Power Lunch 9/14/26

0:00Dust, height, noise, deadlines. That's where your work happens. Where tough conditions push and you push back. And where your standard shows. Because out here, it's not about easy. It's about getting it done right, no matter what the job throws at you. Pros know what it takes. You do the work. You carry the standard. Hilti builds tools, systems, and support made for real job site conditions. So your work holds up when it counts. Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm. That's music to my ears.

0:44I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader. A limited number of ETFs are subject to a service fee of$100. See details at Fidelity.com slash commissions. Fidelity Brokerage Services, LLC, member NYSE SIPC.

1:06Stocks are back in the red this hour as investors reassess the AI trade. Welcome to Power Lunch alongside Dominic Chu. I'm Kelly Evans. Brian Sullivan is off today. The market's other big story, of course, is bonds. The U.S. 10-year Treasury yield pushing back above 5 % for the first time since 2003, a move that raises the hurdle for equities and the economy, and energy is adding to the pressure. with oil back above 100 a barrel, keeping inflation and rates front and center. Plus, noted bank analyst Mike Mayo is out with a new call. He says a Fed rate hike could redraw the financials playbook.

1:41The six banks, he says, belong on your watch list. And then later on, Teva Pharmaceutical CEO Richard Francis joins us. Those shares, by the way, have surged more than 300 percent since he took over as CEO. Now, as the company executes its pivot to growth strategy, We're going to ask what comes next for that big Teva turnaround effort. Kelly. Let's start with the big AI debate, though. Safety warnings are growing as former insiders call for a slower AI race. And over the weekend, Anthropics CEO Dario Amadei outlined a three-step plan to slow the pace of developments, which includes outside evaluators, industry guardrails and global coordination, including China.

2:20Other tech titans chimed in on X. Elon Musk posted Dario is right. OpenAI Sam Altman also agreed, saying the company will pace the frontier and match Anthropik's outside oversight plan. But any global plan would need China on board. With President Trump set to meet President Xi next week, could the two superpowers agree to pump the brakes? Joining us now is Adam Kovacevic, founder and CEO of the Chamber of Progress. They're a tech policy coalition focused on innovation and regulation. Is the Trump-Xi meeting definitely happening? I don't know, Adam. But listen, the broader point is this. the biggest concern about anything that slows down AI here is that China moves ahead.

2:59What do you say about that? You got it. And I agreed. I mean, I think the pacing very quickly has become the main AI policy debate in Washington. And it's the hardest one that Washington has faced, I think exactly for the reasons you say, because it's the first one that the U.S. can't solve on its own. We can deal with data centers. We can deal with job displacement. We can have policy interventions for those issues. But pacing is a collective action problem, and China is on the other side of it. Every proposal on the table to pace AI runs into the same wall, which is that any restraint only works if everyone does it.

3:38And nobody, save for some new global enforcement agency, can make everyone do it. So I think that's why the debate has moved from, you know, what should the law be to who can credibly slow slow this thing down? You cannot unilaterally legislate your way out of that challenge. So last hour we spoke with a researcher. I mean, he's the one who helped uncover some of the rogue agent activity on that German Wiki page. I asked him this question because, again, he has a lot of sensible ideas that could help with regulation. But I said, what about the idea that we would slow down? He said, if we slow down, it will slow down China because we have 75 percent of the world's GPUs.

4:18We have the chips. They don't. They're distilling our models. They can catch up or leapfrog because they don't have the wherewithal to match ultimately the GPUs. What would you say about that? You're absolutely right. Look, I think what you see emerging is a spectrum of opinion here on this question. At one end, frankly, you have President Trump saying none of this is a problem, right? Just put all your faith in me, and we're just going to let them cook in terms of the AI companies. On the other, you have Bernie Sanders saying, let's do a ban of superintelligence. Frankly, neither is where the new center of gravity is, which is really around pacing.

4:52One of the camps on pacing, led by Anthropic, says, let's do it with rules. You start with yourself, then you put rules on your competitors, and then you go from there to some kind of global accord. That is really, really difficult. And I think that's where the second pacing camp comes in. And this is where you have people like David Sachs say over the weekend, that's fantasy, right? Because China, they say, will never sign. And even so, you can never trust them. So if you want to slow down, slow yourself down, make safety a selling point. But underneath both, both the enforcement, the rules-based and the voluntary group, is this question of is restraint self-enforcing, right?

5:30And Sachs says yes. Anthropic says no, which is why they want rules. All right, Adam, it's Dom here. I want to lean a little bit more on your multiple years at a mag seven firm named Google and or Alphabet at this point talking about policy. I wonder from your perspective, as you take a look at the A.I. trajectory as things stand right now with the Amadei letter and everything else, where you think the biggest points of friction are going to be in the coming quarters, not just ahead of midterms, but also in the months and quarters after that, as AI really has to pick a path on whether or not it will slow down or try to keep pace and outpace China?

6:10Well, look, I think the thing about AI is that the center of gravity for policy debates has shifted. Like, we spent pretty much all of August focused on data centers, where data centers before had not really been the center of the debate. And arguably, that's not even really an AI-specific policy issue. I think before that, there was a lot of question and focus on labor displacement. Now we're moving towards this question of frontier safety and AI safety in general, which is really, in my view, the hardest one to legislate because you're talking about not, you know, something that goes beyond transparency, something that goes on beyond the U.S.'s borders.

6:50You're talking about a global accord. we really do not have any precedent for how to deal with this. You look at things like nuclear arms or things like that, global standards where you'd enforce them, and it's very hard to find some kind of comparable situation. So I think what you see, frankly, within the companies is they don't have the silver bullet answer either. A number of the companies have embraced this idea of a FINRA-style voluntary standards board that would sort of have oversight over models. And frankly, I don't think they know the definitive answer, but they are also casting about for an answer because they think one is necessary.

7:25If you're going to have sustained growth in AI, you need to have some sort of check. All right. We'll see what happens with that self-regulatory type environment if it does hypothetically come to fruition. Adam Kovacovic, thank you so much. We appreciate the time. Now let's get the markets take on the AI slowdown. It's a tale of two tech trades so far. The chip stocks are getting crushed, as you can see there, with the stocks down roughly 5 % today. But the hyperscalers, like Alphabet, Microsoft, Meta platforms, are actually moving higher on the day. And then, by the way, cybersecurity names, including CrowdStrike, Palo Alto Networks, and others, are up double-digit percentage amounts.

8:01So is the AI safety shakeout creating new winners? Let's bring in James Demert, the founder and chief investment officer at Main Street Research. You know, it's an interesting conversation if you juxtapose it against the one we just had from a policy perspective. Right. How exactly are these companies positioned to either win or not really win, given the current regulatory construct that we have and the anticipated one that could be there in the coming months? Yeah, Dom, one thing they're not good at is slowing down. And that's a whole new world. And I think that all of us should remember, you know, the AI becoming a problem for the world is definitely a risk and we should be concerned about it.

8:44But the appetite for use cases and the appetite for profits is incredible. And here's an industry, the technology industry, that is so innovative. And our feeling is they're going to come up with protocols, safeguards in a very short period of time and make this a blip when we look back. The real slowdown in AI isn't here yet, which is when we get overbuilt. So that's our view. It's the crash after, you know, the AI boom becomes the AI crash. Kelly, the 90s. You dance while the music is playing, all of that. Right now, when I look at your whole alphabet, Taiwan Semi, I mean, you're leaning in right in the heart of all of this.

9:20We sure are. And even more now because PEs have contracted over the last few months. I mean, in a way, this is another brick in the wall of worry is how we would look at this recent news about the concerns about the fast growth of AI. One of the things that we want to look at is there's been a trade at play over the course of the last several months where people have shied a little bit more away, relatively speaking, from the hyperscalers. And they've gone more towards the ecosystem type stocks, the ones that benefit from all of the spending that happens down the line. I'm not sure how, as a portfolio manager or CIO, you start to kind of figure out how those things ebb and flow in the coming months.

9:59Do you have a construct, or how does the model sort out for how you figure that sentiment shift back and forth between the AI ecosystem? Yeah, Dom, I think investors really want to be aware that this is not going to be the fantastic rally of the MAG-7 forever. We have to look at the second, third derivative, which is what we're doing at our firm, and looking at where are the use cases in health care, in the industrial space, in the energy space. Of course, there's lots of places to be there. And I think that as a portfolio manager, particularly a global portfolio manager, there are amazing opportunities around the world that AI hasn't even come to yet, which tells us that we're still probably early in the AI cycle.

10:39That means this is a roaring buying opportunity right now. Now, the semi ETF down 4%, you know, Nvidia down. So is this the kind of thing you'd be leaning into? I mean, to the extent that you can, you know. Yeah, Kelly, I think we might look back and say, you know, after a tough summer for the AI trade, you know, right now we're also don't have earnings to hang on to. You know, this is that last bean on the pile of reasons not to be there. You know, stock performance being one of them because the short term investors look at that short term performance and they don't like it. So I think you've got some people moving away here when they should be moving in.

11:13Classic reverse psychology. You worried about a Fed rate hike on Wednesday? And kind of not just, you know, yes, OK, 25 basis points. But if they do Wednesday, if they go after that, and if the whole idea is that we're turning from at the beginning of the year, expecting three rate cuts to now, wherever this is going, look at yields today. What does that tell you? Well, it's been a global rise in rates. And what that tells me is that the global economy is really growing at a very healthy pace. We're expecting 4 % to 5 % GDP growth next year. What comes with that is rising bond yields. And that's the invisible hand of the bond market doing the work for the Fed is how we look at this.

11:51So we think that yields definitely, the Fed has to go. They've got a great, I mean, they've never had better excuses with oil above 100. So they're going to go. But I think that for them to think Think about 2 % as a goal in an economy growing at 4 % or 5%. It's going to be very hard. So think about gradually rising rates for the next few quarters, maybe even years, a la the 90s where we had 6 % 10-year, 4.5 % inflation in a great bull market. James, the day is not over. We're showing the intraday charts, right? And what it does show you right now is that folks stepped in to buy the dip. It was a lot worse this morning when we first came in pre-market.

12:32The Nasdaq was poised for much steeper declines. So people have stepped in and bought this. I wonder what exactly is the catalyst there in your mind for why people would want to continue buying every single dip? And at what point does the buy the dip mentality change around this AI trade? Great question. You know, people are buying the dip here. I'm not even sure over the next few weeks that's going to look great because we're in September. We've got oil up. A normal correction would be certainly likely. But I think where the real problem comes in with buying the dip is when price-serties ratios are just way ahead of growth rates, right?

13:08We're nowhere near there. In fact, we've gotten the opposite where PEs have become compressed, and the growth rates are phenomenal going forward. BHP Group, Micron, HSBC, some ways that you're playing the current environment, amongst the others we just mentioned. James, thanks for making the time. Good to see you. Pleasure. James Demmer. As we mentioned, the 10-year Treasury yield hit 5 % this morning for the first time since 2023 before dropping back down. This all comes ahead of the Fed's meeting on Wednesday where they are expected, they say, to raise interest rates. Rick Santelli joins us now from Chicago to break it down.

13:41Rick, you know, I just it's not fun debating anymore because there's only a few of these debates left to have. But, you know, we feel a little bit differently about the Treasury's intervention and the wisdom thereof. But how do you feel about whether the Fed should hike on Wednesday? because I remain somewhat unconvinced. Oh, there's no doubt they're going to hike on Wednesday. No, but should they? The percentages are too high. The percentages are, what, 90 percent? If Worsh and company don't hike rates when the investors trading have pushed the probabilities to 90 percent, how is he ever going to have some type of relationship with the markets in a world of no guidance?

14:20If he wants to not have the markets push the Fed around, then shouldn't he stand up to the markets and say, we're not hiking? No, he won't do that. You know, he's holding on. Basically, everything he's done, in my opinion, gives him a much better horizon to go in any direction he wants. He's got flexibility. And I think there's a price for flexibility, and we see it in the media. We see it with investors who would much rather, of course, have much more guidance and much less thought to try to figure out exactly where things are going. And if you consider the fact that oil pushed us up and the minute oil started reverse yields dropped back below that 5 percent level.

15:03That is also very enlightening as to what the real dynamics are. And I once again say that if oil was to mysteriously drop to$65, we would hear a giant whoosh as long term and short term rates fall just as dramatically as that oil price. Hey, Rick, can I just follow up with one quick question? Are you hearing anything from the pits about whether or not that 10 year yield at five is a screaming buy or whether or not people feel as though there's still more downside for bond prices ahead and more yield to be had? You know, it's a difficult question to ask because open interest went up in many contracts at the end of last week as we started to breach some of these big areas, whether it was the 4.5, 4.60 in a two-year, obviously getting close to 5 % in a 10.

15:54But the best proof that there may be something to your question is how well the 10 - and 30-year auctions went last week. Meaning people showed up. The buyers showed up. And at least we're not in one of those sell-offs where the more it rises, the more panicky people get, at least for the time being. Rick, thanks very much. Rick Santelli. We have a packed show. So let's move on, shall we? All of this news to start off the week. The Fed will likely raise on Wednesday. Would that actually boost some of the bank names? We'll talk about that. And also, have you seen Bank of America today? Plus, we'll discuss whether mega cap IPOs will indeed be delayed if AI slows down.

16:31But first, how does Iran keep the war going? And are they now in control of two of the most important waterways in the world? We'll talk about that next.

16:46Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. And then another meeting. Hit your booking point, book with Southwest, and enter airplane mode. Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader.

17:35A limited number of ETFs are subject to a service fee of$100. See details at Fidelity.com slash commissions. Fidelity Brokerage Services, LLC, member NYSE SIPC. Shipping, billing, admin, payroll, marketing. You're managing all the things. So why waste time sending important documents the old-fashioned way? Mail and ship when you want, how you want, with Stamps.com. Print postage on demand and schedule pickups from your office or home. Save up to 90 % with automated rate shopping. Over 1 million small businesses trust Stamps.com. Get$20 in free postage when you sign up for the pro plan at Stamps.com slash Black Friday 2026.

18:12Terms and conditions apply. Oil prices showing a little sign of easing today, but crude is rising after Saudi Arabia has temporarily shut down its east-west pipeline. And that was following the drone attack launched from Iraq. Former Biden advisor Amos Hochstein says the market may still be underpricing oil. The sale of actual physical barrels is more than is somewhere between 120 and 150 dollars right now in the market. You can't buy. This is just paper oil price. The actual price is significantly higher. Diplomatic efforts to ease tensions in the region have hit a setback. Gulf states were expected to meet with Iranian officials in Oman today to discuss the Strait of Hormuz.

18:56But those talks have now been postponed. Joining us now is Eurasia Group senior analyst Gregory Brew, who says the pendulum has swung in Iran's favor. And here's what I don't understand about that, Gregory, because on the one hand, you read that Iran controls the two most important waterways in the world. now, effectively, the Strait of Hormuz and with Bab al-Mendeb kind of to the south. That's the Red Sea, right? On the other hand, we're told that we are bleeding the country dry, that they're literally running out of money, that no oil imports are getting in. So how can both things be true at the same time?

19:26Well, first off, I think it's important to think about the conflict between the U.S. and Iran right now as effectively a standoff. Neither side really wants to significantly escalate. The U.S. isn't ready to go back to, you know, full-scale operations along the lines of what we saw in March and April. Similarly, the Iranians are trying to ratchet up pressure. They're trying to maintain their position in the Strait of Hormuz. And of course, they're trying to escalate via their proxies. We've seen the Houthis escalate in Yemen. Iraqi militias might very well have been responsible for the attack on the Saudi East-West pipeline.

19:58But the Iranians are also a little wary of going back to full-scale war. So the contest is being fought through narrative, and it's being fought in the oil market. So, Last week, the story was about increasing U.S. economic pressure on Iran. Secretary Besant rolled out the economic outcast program a few weeks ago. We were hearing about sky-high inflation in Iran, the devaluing of Iran's currency, the increasing amount of pressure on Iran. Meanwhile, President Trump seemed pretty comfortable with where things were. Cut to today, where we have the Brent front month reached nearly$110 a barrel. We have physical prices between 120 and 150, as just mentioned.

20:40There's increasing pressure on energy, and the Saudi east-west pipeline is down, potentially for several weeks. Tom Kloza was online suggesting that there was a little bit of panic to what he saw in energy markets this morning, perhaps in response to the president's comment that Ukraine should stop attacking Russian refineries, that it was having enough of an impact on the tightness in gasoline and diesel markets as to be raising some alarm. In other words, his warning was interpreted as a sign of how bad things have gotten. So now we have a small refinery outage in the U.S. to worry about. And what can you tell us about where gasoline and diesel?

21:16Diesel is up to, I think, over$6.20 a gallon today. So what is the trajectory for those two prices? Because honestly, Obviously, WTI and Brent, they're off the highs of the session. They've been highly volatile. You could say around 100 a barrel for WTI. Maybe that's manageable, but the product side of things looks a lot worse. Absolutely. I don't really see the trajectory for products changing in the near term. I think gasoline will tick up much more slowly than diesel. That's what we've seen over the last several weeks. The pressures on diesel, not just in the U.S., but globally, are much more intense.

21:49There's a relative shortage of refining capacity for middle distillates. There's higher demand as we're coming out of the summer driving season. We need more diesel for agricultural operations. We need more diesel for industry. And there's less refineries around the world that could process it, as there is for gasoline and even jet fuel. So that's really what's causing the diesel squeeze. But for President Trump to come off of his position, he did send out some posts this morning suggesting that he is a little bit aware of the kinds of pressure that he's coming under. If there isn't a move towards de-escalation in the Middle East, I mean, the post around Russia, Ukraine, maybe ceasefire around attacks on energy infrastructure.

22:26That's going to ease the pressure a little bit. But if there's no real de-escalation in the Middle East or if the U.S. isn't more successful at moving oil through the Strait of Hormuz and getting east west back online, I think the trajectory for products is to just going to keep ticking upwards. All right, Greg. So it's Dom here. Just how bad could it get, I guess, in your mind? And if we have a situation, the precedent has been set during the Russia-Ukraine invasion and then again earlier this spring with regard to how high Brent and WTI can get. We're not anywhere close to those highs right now, yet gasoline prices are responding very much in kind because of the shortages for refined product.

23:03How much can it get worse? And at what point is the pain going to be something that we all care more about? Well, I think as far as the front month in WTI, Brent and WTI are concerned, I mean, the highs that we saw in April and May were in the low 120s. And just in the last, you know, eight days of trading, we've seen prices go from the upper 90s to 110. So we could go to 120 very quickly. We have precedent for that in the context of this crisis. But, you know, as we've been saying, things can change day to day. The volatility is there. The uncertainty is there. I think products can keep ticking up.

23:36I think gasoline is probably likely to measure out between$4.50 and$5 if nothing changes and we just keep seeing increased pressure and the status quo stays as it is, diesel could get even higher. But even there, I think there's probably a ceiling at$6.50 or$6.75, depending on whether these really high prices do start to impact demand. I mean, that's how consumers and operators are going to start responding to these high prices. They're going to rein in operations. They're going to rein in consumption. But the real pivotal question for me is, when does it start to matter? Not for consumers across the board.

24:08That's already happening. When does it start to matter for the president and for the White House? Because right now they're shrugging. They're putting on a show. We're not going to do anything until after the midterms. Yeah. And they would think they'd know better than anybody. Greg, thanks very much. Appreciate it today. Greg, all right. After some back and forth, it looks almost certain that the Fed will hike on Wednesday. Top bank analyst Mike Mayo joins us next with some banking picks that he says will benefit from those higher interest rates. Hypothetically, that story is coming up next.

24:42Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. And then another meeting. Hit your booking point. Book with Southwest and enter airplane mode.

25:36We'll be right back. off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds. Get$20 in free postage when you sign up for the pro plan at stamps.com slash Black Friday 2026. Terms and conditions apply. Welcome back to Power Lunch with the Federal Reserve widely expected to raise interest rates at this week's policy meeting. Wells Fargo's Mike Mayo is out with a new note highlighting some of the financials that could benefit from higher short-term interest rates. Joining us now is Mike Mayo, Managing Director and Senior Banks Analyst over at Wells Fargo with The Case here.

26:16Mike, it's great to see you. I wonder that the interest rate story here always flows down to the banks. So what exactly are the picks and why do they fare better relative to the other banks that are on your list? Well, as you know, our theme this decade has been Goliath is winning. And I think Goliath continues to win with this impending likely Fed rate shift after an easing cycle now, a rate hike this Wednesday. And I think Goliath is winning because of traction. They have traction with deposits and commercial loans are expanding, not just AI related. They also have technology advantages. Half of the costs at banks are personnel related.

27:02So I think this is a story of banks doing more with less, more productivity per person. And they also have trust. And in this environment, you need trust not only with who you bank with, but also with your identity, cyber risk, with all the AI concerns. The surveys by J.D. Power show that consumers trust banks more than even technology firms. So between the traction, the technology and the trust, I think Goliath is winning. and the Goliath of Goliath is JP Morgan. They have$2 trillion of core deposits. And an environment like this with better loan growth, more activity, a steeper yield curve allows JP Morgan to better monetize those deposits.

27:45Relative to JP Morgan, how exactly would you kind of rate other money centers like Bank of America, like Citigroup and the other big ones, or maybe even large regional banks? Is JP Morgan the kind of head and shoulders standout or can we feel good about investing portfolio-wise across those big banks? Well, J.P. Morgan is the best-in-class global bank, head and shoulders above the rest. So that's my, in the immediate term, I think that's the one that does really well. As you know, Citigroup has been my top pick. It's still my top pick over the next 12 months, but I think they're in a little holding pattern here before they take off more.

28:26But the stock's down a lot today. I'm not quite sure why. And then Bank of America, they also have$2 trillion of core deposits, and they can monetize that much better in a higher rate environment. But today, the CEO guided their capital markets a little bit less than expected. So I think that the short-term estimates could be at risk. That's a little headwind short-term, even though they might have a tailwind over the next year. So I like all three, but JPMorgan is like right now. Citigroup, I still like, but probably picks up more toward the end of the year. And Bank of America over the next 12 months.

29:02So let's talk about what happened today. I guess the CEO said that they had investment banking and sales and trading, can I call them headwinds, Mike? What did we learn? Why is it happening and who else might it apply to? Look, it's not one size fits all when it comes to capital markets. And you see the likes of J.P. Morgan and Goldman Sachs and Morgan Stanley really at the top of the charts when it comes to the current environment. So, you know, it's hit or miss. I mean, these are not high-valued revenues. I mean, sometimes you have a good investment banking quarter. Sometimes you have a bad investment banking quarter.

29:38I will say for all the good, great traditional banking revenues that Bank America shows, the guidance today, you know, continues the narrative that Bank America has lagged behind the leaders in capital markets. But it's hit or miss. But what you learn here is that, you know, there could be some banks that have good quarters and some that don't have good quarters. I wouldn't read too much into that when I look out over 12 months. But I will say I have been waiting for middle market capital markets, middle market investment banking to pick up. And that's been slow. And that's one of the fortes of Bank of America.

30:13So you might not see as much pickup yet in that segment. That's a great point. Makes me want to check maybe the stock price of some other middle market investment banks, you know, who we've covered in recent years. We'll find out, I guess, in a few more weeks' time if it was just them or a bigger industry headwind. But I know, like you're saying, it's short-term regardless, at least from your point of view. Mike, thanks so much for making the time today. Mike Mayo. Sure, thanks for having me. From Wells Fargo, you got it. Coming up with the latest AI safety and regulation headlines over the weekend, when should we realistically expect IPOs from OpenAI and Anthropik?

30:46That update is for you next. We're not rushing into an IPO. I actually think that given everything happening with safety, this would be right now would be an ill-advised moment to go public. And we don't feel pressure on that. That sounds like not 2026, 2027 potentially. I would say not 2026. Yeah, I don't like we got a lot of stuff to do. That was Alison Chantel. No, I mean, it was. But that was Sam Altman confirming that OpenAI will not go public this year in speaking with Alison over at Fortune. What does that mean for rival Anthropic? And if the biggest names keep delaying their debuts, what does it all mean for investors?

31:23Let's bring in Leslie Picker. Leslie, I am not going to be grouchy about this, but I mean, OpenAI already had some financial headwinds. So I don't know if we should, does this have anything to do? Anyway, over to you. What do you think? I mean, they're both still fruit, but in some ways it's kind of apples and oranges, Cal, because in talking to sources, OpenAI had already been looking at a longer timeline for its IPO. They've filed confidentially. said, we're going to go when it makes sense for us. We're not on an accelerated timeline. They have a more complex business. They're more vertically integrated.

31:54They're creating chips. They have an ad business. They have to kind of get all of their ducks in a row and figure out their reporting structure and figure out the auditing for those and figure out how they want to report it and how they want to disclose it. And that all takes a lot of time. Oh, and by the way, they're really trying to grow their enterprise business. So that's all a story that they need to really craft and get kind of perfected before they go out to the market. Now, is it convenient for Sam Altman to go on, you know, fortune and interview and basically say, yeah, you know, it would be a distraction for us essentially to go public now when there are all these concerns about safety?

32:29Sure. He may mean that. But in terms of Anthropik, I think that they've been warning about these safety issues for quite some time. So it's not new for them. And they have been, And, you know, perhaps at least, you know, on a more accelerated timeline toward the public markets, we'll see if that ultimately transpires. But so far, that has been the case. Yeah. And there it may be the case that delaying the IPO. Look, Senator Manchin said there should just be an executive order, you know, stalling it or maybe halting it altogether. In the interest of transparency, I'd love to know more about these companies.

33:05I would love more information, more public accountability. I'm just not sure that staying private would would help with a lot of the concerns people have. It's a really good point. And I agree with you. The transparency will be really critical here. The risk factors, how they see the risk factors and what they're communicating to the market is really important here. Having a quarterly cadence where they go through the earnings calls and talk with investors is also important here. So you're right in that being a public company, being a private company. Now, the actual process of going public where you're doing your roadshow and you're having these investor meetings, I can see how one might see that as a distraction.

33:44But it's very short term. It's five, maybe six weeks long where you really have to have a lot of these discussions. But it's no different than being concerned about safety and really operating and running a business at the same time. You have to multitask as the CEO of an important and large company. Leslie, how much does Wall Street need these mega IPOs from these frontier AI labs? And just how much would they be affected if it really does not come to fruition, the Anthropic IPO or the OpenAI IPO until into 2027 or beyond? Whether they need them or not, it's already looking on pace to be a record year, thanks in large part, obviously, to SpaceX's blockbuster listing.

34:27There are some other non-tech IPOs in the pipeline that they could hang their hat on. But the big question is, it's not just about the IPOs for these companies, which would be sizable. It is the follow-on activity. It is the follow-on equity activity, the follow-on debt issuance that comes from these things. There have been reports out there that they've been seeking investment-grade credit ratings, which would insinuate that they're looking to raise debt pretty soon after they raise equity through the IPO. So all of those things are fee bonanzas for the big banks. That's seen as upside right now, whether it takes place this year or next year, you know, probably is a bit more of a wash.

35:06If it doesn't happen at all, that could be a big problem, not just for these two deals, but for the entire tech and AI IPO prospects that are also waiting in the wings. A lot of anticipated ripple effects. Leslie Picker, thank you very much for that story here on all those big IPOs. Let's now send it over to Frank Holland, who's got a CNBC News update. Good afternoon, Frank. Hey, good afternoon, Don. Vice President J.D. Vance announcing today that the federal government will suspend nearly 900 ,000 people suspected of defrauding pandemic era small business programs. That means they will not be able to receive future loans from government backed programs.

35:40A group of former student activists who Columbia University today accused in the university of failing to protect them. The plaintiffs include Mahmoud Khalil, who said the university's actions led to his detainment and attempted deportation by immigration officials in March of 2025. Colombia has not commented on that lawsuit. And rapper McLemore says he's been dropped as the opening act for Ed Sheeran's stadium tour. It comes after he delivered a political speech on stage during a concert earlier this month and said free Palestine during a set. The tour promoter said the decision came after several venues for upcoming dates, so they would not allow the concert to take place with Macklemore in the lineup.

36:17Dom, back over here. All right, thank you very much, Frank Holland, for that. Coming up on the show, the turnaround at Teva is showing signs it's actually working. Teva Pharmaceutical stock has rallied 300 % in just the last three years. We're going to speak to the Teva CEO on that strategic shift and how he plans to keep that momentum going. It may not just be generics. That story is coming up after this. Welcome back to Power Lunch. Teva Pharmaceuticals is making a new chapter in its turnaround story happen. Since CEO Richard Francis took the helm, the stock has surged more than 300 percent as he executes its quote unquote pivot to growth strategy, refocusing the generics giant around profitability, innovative medicines and a stronger balance sheet.

36:58And today, Teva is simplifying its market presence with its now ordinary shares beginning to trade directly at the New York Stock Exchange alongside at Tel Aviv in Israel as well. Joining us now for that conversation is Teva Pharmaceutical CEO Richard Francis. Richard, thank you so much for taking the time to be here with us. You're going to be ringing the closing bell in just about an hour and 15 minutes time. Can you take us through what exactly is the reason why you have decided to go with the New York Stock Exchange kind of dual listing Tel Aviv, New York? You didn't need it, arguably. Why are you making this happen?

37:35Well, firstly, thanks for having me, Dom. It's great to be here and talk to you. So it's sort of a continuation of this turnaround, as you call it, the pivot to growth strategy we started over three years ago. And we've been working really hard to get the company back to growth. and we've done that. And as you've mentioned, we're transitioning into a more innovative company. And we look at every opportunity to maybe increase the access to investors, particularly in the United States. And we had our final of the three credit rating upgrades recently to investment grade. And we thought this was a good time to move to full listing on the New York Stock Exchange in order to be shares to allow, as you said, more people to maybe gain access to Teva from a shareholding perspective.

38:20But it's really about the continuation of that journey, continuation of making sure people can be part of it. You know, Richard, it's not that it's typecast. That's maybe not the right term, but a lot of folks out there in the world that are lay people, that are not in the biopharmaceutical industry, know you as a massive generics manufacturer, the biggest in the world. What exactly? I mean, we understand the growth around non-generic drugs, but why is this pivot taking place and how exactly are you executing on it? We know there's M &A involved. We know there will be partnerships involved. But what exactly is the driving force, your North Star, behind what you want to be in the next five to 10 years?

38:59Yeah. So look, we're very, very proud of our generic heritage. As you say, we're one of the, if not the largest generic manufacturer in the world. And with that, we bring huge access to medicines to many people around the world, affordable access. And we're very proud of that. At the same time, in our DNA, in our past, we have had and we have been able to innovate some amazing products for people. And we basically, when we put this strategy together, we saw that muscle had atrophied a bit and we actually decided to focus back on that capability we had and build it out because we knew we had some great products in the pipeline.

39:31And we've managed to do that. We've done it very quickly. So we've commercialized products. We've brought new products to market that have done very well, which is the excellent team we have behind them. But our pipeline now is really matured. And we have one of the most exciting late stage pipelines, I think, out there. And there's over 13 billion of potential sales in that pipeline. And so we've got this nice balance of generics, biosimilars, as well as our innovative business, which I'm very proud of. And we have a long way still to go on this strategy. You know, I remind people we're just in the second phase of a three phase execution that we plan to start for a 10 year period.

40:06So so that's what we plan to do. So we're not letting go of the past. We're more building on it and building on the capability we've always had. Richard, one of the things that we talk about in many ways is how the pharmaceutical industry has become pretty much about GLP ones over the course of the past few years. But Teva's portfolio, as you envision it in the coming years, what do you think the bets are going to be placed more on? Where do you think the growth is going to be beyond, say, GLP-1? Where exactly is the expectation for growth for Teva in the coming years? So we're very clear about where we want to play.

40:42And it's in sort of CNS, that's in neurology and in psychiatry in these areas where we have a real capability. team we're already building great momentum both in our in-market assets as well as our pipeline. And then we have immunology where we have products in UC, arthritis, colitis, Crohn's disease, vitiligo, celiac disease where you have some great assets coming through. Both these areas have huge unmet medical need where there's many patients that need new treatments. So I think while GLP-1s are exciting for a certain percentage of the population, unfortunately there are many, many diseases that still need treatments, and we have those assets.

41:20That said, I would like to point out, our generic business will be launching GLP-1s as they lose their patent. So we'll be giving people affordable access to those medicines. But from a TA, it's CNS and immunology, and that's where we have real scaling capability. Exciting times, Richard. Thanks so much for joining us to mark the occasion. We really appreciate it. Thank you, Kelly. Thank you, Always a pleasure to be here. Richard Francis is the CEO of Teva. Speaking of pharma, one GLP One maker is getting a skinnier name. Novo Nordisk is rebranding, changing its name just to Novo. Not just to Novo, just Novo.

41:55In a bid to appeal to consumers and catch up with main rival Eli Lilly. The shares are down 14 % this year, trailing its rival by 20 percentage points. The most Evan Seegerman points out in a new note that the name change adds simplicity, but questions whether it materially changes anything. I think brand matters. Rolls off the tongue better. Yeah, we called it novo anyway. Fears over the AI trade blowing up are actually fueling some bullish moves in the options market within the tech complex. Exactly where those trades are taking place is next with Oliver Rennick. All these AI safety fears are igniting some bullish counter trades in tech.

42:32Oliver Rennick joins us live from Chicago. I'm guessing this is software related, Oliver. That's right, Kelly. All the AI extinction risk chatter is getting at least one corner excited. Cyber security stocks. It is a record breaking day for CrowdStrike up 15 percent. Options trading erupting to almost seven times the 30 day average. Almost 50 ,000 calls were likely bought this morning compared to under 20 ,000 puts and twice as much put trading. Looks like it was initiated by put sellers. Combine the CrowdStrike trading with Palo Alto Networks trading, and you have$400 million of options premium traded so far today.

43:12In Palo Alto, volume is four times the average, and the most popular contract is the 400-strike call expiring Friday, which needs another 7 % move to pay off. In CrowdStrike, it's the 240-strike call, which is now almost a$6 contract, but still needs 4 % to rally by Friday. Oliver, we've hit the software and services stuff. Let's talk about the hardware, the physical I can touch it stuff and specifically DRAM, that ETF. Obviously, memory is a big focus. Tell us about what you're seeing in DRAM. 100%, Dom. I'm glad you bring that one up because, interestingly, it's getting hit today, down 6 % right now.

43:52So, obviously, the two names I just talked about are having great days, a little bit more obvious to see then bullish call buying chasing it. But for DRAM, the flows are just persistently strong. It seems whether the fund goes up or down. I can't think of many days, especially not multiple strings of days, since this fund launched in which we see lots of bearish activity. Once again today, more call buying than call selling and more call buying than put buying, guys. All right, Oliver Renick with the options action on not just cybersecurity, but memory as well. We appreciate it. Thank you very much for that.

44:27Keep it right here. We got more Power Lunch coming up after this short break. All right, football's back and back with a bang. NFL teams have combined to score a whopping 750 points so far. And here's the kicker. If the Broncos and Chiefs combine for 42 or more tonight, this will be the highest scoring opening week since the 1970 AFL-NFL merger. The weekend's wildest shootout was the Chicago Bears and Carolina Panthers. the Bears became the first team ever to score more than 50 points and allow more than 30 in a season opener. And finally, some good news for New York football. For the first time since 2009, both the Giants and the Jets opened the season with wins.

45:08The Giants took down the Cowboys yesterday night while the Jets beat the Titans. So a great way to ring in the new football season if you're in the New York metro area. Did they say why the score? Did something change that the scoring is so high? I don't know, but I think a lot of folks out there coaching-wise are gearing more towards the kind of get the offense going side of things. The best defense is a good offense. I read that we're not supposed to cheer for the Giants because that often precipitates when they do well, it precipitates market sell-offs. But I think I have to anyway because it's so nice to have some positive news around here.

45:36There you go. Thanks very much for being here. Thanks for having me. Thanks for watching PowerLuck.

45:49in stocks and ETFs. Oh, that sounds easier than I thought. You got this. Yeah, I do. 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.