10AM Hour: Binance Co-CEO on Crypto Heist, Shopify President on Earnings, Wall Street’s Apple Earnings Reaction 11/3/26

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0:49Make every moment unforgettable. Find great gifts starting at$250. Jared. Make the holiday last forever. Shop Jared Jewelers. Good Tuesday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live, as always, from Post 9 of the New York Stock Exchange. Two big tech names getting hit after earnings with Apple and Palantir both under pressure after last night's reports. We'll have details on what's weighing on those shares. And Shopify getting crushed after posting weaker-than-expected revenue and merchandise sales this morning. Shopify's president, Harley Finkelstein, will join us in just a few moments to explain the quarter.

1:24That's a first on CNBC interview. And Kate Moore of Citigroup will be here at Post 9 with her playbook as we navigate earnings, tech weakness, and of course, the midterm elections. And that is what is on our minds today, which is some of the economics behind some of these key swing states that everybody will be watching. Michigan, obviously, is a big one. What stands out in Michigan is that Michigan actually has a higher unemployment rate than the rest of the country. The national average right now is 4.2 percent unemployment. Michigan is the third highest as of 2025 in the country in terms of the unemployment rate.

1:58Why has it been so lousy? Well, autos. Auto sector has shed a lot of jobs. There have been changes in strategies around EVs. Tariffs didn't help. And all of that has led to more unemployment in Michigan and just less job creation. Ohio, on the flip side, which is also So another key contested Senate race that's happening and governor race today has a much lower unemployment rate than the rest of the country at 3.4 percent. So just interesting dynamics there. Electricity prices. We know that that is a hot button issue. Inflation, affordability across the country. Look at the three biggest rises in terms of year over year changes that we've seen lately.

2:40Maine, Iowa, Michigan. Those are all three really also hotly contested swing states that we'll be watching, especially the Senate races there today. Now, what's interesting is you could say, OK, war in Iran that drives up oil and heating costs. That's a factor in Maine. But it's not all of the reason. You know, for instance, in Michigan and Iowa, there are some there's some local issues like grid issues and tax benefits coming off. That is actually affecting the price of electricity, whether that makes it into the political discourse or not. it's not all necessarily higher oil prices and pushback against AI data centers.

3:16So those are some good charts to watch. By the way, in the Beige Book, which the Fed releases, they actually cited contacts in northern Maine expressing increased pessimism regarding discretionary consumer spending heading into the winter, given the large increase in home heating costs over the last year. So these are obviously factors. Gas prices, I put Alaska on here because Alaska is so much higher than the national average on gas prices. That's nothing new. You know, Alaska's isolated. It's hard to get transportation there and the refining is limited. But, I mean, these are significantly higher prices.

3:52So if the national mood is frustration with gas prices, Alaska's feeling that too. It's another important swing state. And then, guys, I know you guys have been talking about this, but the data center backlash. This one's going to be important, especially in Texas to watch. Here's the reported data center power. It's, you know, one of the top states. It's going to be important in Ohio as well, because Ohio has a lot of ballot initiatives about data centers that people are voting on today. But Texas represents 27 percent of planned data center capacity in the United States. Both gubernatorial candidates, Abbott, who welcomed all the data center investment and building in the first place, have been against it lately.

4:33I mean, so the question is now, do they elect a Republican who is turning against it or a Democrat who is much more in terms of moratoriums on data centers and trying to crack down from a regulatory perspective? Wells Fargo actually says, listen to this stat. This was surprising to me. Every 10 percent haircut to Texas data centers translates into a 1.6 percent hit to overall AI CapEx. So this one could actually be a market mover if you're looking for that across some of these races today. Meantime, getting some macro data coming in. Jolts was not bad. 7.5 million looking for about 7.1. Prior 7.1 as well.

5:12So a little bit of acceleration in Jolts. Factory orders, 1.8 pretty much in line. X-Trans, 0.5 also in line versus a prior same, 0.5. And then CapGoods orders, non-defense, X-Aircraft, 6 tenths looking for 5 tenths. So all in all, pretty benign picture on the macro today, coming off of some of the recent readings we got last week. I mean, the job openings is key, right? Because if you're looking for weakness in the job market, you don't see it in jobless claims. We know that every week it goes down fewer Americans filing for unemployment rates or at least at historically low levels. And then it's good to see job openings.

5:48Now we just need to see job creation because that's kind of been the missing piece. It's been a little more sluggish, although you could chalk that up to the fact that the immigration policies have completely changed. And so there's just not as many workers available as we've had in recent years. Consensus for Friday is 65, although this morning both Goldman and B of A are a little bit above at 75K. We'll see what we get. Yeah, 4.2 percent unemployment suggests healthy labor market. No question about it. Joining us this morning, Kate Moore, City Wealth Chief Investment Officer, joins us here at Post 9.

6:18Kate, it's always good to have you. Welcome. Yeah, good morning. Happy Tuesday. You think we're at some critical levels, at least in tech, given the action this week? Like critical levels in time to buy or critical levels like we need to be worried? I think I would say I'm still constructive on tech. And I think the sentiment shakeout that we had over the course of October made some sense. Right. We all know that October seasonality, we all know people are really worried about the sustainability of AI spending and CapEx more broadly. But every single data point we look at suggests that the spending will continue and that no company that's been reporting third quarter earnings, has suggested there's any back off in terms of their technology investment.

6:55So I think most of what we've seen in terms of price action has been around sentiment and positioning and not actually around fundamentals. Although our discussions have not been about so much demand. It's been about financing the demand, right? And we've already, on some estimates for hyperscaler debt issuance, we've already beaten the full year forecast for some. Yeah, we keep bringing this up. And there's a lot of issuance both on the equity side and on the debt credit side within the space. We know every time there's a headline there, there's a knee-jerk reaction for many investors to pull back and take money out of these stocks that have outperformed for multiple years.

7:30So that is a sentiment issue, though. We don't see, especially in the hyperscalers, the debt that is being issued as being prohibitive. In fact, here's an idea. If we have an enormous amount of demand, which it looks like we have this backlog, every piece of data suggests this is the case, and supply is somewhat constrained, maybe what we end up having is a longer cycle and that the hyperscalar issuance is not as much of a problem in the near term. A longer period of negative free cash flow? Well, let's just say that supply is constrained. And so the spending in the very near term gets a little bit constrained, right?

8:05And as a result, you don't have as much negative free cash flow in the next couple quarters as some people are forecasting. That's a positive way to spin it. But I have to say also, you have to invest in order to grow. And we've had this reaction in markets for decades, for almost forever since I've been an investor, that when companies spend on CapEx, you kind of fade those stocks because you're worried about their margins. And yet at the same time, in a super competitive, disruptive technological environment, if you're not investing for the future, isn't that more of a risk? Assuming the investment is not malinvestment.

8:38Assuming you're investing in the Internet and not 3D televisions or something else. 3D televisions. Definitely not my speed. But I would say without question, there's malinvestment is part of this entire investment boom. But I don't think it's necessarily coming from the hyperscalers. I'm worried a little bit more about smaller companies who are trying to follow on, who don't have the strong fundamentals, the leadership and the forward contracts. Is this a market event, the midterms around AI data centers and data center building? As I mentioned, key governor races like Texas, where so much, almost 30 percent of future allocated data center builds are happening in that state.

9:14Yeah, I mean, I think it's a great flag. I'm going to be really interested to see what happens kind of in the next couple of weeks once we get past the elections and digest if people, particularly the politicians, pivot a little bit and show a little bit more support for data centers than they did in the run up to the midterms. I think it's going to be very important for local economies. And we know this. There's concerns around power in certain areas. Grids are very strained. I think people have debunked the water story that had caught fire with a lot of individuals. But I think the bigger question is, if we build these data centers and they prove to be net job creators and tax revenue for states and that gets allocated to education and things like that, will people change their mind?

9:55But you don't see it as a market mover in terms of which way the CapEx trade goes? I think both Republicans and Democrats have positioned themselves in line with the loud, but maybe not necessarily majority of voters who are concerned around what these data centers do to both power demand, strains on the grid and also water supply. So I think it's been a kind of a more universal acceptance and less partisan. Are you impressed with the action in health care and some cyclicals, people looking for alternatives to tech? Yeah, I mean, this has been one of the key questions we've got from clients and frankly that I talk about with my peers on the street.

10:31How do you hedge your tech exposure? The challenge I have is that there are so many different drivers within health care. I'm not saying health care as a sector is bad, but it's so much idiosyncratic move there. You know, you have specific drugs, you have specific technologies, you have specific things that are, you know, dependent on the FDA and regulation. And so it's a sector that has so many different moving parts. It's sometimes difficult to think about as a monolith. That said, I appreciate that in periods of tech sell-off, the health care sectors and health care industry groups have held up relatively better.

11:06I continue to look for portfolio diversifiers in general and say, like, what is moving less with both equities and bonds? I've used gold somewhat in portfolios as a duration hedge or as a duration substitute. But this is a big question for us, and it's a reason why we've been more constructive, frankly, on commodities. We think inflation is going to continue to be quite strong, and we're starting to see the very beginnings of some of the Middle East war inflationary pressures show up in the data that we think that's going to come over the next couple of quarters. And as a result, we're more positive on the commodity complex as a hedge more than, say, the health care sector.

11:39So is that another way of saying yield risk is to the upside or downside? Yeah, I believe yield risk is to the upside. I thought that was there was a little while where everyone seemed to agree with that. And over the last couple of weeks, I'm finding myself a little bit out of consensus there. But we still think it's a really tough space to be adding to duration and that, you know, both the demand for CapEx, the cost of capital, the fiscal side and then greater inflationary pressures. All these kinds of things are going to put upward pressure on yields. At the very least, put a floor on yields.

12:08And against that backdrop, I think you're better opportunities and equities. Yeah, but then it gets tricky with tech, because that's where we've seen the wobble before, with some of the higher indebted companies like the neoclouds, and then it's all one circular thing. Yeah, well, I think the bigger issue is what happens to multiples from here, right? So even just taking out sort of the indebted companies or the companies that have higher leverage, you know, we see in these environments with rising rates that, you know, multiples come under pressure. But because earnings growth has been so strong, I mean, stronger than I think most any of us have forecast, You know, not just 10, not just 20.

12:42We're talking 30 percent quarters here that we are outgrowing on an earning side. You know what's happening in terms of the multiple contraction. That's our base case for what it's worth over the next couple of quarters. A little bit of an additional multiple contraction, but returns driven by earnings. Really? Even with other income, even with the Micron, NVIDIA, you know, sort of huge golden goose egg right there. I know we're going to be watching, obviously, all of that very closely. But the one thing I would also say, and people have ignored this a little bit, was how broad the returns were in October, a really tough month for a lot of active investors and particularly the fast money space.

13:20I mean, something like three quarters of companies in the S &P outperformed the index. There was good breadth there. And when you take out tech and energy and materials from third quarter reporting so far, the average company is earning 12 to 15 percent year over year. In any other situation, we would say 12 % or 15 % earnings growth is pretty sweet. You know? So I just think the doom and gloomers and the negative sentiment is kind of a little bit overdone at this point. My expectation is we end the year higher. No target for year end. I don't put targets out. I think that's a really tricky thing to do.

13:56Yes, yes. Kate, always good to have you. Thanks so much. Good to see you. Let's turn to Apple. Shares are off the lows. Falling margins have pressured the stock a bit. Mackenzie Sigalos has more on the quarter as it was reported after the close last night. Mac. Hey, David. So this quarter makes the clearest case yet that AI is eating into Apple's margins with no relief in sight. So this year, Wall Street's really rewarded Apple for keeping CapEx light and staying out of the AI spending race. But that's not protection against what the race is doing to chip prices, with hyperscalers buying up all the memory they can find and Apple for once losing its leverage with those suppliers.

14:31Now, CEO John Ternus is pulling every lever he's got. Unlike the Tim Cook era, Apple has more than two and a half X'd its inventory by stockpiling parts and then committed another 33 billion to suppliers in just the space of three months. But it still wasn't enough. Management warning on the call that memory costs keep climbing past December. The cheaper stockpiled parts are running out and that its high margin services business, which is usually the cushion, was guided below expectations as well. And then And there's Apple's all important holiday quarter gross margin that came in below estimates at that 45 to 46 percent range.

15:09That is the third straight quarterly decline and the lowest that it's been in three years. Now, Jim Cramer and I sat down with John Turnis at Apple Park right before his first earnings call as CEO. And when asked about when margins actually bottom out and whether Apple has contracts protecting it from these 2027 spot prices, he wouldn't go there. He called the memory situation absolutely unprecedented and told us that Apple reluctantly raised prices on Macs, iPads and iPhones to help offset it. Memory, though, isn't the only cost. Apple says that ramping Siri AI is also weighing on margins. But Ternus did tell us how Apple plans to make that money back.

15:46He talked about Siri AI getting a meter with usage limits and paid upgrades for more capacity. But when I asked whether anyone is hitting those caps yet, he said it is too early to say. Guys?

16:00Mac, the services side, I guess, you know, what are you hearing in terms of the analysts who follow it? And what can really the expectations be, given that does seem to be a focus? And it has garnered, obviously, so much attention through the years because it's seen as very sustainable earnings that get a very high multiple. I mean, this is the biggest concern, more so than memory. Every single note is pointing to the fact that services is a high margin business. We're talking about 76 percent of gross margin coming from a quarter of the revenue for the company. And part of the problem is that this is where A.I.

16:34inference costs show up. And we're not yet seeing that made up for in any sort of Siri A.I. monetization strategy. They talked about doing it in the context of having to upgrade your cloud capacity. But we haven't seen any other metered offerings around this. There's no sense of whether people are actually capping out their use of the services business. So that's a huge concern. And what's also key here, the street was expecting services to reaccelerate to 11 percent growth. And we've got Apple guiding to eight to nine percent growth in the December quarter. It's key holiday quarter. That's a huge concern.

17:03Goldman actually singled out two things that it thinks are a big headwind beyond Syria. He talked about App Store and Google licensing headwinds being worse than expected. And then, I mean, talk about the fact that this is what's supposed to be offsetting the DRAM cost. And TD Count probably had the clearest math here. And they said every 5 percent rise in DRAM prices cost about a half a point of gross margin. That's where a lot of that thirty three billion dollars worth of new purchase obligations. They think it all is coming down to memory. And then you don't have the reliable services business.

17:34You lost Phil Schiller in the quarter who was in charge of the app store. And there's a lot of global regulatory headwinds and a lot of pushback from developers who are tired of the in app store fees. Yeah, they're also citing Goldman ongoing mobile gaming softness, just adding to your list there. Mackenzie, thank you for the rundown with Apple under pressure. And interesting to see, you know, it's been the anti-AI trade. The AI trade is working better today on the flip side. Here's our roadmap for the rest of the hour, including check out troubles for Shopify after its first revenue miss since 2022.

18:06President Harley Finkelstein will join us next. Plus how the financials are banking on the midterms, what a Democratic Congress would mean for the banks. and an AI boom and PC gloom, how options traders are pricing in a potential move for AMD tonight ahead of those results. Squawk on the streets, back in just a minute. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments.

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20:10Welcome back to Squawk on the Street. Take a look at Shopify under pressure this morning after reporting third quarter results, though, the off the pre-market lows. Analysts pointing to the top line miss as the reason behind the move, despite revenue growing more than 30 percent on the year. It's the first time the company has actually missed revenue expectations since second quarter of 2022. Joining us here first on CNBC is Shopify president Harley Finkelstein. It's great to have you back, Harley. So, I mean, what do you make of the reaction? You think it was just high expectations and the market being picky or did something lead you guys to the miss?

20:42So first of all, I think Q3 was a signature of Shopify. I mean, we drove consistent, durable growth quarter after quarter. GMV was$119 billion. That's up 29.5%. Revenue was$3.7 billion, which is up 32%. And we had a free cash-up margin of 22%, which, as you know, Sarah, is incredibly rare at our scale. And at the same time, some of the biggest brands in the world joined Shopify from Mac to Clinique to Lululemon and Balmain. And actually something I'm especially proud of is if you look at since the start of 2025, Shopify has actually captured nearly half of all incremental e-commerce dollars in the US, despite only representing 14%.

21:17So in terms of, you know, your comments earlier, I mean, revenue was 3.7 billion, up 32%. Our guide was revenue to grow at low 30s. So we've hit it. But, you know, the market's going to do what the market's going to do. This is my 46th call since the IPO. And the scoreboard we use is building a hundred year company. And we don't really pay much attention to the day-to-day noise. How much of the growth is at this point, Harley, AI revenue? I mean, you've announced these partnerships with OpenAI and Google and Meta. Can you quantify how much actual commerce is coming from the agentic shopping? Yeah.

21:53I mean, look, there's no doubt that AI is changing how we live, of how we work, certainly how we shop. And where Shopify is presenting itself is to make sure the merchant can sell everywhere. I think AI, the channels are becoming real discovery agents for merchants. We saw traffic up 2.6x from AI channels, orders up 3.3x. But to your point, Sarah, this is on very, very small volume, but it is growing quite quickly. One thing, though, that is really interesting is that with AI channels, we're seeing that it is rewarding specificity. In sort of the syngentic world, it feels like relevance reigns here.

22:2574 % of all AI-truited purchases in Q3 were from outside our top 100 categories. So it was like robot vacuums specifically for pet hair or a car seat for three kids in the back of a sedan. And actually, that's something we have a disproportionate amount of merchants who sell. That's sort of the long tail of Shopify. But to be clear, I mean, it's actually the rest of commerce that is really playing the biggest role here. You know, AI shopping is just a tiny fraction. When you look at our offline business, we just crossed$200 billion in GMB point of sale. International is up 30%. So we're doing two things at once.

23:02We're building for the future with Agentic and AI, and at the same time, making sure the things that merchants need today, right now, are the best in the world. I sort of buy the idea that it's good for a wider swath of merchants. I was looking for a shoe rack and asked GPT, and it took me to sites I would have never known before and companies I would have never known. So I get that. But what if, what if, then I just said, buy it for me, and a consumer never has to go directly to these shopping sites? And that's, I think, one of the questions that investors have if you get disrupted by, ultimately, by this agentic shopping, if, you know, consumers just get cut out of the picture.

23:39Yeah, I mean, that actually, we see it the opposite way. Q3, obviously, personal agents hit the mainstream. We saw this new front door with Muse and Instinct and Claude Duet and GrockBot. And we've partnered with all of them on day one. The other thing you're probably seeing is that when you connect your shop account to Muse or Instinct or GrockBot, it has three things. One, your entire shopping history is now there so we can deliver personalized recommendations. You have saved payment details with ShopPay. And then because you're connected to the Shop app, you can track everything. And because we have 400 million shoppers already connected to the Shop app and ShopPay, now that trust goes with every agent.

24:14So in many ways, we actually think that one of the things that's going to accelerate some agentic stuff is having this front door to commerce and an identity system like shop where you have this recognition and discovery while you browse. Look, we don't know which agentic tool is going to win. We don't know which agent is going to win. Our job is to make sure that whatever becomes the leader, whatever becomes a new channel for merchants, that Shopify is deeply embedded. And hopefully what you're seeing is that everywhere where these new opportunities exist, Shopify is the commerce partner. Harley, I'd love to get your take just tangentially on whether or not, if it's not, if agents are not a threat to e-commerce, are they a threat to sort of legacy search?

24:51Look, it seems to us, at least at this point, it's still incremental. It's still above and beyond. Remember, Carl, if you think about e-commerce as a percentage of total retail, it's still 20. It's still sub 20 percent in the U.S. So obviously we have 14 percent of sub 20 percent. So from our perspective, we have a massive TAM ahead of us. But in terms of where it's taken share from, we think it's going to increase e-commerce penetration generally. And we're still seeing very healthy gains and traffic to our merchant stores directly from search. So both are happening at the same time. Just on the quarter, Harley, I'm just trying to make sense of the reaction, as I know you are down 9 percent.

25:25Maybe some some issue with the GMB. Obviously, that's important. Growth deceleration from 31.6 to 29.5 in Q3. So below that that 30 percent level, is there anything to read into there? I mean, Q3 was our sixth consecutive quarter of low 30s revenue growth. And our guidance for Q4 would suggest it's coming to a seventh quarter. The free cash flow margin at 22%, as I said, is incredibly rare. But on the GMV point, it was$119 billion. That is the 13th consecutive quarter of GMV growth above 20%. So these are consistent, durable numbers. We're really proud of the print. And we're going to keep building for the long term and ignore the noise day to day.

26:05But ultimately, I think, you know, you've heard me say this, but the scoreboard that we're looking at is how do we run the company or we become the de facto e-commerce and commerce platform for the best brands. And I think we are. And the fact that now we're getting brands like Lululemon or Mac or Estee Lauder come into Shopify for all their commerce needs, that I think is a testament to the incredible product we're building. Any change in macro that you're seeing from the consumer during the quarter? We talk a lot about rising gas prices and a hit to consumer confidence. What are you guys seeing?

26:37It's interesting. I think businesses are really optimistic. I think shoppers are feeling some economic pressure, which means every new dollar spent is a more deliberate decision. But truth is, we're seeing growth across merchant sizes, geographies and channels. Strength seems very broad based. We know that U.S. consumer sentiment confidence is up. We heard that from you guys the last few weeks. So I do think this is the first holiday season where AI-assisted shopping capabilities will become mainstream, especially with the rise of personal agents. I think last year we saw AI influence more in discovery.

27:10I think now we're going to see more of that conversion. But generally, it seems like shoppers are really, as usual, buying from the brands they love. They're finding new brands, to your point, about the products you're seeing on these agents. These very specific requests are returning incredible products that otherwise would never be found. And the long tail of those merchants on Shopify. What about prices, though? I mean, as AI agents start negotiating prices and price comparing, does that lead to price pressure from some of your merchants? A sort of race to the bottom if all of that is more transparent?

27:42I don't think so. I think ultimately we're not seeing that across the board. We have millions of stores on the platform. We're not seeing that prices are being lowered. What we are seeing, though, is that brands like the Tin Can phones, a screenless phone for kids, are seeing incredible success because of Gentic-based commerce, where a consumer is being very specific and using very merit-based results and using Shopify catalog. It is presenting these great products to consumers that there's no way they would have found otherwise. So I think it's actually exposing a new segment of commerce to consumers, and they're growing really, really fast.

28:15But in terms of sort of the price comparison, that was always possible. I think what agents are doing is they're allowing consumers to spend more time finding brands they otherwise would not have encountered. And finally, the outlook for the holiday shopping season this year is? We think it's going to be a great holiday season. We think, you know, obviously, as I mentioned, you know, AI system shopping is there. But U.S. consumer confidence is up. We're staying vigilant. We're looking at slowdowns, whether it's on FX or supply chains. But generally, strength is broad based. New merchants are leading growth.

28:47We're seeing older cohorts also performing really well. So we expect to have a really great BFCM this year. All right, Harley, thank you for coming on. Really helpful to hear how you explain it and how you're seeing it. Thanks, Sarah. Appreciate it. Both my kids have tin cans. Harley Finkelstein, the president of Shopify. Still to come, we're going to get to a move in Palantir, of course, and how commercial contracts are becoming a bigger and bigger part of that company's business, plus what a Democratic Congress would mean for the banks and the potential for a return of increased regulation. That's when Squawk and Mystery comes back.

29:42and customizer lineup. Score sports and more for a winning price. And stream today. Sling lets you do that. Base pack required. Restrictions apply. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools, no extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Did you know that psoriatic arthritis may progress over time and could cause permanent joint damage if left untreated?

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31:35Leslie. Yes, we will have to wait and see, David. But in the meantime, you have J.P. Morgan analysts recently writing about how elections have been a source of uncertainty for bank stocks, no surprise there, noting that a, quote, clean sweep by Democrats could create nervousness about the regulatory environment getting tougher. That comes amid two years of deregulation. Several banking CEOs have described the current backdrop for the industry as being, quote, as good as it gets. thanks in part to a revamping of bank supervision, capital rules and testing requirements. Since the 2024 election, almost every large American bank has outperformed the S &P's 32 percent gain over that time period, except for Bank of America, although in recent weeks these names have been choppy.

32:19Ahead of today's midterms, banks are bracing for the potential for a divided Washington. And in speaking with sources within several of the biggest firms, oversight remains kind of this key question mark here. Leadership at major financial regulators, including the OCC, the FDIC and the Fed, isn't expected to change regardless of who wins the midterms. But a split Congress could add more friction to the deregulatory process if they choose through investigations and hearings. A change in control would give the Democrats subpoena authority, meaning they could compel documents and hold public hearings rather than just request information.

32:54And this could bring more scrutiny over banks' ties to the Trump administration or alleged dealings with Jeffrey Epstein. Other issues that could be reopened are fights over credit card interest rate caps, interchange fees, crypto and more. And there's also a possibility of Senator Elizabeth Warren chairing the Senate Banking Committee if the Democrats gain control of that chamber, which would most likely increase the headline risk for the sector, guys. But anything meaningful in terms of changes in legislation? So that's the key question with regard to, you know, say affordability issues, whether or not they would kind of reinstate or reopen the debate over credit card interest rate caps.

33:35That's something that talking with sources behind the scenes is a potential issue of concern. Interchange fees is another question mark as well. And then, of course, there's just the broader oversight questions about whether or not some of the deregulatory agendas could get slowed down as a result of investigations into what it means, say, for the systemic risk of the economy. If they were to maybe loosen some of these capital rules to the extent that's being discussed, what that would mean on the economy. All of that could have kind of just a more of a slowdown effect on, you know, capital, which could be to the tune of, say, 20 billion dollars that we're talking about.

34:14Yeah, but usually, you know, when the bank CEOs complain, they point their finger at administrations. Like the last one, there was a lot of that. And now, you know, there's been much more leniency on this one. Thank you, Leslie. We'll see what happens. Leslie Picker, time now for CNBC News Update. Pippa Stevens has it for us. Morning, Pippa. Good morning, Sarah. Ukrainian President Volodymyr Zelensky says negotiators from the U.S., Ukraine and Russia will meet next week in Abu Dhabi for peace talks. During a joint press conference today with Germany's chancellor, Zelensky said the trilateral talks will focus on security guarantees and energy ceasefire and a truce in the Black Sea.

34:49The meeting on November 10th and 11th will be the first direct three-way negotiations since February. The Justice Department announced it is sending 1 ,000 election monitors to the polls today. They will be deployed in all 50 states, including eight locations in Michigan and seven in Texas, where high-stakes Senate races are taking place. And the Supreme Court is hearing arguments today in a case brought by Catholic preschools that say they should be able to receive state funding despite refusing to admit children from LGBTQ families. Colorado says the schools are in violation of the state's anti-discrimination law, which makes them ineligible for a state-funded program.

35:27But the schools say the exclusion violates their free exercise rights. Carl, back to you. Pippa, thank you very much. After this, we'll look ahead to AMD's results tonight with the options market is signaling about a potential move in that name. After a short break. Welcome back. We are joined now by Binance co-CEO Richard Tang on that crypto heist impacting more than$6 billion. Last hour, we had some technical issues with his audio, but we are certainly glad to have you back. It is a huge story, Richard. So thank you for taking the time. I know it's late where you are. So first, just help us understand how more than$6 billion got stolen, one of the potentially worst financial heists in history, in a matter of minutes.

36:09How does that happen? Well, first of all, it shouldn't have happened. And we do apologize to our users for the disruption. But this was a highly sophisticated multi-month campaign, and FBI has attributed it to North Korea. They use a combination of fake recruitment interviews, malicious software disguised as developer tools and AI techniques to work their way in and then executed at a speed our industry has never seen before. We've since closed all those entry points, rebuilt the affected system, and we just published a very detailed report so the industry can learn from it. So, I mean, if you can look at initial findings and response from our Twitter.

36:49But is it true that... It's not one single mistake. Sorry to interrupt, but is it true that you had a single point of failure through one laptop? No, that's not true. So this is not one single mistake or one click, right? So what the attackers did was they spent months building their way in. So in June, they set up a fake version of a developer tool and Leo, one of our engineers, to install that. In September, they posed as recruiters and ran a series of job interviews with another engineer. and that ended up in a coding exercise that contained hidden malware designed to evade security tools. And then from there, they moved privately through our internal AI tools and obtained access that reached the system that authorized our wallet transaction.

37:35And so on 29th October, they managed to gain access and sent unauthorized transfer and exploited a new Ethereum feature that let funds keep moving even after we have paused withdrawal. But we are letting the world know we are pushing forward with transparency because we need to learn together on that front and we need to continue to improve the security as an industry. Well, you have to win back trust. I mean, why would users trust that this would not happen again? Well, so we have done everything we can. So the first thing we did was to close every door that the attacker used. We rebuilt the affected wallet system.

38:10We built the internal tool. Every affected device has been replaced. Every credentials linked to it has been canceled. So we scan all the employees devices across the company and upgraded our monitoring user system. We're also getting the independent expert to review everything that we've done and we'll keep strengthening our defenses as the investigation continue. And we're working around the clock with law enforcement agencies and with industry partners to trace and freeze the stolen funds on that front. Richard, CZ was on the tape this morning arguing that perhaps banks are more vulnerable to future attacks than crypto exchanges.

38:48Can you explain why that might be true and if it's an attempt to distract from this episode? I think we are all vulnerable. So AI has really changed the economics of attacking, right? So we went from roughly one hack a month to one a week. And just yesterday, four different exchanges were hit inside 24 hours, right? So AI gives attackers speed, scale and ability. It's not restricted to crypto. I mean, the banks in Korea, for example, were hacked as well. So that's the reality that every financial infrastructure has to face. While the same technology that we see bring about the attack is also one of the stronger defenses that we have.

39:28It helps us detect anomalies, helps us trace funds and respond in ways that years ago were not possible. And then why the defense has to go AI first as well. Did your DevOps engineers have access to your core technology remotely from laptops? And if that is the case, is that something you're shutting down? So all the devices that our DevOps operator use, I should buy a company with all the appropriate software and safeguards. So we are reviewing all those. And as I mentioned, we have replaced all those and we have tightened control even further on that front to make sure such an episode doesn't recur.

40:12You know, your own report says security improves when the industry learns together. So I do wonder, Richard, what is the sort of takeaway from this overall that every exchange as a result of this heist should should be focused on? If you think about it, we are spending huge amount of money on security every year. right so if something like this can happen to us it can happen to everyone i think what is fortunate in this episode is that you know we bear the full financial impact and users are not compromised we have set aside more than 100 of the funds and replenish the tokens that's affected and we continue to continue to build from strength to strength we want to i mean all these hacks and attacks happens can happen to any platform what set us apart is how we continue to protect users on that front and learn from this episode and become much stronger.

41:06Well, I mean, after FTX, that was the promise as well. The industry promised to be more transparent, to be more secure, to be more ready for prime time. And I think now that question is raised again. Well, so FTX and us are very different. So the comparison doesn't quite hold there. I mean, FTX was a case of fraud. The customer money wasn't there. we did pause for a while to make sure that to protect the money the customer money is there right and we reopened very quickly after that once we rebuilt the system we are confident in our system and we have started to allow customers to withdraw their funds from sunday initially we saw a spike but by now it has normalized and if you look at hourly net inflow and outflow is what we see on a normal day and customers can verify the assets through the proof of reserve which during FTX time, they cannot.

42:00And that's the difference. Verification, not just promises. So all the withdrawal restrictions are lifted now. Customers can take out whatever they want from Binance. I think we have allowed for withdrawal of the different tokens and they're facing pretty much by now. It's back to normal. Got it. And you say you've replenished 95 %? We replenish 98 % of the impacted tokens, right? And the remaining 2%, then, because they belong to less liquid tokens, we need some time to procure them without affecting normal market operations, right? We do not want to go to the marketplace and purchase them, which can affect market prices.

42:38So we have to procure them through OTC on that front. But, you know, those are fully guaranteed. The customer's assets are secured, and we are in the process of procuring them. Got it. Well, thank you certainly for coming on and taking the questions and telling us a little bit about what you've learned and how you're remedying the situation. We appreciate it. Thank you so much for having me. Richard Tang, CEO, co-CEO of Binance. When we come back, can AMD rely on its data center sales to overcome a potential PC slowdown and avoid a reaction like Intel's? We'll see what options are saying today after the break.

43:13Plus, next hour, as voters go to the polls, Morgan Stanley will explain why any post-election dip, probably a buying opportunity. When we're back in two. Welcome back. Three big movers we're watching today. Palantir's one of them, reporting beats on the top and the bottom line, raising guidance. U.S. commercial revenue up 148, surpassing the value of government revenue. Alex Karp telling CNBC, beware of thinking you can delay the future in AI. The future is here. The political ramifications of it are here. Stocks now negative on the year. On semis higher on the back of results, AI data center revenue up 175 percent.

43:48Gross margins also climbing to more than 41. It's fifth consecutive quarter of expansion. And Ferrari raising its 26 guidance after a Q3 earnings beat. Management sites stronger customer personalization, lower than expected currency headwinds, and its F1 championship position as reasons for the guidance raise. I saw your ears perk up just now. Well, yeah, no, Ferrari's had a good season. Lewis Hamilton, you know, he's dating Kim Kardashian. He's back in the top three. And that stuff really matters. You know, one thing I learned in the documentary is that when there's success on the track in F1, that does help sell cars.

44:23That's the whole point of the partnership. Totally. And we've seen that with McLaren and Aston Martin. And it's this whole brand halo. Everyone wants to be as fast as the race car drivers. Up next, how the options market is pricing in a potential move for AMD as it gets ready to report tonight. We'll hit that for you after the break. Welcome back. A lot of chip names, including AMD, getting hit hard this after Intel's nearly 30 percent post earnings plunge that happened last week. AMD shares down about 15 percent just since Friday. Of course, that company will be reporting results later today.

44:55Let's get to Oliver Renick at Sebo in Chicago. He's got a look at what the options market is signaling. Oliver. Hey, David, after Intel's bomb and the drop off in memory stocks after Micron, AMD earnings here have a chance to reset the semiconductor narrative ahead of NVIDIA later this month. Right now, AMD is trading almost exactly where it was before its second quarter earnings, and market makers are pricing a move of 7.3%, which is bigger than the past eight quarter average, but notably smaller than its earnings moves over this past year, which averaged 12 % thanks to a double digit loss in February and then an even bigger rally in May.

45:35Right now, the ratio of open puts to calls is almost at perfect parity, and today's trading volume is also basically evenly divided, 70 ,000 calls and roughly the same number of puts. But it does look like buyers were most aggressive on the call side, with 22 ,000 calls likely bought versus 16 ,000 puts, and three of the top five most popular contracts by volume were calls. A few of those calls were very speculative in nature, including some buyers of long shot 600 strike calls expiring Friday that trade for 80 cents and need more than a 20 percent rally. On the bear side, the most popular put was the 450 strike, which is almost right at that implied move to the downside, guys.

46:20Oliver, thank you. AMD CEO, by the way, Lisa Su is going to join us tomorrow morning, 9 a.m. And that stock, Carl, is up over 5%, of course, ahead of those earnings later today. Yeah, days improving here. Dow has shaved some losses, close to session highs S &P. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

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