10AM Hour: Remembering 9/11, Oracle Earnings Reaction, Situational Awareness Returns to Public Markets 9/11/26

0:00Your financial life rarely fits between nine and five, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi Wealth team built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com slash AI. Citi Wealth investment products and services are provided by Citigroup Global Markets, Inc., member FINRA and SIPC. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

0:34Schwab 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 marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts. Good Friday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live at Post 9 of the New York Stock Exchange on this 25th anniversary of the September 11th attacks.

1:10We're going to have coverage throughout the next two hours for you, including a conversation with Social Security Administration and IRS Chief Frank Vesignano, who is also a founding member and board leader of the 9-11 Memorial and Museum. We'll also be hearing from former Goldman Sachs CEO Lloyd Blankfein with his recollection of that day. I mean, it's a tough one here always. Here's a check on where we stand in the market right now. Following this morning's big inflation read, the market's up. S &P 500 up a full percent. The Nasdaq also up 1.9 percent. Read on inflation in line with expectation, but bond yields, you know, they're coming back off.

1:49But the expectations for Fed rate hikes next week did shoot a little bit higher on that a little bit hotter core CPI reading, especially month to month. Yeah, 92 % odds of a hike next week. Meantime, UMICH is crossing. Let's get to Rick Santelli for that. Morning, Rick. Good morning, Carl. Yes, these are subpreliminary reads. They will change in a couple weeks. Headline number expecting 51 comes in very, very light. 47.8, that's the weakest since May of this year. If we look at current conditions, 50.9. Also less than expectations. Also sequentially lower than our final read last month. 50.9. Well, it's better than it had been running earlier, but 50.9 is still the weakest since June.

2:34If we look at what lies ahead, expectations, a big miss. 45.8. We're looking for 51. 51.5 is our last final read. 45.8. Well, that's the weakest since the all-time weakest that I had going back into the late 70s at 44.1, and that was in May as well. One-year inflation, 4.6. It ticked up four basis points from 4.2 expected, and it's up six-tenths from 4 % to 4.6. This is really something I will point out that these numbers on University of Michigan have been much weaker than other confidence numbers and much stronger on the inflation front. 4.6 equals June. Find a higher number of 4.8 in May. Remember, these numbers are on the high side.

3:24Five to 10 year, 3.4 hotter than expected. 3.4 is the warmest since 3.9 also in May. The market is not paying much attention to this number considering, but yields are going up a bit. And, of course, you pointed out, as expected for CPI, and back to you, Sarah and the gang. Rick, appreciate that, Rick Santelli. In just a moment here, at 10.03 Eastern Time, we will observe a moment of silence. This one marks the time that United Flight 93 crashed into a field near Shanksville, Pennsylvania. Passengers and crew members on that flight fighting back against the hijackers.

4:25Joseph DeLuca

4:51Patrick Joseph Driscoll

5:07We will have much more coverage of the 25th anniversary of 9-11 still ahead today when we talk to two people who have their own compelling stories from that day to share, including IRS and Social Security head Frank Bezignano and former Goldman Sachs CEO Lloyd Blankfein. Very important that the street and the country pay attention to this day because of so... Remember years ago, we were bringing kids who were born that day. They were in kindergarten, then they were in high school. And for a lot of young people, it is only in the books. And it's important to tell the story out loud. Yeah, they're all grown up now.

5:42It is amazing to think a quarter century has passed since that horrible day. Meantime, Sarah brought us some of the internals on CPI and the reaction out of bonds. Gasoline was about a third of the gain. So you can make both arguments for this. You could say this is a supply shock. It's driven by the war and by oil prices and the Fed should look through it. Or you can say this is not what disinflation looks like and we're moving farther from the Fed's target and they need to hike rates. And that market is telling you it's the latter. And that's after Fed Chairman Kevin Warsh spoke at Jackson Hole and made it clear that he's not going to tolerate higher inflation.

6:21And so the market sees this number and says, look, now we're running hot for a while. And the odds have jumped now past 80 percent, some measures close to 90 percent of a rate hike in September. Here are the numbers, OK? We got an inline CPI, 0.4 percent in August. The year-over-year is 3.4. So inflation, 3.4 percent higher in August than August of last year. That's far from the Fed's target, right, of 2 percent. And that's some of the problem. The other problem is that core CPI, if you look at the monthly number, came in at 0.3 percent. That was the highest since April, and it was 0.2 percent in July, and it was a little bit hotter than expected.

6:59So that's why, you know, I think that the market is taking this as kind of a hawkish number. Also, Supercore, you know, the core CPI services, XRENT, it was at 0.5 percent on the month, and that was actually the hottest gain for Supercore since January. So there's a case to be made for the hawks in here that we need to respond to this. By the way, the ECB just did. They raised interest rates. If you're looking, you know, it doesn't matter if it's oil, if it's temporary, whatever it is. They you know, they're away from their target. And so they raise. So so I think the market is saying that this clears the path for the Fed to raise.

7:35But I'm not sure that everybody is on on board with this. You know, Chris Rupke, for instance, I always look at his commentary. He says, I mean, it still looks like an energy price shock. If you look at where the hottest part of CPI numbers were, guys, it's oil, it's transportation, it's airline fare. I mean, it's everything that feeds in basically because of the higher oil and petrol and diesel prices, which we've been talking about. Now, is this temporary? We don't know. We thought that the war was going to be a little bit shorter than this. It's lasting for a few more months, so maybe the Fed should respond to that.

8:08But I do think that there's still a debate about whether they should do that, David. But, I mean, diesel prices being at all-time high shows up in so many of the food-related metrics, correct? And I don't know if that's reversing any time soon. No, I mean, food is still more than 3 % higher than it was a year ago, you know, and people spend on food and energy. So, for sure. The thing is, what does the rate hike do? It kind of, like, slows down the economy. It's not necessarily monetary inflation, right? We're not seeing a big wage gain, for instance. In fact, now wages are rising 3.1 percent and inflation is at 3.4 percent.

8:45So inflation is eating a lot of the of the wages. There's also this argument. You know, we've been watching bond yields really carefully and and yields spiked after the Fed did not hike last time. And so there is an argument that, you know, if the Fed does raise rates and show that they're serious about containing inflation at the long end, that actually might make yields calm down, which is something certainly I think the Treasury would like to see. Yes. For more on the August CPI number, let's bring in David Merrickle, Goldman Sachs chief U.S. economist who joins us here at Post 9D. It's great to have you back in.

9:17Great to be here. Your numbers were pretty spot on with the report. Does this feed your idea that we are on a path back to target? I wouldn't say it changes my fundamental inflation view. We got a number that was higher on poor CPI than we had expected. Ten basis points of that, though, came from cell phone services, a fairly erratic category. So I don't feel like I've learned a whole lot from this. There is some news for the PCE number that will be worse, some better. We raise that forecast a touch. Let me interrupt you briefly. The president is about to speak at the Pentagon. Let's listen in.

9:53Thank you very much. Thank you.

9:59Secretary Hegseth. Secretary Rice. First Lady of the United States. Chairman Cain. members of the United States military, distinguished guests, and my fellow Americans. Twenty-five times we have gathered at this hallowed place and at Ground Zero in New York and a lonely field near Shanksville, Pennsylvania. In 25 years, a generation has passed since the terror attacks of September 11th, 2001. Yet time has not dimmed the honor of that day when our country came face to face with true evil. At 8.20 a.m. on a cloudless Tuesday morning, a beautiful day it was. American Airlines flight 77 took off 25 miles from here bound for Los Angeles.

11:13On board were three 11 year old students heading on a cross country field trip. A father and a mother with their two young daughters bound for international adventure and a flight attendant whose mind was elsewhere. She had just learned that she was expecting her first child and was so excited to tell her mom and dad. Here at the Pentagon, and A.B. Harriman had just gotten off the phone with his 10-year-old son. A secretary was celebrating her 46th birthday. So happy she was. A sergeant major was chatting with some colleagues he had hosted for a dinner party over the weekend. At 9.37 a.m., every single one of those people and every person at that sergeant major's party was murdered by terrorists who flew flight 77 straight into this legendary building.

12:21It is indeed a legendary building. so many wars have been won from this building with the events of that morning 2 ,977 beautiful souls were ripped from our world and many more died in the weeks and years after horrible grotesque injuries centuries so many were sustained. Today we renew the sacred oath that we first swore in their names a quarter of a century ago. We will never, ever forget. That's why we fight today. we don't have a choice there can only be victory we fight hard we fight to win we will always remember the victims and the families of September 11th 2001 very famous date unfortunately and it started out as such a beautiful day we will honor their lives we will cherish their beautiful memories and we will protect this country and its freedoms for every future generation.

13:55We will protect it like never before. For anyone who lived it, no words can do justice to the anguish of that day. After the first plane hit the North Tower of the World Trade Center, Patrick Danny left a message to comfort his beautiful wife Mary letting her know he was safe inside his office on the South Towers 90th floor. Mary was eight months pregnant and playing with their two young daughters when she heard Patrick's voice. She loved him so much She called back, turned on the TV, the line rang, and then it went completely dead. Very unusual, she felt. Mary fell to her knees as she watched United Flight 175 explode by her husband's office.

14:58She saw it right by the office. You know exactly where the office was, right by the office. Seven floors up, Shimmy Begelsisen laid down on the carpet by his desk to escape the smoke. It was horrible, surrounded by photos of his beautiful five children. He was on the phone with his wife, Miriam, praying to God when the television showed her the dreadful image. Things were happening that she couldn't imagine. The South Tower was collapsing with her husband, and she loved him so much inside. But free people must never avert their eyes from such hideous cruelty. We cannot forget that moment of immense and horrible evil that took place in this world, bent on the destruction of all that is good.

16:14But this morning, we also remember how America responded to that wickedness. On days like 9-11, we learn what a country is truly made of. We're learning right now what we're made of. And we have to be strong and we have to be smart. And Americans are made of a goodness and spirit that can transcend any earthly force. And that's what we're doing better than anyone else has ever been able to do it. Because we are sustained by a supreme strength, far more powerful than steel alone. Aboard flight 93 in the skies over Pennsylvania, a brave flight attendant, boiled water to fight back. a loving father from New Jersey, Todd Beamer, asked a telephone operator in Illinois to join him in the Lord's Prayer, thy kingdom come, thy will be done on earth as it is in heaven.

17:22And then he said his last words, let's roll. Today, as we remember the many lives lost on 9-11, we also give thanks for the countless lives saved by the immortal heroes of Flight 93. In those harrowing days after the attacks, we saw the authentic spirit of our nation. We were all New Yorkers that day, every one of us. We were all New Yorkers. But we were also all Americans. We were all family. We were all patriots. The enemy might destroy what American hands had built, but we could not touch the fight and the fire and the love in our great American hearts. At the Pentagon on September 12th, General James Jackson ordered up the largest flag in the military's collection.

18:33And they think in the military's history. First responders climbed to top the walls and hung it next to the gaping holes in this building as a symbol of American defiance. This morning, that same flag is here. to my right for the first time since 2001, along with three firefighters who raised it, Joseph Morabito, Scott Morgan, and Carl Sahlberg. Please stand.

19:2125 years after the attacks, we know the world will never return to the way it was at that dawn, that beautiful, peaceful Tuesday morning, 2001, before the towers fell, before the Pentagon was hit, before the specter of eagle and this horrible, horrible evil came crashing into our lives before we saw what took place in Pennsylvania. Innocence is expecting the future to be good because you have not yet really been tested. We've been tested many times. We're being tested today and we're winning that test very handily. Faith is still believing in that future. even after you have seen the absolute worst, things that you never thought possible to see.

20:20In the generation since 9-11, American sons and daughters have traveled to the darkest corners of the earth and done battle with a shadowy enemy so that our children might once again know carefree days and cloudless skies. For 25 years, our best and bravest have kept America safe. And today we salute every member of the United States military who served in the war on terror. It is a war on sick, horrible terror. We salute our first responders and law enforcement, and we love them. And we salute the service members working right now to ensure the world's number one sponsor of terror, the Islamic Republic of Iran will never, ever have a nuclear weapon.

21:29A generation after 9-11, we also know that the final response to those atrocities and the ultimate victory over the perpetrators will not be found on a foreign battlefield. It's right here in the hearts of families like Tara Stackpole's. Tara's husband, Timmy, was a great firefighter, even a legendary one. after surviving a five alarm fire in Brooklyn that burned 40 % of his body in 1998. He spent three years recovering, learned to walk again and return to the job. That's all he wanted to do is he just wanted to fight fires. He said the greatest high you can ever get in life is by helping someone and making a difference, especially when it came to his profession.

22:31a dangerous profession at that. On September 11th, the New York Daily News carried a story announcing his promotion to captain in the New York City Fire Department. He was so proud. His wife, his family was so proud. Captain Stackpole said goodbye to Tara and their five beautiful children that morning. And when the planes hit a short time later, he responded, leading a team into the unbelievably unusual sight of a south tower that was burning. They lost their lives when the towers fell. Somehow terror found the strength to be a rock, not only for our kids, but for the countless members of a very grieving fire department.

23:26so many people were grieving they were devastated like never before and in the years that followed she raised those children to know love and follow the example of their dad who just was not there with them any longer today their son Kevin is a navy veteran and a brave one at that. He's had his moments. They were very, very big, perhaps not like his father, but they were very big and very proud. And everyone's very proud of Kevin. He served in Iraq and is raising four beautiful children of his own. Their son, TJ, became a captain in the Marines after graduating from the U.S. Naval Academy. Brian is raising two kids.

24:19Caitlin is raising three, including a 10-year-old named Timmy. And Brendan is a proud member of his dad's old company, Fire Department New York Rescue 2. That's quite a company, too. I grew up in New York. I can tell you that's quite a company. the Stackpole family is here today Tara Kevin TJ Brendan Caitlin and Timmy please stand please

25:02he's looking down on you he's very proud of you thank you no one can ever prepare for a day like 9-11, but we can always choose to be the kind of nation the world saw in those days after. We can build families like the Stackpols. We can raise our children to know that their country is good, that their fathers are brave, and that our flag is a symbol of justice and freedom. and we can be a nation whose heroes are not fanatics for an abstract cause. They don't even know really what they're doing, but the kind who race into buildings and give their lives on a Tuesday morning for strangers they've never met, people they didn't know gave their lives.

26:02And we can fill the lives of our children with light and love that will sustain them against any trial and transcend any darkness. Whenever that darkness may come, as scripture tells us, the light shines and the darkness and the darkness has not overcome it. September 11th reminded us of the terrible power of hate. The 25 years since have shown us the even greater power of the American spirit to endure and prevail and to win. And today our country is stronger than it has ever been before. It has never been as strong as it is right now. because of that spirit, when future generations come here in 25, 100, or 250 years from now, they will stand in a nation that is free and unyielding in the face of evil, and they will still honor the heroes of 9-11, 2001, one, who no age will erase from the memory of time.

27:25It will never, ever be forgotten. Will never be forgotten. And we can never forget. God bless our 9-11 families. God bless our unbelievable, brave, and beautiful first responders. God bless the United States military. and God bless America. Thank you very much.

27:57President Trump speaking at the Pentagon on this 25th anniversary of 9-11-2001, recounting some of the incredible stories of the folks who lost their lives just ahead of that happening, talking about some of the stories of the first responders. We were all New Yorkers on that day, he said, and we're all Americans. He said time has not dimmed the honor of that day when our country came face to face with true evil. We're going to continue the coverage here, as we remember, just blocks away from the site of 9-11 at the New York Stock Exchange. We are joined now by Frank Vesignano. He served as chief administrative officer at Citigroup here in lower Manhattan at the time of the attacks, helped reopen the New York Stock Exchange and is a founding member of the 9-11 Memorial and Museum.

28:42He's currently the commissioner of the Social Security Administration and the CEO of the IRS. Frank, it's great to have you here today. Thank you for taking the time on this day. So, I mean, for those that aren't familiar with your story, tell us a little bit about what it was like for you and how you were involved.

29:00Frank Bisignano: As I text many people this morning, I said it's the same ride in from New Jersey to lower Manhattan for me. I was at 388 Greenwich, which was really Citigroup's corporate investment bank headquarters for the whole company that was up on Park Avenue. We had Seven World Trade Center, the old Solomon Smith Barney building, or the Solomon Brothers building that we merged. And we were in a staff meeting with Mike Carpenter, who ran the corporate investment bank. I was fortunate on Wednesday night, the 9-11 Memorial Dinner, which I was a founding member of the memorial. I had a table with all my partners from that day, Bobby Druskin, who was the president, Tommy Harris, who ran all the fixed income, John Donnelly, who was like my brother that day, who ran human resources and was by my side the whole time.

30:01Frank Bisignano: But when the first plane hit, you know, we had a plan for what to do if the towers went down. It wasn't brilliant. It wasn't brilliant because the towers were bombed once before. So it would have been negligent on my part not to have a plan. And I always say to people, I do not want to argue on the day we have a big problem. And we were organized for it. We had a recovery center for our trading force to trade out of in Rutherford, New Jersey. That's where our developers were. But I saw the hole in the building, and I called the gentleman named Tom Jones, who ran the asset management company, and he was in Severn World Trade Center.

30:38Frank Bisignano: I said, Tom, you've got to get out of there. Everybody's got to get out. He said, no, we're being told to stay. I was saying, Tom, I'm staring at a big hole in a big building. I was on the phone with Bob Druskin at the time, who was up down, and the next plane hit. And then it was very clear, you know, it was very clear it wasn't a Piper Cub. When it happened the minute, our offices stared at the towers, right? 388 was a straight shot. It was my view every morning. It's what, like 10 blocks, probably a quarter or so? Yeah, and we had people at 388, 390, 250 West Street. I saw Dick Grosso this morning coming in, and he reminded me, as Mike Carpenter did, the president came down on that Friday, if you remember, and they wanted to open the exchange, and a bunch of people were being bravado that it could be getting done.

31:27Frank Bisignano: And I kind of, who's generally, I'm generally bravado, but I thought it was a big risk. Too many phone lines. We needed the whole weekend to test. That was a good decision. Obviously, it would have been nice to do. We had 16 ,000 people in Lower Manhattan. And we marched them up to 34th Street where we had an operations center, which was like my home away from home. And then got them up there and then came back down here. The idea was 388 was going to be a medical facility. When we got back down late that night, and I never left Lower Manhattan through that whole time, because we had to get, one, we had to, first of all, all day we were making sure that we were moving money and that we could keep the economy going.

32:13Frank Bisignano: You know, we were thinking about what to do about airlines and what type of risks they had. I mean, I was running the command center. And then post that, it was, you know, who's okay, how are we recovering, and, you know, what are we going to do to come back? So I went back downtown and kind of never left. You know, the idea of getting the exchange up became the new issue. You know, I remember talking to AT &T and Verizon. They actually had a big problem, and God bless them. We all recovered together. but lots of their truncation happened at the same location. So you might have thought you had diversity of carriers, but you really did.

32:55Frank Bisignano: I had some odd situation. I had a BlackBerry that was on Bell South. I had a BlackBerry that was off everybody's grid, and I was communicating with everybody I knew, you know, but not everybody could communicate with me. But you stayed down there, Frank, right? Yeah, I stayed down there. I stayed down there. And then I, by the time, maybe a week and a half, you know, I was then started commuting from home. But, you know, I was driving through the Holland Tunnel and the Holland Tunnel wasn't open. I was a different first responder. I was a different, I was a technical leader with thousands of people who, you know, we worked on taking care of everybody and getting the markets up.

33:36Frank Bisignano: And I had to get people to want to come back to 388 Grant Street. So I had to secure that. It never turned into the medical facility we dreamed it would be. It got built out as one. So I never left. Ten years later, I was blessed with throat cancer. But who was wearing a mask back then? You were just trying to get the stuff up and running. It was good. Which you beat, thankfully. I'm sorry? Which you beat, thankfully. And now we have the distinctive voice to remind us. That was interesting among the moments of silence today for the first time was an appreciation for people who did suffer, survived, but suffered.

34:21Yes.

34:22Frank Bisignano: Yeah. And there's plenty that didn't survive. They're just not in the three thousand. You know, you have tens and tens of thousands. But, you know, we had a great team. and you know at that time we were the leading financial institution in the world and it was our job to keep money moving uh and and i think we had a wonderful 25th uh you know i saw mayor bloomberg did such a great job he was such a leader at that time you know and i was blessed to work with him on that uh you know board to to get the memorial up and running i'm curious to get What's your thoughts about the museum and its role in telling younger people about the day?

35:05Oh, I'm so big.

35:06Frank Bisignano: I'm so big on it. You have no idea. You know, I mean, I think about we need, you know, here's an interesting stat, right? 25 years, the country is 250 years old. 10 percent of the country's life was from 9-11 until now. And I don't know that we would ever think it seems like so much littler. It needs to never, never take any different role than it does today. You know, today was beautiful down there. The president, you know, has great leadership, you heard, at the Pentagon today. The vice president, who did a great job last night, showed his leadership. But we had four presidents there, right?

35:54Frank Bisignano: Four presidents there. And, you know, it was all during those tenures. and, you know, I mean, quite a time. Well, we're conscious of your time because I know you have a lot of events and things you have to do that you have to go. But I also just want to mention that, you know, you're at Treasury now with the IRS. The U.S. Mint did release a new half-dollar coin. They did. In commemoration. Yes. Which is very cool. Yes, I can't wait to buy one. I can't wait to buy one. Yeah. I actually want to buy one for every kid I have and every grandkid I have. The Enduring Liberty half-dollar announced before this anniversary.

36:27Frank Bisignano: I think it's great. I think it's really, really great. So and, you know, I would say like if I was to say one thing to people, you know, we have a generational opportunity for people with Trump accounts. I think people don't understand the power of it. I oversee that also. And I plan on 70 million young people having Trump accounts. You know, that's good for the future, the compounding power of the markets that, you know, is the next generation item. Yeah. For everyone to get their stake. Frank, thank you for helping us remember today and coming by. Thank you for what you guys do. Always meaningful to hear your story.

37:01Frank B. Cignano, U.S. Social Security Administration Commissioner and Head of the IRS. We're going to continue to mark the 25th anniversary of the September 11th tax throughout the morning. Next hour, the former CEO of Goldman Sachs, Lloyd Blankfein, will join us here at the New York Stock Exchange. 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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38:21Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. It's the holiday season at House of Burrell, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington.

39:03Welcome back. Take a look at shares of Oracle. They had been up as much as 7 % in the early going here on trading. A dramatic turn since then actually had been negative by about 1%. Now you can see up ever so slightly. This after what was solid earnings that seem to be very encouraging for many of the investors and analysts who follow the company. Let's bring in one of those analysts, Tyler Radke, senior research, senior equity research analyst at Citi, has a buy on the stock. He reiterated that a couple of weeks ago. I guess first, I'm just curious whether you have any thoughts about sort of this reversal, given how strong the stock had been in the early trade.

39:40Yeah, good morning. So a lot of factors at play, obviously, there's a big rate story here with the amount of the capital that they need and all the headlines on AI that we've seen this week. These AI labs are some of Oracle's biggest customers. So I think there's a lot to digest. But I think big picture, if you look at what happened this quarter, revenue growth accelerated. They stood up almost a gigawatt of capacity. They raised earnings. They also told you that they completed a$20 billion at the market equity issuance. So we think a huge overhang has been lifted off the stock. They have their AI world next month in Vegas.

40:15We think they raise numbers again at the end of the month at Investor Day. So we do think this is a good step in the right direction, a lot more room to go here in the stock. Yeah. And Tyler, I'm talking to some people as well. They seem to be encouraged by, you know, it was$28.5 billion of first quarter CapEx. But I think their net cash outlay was about$18 billion. That's right. because of as much as$11.3 billion of what we're calling customer, or they're calling customer prepayments. Were you surprised it was that large? And what does that mean in terms of prepayments and also bring your own hardware?

40:48Is it changing the way you view the CapEx spend for them and or how much capital is going to have to go out? Yeah, look, I think the important thing to realize is we are in a massively supply-demand gap today, right? Demand continues to skyrocket. You hear all those stories about MetaMuse, these new consumer agents. Compute is growing exponentially faster than you can physically stand on the data. So that gap widened. It's very good for people like Oracle to have capacity to sell. So that means they can get higher prices. They can get more customer prepayments. They can get more favorable terms.

41:26All this stuff is very positive for their long-term earnings and for their capital intensity. And so I think this quarter was just a validation of the strength of the demand environment. And as we look forward over the next few quarters, I think this is only going to continue. Right. So when they say they don't require or didn't require an incremental increase in capital in their capital raising plan, I would assume that's encouraging. What are you forecasting then for next year, year after that? Yeah, in terms of capital raises, what they've said is that they need to raise an additional$20 billion by the end of next year, right?

42:02They just raised$20 billion through this at-the-market equity issuance. Look, I think who knows how strong this demand curve continues to go. I think it's possible that could even come down if they get even a higher level of customer prepayment. But they've talked about being able to see peak CapEx based on their book of business today. Look, I think it's a company that still has an investment grade credit rating. I think they're very focused on preserving that. Certainly, they want to continue to deliver strong earnings growth to shareholders. So I think there is a bit of a balance here between how much they're willing to take out in capital spending, what the market appetite looks like.

42:40But I think the important thing is that pricing continues to head in the right direction. You're seeing that acceleration in earnings growth, acceleration in revenue growth. But these are all really strong signals in terms of their return profile. So we like where they're headed. The market, we think, is favorable from a demand perspective. And they're executing well. I mean, a gigawatt of capacity in a single quarter, not many people are able to do that. I wonder if you could just zoom out. So that is the Oracle story. And I feel like a lot of the questions were answered. And you just said compute remains in demand.

43:11It's scarce. There's pricing power. So what is the do you think AI skepticism trade about right now? Is it the data centers and the political stuff? Is it the open source? And does this answer any of it? Yeah, look, I think there's, I always joke, there's like two big reasons to be positive on these names. And you could find 100 reasons to be worried, right? You read on Twitter what people are saying about AI. You see headlines on data center delays, right? There's high levels of capital intensity required to fund these projects. But look, I think there's a lot of noise out there, particularly this week.

43:51And so I do think the stock, you do see these companies see a lot of volatility as you go through these periods. But at the end of the day, the capacity is getting stood up. They confirmed on the callback that, you know, they have a line of sight to the 90 billion in revenue in those data centers coming online by the end of the year. So I think everything we saw was was positive. But perhaps it's a bit of a sell the news event, just just given all the noise that we see out in the market. Yeah. Well, I'm afraid that noise is not going to go away for some period of time as we look at Oracle shares roughly flat.

44:30Tyler, thanks for your time. Appreciate it. Thank you. Coming up after the break, some new details from David on the situational awareness saga as Leopold Aschenbrenner gets back into the public markets. Off the session highs, Dow's up 370. Don't go anywhere. 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.

45:05Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. When you partner with CDW, you get more from technology with AI powered tools that turn complexity into clarity. CDW experts are simplifying workflows with Microsoft solutions, uniting teams with on-the-go connectivity, speeding workflows with exceptional performance, and protecting assets with chip-to-cloud security. Make amazing happen. Learn more at cdw.com slash modernwork.

45:44It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Welcome back. Reported in the last hour and wanted to mention again that Leopold Ashenbrenner, a well-known name now at this point, of course, the man who runs Situational Awareness, the hedge fund that was the focus of a great deal of, well, my reporting and attention from the markets back in July when its performance deteriorated substantially and it was forced to essentially vacate the public market investing that it had done.

46:39Remember, this is a firm that controlled as much as$45 billion in assets at the beginning of the month of July, but suffered significant losses in the public markets. He is back, at least back in the form of buying, what I am told by people familiar with the situation is hundreds of millions of dollars worth of options. And the names, well, there are names you might expect, of course, that populated his portfolio prior to the significant losses he took in July. And then, of course, remember, was taken out at a discount from those public positions or most of them by the giant hedge fund Citadel.

47:16There's some of the names that we're talking about in terms of call buying there. Premium as much as I'm told a few hundred million bucks. Why is it notable? Well, he was well followed. The situational awareness hedge fund did not go away. Remember, it has sizable private market ownership stakes led by one in Anthropic, of course. And there has been an expectation that he would return in some form to public market investing as well. Not clear whether he raised new capital, no comment from the firm itself in terms of what he's putting to work here, whether this was a residual of what may have been around.

47:55But worth noting, of course, again, because Mr. Ashton Brenner is well followed by a fairly large cohort. And, you know, Sarah and Carl has not given up, of course, on his overall views, given the names that we just mentioned are many of the same names that had significant declines in the month of July, which took his performance down sharply. It does remain to be said, though, if you were an investor at the beginning of the year with them, you were still up very nicely. It was the more recent capital that come in that really took sizable losses overall on what they invested. So is it less leverage this time?

48:28Like, is it less risky, I would think? Well, it's options, too. It's call options. Yes. That is the belief at this point. Harder to blow up when you're buying those, at least at that point. But I think the larger takeaway is he's active. And to the extent that he was an important part of our market, we may see more of him. Again, I think there's another story. I don't know whether he raised new capital. There's obviously a lot of people who fully believe in him and his overall thesis. Meantime, some of the well-known names that have been putting in new highs. I mean, Dell up 11 today is notable after new high after new high last couple of weeks.

49:05I mean, And we remember the quarter and the AI server demand story, HPE right behind it. So not necessarily a share story at the moment. I know. That's why I was kind of wondering, like, is the AI story, is the AI trade back? There's been so much skepticism lately. And I do think the Oracle quarter answered some questions just around demand. If there was if one of those bearish cases was like on compute demand, you know, Oracle answered that it's scarce still. And they've got the pricing power. I guess that some of the bear cases this week, it felt like it was around safety, you know, and humanity around AI and whether there's going to be, you know, bigger guardrails there and the regulation.

49:43And it's hard to price that in. But today is definitely a comeback from all that. It is a comeback. Although, as we pointed out with our last guest, the orchestras actually have not particularly had a strong comeback as some might have anticipated. But you're right. There has been no diminution in the demand for compute, period. And we saw the announcement, or at least Microsoft reporting as well, about their need for a lot more gigawatts to power their ambitions as well. So on that front, nothing, but on the safety front, and then what follows as a result of that, and whether you have to slow the development of the technology or whether there's even more pushback to its physical manifestation being the data center, that remains unclear.

50:22NASDAQ's still down for the week. For the week, yes. S &P as well. although nice 1 % gains for the NAS today. When we come back, we mentioned the tech stocks that are getting a boost. Dell and HPE leading the way. Almost every sector is green with the exception of energy, just slightly, and health care. Don't go anywhere. Welcome back. As we were just talking about, AI trade is back today. Dell and HPE leading the S &P this morning. Tech stocks getting a broader lift here. Let's get to Oliver Rennick at the SIBO in Chicago with a look at what the options market is signaling about all this, Oliver.

50:53Good morning, Sarah. These stocks are indeed ripping. Best to performers in the options action is booming with trading five times the 30-day average in HPE. Across the board right now, you're seeing tons of volume as people are piling in. Right now, the volume for over 10 times the average in HPE flows bullish in both. Keep in mind, we're approaching the all-time highs here for HPE. It's up 150 % year-to-date, which amazingly is less than half Dell's return over the total volume in HPE. More than 75 % is tied to calls. Call buying is outpacing put buying by more than five times. The top three contracts bought by volume were all calls, including 60 strike calls expiring today that are in the money and 62 strike calls that are right there, too.

51:38By the same bullish token, one big put seller sold$1.7 million of the 60 strike puts expiring in March. That is a pretty strong bet that the rally today is the real deal. And then looking at Dell, obviously, a bigger stock price means a lot more premium. About$150 million in premiums so far today, and about one-third of that is likely spent buying calls, which was about twice as much being spent on puts. The top three contracts here in Dell are set to expire in the money today, so this looks like a big win for some tech bulls today, guys. And to tag it on after the Leopold news there from David and team, we saw huge options trading in Bloom Energy.

52:16That's the one that stood out to me on that list, guys. Yeah, Bloom's had a ton of news, a little index inclusion. We'll see. What do you think, in terms of volume, do you think it picks up even more next week, Oliver? David, this stock's volume for options and premium just entered a different universe over the past two weeks. Not hard to see why. The S &P 500 inclusion is the first energy stock to be added to the S &P in like four years, something like that. So this was a pretty big deal. It fits a lot of things that people are looking for right now. Yeah. Oliver, thanks. Oliver Rennick watching all kinds of options activity.

53:18Neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit CNBC.com forward slash Squawk on the Street disclaimer. 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 marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.