11AM Hour: Exclusive Interviews with the CEOs of Biogen, Novartis & Visa 9/9/26

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1:03Good Wednesday morning and welcome to Squawk on the Street. I'm Sarah Ivan. Coming to you live from the Wells Fargo Healthcare Conference in Boston. And I'm Carl King-Denilla, live at Post 9 of the New York Stock Exchange. Big show ahead today. We are moments away from the Treasury Department detailing the size of its buyback operation, something many on the street have been waiting for. We'll get you that news as soon as it crosses. Plus, shares of Novartis notching big declines this week following three drug trial setbacks. We will discuss exclusively with CEO Vasanara Simen. And then here with me in Boston, Biogen CEO Christopher Vibacher will discuss the biotech's experimental Alzheimer's drug and his current product pipeline.

1:43Market continues to chop through some of these historical headwinds of September. S &P is down about half a percent for the month to date. a little more weakness today, and especially sector-wise. Energy is the only sector in the green right now, up about 1%, as we've got Brent oil back above 101, VIX back above 16. Joining us here at Post 9 this morning is Man Group Chief Market Strategist Christina Hooper talking about some of the seasonal challenges, which you've been kind of attuned to for the past several months. What do you make of the action so far this month, post-Labor Day at least? So, you know, I have expected this for some time.

2:19I think it's a long time coming. But markets had to really believe that the war in Iran would last longer than just a few months. And so I think there's just a reality check sort of coursing through the stock market right now in terms of anticipating that inflation is going to be higher for longer and that this environment is quite different than where we were just a few months ago. Does midterm election risk, is that part of the equation here? I don't think that's factoring in very much because there's so much else to worry about. Because, I mean, let's face it, oil is top of mind. It's not just gas prices at the pump.

2:59Of course, it's diesel prices. And it is concerns that now that we've had higher, once we have higher gas and diesel long enough, then it courses through the system. And, of course, that can impact profit margins because, you know, so much gets moved with diesel. So it's not just consumers being affected right now. We've talked about the correlation between energy and Treasury yields, which, by the way, on that news, stick with us. We are getting, I think, some news out of Treasury. For that, we'll turn to Steve Leisman. Steve? Yeah, hang on. I'm just getting a statement here from a Treasury official.

3:32Carl, the enhanced buybacks coming in at$6 billion, that's an operation that will take place tomorrow by way of background. These were$2 billion buybacks of off-the-run securities in the 20 to 30-year range. And now they have been increased to$6 billion. When Treasury announced this on August 19th, they said at least$4 billion. You remember Treasury Secretary came on our air, talked with Sarah Eisen, said it could be larger than that. And I reported that it could be they could use the Treasury General account to make these purchases. We don't know if that's the case here. What we do know is that they're up to$6 billion.

4:09What we're waiting for now, in addition, is a new buyback schedule to see if the additional seven operations or six additional operations now will be at that level. Now, just before we got on air, I got a statement from an administration official. I'll just read it live here. Today's announcement reflects continued optimization to Treasury buyback program. Treasury routinely monitors buyback operations and adjusts as appropriate to support market functioning and liquidity. The increase in buyback operation size is part of that ongoing approach. This builds on prior enhancement to the program, including last year's increase in buyback frequency.

4:43So they're trying to say it's part of normal operations, even though, of course, this is a larger operation. And the question becomes the extent to which the bond market is reacting to this. And I am seeing here 482. This is actually yields are rising on the 10 year, which might reflect, Carl, some anticipation among some in the market that this could be larger. I did see some comments that thought maybe it could be in the eight to 10 billion range. Obviously, that disappoints at six billion. I'll send it back to you. Yeah, definitely highs of the morning so far. Steve, stick with us. We've got Christina here and Rick Santelli with some reaction to these numbers.

5:24Rick, your thoughts? Yes, indeed. Indeed, if you look at the 10-year, it's extended up to a 483 yield, 483 and change. And that would be the highest yield close going back to the fall of 23. If you look at a 20-year, which made its high yield close in mid-August to the yield of 540, it's still a ways away from that level at 530. It's getting close. As a matter of fact, right now the high yield for that 20-year is 529. So it's getting close to testing the cycle high yield close from mid-August. You know, Steve said that they were looking maybe for$8 billion. I pretty much heard that$4 to$6 billion was what my sources were talking about.

6:08And as I understand it, you know, we could be looking at different amounts as each operation continues. This operation actually will happen tomorrow at 1.40 to 2 o 'clock Eastern time. will be this buyback operation on the 10 to 20 year maturity grouping. And the results will come out right after that two o 'clock Eastern buttoning up of that kind of reverse auction or however you want to call it. We do think that this is something that's not going to have a dramatic effect on yields, but it shows that the Treasury secretary is paying attention. And just for historical purposes, Carl, this by far is the largest buyback the Treasury has done.

6:50But it's microscopic compared to the buybacks, of course, the Federal Reserve did. You know, just going back to COVID and the pandemic, they were doing 80 billion a month just to put a face on this. But it is unusual for the Treasury. Remember, unlike the Fed, who expanded their balance sheet, this doesn't change the dollars because what they are buying on the long end, they are fueling and funding by selling on the short end in the Tebow market. No free lunch, as they like to say. Rick, is there a demarcation line, Rick, in your view, that would sort of imply who's winning the war of words or the jawboning wars?

7:28You know, I think jawboning has always been part of the job, whether it's against the foreign exchange markets, in this case, the dollar yen, or, of course, if it's in the Treasury complex. Job boning historically doesn't have a long half-life, but it does always at least bring all parties to the notion that, you know, the Treasury in this case is paying attention. But I don't think either the Treasury secretary or investors think that this is going to make a huge difference. I just think it's something that makes sense considering the part of the yield curve that they're playing in and the time zone in terms of when this is all occurring in August through, or excuse me, September through November.

8:11I believe the operation on this one ends November 4th. Steve, anything else you want to add before I get back to Christina? Yeah, just real quick, a little technicality here. The Treasury does not have to accept the$6 billion. It could end up being smaller. So there's a bit of a game theory going on. Is the Treasury here a buyer at any price or is the Treasury here a buyer only at value? That'll be something we'll watch tomorrow. I believe Rick will probably have the results of this and we'll see how much of the six billion Treasury takes down. Number two, we're still waiting for the updated buyback schedule to see if the rest of the operations, six more remaining through November 4th, are also at the six billion level.

8:51That's another, let's say, bullet that the Treasury has to use here. Those could be higher, they could be lower, and we'll see if there's more to come. The other interesting thing here is I want to be a little careful as to say this is the market reaction, that it didn't react well. I will point out that Treasury officials said that at the time when there was very little reaction to this, that, hey, the Treasury hadn't done anything yet. So we'll see if either this announcement or the market reaction to the actual purchases, when we see how enthusiastic a buyer the Treasury is, does that have a better effect on yields here?

9:26Sarah, you're listening in, too. Yeah, I also wanted to respond to comments. You know, Rick talks about jawboning. You asked about jawboning, which is basically when you talk up the markets right into where the policymakers want it to go. and just highlight a comment that, to add to the discussion from Secretary Besson, he was speaking at SMU yesterday, and he was talking about the dollar-yen in particular and that intervention there. And here's the quote from the secretary, and it's unusual to hear this from the Treasury secretary. I am the House now, he said, referring to this intervention, and you can bet against me if you want.

10:04Ultimately, sort of daring currency traders to go against him when it comes to, you know, selling the yen and not buying it as the U.S. Treasury has been. It's just the job owning has increased and it's gotten stronger. And I think, you know, as I talk to people, Rick, and I'm curious if you do as well, you know, both in FX and the bond markets, you know, this is not just going up against any administration. It's going up against someone who actively was involved in these markets as a hedge fund trader and has made billions of dollars betting against both currencies like the British pound or the Japanese yen.

10:38It may be a little bit different this time because he knows exactly how that works. And it does have a very big bazooka. Now, I would like to have the control and put a chart up of the dollar yen starting on the 31st of July. Because, Sarah, I agree with everything you said, but I have to admit this seems to be having some legs as the dollar keeps going down. I think that that's rather significant. We all know that intervention always seems to put a target on that market's backed by investors. But this one, considering, you know, we're at 153 and change from 164 has been rather aggressive in its follow through.

11:17I'm a little impressed by it, to be to be frank. Hey, Sarah, I think you raise a really interesting point, which is how big is the Treasury Department's bazooka in this regard? When it comes to the yen, the Treasury has the Bank of Japan in this regard. But Treasury's resources are limited. Morgan Stanley writing a piece that it believes the Treasury could use between$55 and$200 billion of the$950 billion TGA here. But without the Fed, the bazooka is somewhat limited here. And it may be something that we're seeing right now in the process, the market testing the Treasury here and its resolve. Certainly what we're seeing is a sell-off in the 10s, a sell-off in the 30s right now.

12:03It's modest, of course, within the realm of kind of daily volatility. But it's not the positive reaction the Treasury wanted. And so we'll wait to see what the rest of the buyback schedule looks like. But the Treasury can be the house when it comes to the yen because there's the Bank of Japan. But I don't know that it's the house when it comes to the Treasury market. Well, that was his point when he said when we intervene with the yen, I have pretty good insight what the BOJ is going to do. But that's not true, I think, Carl, when it comes to the Treasury market. I think Rick may have actually been making that point when he talks about the size of this intervention relative to the total size.

12:39But it's not even the size. It's the commitment and the bazooka that the market's looking for here. And I obviously want to give this time. The first reaction is not the only reaction of the market. We'll see what happens here. But the initial reaction is not in the direction the Treasury wanted it to go. Yeah, and you might say that about equities as well. Steve, Steve, Steve, but the counterfactual here is that everybody I talked to was waiting to hit the sell button. They just wanted to see the amount. So we don't know. You know, maybe if they did$4 billion, maybe we'd have shot up to$490 instead of$484.

13:14I do want to point that out. And let's also point out the trajectory and the trend of Treasury yields and global long-dated yields has been going up. So this isn't necessarily something that's going against what they expected. Indeed. German tenure today, 3-4. That's going to take you back to 2011, to Rick's point. Guys, appreciate it very much. Stocks here, session lows. I guess as it pertains to equities, Christina, I mean, there's a lot of chatter about the Treasury yields and how they're quite competitive now with the earnings yield and a perfectly good alternative to stocks, would you argue?

13:51Absolutely. I do think that what we tend to see is when yields go up on the long end, they tend to cause a weighing down of equities, especially long duration equities like technology. So we have to worry about that. We also have other alternatives beyond treasuries that are also attracting dollars like AI related debt. So there's a lot out there. And I would also say that if we look at the auctions this week, long data treasury auctions will total$61 billion. And now we have just 10 percent of that being represented in the Treasury's buyback tomorrow. That's not really going to have a very significant effect, especially since it's only planned to go through November.

14:35Right. So I think what where we're headed is higher yields. I think we're going to easily get to five percent on the 10 year. Absolutely. This year. And I think it could happen within the next month easily. And implications for the long bond. So I think the 30-year will definitely go significantly higher than where we are today. There are a lot of factors moving yields higher, not the least of which is concerns around fiscal sustainability, but also, of course, concerns around inflation. Yeah. I mean, Congress eventually will come back to work and we'll have to do something about the spending trajectory of the U.S.

15:14I'm glad you were here, Christina. Thanks for being with us as we've got the tenure within 15 bips of five. Over to Sarah in Boston. Yes, I am here, Carl, today at the Wells Fargo 2026 Healthcare Conference in Boston. And joining me now for CNBC exclusive is Biogen CEO Chris Bebacher. It's great to have you. We don't get to talk to you very often. Thanks, Sarah. It's great to be with you. The market, I mean, the market has treated you now like a growth stock. It's been good performance over the last year instead of sort of the legacy MS company. How far along are you into this transformation? Well, we've been working on our pipeline now for a number of years, and I think we're really at about that inflection point where I think we're going to be on a path to sustainable revenue growth.

15:56We've got 10 phase three programs that could now start to read out as early as next quarter, with product registration approval submissions as early as next year. We could have five new molecules coming to market that could treat up to eight different diseases. So it's pretty exciting times at Biogen. Of all the, I mean, you mentioned a number of them, but of all the phase three trial readouts that you're expecting, which one are you most excited about? You asked me to choose between my children. I think each of them, you know, Biogen has been this company that has been dedicated to breakthrough medicine.

16:29So we've got rare kidney disease. We've got a new treatment for lupus. We've got a first-time treatment for antibody-mediated rejection of kidney transplant. There's an exciting new medicine coming along. There was just the European Epilepsy Congress, a drug called Zorvinursin for Dravet syndrome. It's a disease that really affects small children. They have so many epileptic seizures that it affects their mental development. Next generation for spinal muscular atrophy. So all of these are extremely important new medicines for patients. Where are we on Alzheimer's treatments right now? So we have two molecules approved today, the A-beta.

17:11We have another treatment in progress for tau. Yep. Different than the amyloid. Yeah, to have Alzheimer's, you need to have presence of both amyloid and tau. And the neurology community has always felt that you really have to go after tau. We recently had phase two results that demonstrated for the very first time. that actually if you reduce tau, you can actually affect cognition. So we'll still have to study that in a phase three study, but that's also an extremely exciting opportunity for Alzheimer's patients. I mean, how meaningful are the treatments at this point? I know because they slow the progression, but they don't turn it around, do they?

17:53You know, Alzheimer's is really a question of neuronal degeneration. So, and in fact, probably before you get symptoms, you've been accumulating these packs as a patient for 10 to 15 years. And once you've lost a certain number of neurons, nobody knows how to bring them back. And so what you really want to do is try to stop the mechanism first that's causing this damage. And that's what we do with these amyloid beta products. You know, one of the interesting things we showed is that if you go earlier and we looked at patients with low levels of tau, because tau really determines the severity of the disease.

18:32You know, after six months, we had 70 % of patients stable on disease and 60 % actually showed some improvement. So right now we can actually have a big impact on that. But I think if we add tau, that we're going to have an even bigger impact on cognition. Are we ever going to be able to prevent it? Well, we actually have a study called AHEAD 345, and we are looking at patients before they have symptoms. And the belief is that the amyloid actually causes an overproduction of tau. So if you could stop the amyloid early enough, you may never have the production of tau, and you may never get that disease.

19:12So we have AHEAD 3 that is looking at patients with such low levels of amyloid. and if we could stop the production of that, we may never get the disease. And if you catch it early enough, so pre-symptomatic, the promise is that we may not prevent it, but we could certainly delay it for a much longer year. So that study reads out in 2028. That could be a real game changer for Alzheimer's. You did do a$5.6 billion deal. What is your appetite now for more deals? Are you finished or are you looking? So I think where we are now, as I was saying earlier, we're at a point of real inflection for growth.

19:49We have all of these new products to launch over the coming years. So we're not really looking actively for acquisitions. We might be opportunistic. What we're really doing is now focused on early stage development and research. We're actually already building the growth platform for Biogen for the 2030s. What about the regulatory environment? There have been so many changes. There's a new FDA chair. I mean, just yesterday, there's a new Center for Drug Evaluation Research, CDER, administrator. Thousands have left the agency. How has that impacted the timing and also the ability for you to get drugs approved?

20:29So there has been a lot of turbulence and turnover at the FDA, but I have to say to the credit of really the passion and commitment of people at the FDA, they've maintained their timelines. We've been able to get lots of new drugs approved. And I have to say, as a company, our experience has still been positive. We've been able to get things through the FDA. But again, this is really the ground level at the FDA and the commitment of people to make sure that patients get new medicines. And it hasn't been harder to get those? No, not so far, no. What about AI? You know, it's a topic here in the healthcare conference, and it's one of the most promising, I think, applications of the technology.

21:08On a day where we're all worrying about the existential threat of this technology, is it happening yet? Are you using it in drug development? AI is pretty much in every part of our business. It's, I don't think, going to revolutionize business, and I don't think it's going to find new drugs. But scientists who know how to use AI are going to be a lot more productive. We're using it to find patients in clinical trials, for example. Clinical development is our biggest single investment, and it is a highly inefficient process. We've got to go scour the world, signing up hospitals and doctors. If we're doing a 400-patient study, we may need more than 400 sites.

21:47With AI, we can actually find where those patients are and get much faster clinical trial development. But we're also using it in internal audit, in compliance, in revenue forecasting. It actually affects most of our business. But so far, productivity tool. It's a productivity tool. We have not seen, we don't look at it as a way of saving on headcount. It is about, you know, in our business, we're always up against the clock. We have a patent. And the faster we can get a new drug to market, the better it is for us. So we're more about speed and efficiency than actually trying to save on headcount.

22:24Well, I know the pipeline is one reason that a lot of investors have been bullish lately. It's a pleasure to catch up with you. Thanks for the opportunity. Thank you, Sarah. Good to see you. From Biogen, Carl, back over to you. All right, Sarah. When we come back, the CEO of Novartis is going to join us exclusively after the third drug trial setback in about a week. Stock, of course, rebounding from its worst day on record yesterday. Later on, an anthropic researcher says there's more than a 10 percent chance that AI could kill all humans. We'll discuss what the reaction's been in Silicon Valley with the Dow down 440, 10-year holding 485.

22:57Stay with us.

23:25www.gmail.com at goo.gle slash workspace with Gemini. 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 five for details.

24:16Welcome back to Squawk on the Street. Take a look at shares of Novartis trying to bounce back from its worst day ever yesterday after a string of disappointing trial results telling investors yesterday that its muscle-wasting disorder drug failed a late-stage trial, a major blow to the company after it acquired the assets as part of its$12 billion buyout of Swiss drugmaker Avidity earlier this year. Joining us now in a CNBC exclusive is Novartis CEO Vass Narasemun. Vass, first of all, thank you for taking the time and thank you for coming on. I know you're a regular guest on earnings, but we appreciate you coming on to talk about this news.

24:50So what is your message today to investors after those three disappointing news items around those drug trials? Yeah, first, Sarah, I think it's important to frame that we actually had one of our biggest wins of the year with remibrudinib and multiple sclerosis to start that. And actually, that was the one that we really think will help to drive us in the long run. And that's why we were able to maintain our five-year guidance of 5 % to 6 % growth through 2030 and also maintained our growth guidance in the mid-single digit, I think, into the next decade. I think what that shows is we have the pipeline and the replacement power to continue to grow, even when we have these setbacks.

25:32And the setbacks are part of drug development. If you want to find breakthrough medicines in areas like cardiovascular disease or neuromuscular diseases that have no treatment, you're going to face these setbacks. The other point I'd want to note is on two out of the three setbacks, We're working very hard to get those programs back on track. We're hoping to get our cell therapy, that's YTV, that's for treating autoimmune diseases, back on track. And we're also hopeful to work through del-deseran setback that we announced yesterday to hopefully ultimately get it to these patients who have no therapy available for them today.

26:08Yeah, I mean, that's the one that one seemed particularly surprising and caused the biggest reaction yesterday. is because you just paid$12 billion for avidity, which raises questions about maybe the M &A strategy and whether it was too risky. You know, when we did the deal, and this is really incredible technology. I mean, this is technology that allows us to take RNA-based therapies and actually get them to the muscles of these patients, the nervous systems of these patients to actually transform disease. First, there were three assets as part of the deal, and the other two assets are completely on track.

26:44We have a priority review with FDA for the first asset to treat a subform of Duchenne's muscular dystrophy. We also are advancing now to discussions with the FDA to hopefully get an accelerated approval for a drug to treat FSHD, also advancing well. And now the third asset had a setback, and we're going to have to work through it. But I would think what's getting lost a little bit in the narrative is we've had two other successes coming out of this deal. And we would have expected that as long as one of the two biggest parts of the deal, FSHD or Del Deseren, work out, actually the deal made great financial sense for Novartis.

27:23So this one was not the key of what you were acquiring there. It wasn't the only key, I should say. It wasn't the only key. I mean, I think we want to get one of the two big ones through, FSHD and Del Deseren. And this one's not done yet. I mean, our scientists are going to work very hard. This is novel biology, novel science, and we have to work through. But we're absolutely committed to finding ways to get this medicine to patients. I mean, definitely, I think investors understand that this is not unusual statistically. What is it? Like five out of 10 stage three trials ultimately fail or do not come to market?

28:01It was just a series of three in a row. So I guess one of the questions it raises is whether you guys and others are paying too much for these late stage biotech assets. Yeah, I think the first on your first point, the way I look at it is on average, about 60 percent phase three trials win across the sector. Actually, at Novartis, we've had an unbelievable run. I mean, since 2022, we've only had one major setback. And that's why, if you were to zoom out on our overall TSR and share price performance over five years, it's been at the top of the sector because we've had that consistent pipeline execution.

28:37So we did have a few setbacks. I think with respect to biotech dealmaking, we do it all based on the science and based on valuation. And we think that we're paying reasonable premiums. And in case of this deal, if we are able to get two of those three drugs over the finish line, we will have created a lot of value for shareholders. I also would want to note that the third one that we're referring to is actually phase two trial, not a phase three trial. That's our cell therapy for treating autoimmune disease. Right. OK, got it. So does this change anything about your M &A appetite process on due diligence, research and development, any of it?

29:22I don't think so, Sarah. I mean, look, this is tough, tough science. We're trying to basically treat a terminal disease that has never been able to be treated before with novel endpoints and novel science. And the way we look at it is we have to be willing to take thoughtful risks to be able to keep growing the company and find the breakthroughs that will really make a difference. And I think we just cannot get lost in all of this dialogue. You know, remybrutinib actually showed itself to be potentially the best oral medicine potentially that's been developed for MS to date. So we get the breakthroughs, but we also have to learn from the failures and the challenges.

30:02But I think we'll certainly look at could we have done something better? Could we have designed the trial better or adapted the trial in a better way? Certainly, there's always learnings that come out of these experiences. But you said that, you know, the the multiple sclerosis experimental treatment that you just said had good results. That's that's in part what's giving you confidence, because I think that's the other question investors have is whether you have the confidence to reiterate the mid single digit growth through 2030, given you are facing this patent cliff? Yeah, I mean, when you look at it, we said five to six percent.

30:37And now we have that was before we got the remybrutinib data. Now we have an asset that we think could be a very significant asset. You know, our casimta drug, as you know, is doing extremely well. And we've guided to that being over a six billion dollar medicine and multiple sclerosis. Now we have this highly safe, highly effective oral therapy that will then in a business that we know extremely well that can then power us into the mid 2030s. I mean, remebrutinib is actually already approved in one dermatology indication. We're expecting another dermatology indication coming up and now multiple sclerosis.

31:14This could stack to eventually become one of Novartis' maybe our largest drug ever. And then on top of that, we have six more readouts coming up over the coming quarters, all for major medicines. So when you take all of that together, That's why we have confidence both in the next five years as well as into the into the 2030s. And we'll demonstrate that over time. I'm fully confident of that. OK, I know I have to ask you about the other your other companies in the news. You're on the board of Anthropic. And there's a lot of buzz today about this research researcher boss that that quit the entire industry, basically, because he believes that Anthropic and the rivals are racing toward these systems that they might not be able to control and may ultimately be dangerous to humans.

31:59As a board member, I'm curious how you're reacting to this and how you think about the risk reward and whether you're willing to stop or slow development if this all gets too dangerous. You know, sir, part of the reason I joined the Anthropic Board is I really believe that Anthropic has the right mindset with respect to AI safety. It has a deep commitment. In fact, its core mission is to ensure this transition into an AI-powered future is done safely. It's pro-regulation. We have strong guardrails at the board level to make sure we're doing the right things to ensure any models that are released are released in a responsible way.

32:37I don't know the details of the situation that was in the news today. But what I can say is it's being done in a very rigorous way, very thoughtful way. And I feel confident that Anthropik is taking all of the right steps. And I hope over time we'll also get to a place where we have appropriate regulation for AI. I think that's one of the best ways. We've seen it in the pharmaceutical industry. We've seen it in other industries. if we can get to thoughtful regulation, that will actually help us manage this transition in a safe way. OK, well, a lot more we could get to there, but just wanted to get your initial thoughts on it.

33:15Voss, thank you very much for taking the time. I really appreciate it. Thank you, Sarah. Great to see you. Talk to you soon. Great to see you as well and for you to have the opportunity to address investors. That's Voss Narsim and CEO of Novartis. Carl, back over to you. I'm heading to an event here at the Wells Fargo Conference on stage. So I'm signing off for now, but I'll be back with you at the New York Stock Exchange tomorrow. Have fun. Safe travels home. We'll see you in the morning, Sarah. Sarah is, of course, in Boston. Let's get back to Steve Leisman as we monitor the fallout from the initial announcement of the Treasury buyback.

33:47Steve? Yeah, and if you remember, Carl, we were waiting for one additional piece of information, which is the schedule for the rest of the quarter. That's now come out. And what it says is the future operations of the buybacks of these long and off the run securities will be equal to or greater than four billion. So that's four billion per operation. There are six after tomorrow remaining. So that will mean the Treasury will be purchasing at least 24 billion dollars of off the run securities compared to what it would have been under the old schedule, the old buyback plan, which would have been 12 billion dollars.

34:20Now, the question becomes, does the market now anticipate that$6 billion is the number that they want? And anything under$6 will be a disappointment. Anything over$6 will be a surprise. Right now, Treasury's pretty much holding on to the move that it had with the$6 billion announcement. I'm reading some initial commentary from the street right now that says the$6 billion was a disappointment. Some are looking for anywhere from$8 to even as high as$10 billion. But, of course, there is more the Treasury can do, six more operations. And Scott Besson is keeping the Treasury market at the edge of his seat as to how much it might do in future operations.

35:00Yep. Well said, Steve, as we're coming off the initial highs of the day. Steve Leesman watching the bond market. Still ahead, an anthropic researcher, as Sarah was just saying, says there's more than a 10 percent chance that AI could kill all humans. What that warning means ahead of the company's anticipated IPO. and then later on, the CEO of Visa on the state of the consumer and the changing role of AI in shopping when we're back in just a couple of minutes.

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36:55That anthropic researcher making a stark warning about AI's threat to humanity. Our Kate Rooney has some details today. Morning, Kate. Hey, Carl, good morning. So anthropic Researcher Jacob Coxon is the one who sparked this debate with a tweet. He did step down from the AI giant this week, and he warns that the race for super intelligence is going faster right now than the industry's ability to make sure that this technology is safe. In his words, he said they are racing straight to self-improving super intelligence and, quote, gambling with our lives. He also went on to say the people building AI earnestly believe that it could kill us all by the end of the decade.

37:35He said this is not a marketing stunt, if anything, many executives, he said, and senior researchers will couch their phrasing in the press to sound sensible. He says, but I hear the same people express fear privately. Also says no other human activity poses this level of danger. And then he's not alone in thinking this, Carl. So the current anthropic researchers are backing up that concern, piling on with other tweets. It's another top anthropic alignment researcher who is still at the company, said he puts the chance of AI causing human extinction within the decade at a greater than 10 percent chance.

38:10He also said they're not necessarily saying that chatbots are just going to turn on humanity and humanity. All of a sudden, the concern is about how they're actually building the future generations of AI as the tech gets a lot better, is increasingly help build itself. This is sometimes called recursive self-improvement. And the fear is if AI is starting to build itself, it can be a lot harder to control and then track some of its motives. There's also this risk around alignment. So essentially, if AI doesn't necessarily have the same goals as humans, OpenAI yesterday put out a blog about this, Carl, which we spoke about here on this show.

38:43It all creates extreme tension right now for Anthropic. It is actively in an IPO process with the SEC. It is worth noting this company has also made AI safety a core part of its identity and its brand. It's a way that it's trying to differentiate. It is not slowing down, though. It's very much competing with OpenAI, with Google, and with many others globally, Carl, who are increasingly also rolling out powerful models in AI. Yeah, so we've had the blog, the Alien Mind blog from the OpenAI chief scientist. These two researchers, Bill Gates speaking this week at Telluride, to your point about alignment, sort of comparing it to Hal in 2001.

39:21one. What do you think the risk factor pages are going to read like in this S1? Carl, it's such a good question. It just came up in a meeting that I had. I think that's the biggest question is what does this look like in an S1? I mean, this IPO is unprecedented in a lot of ways. The data center pushback is coming up. AI is increasingly unpopular. But one interesting analogy I've heard, I think helps kind of put it in perspective. I think a lot of people have this sci-fi view of how this could happen. AI turning on humanity. The paperclip analogy is something that folks in the industry have used in that, you know, you may tell an AI to go out and use this example of make as many paperclips as you possibly can.

39:59The risk is that in making all the paperclips, the AI sees humans, sees humankind as a block in that goal and therefore decides that it's going to do something extreme. That is the risk that we're talking about. So it's sort of subtle and, you know, not necessarily the Terminator view, but it is increasingly relevant as these companies start to use AI to build itself. And there is a consensus view that it's harder to track, harder to see the motives. There's fewer breadcrumbs and ways that people could intervene. Right. I mean, because the whole productivity promise is you tell this model what to do, and it will find a way that you would not have been able to come up with yourself.

40:37It's really getting interesting now, Kate, and I'm sure it will in the days to come, Kate Rooney. Still to come this morning, an exclusive interview with the CEO of Visa as the company releases new data on trust around AI and how it all applies to e-commerce. We're back in just a minute.

40:58Visa out with some new data today on the role of AI and e-commerce. In their new survey, 61 % of respondents said they would trust Visa to handle agentic transactions. Our David Faber talked to the CEO exclusively at Communicopia and joins us once again. Hey, David. Hey, Carl, that's right. I did sit down with Visa CEO Ryan McInerney yesterday. And of course, as you might expect, we talked about how quickly AI is diffusing within the organization from internal productivity to agentic commerce and other efforts as well. Take a listen. You know, we're focused on AI broadly in two big areas of Visa.

41:37One is running the company better, more effective, more efficient, more productive, those types of things. And then the second is enabling agentic commerce, enabling all of us to have agents go out and shop and ultimately buy for things on our behalf. On the first of the two things, it's actually developing more quickly than I expected. We're finding productivity gains across the company in product and engineering, but also broadly across the company that I think are developing even more quickly than I expected. on agentic commerce, maybe it's developing a little more slowly than I expected. And I want to get to agentic commerce, and I know that has to do with trust issues.

42:14And you guys have been doing some work on that as well. Why, though, has it moved more quickly than you might have anticipated? I mean, I guess it's only been, what, four years since the introduction, not even since the introduction of ChatGPT. But I'm curious as to your own sort of thinking around that, what you're seeing within the organization. Because, Ryan, when I talk to a lot of CEOs, they talk about the friction of introducing a new technology into processes that have existed for a long period of time. So I'm curious to your experience. We leaned into it very early. We made the tools broadly available across the company very early.

42:46We invested in a lot of user experience and deployment capabilities that made the tools easier for our employees to adopt. We invested in learning programs and hands-on keyboard training programs. And I think that early investment has allowed our people to really put these tools to work and find productivity gains from them. Right. You know, in our engineering teams, we're seeing 80 % more code commits than we were seeing before. We're actually seeing an 80 % reduction in the time it takes to prototype and build things that are ready to put to market. In terms of feature development, we're actually seeing a 65 % increase in the amount of features we're able to build at a quicker pace.

43:25So, you know, the results are encouraging. As a result, we're putting more product in the market. And I ask that question in part because, you know, every time we see layoffs or job reductions, you got some press around it. You guys didn't give a number, but you did give voice to it on your conference call talking about sort of tech and product teams and some reductions there. Some have reported about 2 ,600 jobs. We all want to say, us in the press, I mean, AI, AI, AI. Is that the case? Is that a fair assumption that AI is somehow at the root cause of why there might be reductions in force? Well, for us at Visa, this has been a journey we've been on for a few years now.

44:03We've been driving more efficiency, more productivity, kind of relooking at how we're doing everything we're doing at the company. And as a result of that, there's been job eliminations. There were some we announced last quarter. There were some we announced a year before and so on and so forth. So for us, AI is a piece of it, but it's really a journey around running the company better, trying to rethink everything we do to be as effective and efficient as we can, and ultimately in service of our clients. Delivering the best products, the best services, and anything and everything we can do to help our clients be more successful and grow.

44:34When it comes to Agenda Commerce, though, you're sort of at the front lines there. So what are you seeing? What tools are you providing? And what are the gating issues? Yeah, so as I mentioned earlier, I think it's moving a little more slowly than we thought. But what we're finding is the web is having to be rebuilt as an agentic web. And there's a lot of infrastructure that's being built to enable sellers to make their inventories available to agents, to make their front door available to agents. And if I had to summarize the work that needs to be done in one word, it's trust. We need to build capabilities and tools and ultimately have companies like Visa step in that can give consumers like you and I trust, enough trust that our agent can go buy on our behalf with our financial information and to give sellers trust that when an agent comes into their environment, it's a trusted agent.

45:27It's actually operating on behalf of David and David has empowered that agent with a Visa credential to go shop at that retailer. Yeah. I mean, given everything we hear about rogue agents at this point, I can understand why people might, at least at the very end there, say, I'm not going to trust an agent to actually do commerce on my behalf. Yeah. And we've actually done some research on this. When you ask consumers, do they trust these agentic platforms to go out and make payments on their behalf? The short answer is they don't. Less than one in four trust their agent to go make payments on their behalf.

46:01But when you ask them, would you trust it to make a payment on your behalf if Visa was involved, if it was a Visa credential, the answer goes more than 60 % would trust them. And if you look at the most engaged AI users, it's more than 70%. So this is where we think we play a very important, almost unique role in this ecosystem of enabling trust, trust among consumers, trust among sellers that ultimately can deliver and fulfill the promise of agentic commerce. All right. Finally, I want to end on macro. we always have to ask, obviously, the CEO of Visa, sort of what you're seeing out there. I think, you know, most recently, at least when I've heard you, you've spoken about seeing steady consumer spending across income levels, some tailwinds as well from the big, beautiful bill and other things.

46:42Does that continue? Yeah, that continues. You know, obviously, there's a lot of uncertainty among consumers out there. You see that in, you know, consumer confidence indexes. People are worried about all the different things you mentioned, the upcoming election. I think what we can contribute to the conversation is what's the spending growth that we're seeing on our network. You know, in the U.S., our business is approximately a$7 trillion spend business, very significant across the entire U.S. economy. For the last 18 months or so, it's been growing at 6, 7, 8 percent. Last quarter, it grew at 10 percent, 10 percent year-over-year growth on a$7 trillion business in the U.S., and it's broad-based.

47:20It's across different segments of households and consumers, discretionary, non-discretionary, across all different types of merchant segments. So what we see in terms of spending growth in the U.S. remains very stable and very strong. And there you have it, of course, Carl and Sarah, continued strong growth in terms of at least consumer spend, which obviously is an important component overall of some of the trends that we focus on. If you want to watch the entire interview, because we did more, why not? You know, when you do tape, you kind of tend to go a little longer. Please check out CNBC Pro for the full interview with Ryan McInerney, the CEO of Visa.

48:01Send it over to you, Carl. All right, David. Fantastic work, as always. And we know you've got a number of big interviews coming up later today as well. There's a look at what Faber's lineup is for the next few hours, as well as the CEOs of Applied Materials, AT &T. CrowdStrike, of course, very important. That's our David Faber at Goldman's Communicopia. You know, his point about Mike Santoli about economic or consumer resilience is kind of allied by the action in some retail names over the past month. Yes. TJX, RH, Dix, Burl are down like 20 percent in a month. Yeah. I mean, discretionary is all you're describing there is definitely been disappointing relative to what we thought we were going to get.

48:40I know we're coming out of the first half. We thought there was going to be a big fiscal push. I think what Visa mostly captures is a relatively fully employed steady state level of spend, plus, you know, increasing share of electronic, you know, debit card payments. It's not necessarily saying there's some big momentum surge in consumer activity. Right. As for today, you got thoughts on Treasury? You know, obviously an incremental move in the direction Treasury didn't want to see, 485 on 10-year yields. Clearly, there was a sense out there that maybe the buybacks could be bigger. I think more interesting is we're going to get through this auction at 1 p.m., 10-year notes being auctioned.

49:19And then I'm thinking about how we're set up for PPI and CPI, because if we get on-target numbers for inflation or cooler numbers, this market is wound pretty tight to rally hard. I mean, I'm saying this. The bond market is. I'm not saying we're getting that. I think it's been my sense that Treasury Secretary Besson didn't really think that the buyback program could muscle around the entire Treasury market. But he probably had the sense that this move in yields higher is a little bit stretched. Maybe positioning is a little bit lopsided. Maybe he could sort of be on the correct side of a trade that was going to reverse anyway.

49:54That's been wrong so far. So my thought on that, if that was his thought on that, has not played out. But I do think we might be getting to that moment. As for the consensus on CPI overall, I think we're looking for 2-4 year-on-year on core, which would be the lowest in, what, five years? This is the thing, right? So people are going to be able to look at the underlying, if you prefer to view it as underlying disinflationary trends, you can make the case. Look, we have two-year yields, two-year Treasury yields, 4-4 or something like that. It's already pricing in kind of like three cuts over that span.

50:26I mean, three hikes over that span. Into March, right? So it sort of says, yeah, whether it's timing or not, I just feel like the market is very set up to at least be susceptible to a trade the other direction. I don't think that saves the market. The stock market's trying to defend this same level. The lows of the day in the S &P 500 were basically last week's lows, which were basically the June highs. Right, which you drew attention to at the time. We keep trying to just sort of say, let's keep it on the tracks. Let's not break the range. Now, Russell 2000 down 1%. A lot of the liquidity tells are not acting very well.

51:03You have a loss of momentum in this market. The question is whether we get oversold and get a buying opportunity before you have the breakdown. That's what always happens in these macro-driven tactical markets. Yeah, Russell down 1%. Utilities, I think, were down about 1%, some of the high-yielding sectors. Right. And so I think you're seeing wear and tear below the surface. And the question has been coming into the week, is it going to stay kind of a stealth internal correction when you highlighted earlier the very low percentage of stocks above their 50-day moving average? Or is it going to have to be like one of these things where everything kind of gets hit?

51:36Semis can't save the tape, as they've been doing for two days in a row. All the anxiety about big-picture AI stuff for now is translating into, you know what, though? They still got to build it. And that's kind of where we are. Look, Micron is still a couple hundred bucks below its highs. Yeah, look at Dell today. There's room for it to re-expand without it necessarily pushing the envelope. The other interesting thing about the cadence of the week this week is that we get PPI first, which tends to run a little warmer because you don't have the middleman to absorb. It runs warmer and it feeds into PCE a little more directly.

52:08So, yeah, we'll be able to have some conclusions drawn tomorrow after that. Next 48 hours is going to get really interesting. Thanks, Mike. Let's get to the judge over at Post 9. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

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