11AM Hour: Former FBI Agent on Nvidia CEO Scandal, CoreWeave Shares Surge & Jefferies TMT Investment Banking Chair 11/11/26

0:00With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you. They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy.

0:39They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Sarah Eisen of Post 9 of the New York Stock Exchange. Today, CoreWeave's Q3 results calming the street's AI slowdown fears. Tech stocks are rallying sharply. We're joined by the head of TMT Investment Banking at Jeffries today. He'll tell us what he's hearing from some boardrooms about the future of AI spend.

1:14Plus, investors still trying to digest the implication of Jensen Huang's affair with an alleged Chinese spy. But the NVIDIA CEO isn't the first high-level CEO to be caught up in this type of spying activity. We'll talk to a former FBI counterintelligence officer about how the bureau investigates such espionage operations and why he says protecting American AI technology requires sustained focus on the methods, not the gossip. And the walk up to Anthropics blockbuster IPO next week, how the debut could help restore some confidence in the IPO market and the overall AI trade. As for the markets, making some progress here.

1:49Back above 7 ,600, about 80 points shy of the end of that post-election day rally. VIX has collapsed back below 18. Don't really have the bond market to lean on today as we're closed for Veterans Day. We'll start, though, on this morning's big earnings mover, which is helping the AI trade. That is CoreWeave. It is surging. Seema Modi joins us with more on the story, Seema. Sarah and Carl, the message from CoreWeave CEO Mike Intrid are really resonating with the street, particularly what he said on set right here last hour. I think it was this acknowledgement that while CoreWeave has historically relied on the debt market to finance the capital intensive build out, they need to look at other options.

2:29And they have found one, which is customer prepayment. So that's basically asking the hyper scalers that lease GPUs from CoreWeave to pay up front, a bigger portion up front, about$9 billion in the last quarter. Carl, you asked him about whether an equity sale could be in the cards. He didn't dismiss that idea, but he did say that he would cancel his planned share sell. We actually saw the stock move up on those comments. And then when it pertains to the election, the impact that could have on the data center timeline, he was pretty optimistic. Here's what he said. There is a massive groundswell of demand around the world for computing infrastructure.

3:08But, you know, taking a moment and talking about the U.S., right? You know, we don't see any impact on our ability to deliver the data centers within the U.S. that are required for us to deliver on our backlog. In regards to Corby's partnership with NVIDIA and the current allegations against CEO Jensen Wang, Intrader said he doesn't think it's appropriate for him or anyone to comment on what's going on and that he wants to let the process play out. We did report yesterday that CEO Jensen Wang is in the office this week in Santa Clara at NVIDIA's headquarters. He addressed his affair to top-level executives in the Monday morning meeting and quickly moved on then to talk about the most pressing matters of the day.

3:53So sort of conveying the sense that it's business as usual at NVIDIA. We're watching shares of NVIDIA actually move higher today along with other semi-stocks, perhaps getting a lift with CoreWeave's upbeat view on 2027, guys. Yeah, it really feels like the Corweave stock got a second bounce when Intrader said he's canceling his 10B5. And he's been under the gun on those insider sales for several quarters now. Sure. And never a good look when you have insider selling at a time when the stock is actually moving lower and there's concerns about what the future holds. But again, it was a very optimistic view on the call last night.

4:28Again, what he said here on set about how they have this financing plan in place. It also reminds me of what Hillary Maxson, the CFO, told David Faber. yesterday, the financial flexibility, that they've got these unconventional tools in place, not just debt to fund the buildout. It's still 56 % off its highs. I mean, this is a bounce today, but I think that have they fixed the fundamental concerns about the business model? True, true. Again, based off of what he said to us, they've got a plan in place. They're not slowing down either, which I thought was interesting. We'll see if they can stand behind those comments.

5:04And I think maybe it just comes down to what NVIDIA tells the street next Tuesday on not just leadership, but again, the demand for GPUs and their competitive positioning because Corvive is such a big customer of NVIDIA's. Yeah, well, certainly a sign of strength today. Thank you, Seema. For more on the tech landscape and the health of the overall AI trade, let's bring in Jason Greenberg, Jeffrey's executive chairman of TMT Investment Banking. Jason, thank you for joining us. How much does this go to boost sentiment around the AI trade, which has been so whipsawed in recent weeks? No, you know, look, at the end of the day, I think we're going through a healthy, I guess, debate and rotation among AI investment.

5:44At the end of the day, I mean, you saw last week $2 ,000 wiped off of the tech market around concerns around the data center build out. People worried about power permitting, how you finance it. But at the end of the day, it's a supply problem and it's a capital cost problem, not a demand problem. No one in the boardrooms I've been in is debating increasing AI spending. They're asking how they finance it and how they actually show an ROI. Right. So does that favor the strongest? Is that why the hyperscalers are in demand? Because if scarcity is the thing, compute costs go up, then theirs become more valuable and they become more able to play.

6:20No, you're absolutely right. Look, when supply is constrained, compute stays scarce. and scarcity favors who has the strongest balance sheet, which is why you've seen a rotation to the largest companies right now. But the real question to me is, you know, if demand holds, who's going to get value from it? And I think when you talk to investors today, that's the focus, which is, where do I rotate my investment today if I believe that AI demand continues to accelerate? What are you hearing from the conversations you're having around Jensen Huang and NVIDIA and just how critical he is to the company, to the market, to the economy, to the country around AI.

6:59You know, that's not a discussion that I'm hearing among the companies that I speak with. That's not really the focus. The focus is on, you know, where and how do you actually invest today to generate returns going forward. So you don't think it matters whether he's in control of NVIDIA or not for all that? I don't have any insight into what's going to happen specifically at NVIDIA. I do believe we're early in an AI build. I believe if you step back and look at AI infrastructure in general, I think it's broader than any individual company. I think you're seeing vertical integration among the hyperscalers offering everything from compute itself, the actual chips to compute to data centers to models.

7:45So I don't think that our success as a country and our success in AI is dependent on any individual company. That's good. What about Anthropics IPO? How much of a litmus test is that going to be? I can't comment on any specific IPO. I think the IPO market in general is certainly something that is important for our success of technology. I am a believer that successful IPOs beget more successful IPOs to the extent that investors make money in IPOs and investors can invest in growth, which is at the end of the day, a lot of what's differentiated the U.S. public markets from other countries, that there'll be more IPOs.

8:25So, again, you know, if I step back and look at the AI cycle, we're early today. Despite all of the money that's been created, despite the fact that we've got multiple trillion dollar plus companies created from AI today, I think we're still in the early innings of development of value. Are you a believer, Jason, in this notion out of court weave that midterms and any policy fallout is really not going to be an activity suppressant? you know look i think i think at the end of the day what's happened out of the midterms you've seen an increased likelihood i believe that you're going to have a fed that's going to raise rates in december do i think that's going to increase long-term cost of capital so far it hasn't do i think it's going to change policy around m &a potentially not now maybe in two years if there's a change of regime in the presidency um i you know i think there's changes that will happen But at the end of the day, the AI trade isn't going to go away.

9:21It may change in terms of who the winners and losers are. It may change a little bit in terms of the access to capital and who gets it. But, you know, again, the point I would say, and if I were sitting back as an investor today, we're still in the picks and shovels phase of AI development. Meaning if you look at the trillion dollar companies that have been created today, their picks and shovels, if you draw an analogy back to the Internet era, and you look at the fact that the internet era had three trillion dollar companies created, one in search, one in commerce, and one in social media, all three were application companies.

9:55And if you step and look at where are the application companies today, because at the end of the day, if you gave a consumer a dollar, you gave an enterprise a dollar and said, spend it, they're going to spend it on things that help them accomplish tasks or achieve objectives. Those are applications. That's where the real value is going to get made. That's where the multiples. Again, you saw many several hundred billion dollar infrastructure companies created out of the Internet era. You're seeing trillion dollars given how much better the opportunity is. Roll forward. That's the opportunity set today.

10:24So I'd be looking forward and saying, where's the three to five trillion dollar company that's going to get created in applications coming out of AI? Right. In consumer or enterprise or both? Probably both. I mean, the issue with consumer is the challenge is monetization. At the end of the day, consumers trade down for price. Enterprises trade up for performance. You know, in consumer, is it going to be an advertising model that wins like what Google did with search? If you go back to the Internet age, is it going to be a gentic commerce where you have AI booking trips, buying products and taking a cut?

10:56I don't think that's actually played out yet, but the companies that get it right are going to be worth extraordinary amounts of money. And on enterprise, at the end of the day, the challenge is ROI. Enterprises always will pay for the best product, but only where the return is obvious. You know, to date, there's only been a couple of clear wins. One's coding, where you see developers dramatically getting more productive. The other is customer support, where you see agents resolving a larger share of tickets on their own. But at the end of the day, what's the next wave? If you talk to investors, they want to figure out where the large repetitive workloads, real labor costs, measurable answers to whether work gets done, where are those going to come out?

11:34Is it finance and accounting apps? Is it legal in contracts? Is it healthcare administration, security operations, you name it? But I think if I were looking forward, those are the things I would be thinking about. Okay, Jason, thank you very much for joining us, giving us a snapshot of what you're hearing. Jason Greenberg, who is the executive chairman of TMT Investment Banking at Jeffries. Thank you. For more on the market, let's bring in our senior markets commentator, Mike Santoli, who's been watching sort of this attempt to regain what we've lost since that day after the election. Yeah, the relief has more to run.

12:05And that's clearly the message from today. We did get pretty intensely oversold in the hardest hit parts of the market. I mentioned yesterday, you know, my my my newsletter that, you know, markets, it's more often true than not. They bottom on bad news. And I think the data center election, the NVIDIA news, the cuts in expected valuation for Anthropic before we got the updated IPO prospectus, That all kind of fits in together. And there was a genuine tactical wipeout on Thursday. And so the question was, did that really leave everybody underexposed to the market and really cutting back on risk coming into a week where you got some, I think, somewhat reassuring information?

12:43I think the Anthropic deal is a net positive. I don't care what the ultimate valuation is. I think you get the cash in the door and that means that you're backstopping the demand story. There seems to be an appetite for the deal at these levels. I think you can sort of check off that box. Now, in terms of levels we're getting back to, I still think there's plenty to prove. 7 ,600 on the S &P. It's burned in my memory that 7 ,620 was the high on the index on June 2nd of this year. June 2nd. So we're almost six months in, and you're still fighting it out in this same stretch of territory. So that's got to happen.

13:19You need to surmount that a little bit. The semis are just getting up to where their downtrend line was. So all this stuff goes into the mix. It's probably, again, more room to run before you actually have to make the determination that we've reengaged upside momentum. Quality has been one of the themes that has made its way through this whole period. So if you looked at sort of quality versus momentum all year, quality, as you might expect, has been that kind of slow and steady blue line. And then momentum, you had boom-bust dynamics going on right there. So the market is trying to deal with this moment of post-peak earnings growth, post-peak capex growth, post-peak index concentration.

13:59All those things are in the mix. And we play today without the bond market giving us either a lead or providing any pressure. And at the same time, CPI was hot pretty much no matter how you sliced it. We heard from Waller, 50. B of A today, maybe 50. Goldman adds, Marge. I mean, that's pretty hawkish. It's hawkish. It's still plausible that it all amounts to a mid-cycle adjustment. I think that's where you have to kind of say, are they really trying to suppress the dominant theme in this economy, AI investment? Or is it just kind of, look, let's make sure we don't let inflation get away from us?

14:38Well, I mean, Neil Dutta in The Times this morning, if they're not willing to slow down the labor market, then they're not serious about inflation. Yes, I understand that general rubric. Look, I don't think the labor market itself has been the push. It's also not this. We don't have wage inflation. So that's not really the source. We have the security of jobs. That's the point. I think his point is that, you know, whatever you might do to tighten financial conditions enough to restrain inflation would result in jobs. It's not so much that wages are the thing that's causing inflation, because I agree with that.

15:12It's, you know, it's much more about, you know, look, a 10 percent drop in the stock market. As Fed Governor Bowman said yesterday, that would be the thing that could also do the Fed's job without really touching, you know, the the mainstream economy directly. A lot of interesting pots boiling at the moment. We'll see you this afternoon, if not before. Sure. Mike Santoli. When we come back, most of NVIDIA CEO Jensen Wong's shares are co-owned with his wife. We're going to break down the details of that complex ownership and how it might actually help shareholders. Plus, we'll speak to a former FBI agent about the scandal, why he says it fits the more common and effective pattern China uses for corporate espionage.

15:52We'll get into all of that when we come back. With the Discovered 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. Your 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.

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17:13And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. Welcome back. NVIDIA CEO Jensen Wong's shares are mostly co-owned with his wife. Amid the recent scandal, how might the complex ownership impact their ability to sell or divide the shares? Our Robert Frank has some details. Morning, Robert. Good morning, Carl. Good to see. Well, Jensen Wong has seen his net worth decline by over 50 billion dollars just in the past month. His net worth now at 140 billion dollars. And most of his Nvidia shares are co-owned with his wife, Lori.

17:48Now, according to SEC filings, about 800 million Nvidia shares are held by trusts where both Jensen and Lori Wong are equal trustees. Now, for some of these trusts, they have equal votes and equal rights to sell. Their main trust, known as a revocable or marital trust, that holds about 530 million shares. Two irrevocable trusts hold about 140 million shares. And LLCs hold another 135 million. Jensen Wang directly holds only about 70 million shares, worth about$12 billion at today's stock price. Now, trust and estates attorneys tell me that while it's common for tech founders to hold their equity in a trust, it is far less common to hold almost all those shares jointly with a spouse, as we have here.

18:33Now, the irrevocable trust could also complicate any division of the shares, since it's the trust, not the individuals who actually own the shares. Bottom line, Jensen Wang has limited economic control over NVIDIA right now with only 3.6 % ownership and even less control over the shares held in trust with his wife. Now, for the full story on Jensen and Lori Wong's complex web of trust and what it could mean for NVIDIA shareholders, you can sign up for the Inside Wealth newsletter at cnbc.com slash inside wealth. Guys? Of course, we have no idea what's going to happen with their marriage or anything.

19:10She hasn't released any public comment. But, you know, everybody's now trying to figure out what causes she's into if she, in fact, does become, you know, one of the richest people in the world if they do separate. Right. And a lot of people are looking at Mackenzie Bezos and how she became a leading philanthropist in some of the most progressive causes, funding climate and LGBT and civil liberties and wondering, you know, what Lori is it to? Yeah, Sarah, those are great points. And the two points I would make to that is, number one, all these headlines about what would Lori Wong get? Well, she already owns half of these shares.

19:46So it's not that she will get anything. she already owns them. And number two, you make a great point about philanthropy. She is the president of their foundation. That's got shares worth about$11 billion, according to today's share price. So she is already the lead philanthropist in that family. And I don't think that's going to change. Yeah, the Times takes a crack at her financials, donations to the San Francisco Opera, but not very political, interestingly, Robert. No, I mean, they've given a lot to Vanderbilt. Their foundation bought$100 million worth of compute from CoreWeave to distribute among academic and research institutions.

20:25So they're very focused on education and research, especially as it relates to AI right now. Yeah, mental health too, it looks like they gave to a crisis text line. Thank you, Robert. Thanks. Robert, Frank, that's going to be a continued source of intrigue, I think. Much more on NVIDIA CEO Jensen Wong coming up when we speak to a former FBI agent, how this scandal compares to other cases he's seen. Plus, we'll get the latest read on mortgage demand. Haven't really mentioned mortgage apps with a pretty nice bounce this week, best in about five months. We'll be right back. With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases.

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22:55Welcome back. Let's get to Diana Olick with the latest read on mortgage applications. Diana, not helpful that all these Fed members are talking about higher rates. No, not at all, Sarah. And things are moving quickly in mortgage land. But let me start with the latest, which is that mortgage rates jumped sharply yesterday after that hotter-than-expected CPI reading, the monthly inflation report. Now, the average rate on the 30-year fix moved 12 basis points higher in just one day to 7.3 percent, according to Mortgage News Daily. You can see this came after four straight weeks of declines. The last high was at 7.61 percent on October 5th.

23:31We will not see a new rate today as bond markets are, of course, closed. Now, that drop, and especially last week, caused a nice surge in weekly mortgage demand. We got those numbers this morning. Applications to refinance a home loan rose 5 % for the week, although they're still 57 % lower year over year. Applications for a mortgage to purchase a home rose 8 % for the week, much larger, but they're also a lot lower than last year, down 18%. We also saw a slight pullback in the adjustable rate or arm share of loan applications. Of course, arms offer lower rates but are considered riskier, and we had been seeing people pile into those as they just searched for any potential savings.

24:09Stocks of the big builders, of course, are not having a great day today following that jump in rates yesterday. Lenar, Pulte, D.R. Horton all down this morning. All right. So what does all this mean going forward? Well, probably, unfortunately, that that nice easing we saw over the last month, as we see the potential for more Fed rate heights, probably going to turn around. The housing market has been, of course, in a deep freeze since September. Zillow's CEO said yesterday on CNBC it was the worst he'd seen in decades. Guys, back to you. Is there anything that can be done for relief as these rates just continue to move higher?

24:45I mean, we could build more houses and lower home prices by having more supply. but supply is actually piling up a bit on the existing side. Yeah, it's just, you know, how do you get more supply in the market to lower home prices? Because, I mean, unless you're the Fed, I don't know what you do about the mortgage rates. Yeah, it's a problem. All right, thank you, Diana. Diana Olick. Time now for a news update. Pippa Stevens has it for us. Hi again, Pippa. Hi, Sarah. Treasury Secretary Scott Besson recently moved from his Washington, D.C. home to a military base due to Iranian threats on his life.

25:15That's according to a New York Times report that said U.S. officials concluded that Iran's plots against current and former U.S. officials had reached a more advanced stage. White House counsel Will Scharf sent a warning letter to Democratic lawmakers on Capitol Hill claiming their planned investigations of the Trump administration, which are part of the traditional oversight function of Congress, could amount to, quote, blatant criminality. The letter comes after incoming House Oversight Committee Chairman Robert Garcia warned Trump officials after the election to, quote, lawyer up. And a judge in Alaska could rule as early as today on a lawsuit filed by Democratic Senate candidate Mary Peltola.

25:54Her campaign is seeking a list of absentee ballots that were rejected in one of the closest contests of the midterms. Alaska and Mississippi Senate races are still too close to call. The Associated Press says Pelotola holds a slight lead over incumbent Republican Dan Sullivan. Carl? Yeah, two big races still to be called on that and Mississippi. Thank you, BIPA. House Republicans considering a subpoena to Jensen Wang as North Dakota Senator Kevin Kramer calls on him to resign. Our Eamon Javers has the last on a story that is increasingly about Washington. Morning, Eamon. Yeah, Carl, you're right.

26:29You're starting to see some cracks in the support for Jensen Wang among Republicans here in Washington. The president has said that he supports Jensen Wang staying on as the CEO of NVIDIA. But we've seen now Kevin Cramer, a senator from North Dakota, Republican, widely respected on Capitol Hill, saying that he feels that Jensen Wang is simply a national security risk, that anything involving these highly sensitive chips and allegations of Chinese spying means that Jensen Wang should step down as the CEO of NVIDIA. That separately, we're seeing a report now from Axios. And what Axios is reporting is that the Department of Commerce received a national security letter advising it that there were these concerns about Jensen Wang and his relationship with this woman who is an alleged Chinese spy.

27:21That all happening last spring. So, Carl, my sense of this is what you're seeing now is folks in the national security establishment talking to people in the media, explaining what they did to warn the political leaders in Washington about this connection between Jensen Wang and this alleged Chinese spy. There's, you know, I think you can see some factions developing here in Washington over this as the national security folks are sending a message clearly through the media saying, look, we did our job here. We notified the White House. We notified Commerce. We tried to warn people about this before it blew up.

28:00And you're seeing some maybe some finger pointing and some blame game going on behind the scenes. The question of NVIDIA's support among Republicans, though, is going to be an interesting one. We'll watch for any additional calls for Jensen Wang to step down throughout the day today, Carl. Yeah, well, we certainly have been talking for, I don't know, a year or more about China hawks and what they thought about Jensen Wang's advocacy for chip supply to China. I'll tell you what's interesting this morning, Eamon, is this Axios report on Besant confronting Lutnik in the Situation Room over inaction on Megaspeed.

28:35Yeah, fascinating report, right? And the question is, was the U.S. government dragging its heels on Megaspeed, which was, you know, there have been media reporting going back a year or more that Megaspeed, there were concerns around Megaspeed, which, remember, was the customer of NVIDIA, which was buying these chips. Megaspeed was in Singapore. Alice Wong was a key official there. But the allegation and the question was, was Megaspeed simply funneling these chips into mainland China or giving Chinese company access to compute from those chips inappropriately and doing an end run on U.S. export control?

29:10So I think you can see that blame game and finger pointing starting to leak out into the press now. And I think that's a sign, Carl, of a widening scandal and the blast radius of this scandal continuing to expand. Well, it also feels like the Democrats are are are trying to figure out trying to investigate President Trump's handling of the allegations, what he knew and when. And it feels like they're going in that direction. If you listen to Senator Schumer. Yeah, I think that's right, Sarah. I mean, once Democrats take over on Capitol Hill, they're going to want to pursue a political angle to this, which is how much blame politically they benefit.

29:46The more blame they can stick on the president, they benefit politically. So I think their hearings, once they start them in the new year, are going to be really focused on that angle of all this, is what did Trump know, what did his top lieutenants know, and when did they know it, and did they do the right thing? Yeah, and is it in China's interest if Jensen leaves NVIDIA, you know, if he's no longer the CEO? I think that's a question as well. Thank you. Yeah, it's a question whether it's in China's interest or the U.S.'s interest for him to leave, right? I mean, at some point, you've got to wonder if this guy has taken on so much water that he's not going to be able to function in the job.

30:22All right. All serious questions. Thank you, Eamon. Eamon Javers in Washington. We'll stick with NVIDIA and the broader risk for corporate espionage. Our next guest specializes in catching foreign spies on American soil and is calling Jensen Wong's relationship with the alleged Chinese spy, quote, not a classic honeypot, but more something common and effective. Joining us now is former FBI counterintelligence agent Robin Drake. Thank you for joining us, Robin. What do you mean? What do the signs point to from your perspective on all this? Yeah, I know a lot of people have been saying this is a honeypot or a typical thing we see in like a James Bond movie, but it's really not.

30:57You know, when we're talking about espionage at these higher levels, when you're targeting CEOs and executives or even diplomats at this high level of government, we're talking about soft influence campaigns. And they're very common because what the Chinese do, they flood the zone with access points. And that's what they're trying to do to get at policymakers. I mean, you talk about it on this segment is we're assessing the relationships and the power and the impact of those relationships on business and on other transactions are taking place. And so that's exactly what transpired here was an influence campaign.

31:29For what? For information, for for policy favorable to them, for secrets. What do you think they want? So we said it right there. It's influence. It's to get to policymakers for their benefit. Because when we're dealing with executives at Wong's level, these are not the guys that are actually going to hand over the classified chips or the proprietary information to the other engineers. That's at the lower level. That's a different kind of attack vector that the Chinese are going to use. And so what they're doing is they do multilayer attacks. And so they're going after the people that have access to policymakers like Trump or like others that are actually going to deal with businesses and nation states.

32:08And so that's why they target people like him. And also it gives leakage to who else the Chinese could target, other relationships. So just like in business, you're creating networks of information to further your own agenda. Are there other high-profile examples like this in recent history? not that we probably know about as much that go on behind the scenes this became more notable obviously because one thing that i'm going to caveat and say that i think jensen did well so far because you've looked at when you work in the world of counterintelligence you're looking at the long game you're looking at how people behave over periods of time and the way he's run his company for so long and i even wrote it down it's this it's this radical transparency blunt transparency and he's demonstrated it now because that's what in the world of counterintelligence what you're looking for.

32:52We're looking for a lot of information, a lot of data, a lot of relationships. And tell me what you said. And more importantly, what was asked of you? What did you disclose? And so in this world, this happens quite frequently. That's why I know it's hitting people pretty hard right now that this happened. But at the same time, when I was working in the bureau for decades, these types of things happen pretty, I wouldn't say regularly, but enough that It was more than you'd expect. Yeah. Robin, one angle we've not been able to tackle well so far has been the fallout in Asia. What we might eventually learn from the Singaporeans or the Malaysians and what kind of reputational damage he has sustained in Taiwan, where he was obviously a revered figure beyond business.

33:39Yeah. And to his credit again right now, again, I'm not jumping on his credit bank. I'm just looking at this as an investigator, what I'm looking for. You know, when you're looking for people that you want to trust, because that's what it comes down to. Can we still trust people to perform in their function, in their role, in their position? We're looking for three key things. Open-house communication, transparency, and vulnerability. That vulnerability is saying, I own my actions, I own my misdeeds, and here's what I'm doing to move forward with it. And so far, the behaviors I'm seeing are much healthier than you'd see from someone else who's trying to cower, trying to run, and trying to own all people.

34:13So the only way you restore trust is by doing those three things. And so time will tell whether he's doing that effectively or not. Do you expect him then to what? Start talking publicly about it? I think that's going to come down to obviously lawyers is going to come down to the investigation. What I expect at the onset is he should be talking with the investigative team that's internal to NVIDIA, which I thought they did a good job setting that up internally, as well as talking to the FBI investigators and our national security resources to make sure that we're having a type of transparency.

34:42transparency they're going to be the ones that give or not give him the green light to talk and disclose the things they've talked about but i would say if we're watching for signs i would say are we seeing any major wobbles as i call them or deviations when we're talking and learning things from the board eventually or from investigators but so far it's looking like pretty solid pretty good investigation and pretty typical actually does would he have security clearance a ceo of NVIDIA? It's a good question. I know people like Elon Musk do because of the type of government contracts they hold in the classified information.

35:16I'm not quite sure whether his security clearance already'd have one or not. He's definitely dealing with high-level proprietary information, so he would actually have that kind of information. It shouldn't be disclosed to foreign actors and could be consequential if it was disclosed. But again, that's not really what the adversaries are going to go for from someone in his position. They're going to look for access points to people that do have the knowledge like that as engineers and researchers and stuff first. Okay, Robin, thank you. Really valuable perspective. We appreciate it. Thanks. My pleasure.

35:49Still to come this morning, Unlimited CEO Bob Elliott will join us while he says this recent bounce, pretty good opportunity to raise some cash in a moment. Markets today holding in here just above 7 ,600, maybe a percent or less from the close after the day of after Election Day. The tech trade does get a boost this morning following Corweave's numbers, a bounce that our next guest says investors should take advantage of by reducing their equity risk. Joining us this morning, Unlimited Funds co-founder and CEO Bob Elliott. Bob, as always, our thanks. Good to see you. I see you. I think you have been pretty consistent in having your eyes open to the possibility of not just a CapEx rollover, but maybe a household spending rollover?

36:32Yeah, I think if you look at the U.S. economy and particularly if you look at the U.S. stock market, there's basically two things that have been meaningfully supportive to the markets over the course of the last, you know, six, 12 months. And it's the AI CapEx story and its households, which continue to spend in a way that is significantly outpacing their income. And And both of those elements are supporting the relatively exceptional expansion in corporate profits that we've seen on a backward-looking basis. I think the challenge here is on a forward-looking basis, those expectations of corporate profit growth continue to be very, very elevated.

37:08At a time when we're starting to see households pull back to some extent as they haven't continued to get the asset price lift that they had before, And we're starting to see some real questions about the CapEx in the AI space. And so if those two core growth engines in the economy are starting to recede, I think that's going to be challenging given where we are with the current equity market pricing. You know, we're just a few points off of all time highs. Right. But doesn't I mean, isn't a even if it's low higher, low fire, isn't a robust labor market really the one that really supports it all?

37:44And until that bends, everything sort of stays upright. Well, I think you've got to focus on what compensation households are getting right now. So while we have an unemployment rate that's relatively low, we have relatively modest employment growth, maybe half a percent. And we see wages, which really are the thing, wage growth, which really powers household spending. That's slowed to cycle lows, about 3%. And so you look at that compared to the price rises that we're seeing, which we got a new read on just yesterday. and real wages are contracting. And that's important because it's hard for households to continue to have positive real spending growth when their real wage growth is negative.

38:30So cash makes sense because you see an environment where stocks and bonds both sell off? Well, I think we're in a challenging environment because not only are there some questions about whether those extraordinarily high earnings expectations are going to be met on the stock market. But the Fed is boxed in when it comes to rates in terms of having to deliver a hiking cycle. Inflation is 4 percent. The unemployment rate is relatively low. You put those two things together, any reasonable systematic measure of, say, the Taylor rule or something like that would imply we need 100 to 150 basis points more of hikes.

39:09The Fed increasingly looks like they're moving in that direction. The reality is holding bonds in that sort of environment is not a great deal through hiking cycles. And so you look at that and you see the challenges that are going on with the equity market, the policy tightening that's happening, and the challenges that exist with the bond market. And it's really not necessarily a good time to be a financial asset holder in general, which is why when you see bounces, for instance, in stocks like we've seen here, You know, we're higher on stocks today than we were before the election. And the regulatory framework, certainly at the state level, has changed a lot.

39:43These are opportunities to maybe scale back where you are in your equity risk. So you move, if not cash, then what, long-term rates? Long-term bonds? Well, I think that's the challenges in this environment. I mean, we saw that. We saw yesterday how the challenge with the hiking environment is it hits all assets, which is why in these sorts of environments, cash often is the best asset to be holding. And so in a world where I think everyone is so focused on buy the dip, buy the dip, in order that things look on a discount, when in reality, the risks ahead and the risks of a meaningful economic slowdown plus a tightening cycle, those are outpacing the shifts in the prices that we're seeing at these levels.

40:33And so that's a time to scale back your exposure rather than lean in and lever up. I guess the counter argument that we've heard here on this desk in recent days is that this market has been through so many risk factors like that before. I mean, the high oil prices, two wars, all that geopolitical risk, higher interest rates, you know, rising rising market rates. Like there's been so much thrown at this that this market and consumers have remained resilient. earnings have continued to grow double digits and the investment boom is happening around AI. Well, I think that's why you have to you have to transition in sort of a classic mania mechanism is dynamic, is that you see what look like fundamentally strong conditions, and then you just pencil those out essentially far out into the future, even as conditions are changing.

41:24And so it's true, like the economy's held up reasonably well, earnings have been strong, But, you know, interest rates are 100 basis points higher today than they were at the beginning of the year. The challenges related to getting enough ROI on all that AI CapEx are increasingly emerging. And not to mention some of the more idiosyncratic dynamics that have been discussed in this program just before I came on. And so it's not that the backward-looking picture hasn't been in good shape. It's that the duration of these drags in the face of very high expectations are set to create disappointment ahead.

42:02And that's really when markets turn. It's when high expectations are met with disappointment in the reality that comes and a tightening cycle that you almost always see these sort of manias fade. And I think we're basically in that in that moment, certainly a moment where a growth, a negative growth surprise or concern is very likely to emerge. Right. Finally, Bob, I mean, if the war does end, Brent's off 30 bucks, the A.I. trade, the U.S.-centric A.I. trade takes a hit. Maybe maybe Europe. I don't know. I mean, the stocks 600 is already outpacing S &P for the year. Yeah, certainly if you look outside the U.S., expectations are much more muted in terms of a forward-looking perspective.

42:48Places like Europe continue to have very low earnings growth expectations. So it doesn't take much to beat those. And so I think there's probably more opportunities outside the U.S., particularly in other places that have been re-rated down. But overall, this is an environment to be a little choosy, to be a little patient, take some risk off the table rather than double down. Bob, always good to get a look at what's on your radar. Very valuable. As always, see you soon. Thanks. Bob Elliott. Thanks for having me. Still ahead on the show, Anthropic is forging ahead with its IPO despite the recent market volatility.

43:30We're going to take a look at what it means for tech investors when we come right back. Anthropic is forging ahead with its IPO despite recent market volatility. Kate Rooney joins us with more on what it means for investors and the broader sector, Kate, as we march toward this offering. Sarah, well, there really is a sigh of relief right now from tech investors that Anthropic is finally on its roadshow after filing this summer. It is on track from what we're hearing to list next week. And I did hear a lot of skepticism even the night before the roadshow that it could actually get out. People I'm talking to doubted that the listing could happen given all of the tech volatility we've been talking about.

44:06There is, of course, venture capital crowd, mostly out west, that needs to return money to their investors. With an exit here, you've got the bankers as well that want this mega IPO to get out. You've got fund managers looking for access to this growth name. There's also the retail crowd. It's really the first time Main Street investors can get a slice of Anthropic overall. A company's putting aside about 20 % of the allocation for retail. It's lower than SpaceX, but it is higher than the average listed in. SpaceX, in a lot of ways, is the recent comparison. It went out in June with the wind at its backs and back in terms of market conditions.

44:39Anthropic now dealing with much more volatility. Vanda Research, interesting guys, tracks retail investors pretty closely. They say they see signs now of what they think is going to be record retail demand, which could support the price. So we'll see what happens there. But they're tracking speculative contracts. These are known as perps, so they're tied to Anthropics valuation. But the reason it matters and the volume matters, which hit a record yesterday, it is sort of correlated to what happens with the IPOs from what they've seen. It's building faster and earlier than it did for SpaceX. The firm now says there was a correlation between these speculative markets and the SpaceX deal, a couple of IPOs they also track.

45:17And based on this, they do expect more than double the activity than what we saw in SpaceX's summer IPO. Some people I'm talking to, though, guys, they're relieved about the price tag as well. Someone called it digestible. Still going to be a lot of attention around how it actually trades when this company goes public. And so that's sort of the next milestone and hurdle here. But what is it worth? That is the question. All right. Thank you. What is it worth? What is it worth? Kate Rooney, I'm tracking the walk up into Anthropics IPO. Look, tomorrow we'll get jobless claims. It's kind of a light data day.

45:50Cisco numbers. We've also got an exclusive for the first time with the CEO of Estee Lauder. So good read on the consumer and what they're seeing across the global beauty sector. China is very important as well. That'll be on the show. Yeah, as we don't really have the bond market to read today, but it will be interesting to see how it has responded to some of the hawkish Fed speak. And we'll see what we get on PCE and PPI on Friday as well. Yeah, today is really the bounce and semis. I mean, the SOX, the Philadelphia Semiconductor Index, information technology, helping the overall market. And close to session highs here at 7624.

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