10AM Hour: CoreWeave Lifts the Tech Trade, CEO on Demand and Nvidia Partnership, Is the Biggest Risk to the Market Not the AI Trade? 11/11/26

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0:39They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. Good Wednesday morning. Welcome to Squawk on the Street. I'm Sarah Ising with Carol Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. Bond market is closed for Veterans Day today, but stocks are open for trade and the Nasdaq is surging. Thanks in part to results last night from Corweave, what the CEO just said here on CNBC, plus what their numbers could mean for the AI trade overall.

1:15And just a few minutes, Warren Pies joins us with why he says the real market risk here isn't the AI trade. He'll tell us what it is coming up. And from Wall Street to Washington, new details on the NVIDIA CEO's affair with an alleged Chinese spy and new calls for Jensen Huang to resign. But guys, today I wanted to focus on the U.S. consumer and tee off of what the Fed Governor Michelle Bowman said yesterday. She made quite a splash when she talked about the risks to consumers from the markets. Here was the quote. Risks include a large correction in the equity market valuations. If returns on AI investment fall short of expectations and a sharp increase in private, longer-term interest rates, lower equity prices could undermine the resilience in consumer spending.

1:58Basically, warning about the AI trade and the risk for the economy on consumer spending, which we've got a little bit of a taste of in the last few weeks with the sell-offs on concerns about peak data center build and whether there's policy pushback on that. So because of that warning, we decided to take a look at just how much exposure Americans have to equities right now. And no surprise, given the market run up, it is a it is a great share of household net worth. The equities, that is. We're talking about more than 30 percent, almost 40 percent. This is an aggregate number. Obviously, the higher income is more exposed to holding equities.

2:36But what this tells us is that there is a risk. I mean, this is the wealth effect you hear about, where the stock market goes up and consumers feel better about spending on everything from travel to discretionary to restaurants. And this number has risen. I mean, you see that it rises in periods of strong stock markets, right? Bottoms during the financial crisis, for instance, when equities go down. But it is a high share, in fact, the highest we've seen of net worth. And you can break it down by age, which is also sort of interesting and not surprising. only 18 % for under 40 crowd. And then if above 55, that's the most 33 % share of wealth by age.

3:18So there's a lot riding on this whole AI trade and the market as we've been talking about. But here's some data to back it up and why the Fed is watching it as a metric for what they think the economy is going to do with the consumer. I assume you're going to walk us through NRF for October. Yeah. So we got a lot of new data. NRF is one of them, the CNBC NRF monitor up Well, less than 4 percent. That was kind of the most sluggish of all, but still showed a gain. But there's some interesting weekly numbers as well. The Red Book sales numbers, which tracks retail. So this is by the week. And so it's year over year.

3:50More than 10 percent gain. Yes, some of that is inflation because it's a nominal number, but still really strong spending. J.P. Morgan tracked card spending for the week up 6 percent. Bank of America tracked card spending for the week up 6.2 percent. So those numbers are pretty good. If you break it down, CNBC does this NRF retail monitor, the sort of monthly look here. And there's a pretty big discrepancy in terms of where Americans are spending on categories, perhaps not surprisingly, electronics and appliances up 9.3%. Again, that incorporates some of the price increases we've seen there because of the memory chip shortage and everything else.

4:25And then one of the weakest categories, furniture and home furnishings. We know the housing market has been weak. Interest rates have been high. And so it gives you a sense under the overall numbers, which I would say are pretty strong. I mean, the NRF is the slowest growth in a year. But overall, I mean, it's still like if you look at Bank of America tracked, for instance, holiday spend so far this year compared to last year and the year before. And we're tracking above those numbers. So, yeah, I mean, put them all together. We'll watch it. But if you were worried about the consumer because consumer sentiment numbers have been weak and gas prices have been high.

5:05We're just not seeing the kind of slowdown you would normally see because of that. I mean, there's still spending growth, especially on some of these weekly metrics that we watch. Yeah. Again, though, cities, data today, deceleration, B of A supermarket down 1.7. I mean, they're cutting back in some areas. In some areas. And we know that the supermarket inflation has been high. We just got the CPI report showing food at home is a problem for sure. But, you know, there's still, you know, aggregate overall spending. And part of it, what I'm saying is could be tied to the stock market. And now we got some of these estimates on core PCE.

5:40I think consensus is 35 bps, which would be about four annualized. B of A is a little bit lighter than that. But I wonder, you know, and we heard from what Logan, Waller, Goldman adding this third hike in March last night? Yeah, I mean, the Fed speak has been hawkish, right? And so the view is either they're going to go 50 in December, which is not fully priced in, but that was something that Waller floated as a consideration, or they're going to add in a hike, right? They're going to do December, potentially January in play, and then March. We don't know, but we do know that they're all paying attention to inflation.

6:17Even Michelle Bowman in her warning about the consumer and the AI trade, which is something that they're clearly watching. She did say inflation clearly is the key risk for the market here. Let's get more on the overall market and the action that we're seeing this morning. Strong day so far. S &P up eight tenths of a percent. Joining us is 314 Research co-founder and strategist Warren Pies. I mean, it's one of those bounce back days. Nasdaq's up 1.3 percent. You don't see the AI trade as driving the bus here? Yeah, thank you for having me. That's basically where we're at. I think that the AI trade, obviously, is driving the bus, but I don't think it's like the big risk to the market going forward.

6:58That's not the intermediate term risk. I think that the demand side, everything we track on the demand side is intact. Obviously, there's concerns coming off of the blue wave that we're going to have a supply side regulatory crackdown on the data center build out. That's possible when we align our numbers with what the semiconductor sales estimates are going out through 2028, though. I think you could slow down data center construction by 15, 20 percent and still have those numbers stay intact. So when I look at everything and zoom out, I look at the Anthropic IPO and the numbers have come out there.

7:34revenue per inference confused, all that stuff says the AI trade is OK. What I worry about is more of what we saw yesterday from the CPI. And I see the bond market's closed today, so we're not getting the pressure from yields. But I think that the Fed is the real risk going out in the intermediate term. And the market is not priced for another two plus hikes, which are probably coming. But you don't think that the equity market and the economy can handle that if things are running hot enough for them to do that? I think that for now it can. But the thing is, it's just like as as you move through that process, though, you start seeing indigestion, the funding market.

8:18And that's what we saw just, you know, at that kind of the outset of this equity market weakness. And so it does concern me. I think that for through the year end in this very short term period, we'll be OK on the equity market side. I think that because we've already been at 5.3 % on the 10-year, it's unlikely that as we creep higher here in the next month or so, that the market's going to look at that and say, oh, we can't handle those yields. They'll feel familiar to it. But as we turn the calendar the next year and we start thinking about January, March hikes and anything beyond that, if we get that residual seasonality early next year in the inflation data, that's where I think you could start seeing some real indigestion in the equity market and people starting to ask, hey, what's the tradeoff here between high rates and in the equity market?

9:04You think they'd be making a mistake if they if they go, what, December, January, you know, more more than you say the market is priced at this point. I mean, a lot of it can be chalked up to the price of energy oil prices, which have come down, are volatile, depends on what happens with both wars. And there's some uncertainty going into next year about all that? It's hard to say that they're making a mistake when Supercore is, which is mostly, you know, I don't think that oil's in the Supercore right now. I mean, I know that oil has been a factor. And I think it was a mistake when they started moving into a hawkish direction because of the war.

9:42But the last three months, we've seen Supercore CPI above four-tenths of a percent month over month. That's like 5 % annualized in the sliver of inflation the Fed cares most about. And so I think that their hands are kind of tied here. They're going to have to start moving to maintain their credibility. And it's tough because I think the housing market's frozen and there's a bifurcated economy right now. And so there is an entire rate-sensitive area of the economy that is going to feel more pain. And this is the problem for the equity market as you go to next year is the Fed ultimately, if the inflation data doesn't calm down, will end up trying to impact the AI trade.

10:23And that's going to take more leaning on the interest rate side than we've seen so far. Warren, a lot of firms looking for, you know, maybe 15, 18 percent EPS growth next year. Almost half of that, at least a third of it is Broadcom, Micron, NVIDIA. And I just wonder, Are you worried or on the lookout for cuts to semi-EPS forecasts? Yeah, I mean, to me, that really goes back to the political risk that we've introduced with the election. And so I understand, like, we downgraded stocks ahead of the election in late October, and we just neutralized risk. So we're not underweight. We're just riding a benchmark right now.

11:04And my instinct is I would like to play for a year in rally, but we just haven't seen the evidence yet. But one thing we are getting more comfortable with is this political risk and how it's going to flow through to semi earnings. You know, I think that our best guess, when we look at satellite data and we pace out how data center supply is coming online, I think there's excess capacity coming online when you align it with those semi earnings. And so if the blue wave saw a regulatory regime that reduced data center pacing or build out in 2028, let's say, by 15 to 20 percent, that's when you would start seeing some minor impacts on semi-fundamentals, on their sales estimates, earnings estimates, and things like that.

11:50So I think we're the bottom line on that is I think we're quite a far ways away from getting anything that looks like a an actual round of cuts to semiconductor sales and EPS. And so I feel pretty comfortable about about that side of it, unless there's a very draconian regulatory environment that that comes on the scene, which at the end of the day, money talks. I think that we'll be OK on that front. All right. Well, having a good day today, those semiconductors. Warren, thank you for joining us. It's good to get your thoughts always. Warren Pies, 314 Research. Here's our roadmap for the rest of the hour, including CoreWeave providing a bounce to the AI trade.

12:30You'll hear what CEO Mike and Trader just told us about demand and talk to a top analyst who says the stock is still a buy. Plus, Washington chips away at NVIDIA. Calls growing from lawmakers for Jensen Long, the company's CEO, to step down from that role after an affair with an alleged Chinese spy. And JetBlue's first-class act, the airline betting big on a new domestic first-class service as management pushes back against some concerns about bankruptcy. We'll be joined by the CEO in just a bit as Squawk on the Street continues. With the Discovered Cashback Card, it's payback time when you earn cash back on everyday purchases.

13:07Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com slash five for details. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow.

13:49Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. Our asset level debt is basically been rock solid through this entire thing.

14:31There is an enormous demand for that product. We're about to launch another asset level debt in the next week or two that has already been rated high investment grade, you know, we suspect that that will be underwritten in the market at a seven to a seven and a half percent interest is what we expect. And that will once again bring down the average cost, average weighted cost of capital for core wheat. You saw that in our earnings when I said, OK, high yield debt is getting expensive. We'll go to prepayments, which we have done in the past. And we raised nine billion dollars worth of prepayments and deposits.

15:08And, you know, that's just another way for us to go about financing the business to ensure that we have the capital at reasonable costs to be able to execute on our roadmap. That was Corey Weaves, CEO Mike Intrade. Of course, he just joined us last hour. His company stock price, you can see it right there, up 19.5 % this effort. It was a beat as well. But the key is the focus on financing. And they went right to it on the conference call. You heard him go right to it there. Not to mention ending the interview also saying he's canceled his 10b5 program, in other words, where he'd been selling stock because there had been a lot of sales by insiders, him and his other two founders as well, during the course of the last year.

15:50So that helped to send the stock even higher. Joining us now on the phone is Amit Arinani. He's senior managing director at Evercore, has a buy on the stock, did lower his price target, not unexpected there, given what's been going on. Amit, do you agree that at some point interest costs is going to actually be below that of adjusted operating income? You know, at some point where they start growing so fast, I think the latter will happen, which is interest costs will start to come down. But, you know, David, to your observation, right, I mean, the biggest statement that came out of the call where they have financing largely locked in for 27, right?

16:28And, you know, the devil will be in the details, but We would love to know how much of this financing we can get done at 7, 7.5%. I think that's going to be the next catalyst. But the fact they don't need a lot of unstructured debt or unsecured debt into 27, I thought was a big positive, along with some of his comments on how strong the demand is near to them for that. Yeah. And as well, the fact that these older chips are coming offline but have a great deal of value. How important is that? You know, they quantify that number at about$10 billion, if you think about it, right? It's about nearly 10 % of the backlog that could come from there.

17:03And beyond that, I'll tell you, if you listen to his pricing commentary, right? The guide will use$11 million per megawatt of pricing. He told you the long-term contracts he's signing out,$20 to$25 million per megawatt. And the short-duration contracts are$40 million per megawatt. I mean, demand for GPUs and tokens is substantially higher than supply. I do think the debate eventually people want to have is, it's great for now, but what does it look like in five years, right? The durability is a bit of a debate, but right now demand certainly seems to be well in excess of supply for GPUs. Does their inability to access the bond market in an effective way, does it preclude certain expansion plans that might otherwise have had?

17:47It's a fair question, and I would say it either precludes expansion plan or diminishes the returns you can get on it, right? So one of the things that Colby has to do if they want to go down the path of unsecured debt, which is the right strategy right now, is they have to go to their customers and ask for a larger amount of free payments potentially. And, you know, if I'm a customer, I'm giving you 30 % free payments of 20, I'm going to ask for a lower profit as well at that point, right? So I do think it makes certain projects perhaps not attractive or may lose the margin profile. But I think it's a tradeoff that's worth making if I'm Corby right now.

18:23The goal eventually is to build an install base and then monetize it with incremental services over time. Right. And obviously a key part of that as well is those chips. Sorry, Carl. Ahmed, I'm seeing a lot of projections for the percent of planned compute gigawatts that will be pushed from 28 to 29. You got a ballpark? You know, our framework at a very high level for the industry, at least, is it's about three to five gigawatts. You know, about 30 gigawatts will come out on board in 28, maybe three to five gigawatts will get pushed out. But the part I'll stress and tell you, we've talked to a lot of companies on this topic.

19:01The inner centers at the end of the day are portable assets. I can move it from Texas to Louisiana, and I think I can move from Texas to Mexico as well. This is a demand deferred. It's not demand destroyed at the end of the day. So it's more of a story of migration than cancellation. If it even gets there, yes, absolutely. This will be before demand. Because, again, if you look at the near-term price that we've talked about, the industry is seeing, the demand is insatiable. You will find a place to run these data centers. If it's not in Texas, it'll be in North Dakota. If it's not North Dakota, it'll be Mexico.

19:35Yeah. And, of course, the demand picture, as you said, remains incredibly robust. Amit, thank you. Appreciate it. Thank you. Cor, we've also a close partner, of course, of NVIDIA, which helps it outfit all of those data centers. We asked in Trader about the fallout surrounding CEO Jensen Wong and his relationship with an alleged Chinese spy. NVIDIA is an extraordinary company, right? It is not one person. It is an extraordinary company. There are thousands of people over there that interface with thousands of people at my company every day. They integrate on the technology. They integrate on the physical infrastructure.

20:14They integrate on the networking. We have a close relationship with them up and down the companies, and they are a great partner. They have been a great partner for us for years. They will continue to be a great partner for us. Of course, continued focus, as you might expect, on NVIDIA and the potential future of its CEO, Wachtell Lipton, as you know. Sarah has now been hired by the board to help them investigate the relationship and what went on in terms of the relationship as well between the company and Megaspeed, the company that the alleged Chinese spy was representing in her dealings with NVIDIA.

20:54And Jim Cramer reporting earlier that he, Jensen, as would be expected, has also hired his own counsel, as he should. I would also point out, by the way, the person leading the investigation on Wachtell is a former, brief time, but a former U.S. attorney. Does that make it more or less likely that it's going to be troublesome for Jensen? Well, I don't think it helps in the sense that this is a person who knows their way around the law, the criminal statutes as well. Yeah. Well, Calci still, I mean, says only 39 percent chance that he leaves before July 1st, 2027. So the predictions markets do not have him stepping down at this point.

21:31And the stock is up today, actually, maybe getting a boost from the Corweave numbers, perhaps. It may be. Yeah. Briefly took out yesterday's highs at 175 has come back in a little bit, up about two percent. But the Washington heat, I mean, that's going to be that's going to come fast and furiously, both from Republicans and Democrats. Yeah. We've made the point a number of times that the board will obviously wait till the till they're informed by the investigation and choose to do whatever it is. And there are many people who believe they will try very hard to make sure they can keep this CEO and founder in place.

22:03But Sarah, to your point, the actions of the federal government, whether it's the State Department or others. Commerce. And what they choose to do based on what they know and the potential view of a national security threat is unknown. Yeah. I mean, we have to get into some of these. We need experts on what China does here. You know, I'm told that there's a different thing. They have these more corporate fixers versus like spies, is how you think about, you know, for sovereign governments and what the objective that she had was and what she was able to extract from him. These are still big unknowns.

22:43Indeed. When we come back this morning, some new revenue numbers from OpenAI, surging growth, mounting losses. We'll talk about them. Anthropics opening up its IPO to Main Street and this major test for the AI boom next week. Can they overcome some of these data center concerns to win over individual investors when we come back? Some of the most important design choices are the ones that go unnoticed. The details that together make an experience feel intuitive, comfortable, and above all, exhilarating. At Acura, that means looking closely at how every detail can make your experience behind the wheel more rewarding.

23:18Every lesson learned and every idea refined becomes part of what comes next, and it lives inside every MDX, ADX, and Integra. That's precision-crafted performance. That's Acura. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. weren't agents supposed to take things off your plate building another to handle the others is a bit much don't make more work out of work Gemini is the one agent that knows all parts of your business and actually gets stuff done you give it a project close your laptop and when you come back the job's finished no matter your industry or role your agent has the skills to help every team stay in their flow seriously make work less work with Gemini on Google Cloud check response subscription required.

24:24Welcome back. Anthropics IPO is going to test the appetite of retail investors to back the AI boom amidst backlash, of course, to the build-out of data centers around the country. Kate Rooney has that story for us. Kate. Hey, David. So yeah, this IPO is going to be the first time Main Street investors can really get a slice of Anthropic. The company is putting aside about 20 percent of the allocation for retail investors. That is lower than SpaceX, but it's higher than the average listing. Our Leslie Picker reporting yesterday that institutional demand has been even stronger than what bankers saw with SpaceX.

24:56The question has been, will retail follow given some of the data center backlash and overall unpopularity right now of AI? Brokerage executives that I've been talking to say the bigger factor here is going to be the market. So SpaceX, of course, debuted in June with the wind at its back. Anthropic is now coming off a lot of volatility in tech. So that could add to some of the weakness. But others do point out that Anthropic also doesn't have the Elon effect, a big thing in the SpaceX listing. Vanda Research tracks this group closely. They see early signs of what they now predict could be record retail demand in this deal.

25:30It is tracking some of the more speculative contracts. They're known as perps and they're tied to Anthropic's valuation. They're looking at volume there that hit a record yesterday and they say that activity is building faster and earlier than it did for SpaceX. So the firm says that there was a correlation between these markets and the SpaceX deal, plus a couple other IPOs they tracked earlier this year. And based on all the activity, they do expect more than double the trading activity that we saw on SpaceX's IPO. Another sign that individual investors, guys, do still have an appetite for AI, NVIDIA.

26:04That's its second biggest day on record of retail buying. Again, that was yesterday. But rival OpenAI is also going to be watching this closely. We did get some updated Q3 numbers for the AI giant, hearing about$10 billion in revenue for the quarter. It was up about 50 percent, according to two sources close to the company. But the Wall Street Journal also reporting some steep losses on that top line. They talk about negative operating margins, 109 percent. But it was better than 150 percent in the prior quarter. Still, guys, a very long road to profitability. And it is interesting just to get to the valuation side.

26:39And yesterday, Kate, I was talking about people who told me they have an expectation that they'll move up the valuation on Anthropic as we get closer to the actual pricing. But the discrepancy between the two, OpenAI at, I think, maybe a 50 billion annual revenue run rate off this last$10 billion quarter. Anthropic at above 80 billion on that number, obviously much closer to potential profitability, not losing quite as much money, at least on an operating basis. And yet OpenAI did issue shares. They didn't raise as much as they wanted, but they did get some done at$1.25 trillion valuation. Yeah.

27:16So they're still doing this funding round in private markets. And as Sarah Fryer has said, it's opportunistic. They want to raise money while they can. They want to do this bridge to the IPO. They've talked about 2027 as being the target. But you're right to point out margins profitability. I think the growth rate and sort of revenue run rate has been something that people point to, and I think OpenAI has pointed to, although they had about$10 billion in the quarter, compare that to Anthropik, it's$17 billion. The big thing is profitability. I mean, negative operating margins, I think, is something that OpenAI is going to want to improve, given that they now are going to have this benchmark, that Anthropik's going out first, they are going to set the high watermark and set the standard for AI companies and this entirely new asset class that we're going to get.

27:58I mean, it really is a test for people to think that AI labs are a good business, regardless of what they think about AI. Do they want to buy into this growth? And does unprofitable growth work in public markets? Clearly, it's working in private markets. We'll see, especially when OpenAI gets out. Yeah, except for that$7 billion surprise loss from SoftBank overnight on the data center build, which hasn't been working out too well. Thank you. Okay, Rooney, time now for a news update. Pippa Stevens has it for us. Pippa, good morning, Sarah. Russia and Ukraine announced today they will conduct a large prisoner exchange But the countries did not make any major breakthroughs to end the Ukraine war during their first negotiations in nine months.

28:37U.S. negotiators Steve Witkoff and Jared Kushner are now going to meet separately with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky in the coming days. The tech consultant convicted of killing Kashyap founder Bob Lee will spend 16 years to life in prison. A California judge also denied his request for a new trial. The sentencing came nearly two years after a jury found Mima Mon Mimna guilty of second-degree murder in Lee's 2023 stabbing death. And nine members of the Kennedy family are joining efforts to block President Trump from building his 250-foot triumphal arch in Washington, D.C.

29:14They say the proposed monument would cast a shadow on Kennedy family grave sites in the Arlington National Cemetery. A federal judge blocked the administration last week from beginning construction for at least 14 days. Carl, back to you. Pippa, thanks. When we come back, the NVIDIA investigation moving from Wall Street to Washington. We'll be joined by one D.C. insider on the risk of a long, drawn-out bipartisan investigation. Later on this hour, JetBlue unveiling some new first-class seats in an effort to court new flyers as the company pushes back against some potential bankruptcy rumors when we continue.

29:49Welcome back. The fallout from Jensen Wang's affair with an alleged Chinese spy now shifts to Washington. GOP Senator Kevin Cramer, an influential member of Senate banking, calls for the NVIDIA chief to resign because of national security concerns. And House Republicans on foreign affairs considering a subpoena for Wong to appear at this closed-door briefing about the scandal next week. Let's bring in Kurt Bardella, former spokesperson for Republicans on the House Oversight Committee, publisher of the Watchdog Report on Substack. Kurt, it's great to have you with us. Thanks for being with us. Thanks for having me, my friend.

30:20So this note from Mass today saying Jensen has until the end of business today to reply, otherwise a subpoena is possible. How do you see this playing out? Yeah, there's usually a process that we go through here with these things. There's a polite invitation. There is a respond by X or else. And then the or else happens. And anyone watching right now, if you think that you're going to be able to blow off Congress when they're coming for you, you're not. The best thing to do is to cooperate up front because it just inflames their motivation to go after you. And right now, Republicans running things, they're happy to do it behind closed doors.

30:54I'm going to tell you, when Democrats take back control in January, it's not going to be behind closed doors. It's going to be in public at a committee hearing under oath with all the cameras rolling. Are you can you explain what you think the dynamics are between state and commerce or maybe even a treasury in commerce right now as a result, as involves the possibility of NADSEC concerns on China? Yeah, I mean, this is one of the interesting things. There's a report that just came out that that Treasury Secretary Scott Bessett confronted Howard Lutnick, the Commerce Secretary, in the situation room about this.

31:25And these inner dynamics of who knew what, when, who at Commerce, who was engaging with NVIDIA, who briefed the president. The Secretary of State, Marco Rubio, reportedly was involved in a top secret memo, classified information about this dynamic. Anyone at Treasury knew. Congress and Democrats are going to want to get to the bottom of all of that to find out what the timeline really was about who knew what, when, what NVIDIA knew what, when, how they acted, how they course corrected or not or why. and how all of that impacted the deal making that was going on, the billions of dollars that they've spent and directed towards NVIDIA and some of their relationships.

32:00All of that's going to fall under tremendous scrutiny. And right now at this second, Democrats are trying to weigh the future of the select committee on China that Republicans started in 2023. This situation creates the perfect reason why they should keep that select committee going. Ro Khanna would be in position to chair that committee. And this is the type of stuff that you could spend an entire two years dragging out, going after every document, every email, every text message, hoping to make that all public. You know, I'm curious on that front because I've made the point the facts rarely seem to get better in situations like this.

32:31To your point about what the intelligence agencies perhaps have, Kurt, in terms of emails and texts and conversations, what do you think they have? And do you think eventually this is going to potentially see the light of the public? You have to assume in this situation, everything is going to come out. Everything from your browser history to every text message you've sent, every email you've had, every extemporaneous memo, note, meeting, note taking that's been happening. When we investigated the financial crisis in the wake of the 2008 collapse and the TARP money that came after, we went after bank CEOs at the Oversight Committee.

33:06We went after the Treasury Department, the Fed. And our goal really was not looking for criminality. We were looking for every type of piece of paper, email exchange that showed something embarrassing, that showed that, oh, it turns out Membrenacki thinks Tim Geithner is a moron. Oh, it turns out that Hank Paulson doesn't really get along so well with these people. They're pretending to love each other in public. Those are the kernel and nuggets that can really create dissension, embarrassment. And what people are going to have to ask themselves are, do they have a tolerance for this dragging out over the course of six months to a year to two years?

33:37Because that's how long this stuff can take. That's the question for the board. Meanwhile, President Trump and she are set to meet on the sidelines of the APEC meeting next week. And I do wonder how this changes that dynamic. Super intelligence was supposed to be on the agenda, right? Yeah. I mean, now every conversation becomes more problematic if you're the president. You want to limit your exposure. If you have a half decent counsel, they're going to tell you, well, there's potential litigation going on. There's discovery that's going to happen. There's congressional investigations. Everything you say can and will be used against you.

34:07Everything you say might be discoverable. And oh, by the way, there's an entire global backdrop. Everyone is watching what's happening. Other countries that do business with the United States, with NVIDIA, like South Korea, are paying close attention because they help supply NVIDIA. They have direct trade relationships with us. Right now, South Korea is cozying up to China. South Korea is coming hard on American companies using fines and regulatory means as a way to gain ground with China against us. All of that plays into how we deal as a country with what's going on with NVIDIA because it creates a permission structure for other countries to do nefarious things, for other countries to think, well, if NVIDIA gets a free pass, then everything's up for negotiation.

34:46Right. There's these reports out of Punchbowl today, Kurt, about this letter from the White House counsel to Garcia at House Oversight basically saying that some of their investigations might cross the line into criminal behavior. You actually think that's going to compress the amount of time for these investigations to actually get serious. Yeah, you know, back in the day, this is how it would work. You send a polite letter that kind of gets ignored. Then you send a less polite letter. Then you wait another week and go, OK, if you don't get back to us, you might get subpoenaed. And then finally you get subpoenaed.

35:20That could take a month. Democrats now have just been given the permission slip to skip all of the formalities, all the niceties, all the fake niceties, frankly, and just start with a subpoena. The White House Counsel and the Trump administration made it really clear they're not going to cooperate. They're going to call it fake subpoenas, fake investigations. You don't have the right to do this. OK, then start with the subpoena, move right on into contempt. And Democrats have got to be really prepared to start enforcing their legislative prerogatives here. And oh, by the way, that's bad news for private enterprise, because if the administration is not going to cooperate, the only target that you have left that you can really compel cooperation and subpoenas and witnesses and documents is private enterprise.

35:59Our CEOs are these companies. You know, it makes me wonder how much. NVIDIA is one of the most important companies in the world. Obviously, that makes the man who runs it pretty busy, as you might expect. How much time does he have to spend with his lawyers now? He should be spending every minute of every day, frankly. And that's the question about leadership and why not having a succession plan, not having top lieutenants who could seamlessly step in when these type of things arise, because this will take all of your time. This will consume all of your days. Preparing for a congressional hearing, preparing for going in, whether it's a closed door deposition, a closed door briefing or a public hearing takes hours.

36:37There's a reason why lawyers in this space bill out at twelve hundred bucks an hour. It is not cheap. It is time consuming. And the question becomes, can you run your company while 25 to 50 percent of your attention is on something else rather than the core basics of running your company, meeting your quarter, meeting your profit margins? Is someone else more equipped to do that while you're dealing with this or not? We're going to find out that answer. Well, and speaking of$1 ,200 an hour lawyers, Kurt, one of the points you make in explaining the dynamics of these cycles is that the investigators in Congress, they don't go to people who can afford those lawyers right away.

37:13Right. They go to more junior staffers who can't. And then, as you put it, they work their way upstream. Yeah. And this is where who knew what where and when matters. If there were a group of and this came out in one of the reports the last day or two, there was a group of investigators at Commerce who kind of flagged this. They apparently reported it to one of Lutnick's right hand guys who kind of like dismissed it and waved them off of it. Whether that happened or not, we'll find out. But those underlings, if you will, those bureaucrats, they don't have the resource to afford twelve hundred bucks an hour outside counsel.

37:45When they get called before Congress in a closed-door interview or transcribed interview saying, who did you tell? How did they respond? You're going to cooperate. You're going to flip on those above you because they're not there to protect you. And you don't have the resources to wait this out the way that someone like, frankly, Howard Lutnick, who's a very rich man, probably can. And so you build the case from the bottom up. You start with the people at the lower room who, frankly, have the most exposure to the investigation, to writing the reports, writing the memos. And they pass it up. And then you get to those people and you ask them, hey, we have this sworn deposition that says you did this.

38:18You knew about this. What did you do with that information? Why did you act this way? Why wasn't this more public? Why weren't you raising the alarm? How does this person end up still flying on Air Force One with the president of the United States while potentially being in a relationship with a spy? Those are all valid questions that we're going to have to get the answers to. Kurt Bardella, Kurt, stay close as we move further into potentially some of these closed door sessions next week. Thanks so much. Thank you. When we come back, options traders making some bullish bets on Apple this morning.

38:47We'll bring you the details next. And later, an exclusive interview with the CEO of JetBlue on the company's turnaround plans, unveiling a new domestic first class service. We're back in three. Apple shares continue to climb higher up some 30 percent for the year, not far from a 52 week high. And it is by far the best MAG 7 name year to date, far outpacing the performance of the S &P. Let's get to Oliver Rennick at SIBO in Chicago. He's got to look at how the options market is playing the overall big tech name here. Continually impressive, David, as you point out. Apple shares just keep on grinding, traveling their own path.

39:22Really important as the big tech safety trade. Basically, no matter what else happens across the market, stock held firm. It's on pace to make highs. Options traders keep buying calls to chase it higher. Of the 400 ,000 contracts today, 250 ,000 are calls with more than 100 ,000 calls likely bought. And that compares to just 40 ,000 puts purchased. The stock's up 30 % this year, as you mentioned, which is now double the NASDAQ and compares to just a 5.5 % return for the MAG7. Traders had rushed into last minute puts in Apple ahead of its earnings at the start of this month. So now with the stock bouncing back immediately after that small earnings sell-off, The puts are quickly unwinding, and the put-call ratio is back down to the lowest, meaning towards calls, since mid-October.

40:12$130 million of options premium has traded so far this morning. $100 million of it is tied to calls. The$355 and$360 strike calls for Friday are getting some attention, as well as a lot of zero DTEs, including the$355 and$357.5 strike calls. To get to the 355 strike today, the stock means just half a percent more. To get to the 360 strike that we see as popular on Friday, 2 % more, guys. Fascinating. Wow. A lot of good information about where Apple stands relative to everything else. Oliver Rennick and SIBO. When we come back, JetBlue unveiling some new first-class seats. An effort to court some new flyers as the company pushes back against some of the rumors about bankruptcy.

40:56All that in just a minute. JetBlue unveiling its new first class Blue First cabin today at JFK before its first revenue flight in December. Phil Aboe joins us now from JFK with the CEO of JetBlue. Phil, over to you. Hi, Sarah. We are in a Blue First part of the cabin here with Joanna Garrity, CEO of JetBlue. How has the early demand been? Because so many people for so long have said you need a domestic first class. What are you seeing in terms of the early demand? So far, demand has been great. And I think as we expected, a lot of that demand is coming from existing JetBlue customers who just wanted more.

41:32We launched Blue First on December 8th between Boston and Fort Lauderdale, 12 to 16 seats, depending on the aircraft type. And, you know, can't be more excited about the Prada Tuft & Needle seat cushions. I think it's the most comfortable seat out there. But let's let our customers be the judge of that. Did you wait too long to add a first class? I don't think we waited too long. We've had Mint for a very long time. It just takes time with some of these products to roll them out. Obviously, there's certification, supply chain. So I think really excited about what we have today. This is our largest incremental revenue initiative as part of our Jet Forward turnaround plan.

42:04Five points of RASM in a steady state will be delivered through our Blue First product. And I can't wait for our customers to see the first seats. This is the first chance we've had to talk with you since the reports last month that some of your creditors, they formed an ad hoc committee. and the reports made it sound like the creditors are interested in a reorganization of JetBlue. Have you had conversations with your creditors? We've actually met with a few of the creditors over the last couple of weeks as part of just normal investor engagement. And, you know, as we shared on the earnings call, I think there was a pretty meaningful disconnect between what some of the creditors were seeing and what we're seeing in the numbers.

42:39You know, we saw operating margin expand quarter three. We expect another one to two points of expansion in quarter four. We've got a nice sort of path on liquidity to bridges to 2028, where we expect to be free cash flow positive and a dollar VPS. So definitely disconnect there. But I think hopefully we've made that clear. And we're seeing the bonds come back relative to where they were. Is it fair to say that you have made it clear to the creditors, look, we do not need to reorganize? Yeah, I think we've made that very clear. We said that in Earnings Loud and Clear. A number of folks have actually thanked us for making that very clear because we do have a great franchise, a great brand.

43:12We've got improving revenue. We see the Jet Forward initiatives really starting to compound. And we have our largest one, Blue First, still ahead. You had revenue growth of greater than 21 % last quarter. And yet there's still the chatter out there that JetBlue will need to merge with somebody. Or maybe somebody like a United would be interested in buying JetBlue. Have you and the board had any conversations with any other airlines? We're focused on JetForward. M &A, you know, it's always an interesting topic, I think, to talk about. But at the end of the day, you know, we went through this with Spirit.

43:40And we need to be focused on getting JetBlue itself healthy. That's part of our JetForward plan. It's part of the launch of Blue First. It's part of some of the cost control measures we've put into place over the last several years. So I'm excited about the organic progress we're making and just sticking to that and not losing focus. Still on target for profitability in 2028? Yeah, we're still on target. So we expect a dollar of EPS and we expect to be free cash flow positive. Obviously, fuel is the wild card in all of this. But as you look at next year, I mean, we're planning for an elevated fuel environment next year, expecting to be margin positive with fuel even slightly above$4.

44:13When fuel comes back, nobody knows when that will be. But people will sit there and say, well, then, will fares go down? What do you expect fares to do when jet fuel finally breaks and it falls down meaningfully? Yeah, I mean, I'll start with we're always focused on affordability. You know, JetBlue is that, you know, sort of disruptive airline that really wants to have accessible product offerings for customers across the full spectrum. I do think as, you know, fuel moderates, we'll probably see fares step back a little. But if you look at the costs of airlines, they are up significantly since COVID.

44:43Labor is up significantly. Catering costs, rents and landing fees. We're paying another$50 million next year to airport port authorities just for the pleasure of operating out of these airports. So costs are very high to operate an airline. And we have to make sure that we're covering the operating costs. So the bottom line is fares may not fall as much as people might expect. Yeah, I don't think fares are going to fall as much as people expect because we actually haven't been covering our operating costs to begin with even before fuel started to rise. That said, there are days where we have tremendously strong fares.

45:14It's still cheaper to fly to Florida at points in December and January from New York than it is to take an Uber from lower Manhattan. So, you know, I think airfare remains a great, great value. Joanna Garrity. Thank you for the time. CEO of JetBlue. In the blue first, guys. Their dedicated domestic first class starts December 8th. Back to you. All right, Phil, thanks so much. I'll fill the boat.

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