11AM Hour: Pershing Square's Bill Ackman, Breaking Down Tech Earnings & New Web Security Flaw Uncovered 10/22/26

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1:05Good Thursday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Cantania, live from Post 9 of the New York Stock Exchange. We've got a big show for you today, including an exclusive interview with Pershing Square's Bill Ackman. We'll cover everything from the geopolitical risks for investors, the AI trade, Pershing Square's holdings, as well as upcoming elections in both Israel and here at home. NVIDIA's Jensen Wong telling us he sees no sign of a 2029 memory glut, even as memory stocks continue to take a hit. We'll discuss the tech trade with the CEO of Roundhill Investments, which does manage DRAM, the first ever memory stock ETF.

1:38And AI's growing cyber risks, how OpenAI helped discover a major software vulnerability that could impact 70 % of websites worldwide, and how governments and companies are scrambling for a fix. As for markets, a little bit of a chop here this morning. The Dow's down A lot less than the S &P and the Nasdaq, definitely close to session lows, 2 % plus, as we get some negative reaction to at least the meta print and some CapEx worries continue. Some relief, though, on yields with the 10-year down to 501. And we mentioned earlier the ITB Home Builders ETF, best week since late August. Let's begin with the sell-off, though, in tech.

2:14Meta does lead the Nasdaq lower after reporting last night. And the neoclouds, like CoreWeave, are falling, despite bullish comments from Jensen Wong earlier. Take a listen. If you look at the fundamentals, the demand for the neoclouds is off the charts. Their capabilities are extraordinary. And so what is missing in the middle is the working capital to fuel that growth, to fund that growth. And because there's just so much demand across so many sectors of AI, there's a scarcity of capital. The demand of the capital is much greater than the availability of the capital. That's going to get solved.

2:53Joining us this morning at Post 9, where, as we said, Roundhill Investments CEO Dave Mazza. Roundhill runs the memory ETF DRAM and more recently launched the NeoCloud ETF NCLD. It's great to have you back, Dave. Thanks for having me. Where are we on drawdowns on DRAM at this point? 40s, somewhere in there? Yeah, it's a pretty significant drawdown from some of the highs that we saw earlier in the summer. And I think the market is sort of trying to decide what to do with these memory stocks now, because the long-term story remains, right? We know these companies are sold out actually for years in the future.

3:23Their valuations actually get more and more attractive from a long-term point of view. But the sentiment right now on memory, but actually the broader tech trade, has turned pretty markedly. I was going to say, how much does backlog, ARR, user growth, how much does all of that matter if credit's going to be stubborn? Well, here's the thing, right? So we know memory chips themselves are a bottleneck. Compute itself is a bottleneck. We just heard from Jensen Wong, and who can argue with him, right? But the challenge is that now the market has woken up to saying, wait a minute. So we know there's a demand there.

3:58We know there's some supply challenges. But how are we going to fund this growth? Because just as we saw last night, when Meta sort of increased the lower end of their CapEx guidance, that's when actually the market turned on the stock during the call. Then there was Lamb Research today, which did guide sequentially a possible scenario where they're flat quarter on quarter. That's different, isn't it? Yeah, that's not the normal. And those stocks are going to get punished. We're in an environment where beat and raise is an absolute have to do. But really now it's become about the guidance. And what's interesting is that we find ourselves in an environment here where actually the Magnificent Seven stocks have become much more defensive.

4:37Not today, of course, because of meta. But people are actually looking for worst case scenarios and leading with that narrative as opposed to thinking about the long term point of view. because when the macro data is so challenging, the micro has to be really good. What's the problem with neoclouds? I mean, you said who can argue with Jensen? The market can argue with Jensen, and that's what we've seen, this pushback on the neocloud in particular part of the AI trade. I don't know if you saw this week, Ellis in South Korea, in public, fell 30 % on its first day of trading, and they essentially have that similar business model as the core weaves and the Nebioses do here.

5:11I think the challenge is that the business model itself is under question, right? These companies essentially raise capital to buy GPUs and CPUs and rent those out for use. The problem is, is that when you have a funding environment, which has moved sharply higher, let's just think about the 10-year from where that's gone from the start of the year to now, investors are now saying, how much can these companies, which are speculative in nature, even if the compute demand is there, be valued? And so what investors are doing is now kind of throwing every baby out with the bathwater, if you will, and just saying anyone who's a neocloud, whether it's CoreWeave, Nibius, or some of these crypto miners that have moved into the space, are all down.

5:51Yeah, I mean, I know this is not quite your universe, but Vertiv 194 is going to take you back to February. Cat has not had a six-handle since the spring. That's the first in a while. Lumentum, Coherent. I mean, that's a much broader story about data center build-out, right? Yeah, it's all the components that go into building the data centers. And to me, that's actually the tip of the sphere of where this debate is happening. And the neoclouds are, to me, the one space to watch for where the direction of the trade goes. People used to talk about semis as sort of the new Dow theory, the new Dow indicator for the broader market.

6:24To me, neoclouds are that for the AI trade. And right now, it's not looking so great. The other thing that I think is making the rounds today is what the IBM CEO was saying, which is basically increasing amount of token share is going to go to open weight models, which may not be as good, but they're pretty damn good and they're a lot cheaper. And we're actually seeing that with inference, right? I know you've been a huge fan of Muse, right? And kind of jumping. Has her agent contacted you? Actually, that's how I got booked today. But what's fascinating is that that actually token usage on the inference side is now going toward open weight.

6:58Because that data actually gets cached. And it doesn't necessarily need a frontier model to be able to run some of those components. But so if the AI, sorry, just to extrapolate though, if the AI models then are becoming more commodities, then what does that say about the valuations of this whole trade? Well, I think that's a challenge for what's happening in the IPO market, which has essentially been sort of frozen. I think, you know, if you look at a company like Nscale, which is thinking about going public, then you have, of course, Anthropic, which may actually go, even though we know OpenAI is not, what actually are these companies worth, even if the token usage is going up, at the same time token prices are going down.

7:35So this is the debate that the market is facing. But at the same time, the valuations in some of these spaces have actually gotten really attractive again. And if we have a clearing event, and it feels like maybe we should have over the summer, then maybe people will step back in with more confidence. But because people were so heavily exposed to these names, I think people would rather take some gains here, wait it out a bit before jumping back in. Are you prepared for headlines that say the NeoCloud ETF was a contrarian indicator? We get that all the time. So I'm most certainly prepared for that.

8:07But what's fascinating is actually on earlier this week on the day that the Neocloud ETF had its worst performance since launch in its early history, actually saw the biggest ever inflows. Yeah. So actually investors step in, stepped in to buy that dip. We'll see what happens today. But there's still a camp of investors out there who believe in this long term thesis. Same with some leverage to Micron, right? Exactly. So so we're we're actually seeing people come in and step in and buy these dips. Now, that's that's a painful trade right now. But it tells me that the longer term thesis is there and investors still believe in the story, even with the volatility.

8:43Dave, thanks. Always good to have you in. Thank you. I'm Dave Mazuron Hill. The other thing in the mix is this move higher in oil prices this morning. Pippa Stevens joins us with more with concerns now of the war coming back on after the midterms. That's right, Sarah. So oil prices are rising amid escalation fears as the U.S. evacuates non-emergency government employees from Saudi Arabia, with President Trump saying last night that the U.S. is not negotiating with Iran. The New York Times also reporting the U.S. and Israeli militaries have drawn up specific plans for renewed strikes on Iran after the midterm, saying plans are for a short but intensive operation.

9:18All of that points to a deteriorating situation and a potentially growing regional conflict thanks to the Houthi stepping up strikes, which means that while oil flows out of the region have picked up, the market is nervous. It is just temporary. As RBC put it, rising crude exports are a lagging indicator of the pressure building in the region, especially when looked at in the context of the curve rising and the slope softening, suggesting a tighter for longer view. Now, Iranian oil on water outside the blockade is now depleted, according to new data from Kepler, meaning the state's oil revenue could drop to zero by mid-December.

9:53From Iran's perspective, the firm saying escalation is the least bad option in the short term. Now, we did hear from Valero this morning net income hitting the highest since at least 1989 per LSEG. On the call just now, management saying the market is well supplied with oil, but the main story right now is freight rates, which is causing severe dislocations in global crude pricing. The stock down here, guys, some 3 percent. OK, thank you, Pippa. When we come back, Pershing Square's Bill Ackman joins us live from Tel Aviv. How he's looking at investing in Israel right now and his take on just the broader landscape right now.

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11:51This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts. Welcome back to Squawk on the Street. Next Tuesday, Israelis will be casting votes for prime minister in what is widely expected to be a close and heated election.

12:30It's the first national election in Israel since the October 7th terrorist attack in 2023. Meantime, U.S. midterm elections set to take place the following week as U.S. support for Israel has become an increasingly divisive issue. Amid all the politics and geopolitical noise, though, money has been flowing into Israel at record levels. The Tel Aviv Stock Exchange, for instance, has tripled in three years. And foreign direct inflows into Israel were up 78 percent in 2025 from the year before. $26.2 billion is the number versus almost$15 billion in 2024. One of those investors is famed hedge fund manager and CEO of Pershing Square Capital, Bill Ackman.

13:08He is in Israel right now and joins us exclusively from the Tel Aviv Stock Exchange, where he is a partial owner of the exchange. Bill, it's so great to have you from Israel. I understand you're there. You've been speaking at a conference on healthcare innovation. What has you attracted right now to what you're seeing there? So I think it's one of the most innovative economies in the world. It's also one of the best economies in the world. If you look at their kind of overall macro statistics, growth expected to be 7.5%. Meanwhile, inflation is very low. Currency is strong. It's an overall sovereign debt is relatively low.

13:45So it's a very well run economy. It's one of the most innovative economies in the world. You know, you might have heard of our Pershing Square Ventures. We mentioned our last quarter, we are going to be investing. We have been investing in some kind of, you know, pre-IPO and earlier stage companies. This is actually a pretty good place to find some of them. So that's among other reasons why I'm here. I mean, you are standing at the Tel Aviv Stock Exchange, Bill, where you invested, bought almost 5 % stake just a few months after October 7th. It was such a dark time for Israel. The investment has returned ninefold since then.

14:23It's got to be one of your best investments. What did you see that other people didn't? Well, it was, you know, obviously, you know, when they say there's blood in the streets, it's usually, you know, unfortunately, an opportunistic time to invest. You know, big believer in the country long term, it's one of the highest ratios, as I say, sort of IQ and IP per capita. You know, Israel, one of its biggest competitive disadvantages is the small size of the country, I would say that's becoming a competitive advantage. The larger countries with big sort of welfare state, you look at what's going on in France right now, being a smaller country with a ton of innovation and environment that's very favorable for startups.

15:08And also just if you think about the grit of a people that have been through a several year war, you've got an entire generation of talent. War is a great place to learn about leadership, develop grit, And also Israel's very well known for the technology training that happens. So you have all these startups being led. You have all the big venture firms here, Sequoia and others opening up offices. So all of these things are going to drive the Israeli economy. Yeah, I was just going to ask you, if you're speaking to investors who are wondering if they should have more exposure to Israel in their portfolios, but are worried about, you know, the never-ending war and increasing geopolitical risk and backlash from around the world, divestment policies and that sort of thing.

15:54I mean, how do you square some of those risks with the opportunities that you see? Yeah, I think investors are actually, most investors are pretty apolitical. They want to invest their capital where they're going to earn an attractive return. This is a very good place to put your money. It's an incredibly resilient country. you know it's it the way i describe it imagine if silicon valley was a country you know and that's and that's israel uh and uh you know so i think it's going to do very well um it's now a from the exchanges perspective it you know used to have a sort of an off sequence uh exchange you know it's now a monday to friday exchange as opposed to sunday to thursday is we'll get added to more kind of global indices over time you know the market's up a ton without the addition to some of these global indices.

16:41That's also going to be a big driver over time. I think you're also going to see a lot of, you know, there's so many startups being formed here, you know, NASDAQ, New York Stock Exchange eligibility. You know, you won't get noticed these days unless you're a pretty significant scale. Whereas in the Tel Aviv Stock Exchange, you can have, you know, significant market exposure. So I think a lot of companies will list here first. And then if you will graduate and have a dual listing in the US. So I'm a big, Big fan of the television stocks change in the country. Generally, I'm married to an Israeli, of course, which also gave me sort of the inside scoop.

17:14So it's personal. And what about the election, Bill, that's coming up next week? How critical is it to the thesis? You know, I think the country's going to do very well, regardless of who is selected as prime minister. And, you know, I do think the country will do better if there's less divisiveness. I would say a bit like our country. I think political divisiveness has not been good for Israel. It's not been good for our country. I think the ideal scenario is that there's a broad coalition that works for the benefit of the country as a whole as opposed to a very narrow victory by one party, one candidate.

17:59Again, a world in which there's a decisive election is much better than a world in which there's a closed election. What about, there's this report from the New York Times that that war will begin again after the midterm elections with Iran. When we talked last, I think it was in May, at the Milken Conference, you sounded very supportive of the strikes on Iran. And I wonder what you make now of the current strategy and where you think this is all going. Look, I think Iran has been a grave threat to the U.S. and to the world. I think you have a radical leadership that gets control of nuclear weapons, and that is really existential for the world.

18:43So I think the president did absolutely the right thing in really diminishing Iran's nuclear capability. The job is not quite finished. I think he wants to finish the job. I think that is important for the world. The consequence, what no one likes, no one likes higher energy prices. No one likes higher gas prices. but I think we have to look at this on a longer term basis and again once the overhang of the war is done and it sounds like we're also potentially heading in the right direction on Russia-Ukraine, energy prices could come way down and obviously that would be very good for inflation and for markets I would say Iran and Russia-Ukraine are sort of two things holding what is still a very booming kind of market environment.

19:29You get those out of the way. Inflation comes down. Rates come down. You know, you're going to have we're going to have an amazing 2027. So obviously the president wants to resolve this war, but wants to, you know, this is a the IRGC killed, you know, 85 ,000 or so, whatever the recent estimates are, you know, people protesting the government's a very evil and dangerous regime that's been stirring up, you know, a big mess in the Middle East. I think there'll be a massive peace dividend for resolving this. I think the Abraham Accords will expand. Great for Saudi Arabia, great for UAE, great for the region, great for Israel, and ultimately great for the United States.

20:06So I think it's been an extremely well-executed war, you know, with relatively minimal. You do? Obviously, every casualty is a tragic one. Yeah, it's extremely well-executed, absolutely. Now, the IRGC is, you know, It's very difficult to rid a radical group, but they've been dismantled to an amazing extent. No real air capability, no Navy, and less and less limited capability in terms of fighting war. It's not popular in the U.S. Very well done. It's not popular in the U.S., and we're going into the midterms. Go ahead. I hear you. And look, credit to the president that he's prepared to do what's right for the country long term, even though it may have shorter term political consequences.

20:59I think you want a president that does what's right for America on a long term basis, as opposed to the politicians I object to are the ones that say or do things or support candidates because it's important for their getting reelected. That's how we end up with the wrong people in power. running the country. We should be making, you know, the Chinese are well known for making decisions on a generational, you know, some people say century type basis. You know, we need, we need to make smart decisions. We can't let a nuclear power emerge with, you know, this evil leadership. Given where the politics are in this country, where do you think the U.S.-Israel relationship goes from here?

21:44You know, like, I think that once this war is out of the way, It will depend to some degree on what the next leadership of Israel is going to be, what the nature of a coalition kind of looks like. But I think Israel has proven itself a very important ally in this region. It would have been a lot riskier for us to take out the B-2, to take out a Fordow and otherwise happened after Israel took out most of Iran's air defense capability. So the Secretary of War has been very effusive about that partnership. And Israel is one of the most capable militaries in the world. And having Israel on side in this very challenged region, I think, has been a very important thing for U.S.

22:32supremacy. And yet we have a Senate candidate in Michigan, Abdul El-Sayed, who said this week, Israel is not actually our friend. And more and more people seem to be behind him. He's up in the polls. How did this go wrong? And how does it, does it turn? Does it turn around?

22:52Look, I'm not a fan of, you know, more and more evidence is coming out that his family and he have ties to the Muslim Brotherhood, which is a vowed terrorist organization. The notion that a person of that ilk is going to be, is a candidate for the Senate and has a shot of winning is, I would say, deeply concerning and should be for every American. What does the second half look like overall to you if the Dems do sweep in the midterms?

23:22You know, more challenging for the president to get things done. You know, I think President Trump, you know, is very focused on, you know, I'm sure his goal is to be the greatest president ever, in his own words. He'll be focused on his legacy. But I would say he'll be unbound by short-term political considerations. so he could continue to do what's right for the country on a long-term basis. I also want to ask you, Bill, while we have you, of course, about your portfolio. The fund is down this year and an up market. So what do you tell shareholders about why that is and what you think of the valuation and why they should stick with it?

24:00Yeah. So, you know, our goal is not to find stocks that are going to go up in the next 90 days. You know, the market has increasingly moved to a very short-term dynamic. like index funds are forever holders, but effectively taking stocks out of the float. And then very short-term investors trying to estimate whether a company is going to make or miss earnings or guidance. And that led to a massive market volatility. And the focus this year has been on AI adjacent hardware energy, very narrow market. And that's really created what we think is a great opportunity for us over a multi-year period of time to buy some of the great franchise, durable growth companies we've always wanted to own, but they were at kind of going in earnings yields or PE multiples that made them go forward, return less attractive for us.

24:50And we've been able to buy businesses, Visa, MasterCard, Netflix, and others at prices that we pencil out to well north of 20 % IRRs over three, four, five-year holding periods. So it's a great setup for us. You know, of course, we'd love to finish the year strong. Every investment manager wants to have a positive year. We do have some, you know, if our money could leave every day or every month or at the end of the year, we would probably try to position the portfolio differently. But I think that would lead to suboptimal longer term returns. So we feel we're down modestly single digits for our largest fund and for our new vehicle.

25:36We're actually, well, before I got to Israel, we were up slightly from launch over a small period of time. But most importantly, we deployed five billion of capital of Persians Square USA in some very high quality, long term, durable compounders that are less, I would say, sexy for, you know, for people trying to make money next month. But I think, you know, they will continue to compound their earnings and grow at very high rates over time. Well, since you mentioned Netflix, that was one that I wanted to ask you about, because the company reported yesterday and it was pretty disappointing, capping off a kind of ugly performance for Netflix.

26:13with some real questions about how long it could take to revive their content slate, what the competition looks like, engagement. I think you added it back as of the August filing. What's your expectation there? So I was on the plane when the earnings kind of came out. I had a brief opportunity to get an update from the team. We actually viewed the quarter very favorably. We thought, well, in excess of estimates, a little bit of, my understanding is that advertising wasn't quite what management hoped, but I thought had a good explanation. I would say Netflix is a high-growth utility. And if you're concerned, the mix of content that people are watching is different than it was a year, five years ago.

27:04And that's...

27:08calculated time engagement, if you will. But what matters for Netflix is kind of the growth rate of subscribers, the persistency, their ability to price for the enormous value they offer the consumer. We think all those things are extremely strong. You can buy the stock today at one of the lowest valuations in history. And importantly, I think the stock today is something like 18 times earnings. You know, we think the earnings growth here is going to be, you know, 20 percent, you know, to mid to high teens for the foreseeable future in a really a utility like to get someone to cancel their Netflix subscription.

27:45They've won the streaming wars. I don't know who displaces Netflix. And yeah, I think they would like to have some big hits like Squid Game and otherwise. And they're making adjustments to the team to make sure that happens. But this is an excellent management team. And I'll point out that 18 times earnings today is a similar multiple of cash flow, whereas four years ago, there was a large gap between earnings and the cash flow of the business. As the business has matured, it's become enormously cash flow positive. I think they bought in something like 3 % of the outstanding share count, if I got that correct, in the most recent quarter.

28:21You know, this is sort of another example of a stock where we'll make more money over time if the stock is cheaper in the short to intermediate term because they're going to cancel a lot more shares as a result. So I think another good example of a super high quality business where a short term investor is looking for something to be disappointed about in the quarter outcome. But we're, you know, we expect our go forward IRR to be well north of, you know, well into the 20s. Speaking of disappointment in the short term, Fannie and Freddie have been a drag. And I know you've had high hopes that the government, that the Trump administration is going to finally make a move here to privatize.

28:55It's taken longer than expected. Did get some comments from Secretary Besson in a podcast this week saying, I think he said 27 or 28 issue, that, you know, they still want to go forward. I would imagine next year or the year after we will be tackling the ownership structure. Do you still have high conviction that this is going to happen? Are you still bullish? Yes, very bullish. And actually, to point out, our relative underperformance this year in large part is driven by Fannie Freddie. These are stocks that went from 3 to 15 or so last year and went from 15 to 3 this year. You know, they became fairly sizable positions.

29:32You know, we own over well north of 200 million shares of combined companies. So this was a very big sort of headwind for us. Now, why didn't we sell it when the stock was up 5x? Because we, again, believe our view what's going to happen here. Actually, what's not talked about, it's actually absolutely politically critical for Fannie and Freddie to be released from conservatorship before the end of the Trump administration. Why is that the case? Because this is an enormously cash flow generative asset that in the hands, for example, of a Democratic administration could be used in a manner that is politically very threatening to the Republican Party.

30:11You know, the control of who gets access to mortgages, you know, and obviously there were issues during the Biden administration where there were mortgages being granted to people on favorable terms because of skin color and other such initiatives. And, you know, it's a it's a tool that can be used in a very political manner. So I, you know, having met with the administration about this topic, I think they view it as absolutely mission critical. It's released. You know, they're both released from conservatorship. We've put forth a very straightforward plan that will get it done more efficiently.

30:44Actually, it's really important that the stock is in the hands of institutional investors and is privatized to protect this from becoming a politically controlled asset. That is well understood at the highest levels of the Trump administration. I think the administration toyed with some other alternative approaches to taking these companies public. There was an initiative, I understand, where Fannie and Freddie would be combined under a new holding company. I don't know if you saw the tweet from the president where there's something called the Great American Mortgage Company, where Fannie and Freddie would stay in conservatorship and there would be this new holding company put on top.

31:19You know, it is not a viable structure. The simplest outcome here that creates the most value for the American taxpayer is just simply accounting for the$300 billion of payments that have been made by Fannie and Freddie to the Treasury, fully repaying the$191 billion that was advanced during the financial crisis. and then an uplisting to a major exchange like the New York Stock Exchange. And the president rings the bell, announces a major, you know, hundreds of billions of value creation for the American people. And then he tasks the Treasury Secretary and Director Pulte with resolving the conservatorship, which is a process, you know, finalizing the capital rules.

32:02But what's fascinating to me is these stocks were$2,$3 a share 14 years ago when they had no capital and they had no real earnings. And Obama had just basically, with the net worth sweep, taken away 100 % of their profits forever. Well, since President Trump was first elected, Mnuchin was Treasury Secretary, he stopped the net worth sweep. These entities have fully rebuilt their capital. What's not, I think, well understood is Fannie and Freddie today have five times the capital they had historically, you know, 250 basis points or so of capital. they will get to the extraordinary high levels of capital that were initially proposed for Fannie and Freddie by 2030.

32:43But we believe the two and a half percentage points of capital they have today is more than sufficient. It's what Jamie German would call a fortress level balance sheet. I completely understand the Treasury Secretary when he says that the first and foremost, the North Star here is we can't let the change in ownership of Fannie and Freddie in any way affect mortgage rates. And there's no reason why it should. and even the release from conservatorship. The proper process here is get them to a fortress balance sheet, which is where they are already. You want to add more capital to that. It's just happening sort of naturally.

33:16Keep in place the$450 billion of the government backstop in the form of senior preferred. Make that backstop something that's paid for. The company should pay a kind of commitment fee for the backstop. And then you're going to have almost, I would say, a stupid amount of capital. There's no scenario in which these entities would be a threat to the market. I would argue mortgage spreads tighten in that world because the fear would be if it's a Democratic administration that wins the next presidential election. I think that creates uncertainty about how Fannie and Freddie are going to use, you know, what's going to happen with their capital.

33:50Are they going to take steps that is going to reduce the underlying mortgage quality? I think all of that can be clarified and resolved. I think it's great that the Treasury Secretary said, you know, 27 or 28, if I were they, I would get busy on this right after the turn of the year and get it done in a 2027 time frame. Now, it's, you know, why do I like these stocks? Why have I held them from 3 to 15 and back to 3? Because in this scenario I've outlined, these are well into the high 40s,$50 stock. You know, the president has even higher estimates of value. And I think we can get there. what we're saying is just an accounting for the repayment of the preferred, a relisting on the New York Stock Exchange, and these stocks will go up tenfold.

34:31And that's the most asymmetric investment I'm aware of in the stock market. Well, they're spiking now on your comments. So what is an incredibly high-quality, these are incredibly high-quality businesses that are trading at one times earnings. Yeah, well, they've been in conservatorship for 18 years, which is actually hard to believe. You know, Bill, while we have you, I just wanted to ask you about minutes. Actually, one other point I would make here with respect to midterms. You know, if midterms go against the president, if they go against the Republicans, that is really going to limit some of what the president can do in terms of things that require approval from the Congress.

35:11I mean, the beauty here is in that world, this is, you know, the Fannie Freddie release is one of the few things the president can do simply by executive order. I saw the tweet from Director Pulte agreeing with the Treasury Secretary on the timing here. We've got the people that are relevant all in line. This would be a huge victory for the president and a big economic value creation for the taxpayer. So we remain very bullish here. Yes, clearly. I want to ask you about Meta, too, because you're a big shareholder of Meta, and it's down sharply today. It had great earnings, but concerns, I guess, just about how much they're spending.

35:47They sort of raised the low end of the CapEx outlook for the year to$135 billion to$145 billion. They're also issuing this, you know, they have this two-for-one split to issue more shares, to raise more money, non-voting shares. I wonder if you have any problems with any of this. Look, I briefly had a chance, again, on my way on the flight to read the news. You know, look, California has made, you know, is really heading in the wrong direction. And they're in the process of, I would argue, certainly economically destroying the state. You know, the wealth tax that's been proposed, there's already been a massive flight of people that would be exposed to the wealth tax.

36:30So there's no way that will actually generate the revenues that were originally intended. But literally every startup entrepreneur, you know, had a meeting yesterday with a startup entrepreneur in the kind of brain-computer interface space. and they're already making plans to open a New York office and potentially for the senior management team to leave California because of this tax policy. The meta news, at least what was stated in the materials I read, is that if Mark Zuckerberg, if the tax is put in place, he's going to have to sell a large amount of stock in order to pay the tax. And, you know, I guess Mark and the board want Mark to remain in control of the company.

37:12And by creating a sort of a lower voting or non-voting class, this will enable him to do so. This is, you know, I don't, Meta has an incredibly strong balance sheet. They've got$80 billion of cash on the balance sheet. They have no net leverage. they could finance whatever they want to do with a very, you know, a turn or two of financial leverage and remain a very strong investment-grade company. So this is not a company that's going to have to, you know, run out. And look, I think we're in a world in which you cannot look at the day one trading of a stock after earnings because of how levered market participants are and how short-term they are.

37:53And they're in a bit, like the stock was up when I went to sleep on the flight. it was up something like 5%. And when I checked in before this interview, it was down 6.5%. These are just short-term traders moving the stock around. This is a business that is accelerating. Muse is very clearly becoming brilliantly designed. There are some other competitors in the space, but obviously Meta is extremely well-positioned in democratizing the use of agents. with this product. They've proven that AI is helping them accelerate their business, and this remains an incredibly undervalued stock, and that's why we own it.

38:38It speaks to a little bit, and I'll just ask one finally, about what's been the problem lately with the AI trade, which is all the borrowing that's happening. It's continuing to be debt-fueled, and we have this rising interest rates, both market rates and the Federal Reserve rising rates. There's concerns about the neoclouds and their business models because of how highly levered they are. I mean, do you share some of these concerns? I know you're exposed through some of these hyperscalers, Amazon, Microsoft, Meta, about just how expensive it's going to be in an environment of rising credit costs.

39:13Yeah, so I would say the following. You know, why are people spending so much money? Because intelligence is one of the most, if not the most valuable asset in the world. And we're asymptotically approaching superintelligence. and the access to compute is critically important for every business model, every company, and I wouldn't question the demand. And why are we playing that demand owning a Microsoft or an Amazon or even a Meta? The answer is these are well-capitalized, incredibly dominant franchises that have the balance sheets to make these investments. The NeoCloud play is a bit like investing in a real estate developer in a highly levered format.

39:57And if you get it right, the levered equity returns are enormous. If you get it wrong, you can get wiped out. It's a very different kind of bet. And it's also a bet where they're very sensitive to their cost of capital. And they don't have the market power or the ability to use the compute in the event that demand isn't there. You know, Microsoft and Amazon and Meta will be able to use every incremental watt, if you will, of compute. And that's why we like their business models versus the neoclods. But there is no question that the demand for compute is enormous. And by the way, yes, if you look at the SpaceX earnings call, Elon's talking about potentially spending hundreds of billions of dollars on gigawatts of compute.

40:44compute. Clearly, the demand's there. But yes, the impact here is you now have companies like SpaceX and the Mag-7 that are competing with the U.S. government to issue debt, and that's kind of bearish for rates. All of that being said, historically speaking, 5 % 10-year is still relatively low cost of capital. You think rates are going higher from here? It's a cost of capital. I don't see a world. Well, if we can resolve, you know, Iran and Russia, Ukraine, I think rates are coming down. Inflation is coming down. And that and again, that that is we're off to the races for the economy, the market and everything else.

41:26But the you know, since intelligence is so valuable, you know, you can earn an attractive return even with a risk free rate of five percent. Well, Bill, we certainly appreciate you taking the time today after a long day in Tel Aviv to talk about the world and your investments and, of course, what you're doing in Israel. So thank you very much. Thanks for having me. It was a pleasure. Bill Ackman from the Tel Aviv Stock Exchange, who, you know, like it always elicits a lot of commentary. He puts his money where his mouth is. He has strong views both politically and economically and on the markets.

42:06And, you know, he's willing to come out and share them and express them and stand up for what he believes in. Main time, S &P is down 100 points. We even still do have the 10 year with a forehandle first since September 22nd. When we come back, we'll get the results from CNBC's latest All-America Economic Survey. Get a closer look at the public perception of the AI build out right now. And we're back in a minute. Ulcerative colitis and Crohn's disease symptoms. don't pause for the moments that matter. That's why understanding your treatment options matters. Discover what's possible with Trimphia.

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43:19Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools, no extra logins, Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at go.gle slash workspace with Gemini. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading.

44:03Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. Welcome back. We've got the results from the CBC's Q3, All-America Economic Survey. Our Steve Leisman joins us with how respondents are thinking about AI. Morning, Steve. Good morning, Carl. You've heard of NIMBY? We'll now call it NAMBY. No AI in my backyard. The CNBC All-America Economic Survey, we asked a thousand registered voters, how would you react if a data center was proposed within 10 miles of your home? The answer, not here. 13 % say they would support it.

44:4163 % would oppose it. 22 % don't care. Either way. Looking at it, those who are most opposed to the data centers, You can see it's a sort of partisan issue, 80 percent of Democrats, but it's also 59 percent of independents and 44 percent of Republicans. I was surprised to see young people, 76 percent in the 18 to 34 group would oppose it, as well as women, 71 percent. More broadly on the important issue of AI development and regulation, 52 percent. They want to pause. They want to wait until regulations can catch up. 32 % say keep going in order to stay competitive with China. On the issue of who is most supportive, 56 % of Republicans.

45:23Those who are optimistic on the economic outlook and wealthier Americans are support development. Those who want to hold back and pause, women 18 to 49, Democrats, as well as those more modest incomes,$30 ,000 to$50 ,000. On the party advantage, we asked which party has the best policies to deal with data center issues. Democrats hold a four-point advantage on this issue over Republicans. But worth pointing out, 40 percent of the public say both parties are about the same or neither is any good. So there's scope for either party to make inroads with the public on data centers and maybe scope for the AI industry itself to do a better job thinking about and addressing the public good.

46:02Carl? Meantime, Steve, what about other issues that are top of mind and what does that lead you to on party advantage? Well, so take a look here when you when you think of the top issues. Interestingly, corruption rockets to the top. Now, in part, that's because we separated out some of the cost issues. Inflation to altogether is still the biggest issue. But separately, corruption is the biggest issue named by 36 percent. And Democrats have a four point advantage on that cost of food. Thirty four percent say it's the biggest issue in the country. Democrats have a 16 point and higher advantage than the last time around protecting democracy.

46:37Most of these top issues have Democratic advantages, except when you get down to immigration and border security, where the Republicans have a lead, according to the public, Sarah. OK, Steve, thank you. Pleasure. That's why we need Elon to start building those space data centers so people can complain. The bidding war for the World Cup's 2030 and 2034 TV rights actually begins today. Alex Sherman joins us with more. I guess they had a successful World Cup. That should help, right? Yeah, Sarah. I think FIFA is about to get a lot more money in its coffers. As you said, the official start of the tender for the U.S.

47:14media rights for the World Cup beginning today. Bids due November 19th. All of the big streaming media companies are expected to be hyper interested in the 2030 World Cup, which comes with an option also to potentially acquire the rights for the 2034 World Cup. So talk about Netflix, YouTube, Amazon, Disney, with now, of course, having ESPN as a streaming service. They're likely to be interested. And then the incumbent player, Fox. Now, we don't know exactly how much these rights will go for. Fox paid$425 million for the 2026 World Cup, which, of course, just ended. You can certainly expect a lot more money will be paid for 2030 and 2034.

47:55Just how much more? I know some media executives I've talked to have speculated it could be in the$1.5 billion range. So we're talking like triple the amount of the last one. Now, look, there is a consideration from a time zone perspective that you have to take into account here. Of course, this past World Cup took place in the United States, in Canada, in Mexico. So the time zones lined up appropriately with American viewership. The 2030 Men's World Cup will be taking place in Europe primarily, also Morocco, Portugal, Spain. Those are the co-hosts. So there's, you know, a six hour roughly time difference for East Coast, obviously even more for the West Coast there that you have to take into advantage.

48:32I did speak with the FIFA chief business officer, Rami Guy, and he said, look, we understand there's going to be a time zone issue here. But rest assured, we will make sure that pivotal key games, particularly those U.S. games, are seen in a time zone that fits with an American audience. That probably means, you know, an afternoon game. Obviously, a late primetime game will be impossible in Europe. But that's where we are. FIFA hopes to get a winning bid announced by the end of the year. Well, we certainly talked about its influence on Peacock's quarter. It's definitely a force all around the world, no matter what time it airs.

49:11Alex, thanks so much. Alex Sherman on World Cup. Still ahead, a critical security flaw was just discovered in the software that powers a lot of the Internet. We're going to discuss some of the implications after a short break. Welcome back. A critical security flaw was just discovered in the software that powers a lot of the Internet. Our Seema Modi joins us with more in a story, Seema, that's kind of hard to get into and understand at first. Yeah, let's try, Carl. What makes this unique is that this security flaw was discovered by AI in PHP, an open source programming language that supports nearly 75 % of all websites out there.

49:46The attack prompting governments from the UK, Germany, Netherlands to take down key government sites to prevent private data from being breached. Simultaneously, the PHP Foundation releasing a patch so unclear how much information was potentially hacked. The Dutch prime minister, Rob Jetten, writing on social that his cabinet was monitoring the situation closely. Private security company Ox says this is as broad as a critical vulnerability gets, adding that if you have a publicly accessible PHP instance and haven't patched it just yet, start from the assumption that you have been exposed. Guys, it does represent just another front in this cybersecurity fight and highlights the growing role of artificial intelligence.

50:25In other instances, Frontier Labs have been responsible for the software vulnerabilities. Case in point, OpenAI with Hugging Face. In this event with PHP, OpenAI was able to expose the issue and alert the world to it, but offering patches won't cut it. Paula Alto Networks in a blog post this morning writing that as soon as patches for vulnerabilities are available, attackers can then reverse engineer them, locate the root flaw and target them real time. Their recommendation to clients, just secure, limit what's accessible to the public Internet. It does come as cyber budgets are set to expand in the coming year by big companies.

50:58That, of course, has been a talking point this earnings season. But guys, the question is, will it be enough on a down day for tech? Worth noting, the cybersecurity bug ETF is up. Paula Alta Network specifically higher by around 3%, guys. Yeah, there's a nice chart floating around SEMA of shares of cyber names since the day that they announced Mythos. And that just spread concerns about what you would need to do to protect yourself. Sure. And I also think it highlights just the different types of ways you can add security to a company's software system. Is it AI security specifically, data protection, cloud and threat detection?

51:34they really now are starting to think more strategically just about how those cybersecurity dollars are being used. Seema, thanks. A really important story and a lot more on cybersecurity tomorrow when CrowdStrike's George Kurtz is going to join us exclusively at 11 a.m. Eastern time right here on Squawk on the Street. Yeah, I need him to translate for me how bad this is and whether this kind of stuff is fixable. I just want to show you some movers from our interview with Bill Ackman this hour. Fannie and Freddie, by far the biggest, he reiterated just how bullish he is, why he's hung on to the stocks as they've gotten pummeled over the last year.

52:10Why he's hung on? Because he thinks that the government is going to move toward privatization. He laid out exactly how he thinks they should do it and how it won't have an impact in the mortgage market, which he said had been some of the cause for concern. The stocks were down today. They completely turned around and are now soaring 20, 17 percent apiece. He also reiterated they're just in such strong financial shape, and they've been such success stories operationally. The reason is they've been stuck in conservatorship for about 18 years is mostly political. And so he laid it all out, said he's as bullish as ever, and expects the administration to make a move, and cited the Treasury Secretary's comments on that in a podcast this week.

52:52Yeah, I think the market probably thought it was more imminent than it actually was earlier in the year. But his point was that it's something the administration can do unilaterally without even if the midterm dynamics change. Correct. And then on the midterms, you know, he's been very outspoken lately about how he's a he's converted from Democrat to Republican and sort of worries about the outlook for the president. If Democrats sweep the House, he also, you know, reiterated bullishness on Meta, which is down sharply today. And interestingly, Netflix as well, which he said he thought that it was a good quarter and that it's going to be, you know, a 20 percent grower almost, you know, for the long run.

53:29And it's very undervalued and a must have. Yeah. Although he mentioned Squid Games, which is kind of a couple of years removed at this point. He said they would like to have another Squid Games. Yes, they do need more Squid Games. As for, you know, the Dow is only down 30 points. We should point out Procter up six, Hershey up four. Home Builders, best day, best day since August. Lennar, I think, was up seven at some point this morning. Well, when rates go down, right, these are some of the least loved sectors of the market, in part because we've had higher rates, but also housing's been under pressure.

53:57So they're getting a bid. Maybe we'll get lower mortgage rates now. And Staples is where you turn when the rest of the market sells off. And the organic was good at Procter with the 10-year pinned right at five. Let's get to the judge. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

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55:05Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.