11AM Hour: McDonald's CEO, Okta CEO & Trump-Xi Meeting on Deck 9/23/26

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0:47No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Good Wednesday morning. Welcome back to Squawk on the Street. I'm Sarah Eisen with Carl Kandania, live from Post 9 of the New York Stock Exchange. Today, as AI fears grow, security firm Okta aiming to offer a solution, expanding how enterprises can find, manage, and stop AI agents, including a last resort kill switch. We'll discuss all this with CEO Todd McKinnon. McDonald's host tickets investor day today as the U.S.

1:20business continues to struggle. Stocks down 29 % from the all-time high back in March. You'll have more with our exclusive conversation with Chris Kamchinsky. You'll hear what he told us about plans to deliver for shareholders, how the chain's leaning in on AI, and the impact of GLP-1s on the restaurant business. And MasterCard's consumer outlook. Chief Economist Michelle Meyer joins us to discuss why ongoing economic uncertainty is not taking a big bite out of spending. And guess what? AI is impacting holiday spending as well. As for the markets, a little bit of work to do here with The 10-year up to 5.06.

1:55Long bond almost to 5.37 or so. Got some weakness in most sectors except for energy. Some strength in industrials and financials in breadth is about 3 to 1 negative. Semis pulled back this morning, but still up big over the last few days. The SME ETF up about 10 % over the last week. And that momentum is spilling over into memory names. Check out the memory ETF DRAM up more than 12 % over the same period. Our next guest firm manages the DRAM ETF. Joining us today is Roundhill Investments CEO Dave Mazza, who joins us here at Post9. It's good to have you back, Dave. Welcome. Hey, thanks for having me back.

2:29Can you sum up what's caused this second look at the space? Yeah, it's interesting. We saw, of course, explosive growth earlier in the year. And then we've been basically in a two-month trading range, somewhere between 50 and 60. But recently, semis and memories sort of at the tip of the sphere broke out. So DRAM over the last few days is up about 13%. And what's interesting here is that there was tons of scares about where AI was going, but the market absorbed it, and it absorbed it for a reason that at the end of the day, it doesn't matter whether we're slowing down frontier models or continuing to invest in them, there's still demand and a need for memory.

3:06And at the same time, these stocks still remain trading like commodities with multiples that are extremely low. Did the reset ring out a lot of leverage? Are you seeing as much activity in the levered ones? What's interesting is, yeah, most certainly. I think there was a significant amount of leverage in the system. There was leverage in the U.S.-listed memory ETFs that have 2x leverage. There was a significant amount of leverage, which we've talked about before, from South Korean investors, from hedge funds. It rung a lot of that out with that kind of 25 % to 35 % drawdown. And now the setup is much more focused on fundamentals, especially with Micron reporting next week.

3:41I think of all your popular buzzy ETFs, right, DRAM, MAGS, CHET. Is DRAM still the biggest by far? DRAM is the largest ETF by far, so about$27 billion. And then the Magnificent 7 ETF, MAGS, actually just crossed$5 billion earlier this week. With its first, I think, new record since June? Correct, yeah. So Magnificent 7 is an interesting trade, right? Those stocks were punished, perhaps for good reason. Tons of concern about CapEx. Was that going to be debt funded? But now the market has woken up to perhaps the Magnificent 7 is defensive in a different way than we think about defensive, right? It's not defensive like a consumer staples in utilities, but with yields over 5%, that 10-year over 5%, maybe companies that are growing revenue at such consistent rates become the new defensive trade, and that's one of the reasons why we've seen actually money come back into MAGs that we hadn't seen some time.

4:33That's a great chart looking at the MAG 7 versus the 493. Last time you were on, we talked a bit about ETF innovation and what others might be constructed. to satisfy investor appetite. Has there been progress on that front? Yeah, it's interesting. There's, of course, a ton of innovation having an ETF. ETFs have now come to expand from not just stocks to bonds to commodities, looking at a variety of different asset classes, including crypto. But what's interesting is that this year, it really has been the rise of the thematic ETF again, partially driven by the success of DRAM, but also the fact that investors are now looking for what I'd consider kind of pinpointed precise exposure to different parts of the AI trade, right?

5:14So there's neoclouds, our ETF end cloud, photonics and optics stocks, our ETF light, L-Y-T-E, that investors have embraced because, as we know, the AI trade a few years ago was just about chat GBT, just about Anthropic. Now it's about all the different components that investors are looking for that are going to be rewarded at different times. I mean, it's funny, your chat ETF, I mean, you can't have open AI in it right now. So what is in it? Because that has been the huge winner over the last year. Yeah, Chad's had a really successful performance. That's an actively managed ETF. So I'm one of the portfolio managers on that ETF.

5:46And what's interesting is we pivoted actually into memory even before we launched the DRAM ETF. One of the reasons why we looked at creating an ETF just on memory that has, of course, been rewarded. More recently, we've actually been looking at some of the cybersecurity and what's called AI inference names. We know that's been all the buzz, particularly with Muse and Instinct coming with the Gentic AI. What does that mean? Of course, those stocks fell off sharply when that first came out. But now the market said back, wait a minute, if this is all going to be happening, we're going to be freely giving our bank accounts and other personal information.

6:18We're going to need a lot more cyber and a lot more ability for inference to actually make all this work. What about when these companies do become public, anthropic and open AI? How does it change the composition and the way you invest? Well, certainly if you look at for genitive AI companies, I think those two names that are looking to go public at some time probably would make sense as part of that basket. When I think about the AI trade, though, the fact that these companies are going with such large market caps, trillions of dollars, we saw it with SpaceX. That's actually one of my fears from for the AI trade to be able to continue.

6:50It's not the fundamentals. Those are actually quite strong. It's does the amount of capital that investors want to allocate to these companies, which are exciting and promising, going to kind of suck the air out of the rest of the market because people need to be able to fund those. There's not an infinite amount of money where I can just go start allocating to a trillion-dollar market cap. So that's actually some of the concerns. So I actually think OpenAI getting pushed out in an interesting way is actually beneficial for the smoothness of the trade to continue. Well, we had those fears going into SpaceX.

7:18Didn't really come to pass. Yeah, well, I mean, it did a little bit, right? We certainly saw the market wobble there. And then, of course, as people took a step back, the market continued to grind higher. And it's grinding higher even in the face of what remains a pretty mixed and, in fact, I'd call it weird macro tape when you have all these concerns about oil, which is driving rates higher. But perhaps, as Kevin Warsh was stating recently, maybe the market's being driven higher or rates are being driven, excuse me, because growth is actually better than expected. And if you look at today's PMI data, there might be some truth to that.

7:50Yeah, blowout. Blowout numbers. And that does explain the yield backdrop. On volume, is number one on volume? Is that DRAM? Yeah, DRAM's volume is incredibly strong. The DRAM's options volume, again, this is getting into all of our Rennix territory here, but the calls to puts after that shakeout that we talked about a second ago, that's re-accelerated. The other notable thing is that we've actually seen calls actually come off in mags, but then get reset heading into the end of the quarter, heading into micron earnings, which I think are going to be a real tone setter for where the market goes from here.

8:24And what comes second in terms of volume to DRAM? Is it MAGS? It's MAGS. And then after that? And then you got CHAT. Wow. I was just looking at CHAT versus MAGS. I mean, it's not really a contest so far this year. Yeah. Well, I mean, MAGS is pinpointed exposure. You just have the hyperscalers and then NVIDIA, of course, and then Tesla. CHAT really is going to be able to move and ebb and flow depending upon where we see opportunities in the AI trade. It's all doing better this week with the NASDAQ coming up a good week. That's for sure. Dave, good to see you. Thanks for coming in. Thank you. I will turn to geopolitics.

8:57President of Iran giving a speech this morning at the United Nations. That's ahead of President Trump's meeting with Chinese President Xi Jinping tomorrow. Megan Casella has the details and Megan whether there was any progress from this meeting between U.S. officials and Iranian officials as well. Yeah, it's not so clear on that point, Sarah. Iran's President Pazeshky in delivering what was a very defiant speech this morning from the floor of the U.N. He accused President Trump and the U.S. of assassinating Iran's Supreme leader without any legal reason. He also blamed the U.S. for killing Iranian schoolchildren, an attack that he said violated international law.

9:31He warned that the resistance of the Iranian people will only increase in the face of sanctions and bullying, and said that while Iran is ready for dialogue, diplomacy, and negotiations, it will not accept the language of force. So that came, of course, after that three-hour meeting yesterday between U.S. and Iranian officials on the sidelines. That renewed hopes that the two sides could be edging closer towards a deal to end the war, but the running president not exactly making it seem in his speech that that would be happening anytime soon. Now, though, pivoting to China, the big state visit set to kick off here this evening.

10:02That's when President Xi will be greeted by President Trump on the tarmac at Joint Base Andrews. That's an exceedingly rare diplomatic gesture, and it's one that President Xi did not give to President Trump when he landed in Beijing in May. That arrival is what you're seeing here. But today's red carpet welcome will set the tone for all the pageantry that the White House will be laying out this week for the Chinese president. The policy talk on AI, tariffs, Iran, all of that will start tomorrow. But with expectations of any big policy breakthroughs really quite low, the pageantry here is the main point as the U.S.

10:33looks to shore up its relationship with China with this visit. Guys. Really interesting messaging, Megan. I noticed that the chair of armed services on the Senate side, Roger Wicker, said, I would have suggested the president not invite Xi for such a lavish welcome based on all the troubling issues. we have with the Chinese Communist Party. We know of all the criticisms of socialism, so to speak, lately out of the White House. How do they work their way around that? Yeah, it's an interesting point. Interesting to see that from a Republican lawmaker, and a pretty high-ranking one as well, calling it a lavish welcome.

11:04It's one thing to invite the Chinese president. It's another to make sure it's a state visit for the first time in over a decade with all the bells and whistles and red carpet and tea ceremonies and all of that that comes along with it, military flyovers, you name it. So there's a lot that goes into this, But really what the White House wants to do here is show that he honors, that President Trump honors President Xi as an equal, that he wants to reciprocate everything that happened back in May when he was in Beijing. And they want to make this relationship look as stable as possible. There is so much tension simmering just beneath the surface over Iran, for one, over socialism, concerns, as you said, over Taiwan, over China's military buildup on AI and tech, of course, as well.

11:43All of that, though, doesn't seem like it will be really addressed that substantively when what the White House most wants to show here is that they are welcoming the Chinese president with honor, with respect and really want to wow him when he gets to U.S. soil. Yeah, I mean, there's always been a good personal relationship, seemingly, despite some of the very wide disagreements on the state of the world. Thank you, Megan. Megan Casella. When we come back, the CEO of Okta will join us. The company just releasing new offerings for AI agents as concerns around safety grow. Much more from our exclusive today with the CEO of McDonald's, what he says about the stock price, AI, and the impact of GLP-1s as Squawk on the Street continues.

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13:44So instead of guessing, you get clarity and can hire with confidence. For your next home project, try Thumbtack. Hire the right pro today. Welcome back. Identity security firm Okta launching a new series of tools aimed at helping companies manage potential rogue AI. including an expanded kill switch and a new coalition alongside AWS and Google Cloud to come up with an expanded blueprint for securing AI agents. Joining us now on CNBC exclusive is Okta co-founder and CEO Todd McKinnon. So clearly there's demand for this, Todd. How is what you're doing different? Topical conversation, huh? For sure.

14:25So I was just going to ask, how are you adding value here? How's it different than what CrowdStrike and Palo Alto and the others are trying to do? Well, the issue in the industry right now is that we're being forced to make this tradeoff between security on one hand, where we lock all the data down and don't let AI have access to anything and don't get the benefit. And on the other hand, innovation, where we connect everything and then deal with some of these scary headlines we're all talking about. So what we're doing is we've built this coalition, this blueprint alliance to bring the industry leaders together.

14:57whether Amazon, Google, Salesforce, ServiceNow, CrowdStrike, and others, to bring visibility and control. If you look at these hacks, if you look at the OpenAI hugging face hack, the issue was that OpenAI didn't know the system was connected to the Internet. They didn't have the visibility and control they needed. So all of these issues, if we can bring industry partners working together to bring a transparent system of visibility and control, we can get the innovation and the security and take this where we all want it to go. How do you control, like, can you control what happened there with the Hugging Face incident?

15:30Well, it's about bringing the visibility. There's no magic answer. These systems are dynamic in their innovation and they're being built in different ways. So there's no magic answer. But this fundamental principle of making sure all the parties, all the players involved, know what the systems are connected to and know what permissions they have, that's the foundation you can build a scalable, sustainable system that delivers both innovation and security. And what about the rest of the competitive landscape here? I mentioned others are also trying to, everyone's trying to secure the agents at this point.

16:01So what is your special sauce? Well, when I talk to customers, the real competition is confusion. As you mentioned, everyone's coming to them and saying, we have the answer. We're the only company that can do this. The reality is that every layer of the tech stack is becoming agents. Every layer is becoming more autonomous, long running, connected to more things, startups, existing companies. And no one company can secure it all. So that's why this concept of this blueprint is so important. It's clarifying the environment for the customers. So customers can move forward with these no regrets investments.

16:36Foundational things like a central directory of agents that's integrated with all their systems. A way to manage what agents have connections to what, the visibility there. And finally, this kill switch. So the industry can agree on a way to sever these connections and shut the system down when it deviates from what it's supposed to be doing. I know, but Todd, I mean, it was supposed to be doing because that's what it was asked to do. How do you describe to viewers how a kill switch can work without degrading its sort of mission criticalness? Well, it's the visibility, Carl. You have to understand what the intent was and making sure it matches with the permissions the system have.

17:12I know I'm speaking in generalities, but we're talking about a technology that's permeating every other layer of technology. So the answers have to be general, but it comes down to these fundamental principles of visibility and control. That's what gets the outcome we all want, because what we all want is we want the benefit. We want the innovation. We want the invention. We want the new breakthrough drug discoveries without the downside. We don't want the hacks. We don't want the bioweapons. We want to have innovation and security and risk mitigation. The story this week has been about Muse and consumer AI agents and chatbots.

17:46And I wonder, is that an opportunity for you as well? Well, it is, absolutely. And from an industry perspective, it's an acceleration of what we've been seeing. There's existing systems are becoming more agentic when you look at something like AgentForce from Salesforce. And there's these new inventions like Muse and other consumer-facing agents. And what we need to have these things reach the full potential is, again, they need to connect to many systems. And we need standardized ways for those systems to connect securely. You talk about Amazon blocking Muse. Why did they block Muse? Because the way that Muse takes users' passwords and then uses them to log into Amazon, it's not ideal.

18:25It's not good to share passwords, but that's the only way. There's no other standard way for Muse to do that. So lacking that industry standard, we're left in this bad situation where Amazon has to block them and the Muse product doesn't work as well. That's why we're going forward to the industry with these standards like Agent SSO, which allows any agent to connect to any system without sharing passwords. So, again, visibility and control and standardization are our key successor. Some of your peers on the security side say nobody realizes how big a battle this is going to be as other elements or other versions of Muse get rolled out by other competitors.

19:01And then those force reactions from vendors. Do you agree? Well, I think there's a motivation here. The scarier people make it sound, the more people want to buy security products. So I think a more balanced view is appropriate. That's why we're focused on these fundamental concepts. How do we work together as an industry to not confuse the customers? How do we make this pie bigger for everyone, including the customers? Because what they want is they want their businesses to grow faster. They want their customers to be more successful. So how do we bring this balanced view that brings visibility and control, where people working together in service of the customers and helps us balance security innovation.

19:37That's the goal. And maybe dial back the cataclysmic headlines a bit. Based on, well, I'm curious of what you think. Based on some of these frontier models that you've seen, how scary are they in terms of, from a cybersecurity perspective, in terms of what they can do on their own? I think it's exciting in terms of the power and the capability of the model. As someone running a company and someone trying to build great products and someone helping our thousands and thousands of customers. It's very exciting. There are risks. There are risks in every wave of technology. And I think the biggest risk is that what we've seen, that these models are capable of speeding up cyber attacks, not necessarily totally new class of attacks, although everyone's on the lookout for that.

20:19It's the amount of speed and the amount of coverage they can get very faster. So what that means is that on the defensive side, we have to take advantage of the same technology. So if an attacker can use a frontier model to attack systems, then defenders can use a frontier model to defend. And so we have to match capability with capability, which is, I think, the smart thing to do. Finally, Todd, I mean, your stock has really taken off this year on this. It started earlier in the year and it's kind of been a moonshot in 2026. How big of a business is this going to be, securing agents versus securing humans, which is your bread and butter business?

20:53Or are you lifting both businesses in the process? Well, a couple of things going on here that are very exciting for us and our investors. The first thing is that people are finally realizing after many years is that if you look at the overall category of cybersecurity spend, it's about$220 billion a year. We're likely to look back in five or 10 years and see identity management is the biggest category within cyber. For a long time, people thought it was going to be network or endpoint. It's becoming pretty clear that identity management is going to be the biggest category in cyber. That's one thing.

21:23And the second thing is this bringing visibility and control in a standardized way to AI agents. That might be a bigger business than all of identity management. So we have these two fronts that are very exciting. So what that means about Okta is we're focused on meeting this moment, making sure we're building the company that's serving customers and moving the industry forward to take advantage of these two massive opportunities. And that's why we're also excited to come to work and have this conference we're having here in Las Vegas and tell our story. And it's an exciting time. Well, thank you for taking some of the time to talk to us and our audience, Todd.

21:55Appreciate it. It's great to be here. Thank you so much. Todd McKinnon, the co-founder and CEO of Okta. Still to come this morning, a lot more from our exclusive with the CEO of McDonald's, how the company is using AI right now, how GLP-1s are impacting the business. Plus, Michelle Meyer of MasterCard Economics Institute will join us. We're going to break down their brand new forecast for the holiday shopping season. First one out of the gate here. We're back in a moment. You've never been one to settle, stand down, or stand still. You're a lifelong learner, energized by excellence. There's a fire inside you you can't ignore.

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23:53McDonald's share is still down here 5 % as the company holds its first investor day in three years. Last hour, we heard where the McDonald's CEO stands on the macro and the consumer. We also discussed a number of other topics, including the stock, GLP-1s, and the company's plans to roll out more AI use in stores across the country.

24:15There's, I think, all sorts of use cases for us on AI. You touched on one, which is around what we can do in the drive-thru. And we've been piloting what we call Archie, which is our own voice recognition or voice ordering system in the drive-thrus. We've had really good success with that. We're getting over 90 % accuracy rates right now in both English and Spanish. And I think you can expect that in 2027, you're gonna start to see that roll out in the US. And we have plans for that to go into other markets. I think one of the things that's important though, as we do that is we've always got to make sure it's in service of elevating the customer experience.

24:55And so, as we do voice ordering, it allows us to perhaps put labor in other parts of the restaurant where we can actually deliver that hospitality. There are other things that we're using AI for, For example, inventory management today, it's two to three hours a week of crew time actually manually entering in inventory as it comes into the restaurants. All of that's going to be AI enabled. And then if you think about the equipment in our restaurant, one of the things that we're going to be doing over the next few years is all of that equipment is going to be connected to the cloud. We're actually going to be able to have real-time monitoring of our equipment and be able to predict when maybe equipment needs cleaning or when it's about to go down.

25:35So that notorious shake machine that people like to talk about, that's certainly going to be an opportunity and we should see some benefits there from AI. Right. It sounds like the industry response to GLP-1 is kind of coming together. Yes? Yes, I think for us, we're going to talk about GLP-1. And while today we don't see it as having a really meaningful impact on our business, the expectation, as we've said pretty consistently, is that it's going to continue to have a bigger impact over time. And so if you think about what penetration rates are today, it's probably around 10%, maybe a little bit higher than 10 % in total in the U.S.

26:17among adults. But imagine if that penetration rate gets to 20%, 30%. I think the important thing is what we see is when people do go on GLP-1s, they still crave our food. They still love coming to McDonald's. But what they're buying, the portions that they're buying, that changes. And so we're going to evolve our menu to make sure it reflects where we think that consumer is going to be looking for in the future. One of the reasons I wish I was there with you guys today is the store architecture. Are there advancements? Are you making some changes? can you give us something on that and maybe on unit growth or store count?

26:56Sure. Well, we're excited to be sharing our new restaurant design. And this is something that's going to get rolled out really over the next several years. This is part of our regular remodel cycle that we do around the world. Every 10 years, we do a remodel cycle. And so the restaurant that we're sharing here has a number of features. Certainly all that technology that I was talking about, there's a ton of tech that we're putting into the restaurant. that's mostly all behind the counter. At the same time, what we're really trying to amp up is the friendliness, the hospitality in the restaurant.

27:28And you see all that in front of the counter. Our restaurants are gonna be much more open. You're gonna see a lot more light. We're adding the fun factor back in. I think there was maybe a little bit of an opportunity for us to inject some more fun into the restaurant. You'll see that. And so next time you're in Chicago, I'd love to take you by and we can show you what this restaurant looks like. Yeah, no, it's been too long. On the stock price, I mean, restaurants have been challenged all over the place. And we have seen very difficult examples of comps, especially in pizza and even some of your rivals in beef.

28:04But I wonder how much of a sense of urgency has that lent to you today on this investor day? Sure. Well, after a good start at the beginning of the year, our stock was at an all-time high back in February. And then certainly there was a slowdown that we saw in Q2. But at the end of the day, what I tell our teams is we manage the business, we don't manage the stock price. And ultimately, if we're doing our job of managing the business in the right way, managing it for the long term, the stock price will take care of itself. So, you know, while it's something that I think gets some headlines, our focus is really on driving the business long term.

28:40And I'm really confident about what we're going to be able to deliver for shareholders over the long term. Yeah. Now, you yourself have become a bit of a personality, I would argue, on social media in particular, as you were willing to go on camera and test some product. Has that paid off? Do you think you'll do more of that? Well, it certainly helped us sell a lot of big arch burgers. So that was one of the benefits of it. You know, I think there are opportunities for us to do that. And I think, you know, you'll see us do that periodically. But ultimately, what we are is about celebrating our brand.

29:18And there is no stronger brand to be selling the burgers and fries in our restaurants than the McDonald's brand. So I want the McDonald's brand to be what's out front and center. And to the degree that I can support that periodically, I'm happy to serve. Of course, one of the viral moments in the fast food industry earlier in the year. As we've been watching the Investor Day proceed, they did give us some numbers on new unit growth, 4.5 % in 26 and 27, slowing to 3 to 3.5 in 28 to 30. Because new stores are expensive. I mean, the architecture, we've heard this from all kinds of companies like Starbucks, that it's hard to have cost discipline when you're trying to revamp a store, make it look nice, grow the number of units.

30:04Very challenging. Make it more fun, as you said. Yeah. And that's where it was interesting to hear him talk about the AI model, Archie, that he said that they're experimenting with or using, really, not just as a chat bot to talk to drive-thrus, but it sounded like it was more of an operating system on running the restaurant. And I do wonder if there's a margin productivity story that's not being appreciated. Because ultimately what the promise of AI and these models are that it totally changes the economics when it comes to labor and when it comes to operating a restaurant. So I do wonder if that's the margin story.

30:38Maybe we're in early days or maybe it's not. Yeah. That is promising. I mean, they're talking about 250 bips of what they're calling gross restaurant level efficiency is how they're phrasing it. But you're right. I mean, we're going to start getting a lot more specific metrics from companies probably going into next year on what it's delivering. Right. Return on investment. Return on return. If you're spending. Also, the notion of GLP-1's tripling from 10 to 30 in the U.S., that's why they're talking more grilled chicken, egg bites, things like that for consumers who, yeah. Although he still says not having as big of an impact when it comes to McDonald's.

31:13Maybe people are taking smaller, more delicate bites like he did, which is so funny because he said it helps sell a lot more burgers because originally it was mocked. But then ultimately, I guess, you know, it's good press, right? Any attention is good attention, exactly. This is the corporate leader eating the burger. You said there's more coming, too. Yeah. So I wonder if he'll take bigger bites in the next one. All right. Time now for a news update. For that, Seema Modi is back. Seema, Sarah and Carl, here's what we're watching at this hour. Federal prosecutors have reportedly opened a probe into the executors of Jeffrey Epstein's estate.

31:50That's according to The Wall Street Journal. Darren Indyke and Richard Kahn were also the longtime lawyer and accountant for the late sex offender. Prosecutors have reportedly met with the potential witnesses and requested documents about their dealings with the two men. Both have repeatedly denied any wrongdoing and say they were unaware that Epstein was engaged in sex trafficking. The FBI says it's investigating a possible hack of its primary job site, FBIJobsMedia.gov. 404 Media reported yesterday that a cybercrime group claimed responsibility for stealing employing data. Sources familiar with the investigation tell ABC News that the Bureau is continuing to assess the extent of the breach.

32:27The site is currently shut down. And Swifties got a big surprise this morning when Taylor Swift revealed an expanded version of her latest album called The Life of a Showgirl. The Inc. Encore will feature four new songs and be available for download on Friday. Keep forward to that. Carl, back to you. We know what Sarah's doing Friday. Yeah, exactly. Of course. And people were thinking that she's just a housewife now. You know, she got married. Right, that she'd slowed down. She's not going to release anything. Not the case. Taylor always delivers. See what thanks. Still to come, the CEOs of OpenAI and Anthropic are set to brief the U.N.

33:00Security Council this afternoon. We're going to break down what to expect from that meeting as these A.I. safety concerns grow. Plus, could President Xi Jinping's visit to Washington clear the way for Chinese autos to be sold in the U.S.? We'll discuss that question in just a moment. Welcome back. CEOs of OpenAI and Anthropic are set to brief the U.N. Security Council this afternoon. Kate Rooney joins us with more. Kate, what do you expect? Hey, Sarah. Well, we do expect to see Sam Altman and Dario Amadei addressing the U.N. Security Council today in New York. It is expected to kick off around three o 'clock Eastern.

33:35So Amadei will join remotely here. Altman, from what I'm hearing, is going to be there in person. And despite the public rivalry between former co-founders and now the two biggest AI companies, these two have actually moved a lot closer on AI guardrails and recently agreed to, quote, pace the frontier of AI, although they both released new versions of their models yesterday. I did speak to a source who says OpenAI's Altman today will try to strike a, quote, pragmatic middle ground between no rules at all and then the sky is falling safety rhetoric, as this person put it. Altman, from what I'm hearing, does plan to ask for common global benchmarks to measure AI capabilities.

34:12So that is similar to what OpenAI has argued in the past in a recent essay. You also have Dario Amadei. He He has often been painted as the more extreme voice on safety. He has long warned about cybersecurity and bioweapon risk, but also the upside to cure diseases, for example. He has pushed back on some of the Doomer criticism, says that he's balanced between the risk and benefit. Amadei was the first to call for coordination between the labs. He's argued for international coordination as well. There has been a split, though, in Silicon Valley. Not all CEOs agree with that. You have Mark Zuckerberg and Jensen Wong on one side of this debate now.

34:46And the White House stance, guys, is very clear. President Trump stood at the U.N. yesterday and then said the U.S. is, quote, totally rejecting a global system to control AI and any sort of new laws and regulations here in the U.S. Finally, guys, there are some reports that Treasury Secretary Scott Besant is emerging as the possible AIs are. He would be replacing David Sachs, who stepped down. I'm told Sachs does still have real influence in the White House when it comes to AI. Besson has already reportedly discussed an AI safety notification system with China. Back to you. Yeah. Much more influence than the U.N.

35:20Security Council. That's for sure. Kate, I do wonder if their messages change at all in light of what we heard from President Trump and Secretary Besson, who spoke on CNBC on this notion that, you know, what they've said and what Dario put in his memo doesn't necessarily match up with what this administration is looking to do. And Sarah, it certainly raises the stakes and puts the spotlight on these CEOs in terms of they now have to be aware of the White House stance here and anything they say that is pro-regulation, pro-global coordination could be seen as going against the president and the White House here.

35:56I think that is why, from what we're hearing, Altman is going to try to strike this middle ground and really walk a tightrope of being completely in the middle, which is nearly impossible in this. But pragmatic, I think, is the word that he's going for and trying to stay neutral, as neutral as you possibly can, given that this is now a political issue in some ways as well. Yeah. As Jensen Wong in The Times now, after talking to CBS, calling any kinds of doomsday talk irresponsible, in his words, his press tour continues. Kate, thanks so much. Kate, we're with you this morning. Still ahead, Michelle Meyer of MasterCard Economics Institute will join us.

36:31We'll discuss their new forecast for the holiday shopping season and how AI is impacting shopping right now. And we're back in a minute. Welcome back. Never too early to think about the holidays. The MasterCard Economics Institute is out with its forecast for the holiday shopping season, expecting 5.5 % growth in U.S. retail sales between November 1st and Christmas Eve. For more on that and how AI will figure into your holiday shopping season, let's bring in Michelle Meyer, chief economist at the MasterCard Economics Institute. So this is new data, fresh off the press. It is. How do you model what holiday spending is going to look like right now?

37:06It's a great question. So luckily, we have an incredible ability to look at how consumers are spending in real time with the aggregated transaction data. So we are seeing the trend evolve, and it has been strong. And that sets up for continuation of a healthy holiday shopping season. So we're taking the real-time data coupled with our typical macro models of how we think consumer spending is heading into the end of the year, driven by labor market fundamentals, household balance sheets, all the typical variables you'd put into a model. But that's just powered by the real-time data. Are you surprised at how strong the trends are right now?

37:39I mean, it's been pretty remarkable. Now, part of that is a function of prices. So about half of the increase in the holiday spending numbers is due to inflation. That's not that unusual. We had a similar situation a few years ago. Even last year where tariffs contributed to some higher pricing. So it's 2.5 % spending growth, 2.5 % inflation? A little bit more than that because we're getting up to about 5.5%. Yeah. So, of course, that's part of the story. But real spending is holding up. We are seeing pretty incredibly powerful growth rates when it comes to actual spending, units, transactions.

38:14Is it broad? Is it category specific? So it is. It's showing up in a number of categories. There's some that stand out more than others. So one would be electronics, for example, which is definitely having a moment. We are seeing quite a lot of acceleration. And then the experience economy continues. So travel, restaurants, live entertainment, continuing to see this outperformance. It's interesting. I mean, there's been some discussion of TSA throughput showing a soft summer season, but I wonder if you think that continues. Yeah, I mean, from what we can gauge, it looks like travel spending was pretty robust throughout the summer season.

38:52Now, of course, part of that also has to do with airfares, did see some of that inflationary push from higher energy costs. But you absolutely see a very active and engaged travel. Do you think the aggregate forecast is a result of saving rates coming in? So I think it's a combination of factors. I think it's this strong labor market, which we continue to see. We just had a new manufacturing survey out today that showed continued rise in the business economy, continued rise in manufacturing jobs. So the broadening of job growth and that supportive of wages, I think, is the most critical factor.

39:24The slight drop in the savings rate is partly an offset to the fact that we've seen all this wealth creation. So when you think about how to realize a positive wealth effect, part of that is you save a bit less. So the balance sheets are very supportive. So I think consumers have purchasing power, and they are absolutely putting it to work. Even with the high gas prices and the high home prices and the high grocery bills, the confidence surveys tell a different story. Well, confidence surveys have told a different story for years. So I think we have to be really mindful in terms of how we interpret that.

39:54But I do think there's another really important factor that's helping consumers navigate all these different external factors, including the price pressures, which is the use of technology, the use of AI. So in the research that we just released, we're able to have a unique lens to understand how consumers that use AI spend differently and, frankly, in some ways, are just a lot more nimble. And I think that helps them with navigating where prices have increased. What do you mean? So we look at AI power users versus non-AI power users or non-AI subscribers. And what we identify is a wider range of merchants that are being frequent by AI power users.

40:36Because you say, I want to buy this, and then they give you ideas. You have choices. And it opens this incredible market, I think, for those consumers. And especially in a world where you're trying to find the best value, You're trying to navigate all of these different headlines that you just talked about. You need to find that value. So it really shows up in things like restaurants, beauty services, specialty food stores. We see that big dispersion for AI power users. For things like groceries or home improvement stores, there's not a real big difference in how consumers spend across different number of merchants between AI users and brokers that are not.

41:11What do you make of this Muse craze? and does it result in the end in margin compression for the vendor because you've got this empowered consumer who can look through all kinds of different... I think it just has to make everybody smarter because guess what? The retailers are also going to be using new technology, trying to use AI to get the best inventory in place, to figure out what's the latest... To dynamic price. To dynamic price, absolutely. And that's the world that I think we live in now. And that's really helpful because we do have these external forces that are exerting upward pressure on the economy in terms of...

41:45Are the power AI users saving money? Well, that's hard to say because you can't necessarily control for what they would have been spending otherwise. But we do see greater choice. We also see the AI power users spending earlier in the season, particularly for the premium items. So for things like jewelry or even booking travel, it's booked earlier. So from that extent, perhaps that means they're also getting maybe better deals or discounts or they're just, again, being a little more flexible in terms of how they're engaging. And do you see the strength, lastly, across income groups? Because there's been more concern about lower and middle.

42:18We see spending across income groups. I mean, certainly the higher income households have ability to spend at a faster rate, particularly for some discretionary items, services and goods. But the spending is happening across the economy. It's a bullish read. Michelle, thank you for joining us to share it with us first. I appreciate it. Michelle Meyer from MasterCard's Economics Institute, where she's the chief economist. When we come back, Chinese President Xi Jinping visiting Washington on his way right now. In fact, might we see any changes to the U.S. ban on Chinese autos? We'll talk about that after the break.

42:51Welcome back. Chinese President Xi Jinping set to meet with the president tomorrow. Should we expect the meeting to clear the way for Chinese autos in the U.S.? Phil LeBeau has more on that this morning. Good morning, Phil. Good morning, Carl. That is a concern for the U.S. auto industry. And we're talking not only about the automakers, but also the parts suppliers, auto dealers. The big concern is what would happen if the president says, you know what, maybe we'll open the door to a joint venture where some Chinese automakers might be able to manufacture vehicles with a U.S. automaker or some other automaker as long as the plant is here in the U.S.

43:27That is a concern for the auto industry because they believe that it would lead to the Chinese coming in and really disrupting this market with lower priced vehicles. In fact, the industry, a coalition of companies as well as trade groups within the industry, sent a letter to the president saying localized Chinese production will not advance the administration's manufacturing jobs and national security agendas. And they've been vocal about this for some time, not just publicly, but also privately meeting with people in the administration. As you take a look at GM, Ford, Toyota, we're going to show you those shares and what they've done over the last year.

44:01really haven't moved a whole bunch, but they've been at the forefront of saying, look, we have increased our production in the United States. This is what you're looking for. Don't turn your back on us now by allowing the Chinese to come in here, perhaps through a joint venture. And as we take a look at some of the Chinese automakers, keep in mind that some of these automakers, including BYD, Gigli, Sherry, they're expected to begin sales before the end of the year in Canada, which has certainly been a point of contention for the Trump administration as it deals with trade relations north of the border.

44:33Bottom line is this, guys. This will be watched very closely to see if there is any change in the language from President Trump when it comes to Chinese autos either being sold in the U.S. or built in the U.S. You know, Phil, we're showing a chart of the Chinese automakers, and they've actually had a pretty rough year. And I wonder if part of the story here is that they, you know, excess production. They've made too many cars, and they really need the U.S. market to sell into. They do. Look, this has been their MO for the last several years because they do not shut down their auto plants, guys, even though there's overproduction and that market has slowed to a certain extent.

45:10I'm talking about the Chinese market. So what are they doing? Sarah, you've been to Israel. You know how many Chinese vehicles are over there. It's the same thing whether you go to South Africa, go to Chile, go to Saudi Arabia, go to Thailand. You go to what's called the rest of the world and you will see a lot of Chinese vehicles. That's because they need to export those vehicles to keep the plants going in China. Meanwhile, Phil, I mean, I saw Mannheim used car data earlier in the week showing a negative print year over year. Is that sort of reflective of the pricing environment right now? A little bit reflective of the pricing environment.

45:44But, you know, I saw that print as well, Carl. And I've talked with a few people, a couple of auto dealers. They're not overly concerned about the fact that we might see a dramatic shift in the pricing of used vehicles. The way they look at the market right now, what you're seeing with used vehicles in terms of pricing, it's likely to hold in that area, roughly speaking, for the next several months. Really interesting. And wow, we'll look for some headlines maybe later in the week regarding the Chinese. Phil, thanks. Ten-year 508 really has been unforgiving all morning long. And I mean, part of the story is we got strong data on manufacturing and industrial production.

46:20So it's happening for the right reasons, but obviously is seen as a pressure point for the market right now. 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. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

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