goes is the signals that we're going to get from the credit market. Credit has been remarkably buoyant, given the fact that you've had competition from the U.S. running the$40 trillion deficit, the rest of the world, of course, and then the hyperscaler issuance, which is slated to be large in the fall. So far, so good. But that is where the critical links lie. You know, just going back to the kind of fallout that we could see from rate hikes or not rate hikes, it's been, I think, three years since the last rate hike.

4:31We've had six rate cuts since then. So is that the end of that cycle and the beginning of a different one? It's the beginning of a different one. And this won't necessarily be those large scale 200 and 300 basis point hikes. And in fact, if anything, the almost four hikes to the end of next year might be slightly lower. But it is a new paradigm. And the fact that the market actually wants a hike and we think they're right in wanting a hike tomorrow tells you you're in a new. Robin Brooks, what matters more, the Federal Reserve or the price of oil? They both matter. And we're getting both at the moment.

5:09But if I can summarize the discussion that you guys just had. You know, the big thing is that we have gone before COVID, we thought we were in a low interest rate environment forever to now the realization that actually that was kind of an aberration. And we are in a high interest rate equilibrium. And this is the new equilibrium and the new permanent equilibrium. So the Fed is going to hike tomorrow. But underneath all of that is a geopolitical situation globally that's super unstable. So, Brian, rising oil prices are one manifestation of that. And then Kelly mentioned the rate cuts that the Fed did, for example, last year.

5:53You know, those may have been a mistake because it turns out that perhaps inflation is more stubborn and so interest rates should never cut in the first place. So we are in a different higher rate environment. And some of the angst that you're hearing is a realization that, oh, my God, we have all this debt. And so that really doesn't fit in with a high rate environment. Are you, Robin, in the camp that, you know, let's talk about what they should do for a second, not what they will. Do you think they should hike or not? I don't think that they should hike based on all the data that we have gotten.

6:31You know, Kevin Warsh, for example, at Jackson Hole, talked about the weight of items in the inflation indices with inflation above 3%. And he said, you know, this thing is not coming down fast enough. So in the CPI data that we got on Friday, that thing actually fell very sharply. So in an ideal world, I would not be hiking. Now, we're not in an ideal world. And there's huge questions of Fed credibility and questions around Warsh. And so I think here you have to do a little bit damage control. And unfortunately, between the headline CPI data, which surprised on the upside, the very hawkish speech at Jackson Hole, I think the Fed and Kevin Warsh in particular, they've kind of backed themselves into a corner.

7:21But it's really not a good place to be. We don't have an inflation problem as yet. We have a debt problem and a fiscal policy problem. And ideally, that would not be for monetary policy to fix. That's a fiscal problem. You know, Julian, Kevin Warsh is going to get a nasty gram if he raises rates, but he's probably going to get a bit of a big nasty gram if he doesn't raise rates. And the nasty gram is going to come from the bond market, which I think, and we talked about at the top of the show, is all but demanding an interest rate hike. Either way, does a 5 % 10-year yield steal money and attention away from the stock market?

8:02Will it lower the stock market by driving savers to buy bonds? Well, I can tell you right now, the professionals that I talk to that deal in a multi-asset world, the last 10 basis points or so on the 10-year yield have really started warming up to bonds. And that's a fact, OK? And at the margin, again, as we said at the top of the moment, is that September is a tough month for stocks. I would just say, though, you know, when you think about whether he should or shouldn't raise or whether they have to or not, the issue with not hiking tomorrow is you really risk a massive de-anchoring in the 10-year yield.

8:43And to us, that is likely the most damaging outcome. So you think we go well above 5 % if they don't hike? Yes. OK, Robin, real quickly, do you think they go well above 5 % if they don't hike? Yes, absolutely. So a great thing to hang our hat on with that question is the July meeting. Kevin Warsh came off dovish. And of course, what happened after was that the yield curve steepened very sharply. And I think the number one objective for tomorrow for Kevin Warsh and for the U.S. government in general should be to anchor the long end. Now, that's going to be really, really hard for Warsh to do because markets not only basically fully price a hike tomorrow, they price fully a hike for December, and then they price two hikes for next year.

9:32And so is Warsh going to be able to validate that market pricing? I highly doubt it. So this is a very dangerous meeting for the Federal Reserve. He's going to have to bring his A game in terms of communication tomorrow. It's going to be very, very difficult to anchor long-end yields for him. Let's bring in Rick Santelli to weigh in on this, Rick. And the very poor 20-year auction that just happened. Again, least liquid part of the curve, highest yielding. Don't want to make too much of it. But it did so the 10-year back above 5%. Words like dangerous, demanding. I really don't get it. You know, the swaps traders, the Fed funds futures traders, the three-month to two-year traders, all the spreads.

10:16That's how we arrived at not demanding, but pricing in a rate hike of 92 percent. I don't see anything demanding. I don't see any hair on fire in the market. I see a lot of nervousness over a basis trade because hedge funds might have bigger positions than they used to. But it's always the job of the Treasury Department to monitor and worry about large positions. I don't know. Here's what I see is important today. OK, is that oil prices and 10 year yields seem to be diverging. My charts are probably out of order. But if you do a one week chart of oil and tens, you can see that they, you know, they pretty much rhyme together until you get to the end.

10:54Now, let's zoom in on the end and do a 12 hour oil and tens. That's the important chart today. So why is this happening today? It's because obviously what's going on with oil most likely will continue. But the 10 year has a lot on its plate with the first day of a two day Fed meeting. And maybe the issue here is, is that many believe that 10 year behavior is going to change rather dramatically should, and I'm sure they will, the Fed hike rates. I'm not so sure. And in terms of the intensity of the long end, all I want to say to that is the Japanese had negative rates, yield curve manipulation.

11:33The U.S. manipulated its rates. We kept rates too low for too long. To think the Wall Street Journal thinks 5 % is a nasty area, it's normalization. There were times when I was a bit younger where we were significantly higher than 5%. The moral of the story is we have a whole generation on Wall Street that has never lived through a bear market in yields. Rick, a quick question. You pointed out you're always 10 steps ahead of me. But what you just said about the breakdown and the correlation between oil and yields is an excellent point. And I was going to ask you. So, again, just we have we have oil rising throughout the session today and yields kind of sputtering except for the auction.

12:11Is that because we're flipping now and instead of this driving inflation and high, is it because now it's so high it could start slowing the economy or am I reading too much into it? No, I think you might be reading a bit too much into it. I thought the 20 year auction wasn't good because it's a 20 year. Last week's 10 and 30-year auction were fantastic. I think there's a whole crowd that's going to like a five-handle on long-dated Treasury yields. They're most likely going to turn into buyers. And I think ultimately the conversation about what the Fed should do, what they shouldn't do, whether you call it symbiotic or reflexive, the relationship between what the market is pricing in and what the Fed delivers is just a cord that is not going to be severed.

12:55There's no way Warsh is going to sever it. One other thing, you know, we always talk about this new chairman in a variety of ways, except for the most obvious. OK, you were talking about where the three cuts a mistake. Well, the way people look at that is we go in cycles. The Fed rarely eases, then reverses or hikes, then reverses. This Fed may be different in that regard. Maybe. And Robin, we have to go. But you were saying you think that the risk tomorrow to markets is that they might hike, but then be dovish at the press conference. Yeah, Kelly. So Fed meetings are incredibly stressful because they basically come in multiple tranches, right?

13:32We get the announcement of the rate decision at 2 p.m. and the statement of economic projections. But then the press conference is a whole different ballgame. And the press conferences are what have been so difficult for Warsh. and it will be especially difficult tomorrow because the market here is really pushing him to the wall. It wants him to validate a lot of tightening that's priced into the front end curve and I think that'll be really hard for him to do. So I think the risk is we get a hike but actually then the market will be disappointed. It'll start asking questions about well is this guy going to tighten as much as we want?

14:10No. So then you could have curves deepening, the dollar fall, gold up and so forth. Right. All right. Julian, Robin, anything you'd add there? Agree or disagree? I just want to say one thing quickly here is that the concept of a bear market in treasuries is different this time in that this has been the first time that you have this incredible competition for capital between the rest of the world and hyperscalers who are going spend a trillion three in 2027. So maybe we're reading too much into all of it. They can do whatever they want. Julian Emanuel, Robin Brooks, thank you. Rick, appreciate it as well, Rick Santelli.

14:50Speaking of the Fed, don't miss our special coverage starting at 1 p.m. Eastern tomorrow. Brian and I will be live from Washington, D.C. for that decision for the press conference, as you heard, and a big afternoon of analysis. We've got former Deputy Treasury Secretary Michael Falkender, former Philly Fed President Patrick Harker, Congressman Josh Gottheimer, JPMorgan's David Kelly, RBC's Francis Donald. I need to take a breath. You don't want to miss it. Coming up next, more on the breaking headlines out of Saudi Arabia and what that's doing to crude oil prices today. Also coming up this hour, will crypto finally get the clarity the industry wants?

15:23Plus, we'll be joined by a portfolio manager with some picks to energize your portfolio and talk about whether biopharma's breakout will continue.

16:05We'll see you next time. G-O-O dot G-L-E slash workspace with Gemini. At Fanatic Sportsbook, we're talking real fan cash on every bet. Spend it on jerseys, tickets, collectibles, and more. Rewards hit different here. New customers can bet and get up to$1 ,000 in fan cash over 10 days. Fanatics, the only sportsbook to reward every bet. Must be 21 plus. Gambling problem? Call 1-800-GAMBLER or 1-800-MY-RESET. CT, call 888-789-7777. MA, call 800-327-5050. And Y, call 877-8-HOPE-NY. and be visit mdgamblinghelp.org. Offer not available in all states. Terms apply. See Fanatic app for details. A lot can happen between now and November, 2028.

16:42Two more summers, two more holiday seasons, and plenty of time to enjoy your new renewal by Anderson windows. Because right now you can buy new windows and pay nothing until November, 2028 new windows. Now paying for them that can wait by now and pay nothing until November, 2028. Get started at renewal by Anderson home.com hurry. Offer ends November 30th. Only valid on initial visit. Welcome back. Let's begin with some breaking news from Washington. Congressional Budget Office just releasing its latest estimate of the cost of the war in Iran. Megan Costello with the details. Megan. Kelly, that's right.

17:17We're just reading through this. But the top line that the Congressional Budget Office is putting on the total cost so far of this war against Iran up through August 1st is$38 billion. Now, they break this down to a couple of different categories. I'm looking at it in terms of overall cost, the cost of munitions and then the economic impact as well. So that$38 billion is as of August 1st, and they say each additional month of conflict after that will cost between$2 and$3 billion. That will depend on what type of weapons are being used, how expensive they are, and just how active the conflict is in any given month.

17:47Now, on the munitions, CBO describes this as an opportunity cost of the large expenditure of missile defense interceptors. They say this will leave the U.S. with a reduced inventory for several years, which could become, quote, especially problematic if there's some sort of conflict that arises, especially with an adversary like China over Taiwan. CBO estimates that the U.S. has probably used between one-half and two-thirds of its inventory of certain interceptors since June 2025. So that spans the conflict last summer as well, going after those nuclear sites. Now, on the economic impact, CBO estimates the economic impact is due to higher inflation due to the reduced oil shipments amid all this conflict over the Strait of Hormuz.

18:28They say annual inflation based on PCE is now estimated to be 0.5 percentage points higher than their February 2026 projections. They say as for core PCE, it's 0.3 percentage points higher. Guys, back over to you. All right, Megan. Megan Casella, thank you very much. All right, it is time now for Power Insider, as evidenced by the snazzy graphic. Let's talk about one of the big stories hitting energy right now. Now, oil prices are climbing again after Reuters reported that Saudi Arabia has told some European customers that specific late September crude cargoes will be canceled. In other words, some customers may not get the oil that they want on time.

19:08CBC cannot right now independently confirm that report. But it does come after Saudi Aramco temporarily shut down the east-west pipeline following attacks on it on Thursday. Now, how long temporarily means is what the entire oil market is focusing on right now. But U.S. Energy Secretary Chris Wright says he is optimistic the pipeline will be back online soon. Here's what he told our colleague Morgan Brennan earlier today. I think you will see the pipeline running again very soon. This will be a brief and temporary interruption. When you say very soon, potentially days here, longer? It's still a detailed assessment, but I think it will be measured in days.

19:50It will be measured in days. The market would like that. What does this all mean for the energy market, which is already seeing oil over$100 a barrel? And what about energy stocks? Joining us now is Tyler Rosenlicht. He is portfolio manager at Cohen & Steers. The price of oil continues to go up. The price of diesel fuel is$6, highest nominal. It's been higher in inflation adjusted in the past, highest nominal number so far. How is this impacting how and where you invest, Tyler? Yeah, so I hate to use the bad pun of we're in the dire straits with oil today, but that's where we think we are. I mean, hindsight's 20-20, but you look back and I think anybody that thought the conflict was going to last this long would have thought oil would be way above where it is today.

20:31But we came to this conflict with really high global oil inventories. There's been a lot of oil working its way to the market from other avenues. And also, China has really not been buying a lot. And that's been a real good buffer, keeping oil prices low. But as you noted, gasoline, diesel, jet fuel prices are really, really high. We think now people are waking up to the fact that, hey, there's going to be some real challenges here in terms of can consumers actually afford. As it pertains to energy stocks, we think the market's waking up to the reality that we're in an energy addition world. We need more of everything.

21:00We need more oil, more natural gas, more alternatives, more sources of supply from everywhere. And that's creating great opportunities. And I will note, the people that will add us, the physical barrel of oil is higher than what we're showing on the screen. That is the paper futures contract. If you want to buy a physical barrel of oil off a ship in Oman or the UAE, it's going to run you 130 plus U.S. dollars. That aside, OK, you talk about this energy addition. I love this because what people don't get is with all the growth in solar and wind, which is great, by the way, they're actually about the same percentage makeup of the overall energy use as they were about 10 or 20 years ago.

21:38This is an all in strategy. Does that benefit names like a Williams? Absolutely. So for us, we think energy demand continues to rise. It's a function of population growth, economic growth, and the changing energy intensity of the global economy. One of the big growth engines we see going forward is electricity demand and how can you actually generate the electricity you need for industrialization for data centers and AI and so forth. Domestic U.S. natural gas pipelines we think are really well advantaged. We have very cheap natural gas here. There's pipelines in the ground that can continue to grow and increase how much throughput they have.

22:12And these businesses are starting to expand downstream, actually convert the natural gas into power for data center customers. Natural gas pipelines were sort of thought of as very low growth and boring for the last 10 years post the shale renaissance. Now you're starting to see some animal spirits come back. As long as it's managed growth and well financed, we think companies like Williams are really well positioned. You also have a position in Tamboran Resources in Australia at Solve Energy, you know, which is kind of here's my question. Why aren't you in refiners? Why aren't you in pure play oil?

22:44I mean, for the person who's watching this and saying, you know, how would one of the most sophisticated people in this space be thinking about what's going on with these parts of what might be more of the U.S. familiar names right now? Yeah. So we do love refiners. Don't get us wrong. It's a big part of our portfolios. portfolios. I mean, you look at oil prices, and that's what everybody talks about. But really, what matters is what is the products prices. That's what we experience. A lot of what's gone on in product markets has been not just the Middle East, but it's been the Russia-Ukraine conflict.

23:09And lots of the refineries in Russia have been taken offline. Even if oil prices come down because the Middle East crisis is resolved quickly, products prices are not going to come down anytime soon. So we do like refiners. We like E &P companies that have lots of inventory. Again, it's about who can produce oil now and 15 and 20 years in the future, because we're really going to need it. This may be just a rumor. There may be more to it. They will get desperate. I think policymakers will if this gets much worse because people are saying diesel is going to seven bucks now in certain areas. What if they do an export ban on diesel?

23:39That is the big risk. And that's a really unknowable one because we're in a midterm election year. And obviously, prices at the pump really matter. I think there's going to be a lot of negative externalities of an export ban. That's not to say they won't do it. That is one way to keep domestic prices low. That's really bad for Europe and a lot of our trade partners. So we're very wary of how can policy change and what can that do to affect things. But it's also how we take this broader lens. It's not just about traditional energy today. We love traditional energy companies. We're also seeing opportunities in Australian exploration companies and companies that build solar farms.

24:10And we think alternatives are going to continue to be. Dusty. Hey, Mr. Tamborant, man. But I like your I think your question spot on, because don't don't put zero sleep on the regulatory risk here. This is a president who might say we're going to they've said they won't do it, but things change. By the way, also windfall profits, taxes. I mean, things could happen. That very quickly, we talked about oil and gas. Solve Energy, Kelly mentioned it, battery company. So you're not picking gas over whatever. We're going to need, to your point, all in Solve. That's a storage company. Ticker is megawatt hours, MWH.

24:44It's an energy edition world. We need more of everything. Actually, their core business is building and maintaining utility-scale solar farms and also the BESS, the storage systems that go along with them. People are looking at what's going on in energy now, and they're just focused on oil. And you have to realize we need more of everything. So as oil prices are high, the cost of competitors like alternatives and solar makes it more attractive. We think Solve's really well positioned to capture massive growth in generation investment. And as long as they can execute on their project backlog, we think the market's really underappreciating what they can do.

25:18Tyler, great to have you here, especially on a day like this. We've been saying that a lot lately. Tyler Rosenlicht. You're seeing a live shot of the Senate floor on Capitol Hill where a key procedural vote on the Clarity Act has just begun. If passed, the bill would establish the first regulation for the crypto sector in the U.S., kind of broadly speaking. The House has already voted on it but faced opposition in the Senate. Bitcoin, for what it's worth, is trading lower by about 3 % today. Coming up, the names that our next guest thinks have gotten punished too far. Why it's time to buy these AI plays, he'll tell us next.

26:20We'll see you next time. Google Workspace with Gemini at go.gle slash workspace with Gemini.

26:52877-8HOPE-NY. And be visit mdgamblinghelp.org. Offer not available in all states. Terms apply. See Fanatic app for details. A lot can happen between now and November, 2028. Two more summers, two more holiday seasons, and plenty of time to enjoy your new renewal by Anderson windows. Because right now you can buy new windows and pay nothing until November, 2028 new windows. Now paying for them that can wait by now and pay nothing until November, 2028. Get started at renewal by Anderson home.com. Hurry. Offer ends November 30th. Only valid on initial visit.

27:30Welcome back. Let's do some navigating of these markets. They could use a little direction, I think. The so-called pick and shovel firms that supply the infrastructure needed to build and run AI. Well, they've been under pressure. How could an interest rate hike by the Fed further complicate that? Joining us now is Thomas Martin, partner and senior portfolio manager at Global Investments. Thomas, we've promised stock picks to our audience. You have three of them in particular in the AI realm, including Corning, which was down big yesterday. So what do you see as opportunity here? Great. Well, thanks for having me on the program.

28:02I think you have to start with the idea that compute is really what is going to be needed. And the essence of that compute is in the microchips and in the connectors that help them process together. And, you know, a number of the names got bid up pretty robustly and then, you know, got chopped a little bit. And so the names that I've chosen for today are the ones that are down a good bit but still have a lot of growth coming to them. Like Corning, like Sienna with a C. We're showing these on the screen there. Like KLA. Why these three in particular? How do you know they still have a lot of growth coming to them and that it's not already priced in?

28:44Right. Well, they certainly are still favorites in the market despite being down. But that is because the growth is likely to be there. Really, if you look at 2027 earnings, about 60 % of the growth in earnings is coming from semiconductors. And some of that is from these companies. KLA is a process and testing equipment company for the semiconductors. So they don't get out the door if you don't have them doing their work. And the demand for those chips is so high, they need to keep on advancing the technology. And that's where KLA plays. And the stock's down 40%, over 40 % just in this quarter alone.

29:32So I think that there's plenty of opportunity if they're going to continue growing over the next five years, which we think they will. With regard to optics and optical fiber and optical switches, we have two different companies. We have Corning, which you mentioned, which is fiber optic cable, which transports over long hauls. And just as an example, one of the recent deals was announced with Verizon for an 80 million plus mile fiber optic cable. And it's not just to connect data centers, but it's also to connect all the other kinds of telecommunications that are in big demand. And Corning is the leader in that area.

30:16Sienna is an optical systems company where they get the components together on many different scales to be able to process faster. So it's the amount of compute and the speed with which you can process. And that's where Sienna can really help these companies to stay ahead of the curve. Well, it has seen a pullback from the summer, as many of these stocks have. This could be a moment, like you say, to add them to the list. Thomas, thanks very much. Appreciate it today. Great. Thank you. Yep. Thomas Martin. Brian? All right. On deck. Some off the headline stock picks and one under followed part of the market.

30:55It's next.

31:02Biotech has been on a tear and the winners keep getting bigger. Take a look at some of these gains. Biogen, Natera up double digits this year. The big winner is Moderna, which has quadrupled in value. And the broader biotech space is on track for another strong year. The last time the XBI had back-to-back double-digit annual gains was in 2020. So will that momentum continue? Our next guest says yes. Joining us is Evan Siegerman. He's BMO's head of health care. It's good to see you. Thank you for having me. Like you were just saying, very exciting. A lot going on in your space. And a lot of different kinds of companies involved as well.

31:34So this has really broadened out beyond the GLP-1s, hasn't it? Most definitely. So there's a few types of companies in my space. You have the speculative biotechs that are developing drugs, some of which have done very well this year. You have the larger biotech names like a Vertex. That's actually our top pick into the back half of the year. Vertex. I remember them from like 29. They used to be like one of the best performers. And they still are. And then, of course, you have the big pharma names, and there's still some stock picking among them. We have Lilly and Novo, which we can touch on. But I really like Merck.

32:03They've done a very good job of solving for the Contrude of Loss of Exclusivity event later in the decade. So go ahead. I feel like because of all the rightful attention on the obesity drugs, GOP-1s, that we've forgotten about all these other companies that are trying to solve some really, really bad diseases, like woefully, chronically underfollowed on the biotech side, which leaves, to me, that says opportunity. Opportunity, a name like a disc medicine, iron. Yeah. Disc medicine, small cap or small cap company. Smid. Smidish. They have a readout for their lead drug, bitter pertin, coming later this year.

32:42They also have drugs for non-malignant hematology, so blood disorders. All in, these are very important, and these diseases need attention, and they're not obesity. What's interesting, if you look at our outlook, our back-to-school outlook, we like obesity, but it's not our key driver. Lily's high on the list, but it's not number one. What about Tayshia? Do you sound like chatbots? Tayshia gene therapy. That is a they're working on gene therapy for a very, very rare disease called Rett syndrome. They had some really interesting data back in June. And then next year we should get pivotal data, which they can potentially file for with the FDA.

33:15Remember this company of Vexis for SMA? It's it's about interesting biotech, a big success. This is a similar setup to that name. Except I guess the problem is that if the drugs don't work, these companies are in big trouble. They have to reinvent themselves, reverse. Which can be hard because you're burning cash and that's obviously a risk. If they do hit, the upside, I've got to imagine, is massive. So how do you approach the risk of approval on something you can't control because you can't know what the FDA is going to do? This is what I've been doing for 15 years at this point. So you have to look at the clinical data that you have.

33:54You have to understand, are they aligned with the regulatory path? I think there's been some misalignment. You have this company, Replimune. They finally got approved. And you actually have to see what the unmet need is and what physicians are saying. So there's a lot that goes into it. And, of course, there's manufacturing. So you have to put that all together, apply risk to it, and look at a bunch of companies so you're not just anchored to one. Lastly, anywhere that you don't share the enthusiasm. Ooh. And even if the answer is no, I mean, I understand this is your bread and butter, but also why was it so long that this was such a quiet industry?

34:29And why is it that after the president goes in and puts on all these pharma kind of price controls, now we have this flurry, like all these stocks have all this interesting stuff going on? Two questions in there. So you have a lot of flurry in interest because these big pharma companies need to buy. A lot of these companies have loss of exclusivities later in the decade. Merck's Contruder, for example. I would also say that, you know, we've had like we've had real clinical success in biotech names and we're seeing winners and losers. And the winners are getting a lot of the attention. I mean, Moderna, which I don't cover, struggled for a while after COVID, but then they had good data with their partner Merck for a personalized cancer vaccine.

35:05Names that I don't like, we actually just downgraded Amgen to outperform to market perform. We think that their drug for obesity, Meritide, may not be what the obesity market needs. It's a long acting. We haven't had data for a while. And, you know, their commercial execution is great, but that's kind of the base case at this point for them. Why is Vertex so sexy? They are the leader in treating cystic fibrosis, no competition, a new kidney franchise on the precipice. And they're really good at innovating in areas where high medical need exists. Sounds good. Evan, thanks. Really appreciate it.

35:42And it is fun to hear about all these things that are hopefully happening. Evan Seegerman. Let's get over to Brandon Gomez now for the CNBC News Update. Brandon. Hey, Kelly. Republican Representative Thomas Massey introduced a resolution today calling for Defense Secretary Pete Hegseth's impeachment. He accuses Hegseth of illegally continuing the war with Iran. While it is unlikely the resolution will go anywhere in the GOP-controlled Congress, it is privileged, meaning it could trigger a vote on the House floor this week. Meantime, there was another courtroom loss for the Trump administration today after a federal judge again blocked the Trump-appointed board of the Kennedy Center from putting his name on the building.

36:17It's the second time the judge has ruled against the board, saying only Congress can approve such changes. And pop star Ed Sheeran says it was not his decision to remove Macklemore as his opening act on his U.S. stadium tour. He said the tour promoter made the call following backlash over Macklemore saying free Palestine during a set earlier this month. In a statement this week, the promoter said venues hosting the upcoming tour dates would not allow the concerts to proceed with Macklemore on the lineup. Brian, send things back to you. All right, Brandon Gomez. Brandon, thank you very much. All right, coming up, while your next guest says, don't believe the hype, at least not all of it, when it comes to warnings from AI executives.

37:06What I think would be wise to do as soon as possible, if not immediately, would be to have the major AI competitors test each other's models. Instead of grading your own homework, you would at least have competitors grading your homework and raising the alarm if they see concerns. That was Tesla and SpaceX CEO Elon Musk echoing recent warnings from AI execs on the potential dangers of unregulated AI. Our next guest agrees the industry needs guardrails, but questions whether the big names in Silicon Valley should be writing the rulebook. Kate Rooney joins us now from San Francisco with Cohere CEO Aiden Gomez.

37:46Kate? Thank you, Kelly. And Aiden, it's great to see you. Thanks for spending the time today. Yeah, no, thank you for having me. Yeah, we really appreciate it. You also put out a blog post. So this was after Dario Amadei's call to really slow down the frontier of AI. The question you say that nobody is asking clearly enough is basically, should a handful of some of the market-dominant AI companies out of the valley define the rules and standards? As part of this, you call that group a cartel. Can you unpack that for us? What do you actually mean by cartel? Well, I think the letter that was put out by Dario, the Anthropic CEO, called for the specific alleviation of antitrust laws for a small group of companies to coordinate amongst each other.

38:34And those antitrust laws were explicitly developed to prevent cartels. So that's what I'm referring to. And I really don't think that's the right solution. It's certainly the case that this technology has risks. For example, it is the most potent cyber weapon we have ever encountered and seen. And that's a real risk that needs to be faced down by the industry. But I don't think it's the case that a small group of AI companies should be setting the policy and the regulations and setting the bar for everyone else. It's a great way to ensure regulatory capture and a ceasing of competition, which is dangerous.

39:11There's a ton of stakeholders who need to be consulted here, and that was not present in this letter. We should also mention you compete in a lot of ways with Anthropic and OpenAI. You're based in Toronto. You're coming from a global view here. Have you seen evidence so far that they've done things and done anything in the category of regulatory capture? People have talked about those two potentially pulling up the ladder as part of this. Has there been other evidence that you have seen as a competitor that this is a pattern of behavior? It's not just necessarily a one-time issue. Well, I mean, these companies have been asking for regulation for a long time, and I think that's OK.

39:51That's good. You know, it's important to get sensible regulation in place, and there's good regulation that protects the public and also just gives clarity to the market about how to operate, how to safely see this technology integrated into the economy. What is the solution? You know, as we talk about this, I'm just curious from your perspective as a player in the industry, if not what Anthropic and Dario Amadei are suggesting, what can the industry do? You're acknowledging there's a safety risk, but is there a solution that could happen quickly given how quickly the technology is moving? Yeah, absolutely.

40:29So the first thing is to agree on what the risks are. If we're talking about, you know, sort of Terminator stories, sci-fi-like stories of extinction risks, it's very difficult to debate that topic. Those are sci-fi and fiction-based discussions. So that's something that we can't really engage in. If we start to get more concrete about things like cyber and bioweapons, we have a framework that we can start to build around to mitigate that risk. Going forward, I think we do need testing. Certainly, we need to be able to measure these capabilities. An independent and government-led effort to create institutions to perform that testing makes a lot of sense.

41:10But again, having it be led by the public, by the government, is the right way to get to a future that is actually safe and sees the benefit of AI instead of just regulatory capture and entrenchment of value in a few incumbents. Aiden, geopolitics is such a big part of this discussion. We were just showing on screen this sort of three-part plan that Anthropic laid out. Part of it is agreement by China in particular, one of the other big players. You can see it there are global rules. They want international coordination, including China. Do you have any expectation that China would be on board with anything coming out of the U.S.

41:44and any sort of global agreement on this? It would be a huge surprise. I think that conversation needs to be had. What about the risk, quickly? I mean, as we think about this, Aidan, sorry to cut you off. We're running out of time. But I mean, you have I have friends and family asking me this. There's this huge disagreement. Jensen Wong and others have said the rhetoric is irresponsible. Musk saying people inside Anthropic and OpenAI should be trusted. They may be seeing something we don't. How do you tell your friends and family when you're talking to them how to think about the risk of AI responsibly without overblowing it?

42:16I think it's an incredibly powerful technology that's going to impact every single sector across the economy and many parts of our life. There's a ton of benefits that are going to come in terms of cost of living reductions from the efficiency it's going to drive to new medicines to cure diseases. But certainly we need to stay focused on the risks that we can foresee and that are in front of us like cyber, like bioweapons. These are tangible risks that can be mitigated to ensure we get to that good future that we want to build. That's the way I try to frame it. It's not just one story. It's not a Terminator sci-fi story.

42:52It's a real technology that is going to have a huge impact. There's a lot of nuance here, Aiden. It's great to get your opinion on this and your take here. And Kelly and Brian, we'll send it back over to you. An interesting warning. Kate, thank you very much. And our thanks to Aiden Gomez as well, the CEO of Cohere. Meantime, OpenAI CFO Sarah Fryer also weighing in on AI security fears. Here's what she told Jim Cramer out west just moments ago. I'm going to ask you directly. Are you scared of dying in four years from a rogue actor manipulating Asians to misaligned weapons of mass destruction? No, I'm not.

43:30However, we do need to take safety seriously. And if it means we have to pace the frontier and slow down, absolutely. We're going to listen to our researchers and do that. But as the CFO, I need to then make business decisions around it. But no, I think that we are doing what we do well at OpenAI. We're pacing that frontier and taking that safety and alignment really seriously. And be sure to catch the entire interview with OpenAI CFO Sarah Fryer tonight on Mad Money. And this just in, Jim will also have NVIDIA CEO Jensen Wong on tonight as well. Jensen on Mad with Jim tonight. Booyah. More Power Lunch after the break.

44:16Let's take a look at some market movers. starting with shares of Nike, which is trading at lows not seen since May of 2014. It's down 2 % today,$36. The street continues to fade the swoosh with Baird and Truist now downgrading the stock. But I keep in my head thinking about this 4 % dividend yield. I don't know. Maybe I'm going to get me psyched. We can't get Nike, but I'm just saying. Anyway, next are shares of Dell trading at all-time highs today. Going back really to its relisting in 2018, That's a$544 stock now. It's up more than 300 % so far this year, thanks to demand for AI infrastructure, up about 2 % today.

44:51Meantime, on the energy front, Bernstein is out with a bullish note on GE Vranova. The firm says that GE Vranova is a, quote, durable investment. Adding that it's more than a data center trade, Bernstein has a$1 ,298 price target on GE Vranova, implying, Get this, a nearly 50, 5-0 percent move on GEV from these levels. All right, folks, this just happening right now. We are waiting for the final cloture vote on the Clarity Act. Michael Buccella is managing partner at Neoclassic Capital. He is here. Michael, I know this is all happening kind of real time. That vote is happening right now. What are your expectations and what are sort of the outcomes on either outcome?

45:37So it seems like we've we've hit a point of setback with the vote, at least in preliminary phase, not passing. And so this was I think what happened here was there was a bit of a contention starting last night into this morning with three key Democratic votes. And so that led us to a point where we didn't get enough votes for the Clarity Act to pass. And so I would say between crypto and data centers, I'm in the most two most contentious spaces in our nation right now. Again, this is something that we didn't think was out of the realm of possibility. But, you know, we're at this point now. We don't have the final numbers and I don't have a tally in front of me.

46:13Maybe you do, Michael. So I can't see where the vote is right now. There's even a real time thing on this cloture vote. But we did have a guest earlier on CNBC, and I can't remember the name. It was I think it was the 11 o 'clock hour. I was watching and listening where they said if the Clarity Act doesn't pass today or the cloture vote, that it's pretty much gone for a long time? I mean, that was a pretty grim assessment. Do you agree? So one, the unofficial vote, which is ongoing, is at a point now where if it is formalized and made official, we will have not passed the cloture. So we're at a point where that may be the case and likely is the case.

46:51And yeah, I mean, it's gone for some time now that the midterm election will take hold. And then we probably have a rewrite of more components to the act beyond just the ethics piece. And so now, you know, I think we're in a position where we're going to have to kind of go back. And luckily, we have the SEC and the CFTC as agencies providing guidance in their own right. But we're not going to have this comprehensive bill. Michael, and you'll forgive me, I'm going to look down. Viewers, I got to read. Michael Novogratz was out on X yesterday saying, what is clear to me is that if the Clarity Act does not advance tomorrow, meaning today, we probably won't get crypto regulation for a long, long time.

47:28If ever, this would be terrible for the USA and force more of our industry offshore. Do you agree with Novogratz here? I mean, I don't agree that we'll never get regulatory clarity. I think that's a bit of an exaggeration, but I think it might be some time till we get both sides of the House to both sides of the Democrats and Republicans to come together on something that feels good to both sides. I will say we're going to have brain drain offshore. I mean, luckily, we have corporations and industries that are willing to be progressive. You had Nasdaq put$100 million into Kraken or their parent company, Payward.

48:05You have ICE and the CME putting large amounts of capital into emerging parts of the crypto finance kind of convergence industries. And so we have people that are willing to take bets, but it's going to be harder to get those people to continue to invest when we can't get there as a nation. I know that the industry wouldn't like it. Michael, I just struggle to understand why it's that big of a deal. The bill? Yeah, not passing it. I've said last time I was on, I said, you know, the industry has done just fine without the government thus far coming together on a particular bill. I think, you know, genius passed and we were happy about that.

48:42Clarity is something that has numerous points of contention, although the hang up has been ethics. But I think that's just, you know, something to point to. And in reality, there's a lot more underneath that that people are taking issue with. We are truly going to potentially impact the financial services industry. And so this is there's a lot of substantially strong parties, Michael, and we need to. Got to leave it there. Really appreciate you jumping on a last minute with the Clarity Act. Michael Buccello, thank you very much. Thanks for watching Power Lunch. And Closing Bell picks up our coverage right now.

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