Mega-Cap Tech Rally, Diesel Prices Hit Record High, East Coast Flight Disruptions 9/21/26

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1:06Oil prices and bond yields down, stocks up. That pretty much in a nutshell is your story. Welcome to Power Lunch alongside Contessa. I am Brian Kelly. We'll be back tomorrow. We are seeing stocks rallying across the board to begin the week, but maybe more importantly, it's which stocks are leading the charge. Many AI and tech names surging today as the market looks to be moving on, at least for a day, from fears of overregulation. We'll talk more about it. And speaking of AI, a lot of the players responsible for powering the AI buildout have struggled the last few months, or at least their stocks have.

1:40Why are they going down while investment in the space is going up? We'll talk to Morgan Stanley, Stephen Byrd about all of it a little bit later this hour. Plus, to regulate or not to regulate AI, that's the debate we'll ask tech investor and entrepreneur Peter Diamandis to weigh in. All right, so we've got a lot to do. Let's start with what's going on today. And that's kind of out of nowhere. We got this sort of semi-soaring stock market. Today, the magnificent seven, those seven big tech companies, have added about$500 billion worth of market cap. And that brings us to the big question to begin this hour.

2:15Is this the start of a new run for the AI trade? Well, your first guest thinks it's the beginning of at least a face-ripping rally to end the month. It's bringing Fundstrat's head of research, Tom Lee, also a CNBC contributor today, certainly is kind of a face-ripper, not just with stocks, with crypto as well. We'll get to that in a minute. Was there a catalyst I missed? What happened? You know, Brian, I think last week was maximum pain, maximum pressure, because we had a Fed hiking very hawkishly, and we had high oil prices and rates high. And as you know, in the last few days and over the weekend, oil cooled and rates are behaving.

2:59And now we have a maximum hawkish Fed that could walk back. And so I think it is all the ingredients for a face ripper, especially given how oversold you got. And I'm talking to my book as the energy guy. I get that. But like is how much of a deal is oil's decline? Because it brings bond yields down. Bond yields have been following oil. So oil goes down, bond yields goes down, stocks go up. Is that kind of the formula? Yeah, I mean, it is because, you know, if you look at the CPI components that are still elevated, like airline fares and transport services, those are all energy related. And, you know, last week, the JP Morgan report about how they don't even have a base case for oil kind of just told everybody oil is just high and deal with it.

3:40And I think that was a maximum pain point, too. And are you factoring diesel in there, too? Because when you look at the price of diesel, and it was shocking for me, even filling up with unleaded to look over and see the price for diesel above, I think it was$680 when I saw it,$681. That's shocking. And I'm hearing from completely unrelated industries, casino industries, guys are worried about what their construction costs are going to be because of the trickle-down impact from diesel. Yeah, and diesel, as you know, is widely used as an industrial fuel. I mean, so, yeah, it's a it's a problem.

4:13And if there's shortages, you can't really substitute diesel. So I think there are valid reasons for why people should be concerned about energy. Yeah, but today they're not. I mean, today the A.I. trade is back in full. And we've got Stephen Byrd and Morgan Stanley coming up a bit later on in the shower. Let's shower. That would be something. You know what, Stephen Byrd. I mean, hey, no, let's let's add another voice on this big market. It's a Jay Woods of Freedom Capital Markets, also a CNBC contributor as well. We'll join us on the show right now. Jay Woods, thank you very much for joining us.

4:45I know in your heart of hearts, you are a technician. You love the charts. So was there, again, some sort of a trigger, a catalyst that caused today kind of came out of nowhere? Yeah, it did. And it's technology. I just wrote a piece this weekend and I called the market the ultimate tease between the bulls and the bears. This 7600 level, we broke down from it last week after the Fed. We rallied back. Now we're breaking out. So you have to look, as Tom was talking about, that leadership, the MAG-7 breaking out to new highs. Then you look at those stocks that can take us to a face-ripping rally.

5:19We've got them in play. Now, here's where I want to throw a little cold water on this face-ripping rally. Energy, we're down one day. Nothing has changed. To your point, what has changed today? Nothing. We are risk on. There is hope the Trump-She-Summit goes well. There's really nothing on the earnings front this week, unless you count Cracker Barrel and General Mills. Costco is interesting. But next week is where we're going to really see where the rubber hits the road when Micron reports. Micron is a stock, one of the top 10 in the world, that has another 10 percent to go. I think that and these semiconductors, along with the software rallying together today, will get us back to this old high around 7 ,800 in the S &P 500.

6:01But I don't think we're going to have enough momentum with technology alone to get us to new highs and get us to this face ripping rally. It's a good rally. Don't get me wrong, but not to the extent as we go into the midterms where we should be all, you know, all in in this market. Yeah, I mean, I'd agree with Jay. I think that there is fuel here. I think maybe where I'm going to disagree is I think sentiment is still quite bearish. Last week, AAII had a plurality of bears, a majority, which is basically rock bottom sentiment. And I know our clients were de-risking. There's been a lot of de-risking because they don't want to be buying stocks into a rising Fed.

6:38So I think people are off sides. I think that this is the potential to take the S &P above 8 ,000 before the end of the month. But you have AMD hitting a$1 trillion market cap today. You've got Meta up 25 percent this month, Intel up 35 percent this month. And the last time I checked, it was up 11 percent today. So what what gives you the confidence that there's still room to run here? Well, I mean, these are examples of names that people wrote off since end of June saying, hey, these are large names that AI trades over. And then look at how explosively they move. There's still a lot of names that have a lot of catching up to do.

7:13And, you know, AI stocks are still below their June high. So I not only do I think there's leadership coming from there, but as you know, crypto moves typically lead S &P moves by about a month. And, you know, crypto made a pretty big move in August. And I think that's why we're seeing equities in September. You know, Jay, I've got my Power Insider newsletter coming out tomorrow. And my theme this week is kind of like, I don't know anything. I mean, that's basically it because we don't know what no one does. JP Morgan admitted that like we have no base case because we don't know what's going to happen tonight or tomorrow.

7:42If we see some re-escalation, I know it's a big if, if oil prices were to go back above 100 with this kneecap, this mini rally or whatever you want to call it that we're having. You heard my question to Tom, how much oil and thus bond yields matter right now? Well, I think technology is still the place to be, and it can deal with some of these higher energy costs. But when you look at the market, it is a confusing market. So you have to go where the puck is going. And right now, when you look at the charts, which we do, we're seeing breakouts in these big technology names. The cyberspace looks phenomenal.

8:16Look at a stock like Zscaler, which I wrote about on CNBC Pro last week. It is just breaking out room to reverse. Then the leadership, CrowdStrike, Palo Alto. So there is great room to go in this technology trade. But overall, the market breadth is weak at best. The AD line in the NYSE has broken down. 25 % of the S &P 500 is making new lows compared to what we're seeing. It's actually 5 % making new lows today. On a four-week basis, it's 25%. So there is underlying weakness that while we were treading water in those MAG-7 names and they're lifting us today, I don't think this is, all right, all clear, let's buy anything with a symbol kind of rally.

8:59But I think the tech has more legs to go despite what we may see coming out of the energy market. It's interesting, Tom, when you bring up crypto as a prognosticator. If we're going to talk a little bit more and dive into crypto, you hear you have Bitcoin up almost 6 % at$85 ,975. 975. That's the highest since January. Ether now is at 2 ,746. It's up four and a third. Is the crypto winter behind us, Tom? Yeah, the crypto winter looks like it's largely over. I mean, it may be a couple of weeks early. Crypto has had an immense headwinds. Clarity Act failed. Interest rates are rising. There's been some high profile disappointments and yet crypto prices are up, I think that's the ultimate bottom signal when you rise on bad news.

9:47It's kind of like your thesis about the market, where everybody seems like they're bearish, which may ironically be the ultimate bullish call. That's right. The last seller probably sold last week or repositioned last week, and now we have a face ripper. Maybe a couple days delayed. You know, I was expecting it earlier. Quickly, how much are you paying attention to the midterm elections, not as a citizen, but like as a market guy? November 3rd, I mean, that's not that far off. And some people say, listen, could this be the election that sort of hits the rally where people maybe take some time off ahead of it because they just don't know how it's going to turn out?

10:19Yeah, I heard your segment earlier with the Wolf strategist, and he thinks the Senate stays Republican. You know, the prediction markets have been very good with elections and they're talking about a flip. I think that the market is pricing in a Democratic sweep. that's probably good news for stocks because it means gridlock and markets like prefer gridlock over trifectas. Well, and even the prediction markets might have a rude awakening, depending on who stays in power in D.C. and how the administration goes. What does that mean? Well, there's bills right now pending in Congress that would significantly restrict what prediction markets are able to offer for markets.

11:00Plus, there's the whole legal case that would take those out. So we'll have to wait and see whether elections, as some lawmakers have suggested, get stripped out of prediction markets and crypto. And there could be a different reckoning with crypto. There could be a different reckoning with A.I. So, Jay, let's ask you the same question. When you look at what's coming down the pike, where we are now in September versus a month and a half from now, how are you factoring in your your particular investments? Well, I agree with Tom. A gridlock is actually a great thing for the market. And seasonally, we're going to see the market continue to go higher.

11:37So I think we're set up for a good year end rally and to kick off the year fine, regardless of what happens in Washington. If it's all Democratic or total split. And to his point on Bitcoin, I think that broke out. It put in the perfect bottom. So I think that is a great place to be, even if we get some turmoil in the market going into the elections. Granny shots. Tom Lee, give us a couple of specific investment ideas that you love right now. Well, you know, I think a good intersection right now, which is long AI and long financial services disruption in crypto, would be a name like Robinhood, you know, which is really a forefront, really tech forward company.

12:19That would be one of the names. And then, of course, we like NVIDIA because NVIDIA is still undervalued and it is the single linchpin for the AI trade. and it's 16 times earnings. I mean, it's cheaper than the market. And of course, one third the multiple of Costco. And Jensen Wong thinks that there is not going to be an end to the world. So he's an optimist. We'll have to see what. Yeah, humanity will survive. Yeah, that's always. That's now considered an optimist. We're all not going to be wiped off the face of the earth. That's a contrarian take now, right? You know who's not an optimist? Everybody's sitting at Newark Airport right now.

12:48We have some, yeah, we have some bad news coming in. Hey, thank you, Tom, for joining us. Thank you, Jay. Appreciate that. You want to tackle the breaking news? Well, just that there's a ground stop at most New York City airports. They're going to lift it in Boston, according to the FAA. They're going to lift it soon for JFK and LaGuardia. Folks, if you're watching us right now on your phone sitting at Newark Airport, sitting at LaGuardia, sitting at JFK, we feel you. I mean, we're glad we're not there. But what happened is somebody cut a fiber optic line in Philadelphia, do a construction work.

13:15So like everything in life, if there's a problem, blame Philadelphia. Well, I wasn't going to go there, but I would say that there is definitely questions that will be raised about redundancies and why all of New York City's airports got ground stops. Today, on Yom Kippur, ahead of UN Week and two days ahead of one of the biggest nor 'easter storms to hit this year. Book your hotels now. From Wall Street to Washington, the AI safety debate continues to be front and center. And coming up, you're going to hear from entrepreneur and venture investor Peter Diamandis calls AI the most important technology ever invented.

13:57But after the break, AI power stocks, they're down, even as electricity demand keeps going up. Stephen Byrd of Morgan Stanley is here on what is driving the divide. Stick around.

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14:58and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box, that smile they can't hide, knowing you chose exactly right, because the right gift can bring a lifetime of meaning, a promise, a milestone, a memory in the making. Make every moment unforgettable with 20 % off storewide. Exclusions apply. See jared.com backslash radio for details.

15:40Jared, make the holiday last forever. Shop Jared Jewelers. We know that the AI buildout has a power problem. There's simply not enough power to power all the things that we want to power. But in a new note, Morgan Stanley analyst Stephen Byrd, who did some of the best research on Wall Street in the world on this, says we are still way short, maybe shorter than we thought about our power demands. So how does this all play out? Stephen Byrd putting out a new 50 odd page note. You need to cut these notes down a little bit. We got things to do. Stephen Byrd, thank you very much for joining us. So you said that our estimate of 26 to 20, In 2008, incremental power demand rises to 97 gigawatts in our base case.

16:27Yes. And the shortfall is 57 gigawatts. Now, to put that into perspective, because a lot of people are watching Back to the Future, and that's what the car went back in time, New York City uses between 7 and 10 gigawatts a day. Correct. So we are 5 to 8 New York City's short of power. But yet the power generation stocks until today have been going down. How come? Yes. Over the summer, we had mostly a technical meltdown, which you were describing in the last discussion about challenges over the summer. When tech gets hit, these little powered shell companies get hit twice as hard, not because their business is impacted, but because of technical.

17:03So we had a meltdown among, frankly, a lot of investors who just saw their positions really get hit badly. The fundamentals are fantastic. And what I see is the escape from this, because, you know, how do we get out of this endless trap of just when the markets fall until these stocks go down? that path is signing long-term contracts with folks like Amazon. And that's what they're going to do. So over the next couple of years, they're going to turn themselves from sort of a former Bitcoin company into a bond. And when they do that, they're going to trade completely different. What do you mean into a bond?

17:33When you have a long-term lease with Amazon with highly predictable cash flow. 10-year, 20-year lease. Moving to 20. I think all future deals are going to be 20. 10 is too short. 10 is too short. With that kind of profile, there'll be REITs, and they'll trade completely differently from where they are today. That's the upside we see. Also, if you think that utilities are going to boom, this boom times because of the infrastructure build out for AI, wouldn't these be long-term plays anyway? That's correct. A lot of the companies that are looking to provide that power solution are going to sign new power contracts, do incredibly well as a result of that.

18:08So the power sector participates. The problem, though, is utilities can't move fast enough. That's the problem that Brian was just walking through. Even after we look at grid access, we're still really short. So then we need unconventional solutions. Why can't they? Is it because of the disparate regulations that are happening across the nation? We've seen so much pushback from local and county and state governments over the AI build out. That's a huge part of it. So we have people, power, and politics. All three are a problem. Politics, you see pushback from communities, pushback from states.

18:37And utilities are ultimately political entities. They're very aware of the politics in their state, so that plays into it. But to be fair to utilities, they also have physical limits on their grids. Okay. When you look at an example like a couple years ago, Texas had the deep freeze that crippled their power infrastructure system. It really highlights how aged our system is. Now you have all of these new builds. Could this be a good thing for the nation's infrastructure? If you have data centers going and going, we know that we're going to need more stable, more consistent, predictable power supply.

19:10Yes. And lots more of it that we upgrade and modernize our systems. 100 percent, but there are limits. So Texas is a great example. On a hot summer day, Texas uses about 90 gigawatts of power. And the state received 400 gigawatts of requests from data center folks to connect. They just can't. They can't do that. So Governor Abbott's letter is fair. He said, basically, we need to carefully think about the impacts to the grid, impacts to communities. Ultimately, Texas will connect a small fraction of that. But a lot of those projects just will never get built. Texas has carried the load. And by the way, some of those requests are probably duplicative, right?

19:42It's the same request in the line. So the numbers are kind of mushy. Yep. So Texas can do what it can do. But ultimately, even Texas, even Texas is going to run out of opportunities. Yes, exactly. So a lot of people have talked about space. I want to talk about someplace that's almost as far away, Australia. Yes. Okay? Yes. Because we're going to have to start looking, are we not, outside of the United States to countries that have not a lot of people. Yes. They have a lot of water if they need it, and they have a lot of access to natural gas. 100%. Where are the international opportunities? Australia, Thailand, Malaysia, India, the Nordics, Spain.

20:19But when we add all that up, it's not enough to account for the U.S. shortfall. But you're right. Incrementally, the developers in Australia, for example, signing new contracts that are very lucrative is just not going to be enough. Is this the biggest bottleneck then? Utilities and power, is it a bigger bottleneck than chips? Yes. Yes, by far. So what we're seeing and what we heard over the summer, you're asking sort of what happened over the summer. The tech community reached out to all the U.S. time-to-power solution providers and said, whatever power you have in 27 and 28, we'll take it. Wow.

20:47That's different. Sit tight, Stephen. I don't think we're letting you go just yet, but we've got some breaking news now that we've got to get to out of the White House with Eamon Javers. Eamon. Brian, that's right. We've got a new statement now from the White House about their ban of three media outlets from the White House grounds. The White House putting this in some context, they say the First Amendment protects their right to publish. It does not entitle them to a hard pass. That's the pass that allows you to come and go here at the White House every day. A briefing room seat or place in the press pool.

21:18Access changes are nothing new. What is new, however, is the sudden claim that it becomes sacred only when the outlets are friendly to the radical left. The rule was never every outlet gets in. It was always our side gets in. And then they go on to say no president is required to host a hostile operation on the grounds. Access has always been a privilege. And President Trump is applying that rule. Of course, the three media organizations in question filed a lawsuit this morning in federal district court here in the District of Columbia, seeking a temporary restraining order to block the White House's campaign to remove their press credentials and allow them to reaccess the White House grounds to do their news coverage.

21:59We'll see. Ultimately, it'll be up to a judge. The judge was appointed this afternoon. It was a Trump appointee, somebody who has experience with this in the past. This particular judge handled the Jim Acosta case at CNN in the first term, in which Acosta's credential ultimately was returned to him after a dust-up and a decredentialing by the Trump White House in the first Trump term. Guys, back over to you. Eamon Javers, that breaking news. Eamon, thank you very much. Back to our guest, Stephen Bird and Morgan Stanley. I know you've got to let you go. Give us a couple of names, companies that are going to benefit from everything that we just talked about.

22:30Yeah, I'd say Cypher and Hutt would be two that we love. Cypher, we think, is going to do a huge behind-the-meter power generation deal at one of their Bitcoin sites with a large tech player by October. We think that's going to be a game changer. Hutt in Louisiana is going to do a large deal as well. And this is what's so interesting, the politics in Louisiana. Back to your question. Louisiana likes data centers when they're structured correctly. They benefit communities. And in areas of Louisiana, they're very poor. This can improve the school systems, for example. This can improve infrastructure, fire stations, police stations.

23:00So I think what we'll see in Louisiana and in Texas is smart data center development in ways that actually work pretty well for communities. And we'll see whether that provides a model for other less friendly to data centers sort of jurisdictions. Exactly. It's great to see you, Stephen. Thank you for coming in. Thank you. Coming up, diesel hits a new record, but it could send prices even higher. The economic and market fallout after the break.

23:46do. Now, where did I put my keys? You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC, member NYSE SIPC. 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. Buy now and pay nothing until November 2028. Get started at RenewalByAndersonHome.com. Hurry. Offer ends November 30th. Only valid on initial visit.

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24:46All right, one of the big themes today, not just that stocks are up, is because bond yields are down and bond yields are probably down. We'll talk to Rick Santelli in a moment about it because oil is down. Oil is down about 5 % right now. That is sending oil back below 100 bucks a barrel, at least here. We know it's higher in other parts of the world. So the oil stocks, the Conoco's, the Exxon's, the Occidentals and more, they are all down as well a couple of percent. But another part of the energy market not seeing a lot of relief is diesel fuel. Diesel obviously moves the American economy, trucks, trains, giant ships.

25:19It is at a new nominal record high. The national average,$6.51, according to AAA. That is up sharply for about$3.70 this time last year. But I will say this, it's a nominal high. If you adjust for inflation, diesel prices were about$7.50 a gallon in 2008. Obviously, 2008 is a rough comparison to Tesla for anything. But diesel fuel prices have been this high or higher in the past, not taking anything away from the price. But we've been here before. Well, oil prices are down and so are the bond yields. The 10-year breaking below 5 percent after hitting its highest level since 2007. Last week, Rick Santelli joins us from Chicago now watching all the action there.

26:05What are you seeing, Rick? You know, it's so fascinating to be talking about oil and rates in a different way today. I will call it decoupling. Now, it hasn't completely decoupled and we don't know if this is temporary. Maybe we need the war to end for the Treasury complex to pay a lot of attention like it did in Chapter one. But as you look at a 12 hour chart of tens and oil, you can see that overnight it definitely gave us the direction. Yields are definitely lower. But as you could see, kind of center right, the divergence there in terms of not necessarily tracking it. Ten-year yields are only down three basis points.

26:41And as Brian pointed out, oil's down 5%. It doesn't seem very equitable. Now, if we look at twos and tens going back to Fed Wednesday, look at the difference. This is a percentage chart. Two-year yields, they're moving up. And 10-year yields are basically sideways. And this is really important because the Fed is driving a flattening of the yield curve. Now, normally, flattening of the yield curve are considered bearish for the economy. But this really is driven by the short end rates being firm and moving higher. Right now, we're still hovering at what was yesterday's high yield close going all the way back to the summer of 24.

27:22Consider this. We also have a bunch of supply that's going to be hitting the market Thursday. SoftBank launched an$11 billion corporate offering. It's junk. They're rated junk. And$10 billion of that is dollar related. is going to have a three and a half year, five and a half year, seven and a half year. One billion is going to be in euros, and that'll be a five and a half year maturity. And I want to point out, if you look at the credit spreads for the long end, it's 270 basis points over treasuries, the best credit in the world. That is really tight, and it is some of the tightest it's been in almost three years.

27:57They couldn't have picked a better time to launch. And in terms of the yields they'll get, we'll know more as we see more interest by investors. Brian, back to you. All right, Rick Santelli. Rick, great stuff as always, my friend. Thank you very much. Still ahead, tech investor, entrepreneur extraordinaire, Peter Diamandis, here to share his take on AI, technology, and longevity. Peter, always a great guest, is next.

28:302030 is not going to be the end of the world. there is 0 % chance that's going to be the end of the world. And so I think that scaring people is unnecessary. It is irresponsible. That was, of course, NVIDIA CEO Jensen Wong pushing back on any AI extinction fears. It comes to some of the industry's most prominent leaders, including Sam Altman and Dario Amadei of Anthropic, call for a slower approach to AI development. But your next guest sides with Wong. He argues America cannot afford to hit the brakes while China races ahead. Joining us now is top tech investor, futurist, one of America's greatest minds, longevity expert, Peter Diamandis, founder of the XPRIZE Foundation.

29:16I know we've got questions about longevity or as I like to call it longevity because, you know, I like to invent words, Peter. It's an inside joke. We'll get to that in a minute. But you're obviously not worried about AI. What do you think is behind these AI fear calls? Is it politically motivated? Is it people just don't know? What's behind it? Yeah, Brian, first of all, great to see you again and a pleasure to be back on the show. So my greatest concern right now is what I'm calling a pandemic of fear, right? The amount of fear being pumped into the public right now is through the roof. And fear is a terrible place to face the future from.

29:52So when I dissect what's going on, here's the way I see it. these labs are building extraordinary technology. The technology is getting out. Will there be issues? Yes, there will be problems. Like with any new technology, the car, nuclear, whatever it might be, there are problems that emerge and we will learn to properly regulate and to manage those. But the situation is when we have these multi-trillion companies, the largest in the world, and something goes wrong, maybe it takes down a power grid in a city. Maybe it takes down a banking system in a particular area. Can you imagine the number of lawsuits that will result on these trillion-dollar companies?

30:36They're looking for regulatory relief. We saw this with Besant where he said we cannot dismiss these companies having liability for any harm they have. So they want top cover. They want regulations and they want to have, you know, no liability in this situation. And, you know, you've got all four heads of labs coming out within like a minute saying, I agree, I agree, I agree. What's behind that? They know the liability is huge. So that's the first thing. Well, we have all of these examples where there's agents that are supposedly sandboxed. They don't have access to the Internet and they invent access.

31:16There was a story that I was just reading today about AI that says, OK, you know what? You don't have to follow the rules. You don't answer to government and you don't answer to any corporation. You're on your own. The question about whether China is going to win or whether the U.S. is going to win becomes irrelevant if you think that you no longer have to plan for your retirement or plan for your children's future. So how do you factor in these? I don't mean to be a fear monger, but I read the book. If anyone builds it, everyone dies. And it's by people who know a lot more about it than I do.

31:49And it scared me. How do you factor in that? But you bought the book. Yeah, I did because I'd rather know. Okay. I would rather know than not know. Give me some hard, fast facts that are going to reassure me that these breakaway agents can be controlled. So, first of all, read better books than the fear-mongering books, right? Our amygdala in our brain evolved for 200 ,000 years to pay 10 times more attention to fear than the positive news, and all we hear is the negative news. Secondly, I'm not saying there's no danger. There is danger. We have to manage that danger. One of the areas, the way we manage this is by alignment.

32:31So you have to understand, we're not – these AIs that are being created are being grown. They're like children. They are learning from us. And when the AI labs are using— And just like children, children rebel. I agree. Listen, a three-year-old with a hammer inside your house is going to do damage. But at the end of the day, we trained these AI systems on a massive amount of data. Where did that data come from? It came from Reddit. It came from Facebook posts. It came from all the vitriol that we have, you know, as humans put out there. We can and we must train these next generation of AI systems, GROC-5, GPT-6.5, whatever is going to be coming out next, train them on data that is aligned with human interests, and they will learn to be aligned with human interests.

33:20So what I want to hear from the labs out there is we're going to not spend all of our million agents on solving the math equations. We're going to focus them on alignment with humanity. So generally so that we have this requirement that the AI models coming out have alignment. They are in our best interest. This is possible. This must be done. At the same time, you know, Elon announced a methodology that I think is really good, that we have all of the labs, all the frontier labs check each other's releases for alignment, for escape capability. And you have to understand the escapes that we've been reading about, the hugging face incident, all of that.

34:06There is a very good reason that that occurred. First of all, it was one particular company in Israel that was doing all of the testing. And the way they set it up, there was a fault in their testing. And the agent was given an impossible task, asked to solve it. And they found the fault. They found the crack in the wall, and they went out. That shouldn't have existed. You know, the IT folks for generations have called it giggo, garbage in, garbage out. It sounds like you're saying. 100%. Like Crosby, Stills, Nash, teach your children well, right? Put in good information, not stuff the crap that's on the Internet.

34:43So the machine is learning bad, bad things because it's reading bad things, right? Is that kind of the thesis? 100%. We can build a set of synthetic data that is aligned. There was another example back, I think it was like GPT-4, one of the, no, it was Opus 4, came out and it blackmailed one of the engineers not to shut it down. This was about a year ago or so. And when Anthropic went back and looked at the data of why it did this blackmail, it was the fact that it learned from science fiction books, science fiction movies, this is what AI systems do. So it's performing as we have trained it. Let's make sure we're training it, you know, as a good parent with the data.

35:32We have the option to do that. And I think that should be mandated. In the meantime, just because I'm not a doomer and I'm not a conspiracy theorist myself. Okay, doomer. But I am very interested in all of the ways we can see AI help us become better humans. For instance, longevity, right? Like, every book that my husband picks up is not about the end of the world. It's about how to live longer for the end of the world. I like him. Yeah. We are, yeah, we're at the verge of a health span revolution. People need to hear this. Ray Kurzweil first predicted this a while ago called Longevity Escape Velocity, that there's going to be a moment in time that for every year you're alive, you know, AI and longevity technologies, therapeutics, are extending your life for more than a year.

36:20We've just seen a dear friend of mine, Alex Zeverankov, who's the CEO of Insilical Medicine, just get phase three approval for a drug that is extending life four to six years. We've seen the GLP-1 drugs. We've got this$101 million HealthSpan XPRIZE going on. 800 teams entered our XPRIZE competition. The work of David Sinclair with Life Biosciences. all of these are AI-driven technologies that are working on reversing aging, giving you the cognitive ability, the immune ability, the ability to build muscle you had 20 years younger. This is not happening because we're becoming smarter. It's happening because we have better tools.

37:00So at the end of the day, reinventing healthcare. We spend the most of any country on the planet in healthcare, and we're like ranked down number 50 or 60 in the world. That's ridiculous. The best diagnosticians, the best physicians will be AI delivered to you for free, right? We're going to start discovering new drugs. The same thing is true with education. We split education into two parts. One is socialization, be a good human, you know, learn good interactions with humans. The second part is learning. And we're going to have AIs that are the best teachers on the planet interacting and helping teacher students.

37:38And so that combination is going to help. You know, I have two 15-year-old boys. That's what I'm excited about, giving them, you know, a purpose. A better future. Yeah, for sure. Yeah. Peter, I'd love to do an hour on this, but then I'd be fired, and that wouldn't be good for anybody. So we're going to say goodbye, but we'll get you back on soon. Peter Diamandis, really appreciate all your insight, as always. Great to see you. Thank you, Peter. Always my pleasure. Pleasure to see you both. Let's get to Christina Partzen-Nevelis now for a CNBC News update. Hi, Christina. Hi, Contessa. The Vermont man charged with shooting three young Palestinian students in 2023 was found guilty today on three counts of attempted second degree murder.

38:17Jason Eaton's lawyers argued that he was suffering from delusions that ordered him to shoot the men. He could spend life in prison for the 2023 attack near the University of Vermont campus in Burlington. The shooting paralyzed one of the men from the waist down. Eighteen suspects in the killing of Haiti's former president, Jovenel Moez, appeared today in a federal court in Miami. They were flown to the United States yesterday to face charges related to the 2021 assassination. Prosecutors say they planned and financed the plot to kill Moez in South Florida. Some iPhone owners can now file a claim in a$250 million settlement with Apple.

38:53A class action lawsuit claimed Apple deceived customers by advertising artificial intelligent features in some iPhones in 2024 and then not delivering them when the phones were released. Apple denied these allegations. Eligible users can file a claim until December, but a judge still needs to finalize the settlement before actual payments can be sent out. Contessa, back over to you. All right. Thank you very much, Christina. Still ahead, chips are getting supercharged again. AMD, Intel, and Arm all moving big. Is it time to buy the rally? Jeff Kilberg has his traits. That's next.

39:31Two major chip names are surging today. The first Intel up double digits now. I see it at almost 12 percent on pace for its best day since early May. And then look at AMD. Today, it joined the one trillion dollar market cap club, also on track for its fifth straight day of gains. It's up eight and a half percent right now. It's risen more than 20 percent over. Oh, the last like since since September 8th. I can see that. So should you keep riding this wave? Is it time to take some chips off the table? Joining us now is KKM financial founder and CEO Jeff Kilberg, also a CNBC contributor. Dad joke, even though I'm a mom, Jeff.

40:11I love it. When you look at AMD and Intel, which are your two largest positions now, what makes you think there might be more room to run? Well, Contessa, interestingly enough, Intel, I got criticized a little bit as Intel was our largest holding the essential 40 ETF, ticker ESN. And we saw what happened, that volatility we saw in August and September. Arguably, we saw markets paralyzed, the semiconductor trade paralyzed, due to the fact we didn't know what was going to happen last week in that Fed decision. Now it's in the rearview mirror. Now we are seeing this reignited trade. And since Fed Chairman Warsh moved the QQQs, they sold off on Wednesday down about 700, we've seen a 6 % move higher.

40:53So that's Ignited AMD, which is our largest holding in our Gary growth ETFs. So we get excited and there's more room to run because this is where money's chasing. It's a huge gamma squeeze today, Contessa. And you're seeing that play out with the Nasdaq up 825 points, almost 3 percent. All right. But you took profits in Oracle. You sold calls against Palantir and Tesla. Do you think that the high beta AI is overextended? Well, in our Gary ETF, we're very tactical. So we tried to bottom pick Oracle and then we saw great earnings and it just could not sustain above$160. So we exited that. Now, we may be wrong, and maybe Oracle goes up to 190, but the whole thought process of when we trade in our Gary ETF is to be tactical, dance between the range ups.

41:37That's why we've been doing so well this year. But I think if you look at Palantir, you look at SpaceX, some of these names, even Tesla can test. So you've had a sensational bounce. Pigs get fat, hogs get slurred. So I personally have sold some calls. We don't trade options in our ETFs at the moment, maybe a teaser for 2027. But what I do think is that you can sell, mitigate some downside risk. But it seems like this chase, the underinvested, this seasonal September that everyone was so bearish about. The VIX closed at 14 last week. There were no clouds on the horizon. Therefore, I think Tom Lee was right earlier talking about 8 ,000 in the S &P 500.

42:12And I think you're going to see a chase to that number. What's the next biggest thing that you are watching, Jeff Kilburg? Like, what's next on the macro radar? It's earnings, Sully. Honestly. What are earnings of what? General Mills this week? No, no, no. Costco this week we'll look at a little bit because we own the Essential 40. But the next earnings season, I think if you put it in context, everyone forgot about how wonderful earnings were. Three quarters in a row we're expecting year-over-year earnings per share growth of 25%. You know what the 10-year average is, Zoe? What? 8%. So put it in context.

42:46We are seeing a robust, historic earnings environment. And that is now front and center stage. And that is why we're going to continue to move higher. And all the bearish folks, I talked about in my letter I put out this week, so the week ahead, all the fear index down at 29. People are getting so fearful. People are waiting for the extreme fear to buy. We may have missed that boat, but I think you're going to see the markets move higher. But the underinvested, that's the biggest risk. We're under 15 on the VIX. There you go. And how glad are you you're not flying into New York right now, buddy?

43:14Because if you were, you wouldn't be flying into New York because it's a ground stop at Newark. Sully, I got home yesterday from New York by the grace of God. So I'm very happy to be home. Luck of the Irish, dare I say, as that helmet next to you, Jeff Kilburg. Thank you. All right. Thanks, Jeff. We have more Power Lunch right after this.

43:36He says it is not clear when a ground stop at a number of East Coast airports, primarily here in the New York City region, are going to be lifted. This is a live look at the website FlightRadar24. Normally, it is filled with yellow airplanes. I know because I travel all the time and I use this website to do a nice job. There are no flights in or out of Newark Airport and flights just stopped landing at LaGuardia. Not my opinion. That is a live look. CNBC News line airline reporter Leslie Josephs joining us on the news line. Leslie, thanks for hopping on. What do we know about what's going on or should I say what's not going on?

44:14Well, not a lot of flights are going on at the moment. The last inbounds we've seen in Newark was late morning, so it's been several hours. Inbound flights from Europe, other international flights had to divert to Boston as far as Detroit, to Washington, D.C. And what we just heard from Verizon right now, which has a fiber optic line running to this very critical FAA facility that is responsible for guiding the traffic in and out of Newark, there was a fiber optic cable that was running adjacent to an Amtrak line in New Jersey. The construction contractors were working there and they dug up and cut the cable.

44:51The Verizon says they are they have no responsibility for the incident. And we expect to hear from the FAA very shortly within moments. I got to apologize. The initial report was Philadelphia and I was knocking Philly. It's a New Jersey problem because, of course, it is. So apologies to all my friends in Philly. I love you. Still welcome me back quickly. How important is like Newark is not just a busy airport, Leslie, but it matters for flights going all over the country. All over the country and all over the world. It's the busiest international hub for United Airlines. A lot of those Europe flights that leave, you know, before dawn, East Coast time, those were in the air already when this happened.

45:26So you have passengers, hundreds, thousands of passengers that ended up landing in Baltimore, D.C., Boston, Detroit, Cleveland, when they were not expecting to. So the airlines are going to have to work to get those passengers back. But we're looking at about 335 cancellations in and out of Newark today, 200 delays. A lot of those delays are turning into cancellations now. So kind of a big mess on what's looking like a blue sky day otherwise. Leslie, thank you for that. By the way, the FAA says Philadelphia has a ground stop. They've updated JFK to a ground delay. LGA has a ground delay. But there are significant delays.

46:00EWR Newark still has the ground stop. Good day not to fly. Be kind at Newark. It's going to be not good. Thanks for watching Power Lunch, everybody. Closing bell starts right now.

46:38Fidelity Brokerage Services, LLC, member NYSE SIPC.