11AM Hour: Sequoia Capital Partner Shaun Maguire, Webull Shares Tumble & Apple's Smart Home Ambitions 10/7/26

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1:03Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanillo. Sarah Eisen here at Post 9 to the New York Stock Exchange. Today, tech and the broader market taking a bit of a breather after that record run where the combined market cap of the seven mega caps climbed to roughly 25 trillion. We're joined by T. Rose Tech Fund Manager Tony Wong why he says the opportunities for the AI trade are now broadening beyond chips and beyond data centers. Plus, Sequoia partner Sean McGuire with us. He led the firm's investment in SpaceX. We'll discuss the company's major debt raise to buy NVIDIA chips, plus his own firm's big bet on Israeli tech, as we remember the October 7th attacks three years ago.

1:42Shares of trading platform Webull tumbling on some national security concerns from its Chinese ties. We'll try to explain that one. Meantime, some early session lows here. Dow's down about 5.30, down about a percent. S &P down about two-thirds of a percent. Industrials getting smacked a little bit, down 2 percent. That 10-year at 5.3 was a little bit worse earlier today, got to 5.35, and that was a fresh 24-year high. Yeah, just staples in health care in the green. We are getting some breaking news from the New York Fed here. Steve Leishman has it for us. Steve. Hi, Sarah. The New York Fed surveyed consumer expectations for December showing that one-year inflation expectations hit their highest level since May 2023.

2:23The outer years, though, doing a little bit better. You can see a 0.3 % increase there in the one-year expectation, 3.9%. That's the highest since we were coming down on inflation expectations from the pandemic era, inflation. Three-year, 3.3%, up a tenth. Five-year, 3%. That's been pretty much around where it's been unchanged. That's the one the three and the five of the Fed will watch, not seeing much improvement. They are elevated, but not seeing much deterioration either. Home price expectations unchanged at 3%. And you also saw increases for expectations for gas, for food, medical care, rent, and college education, all the things that matter.

3:00People think those prices are going up. Earnings growth expectations also declined by 0.3 percentage points. That's about the 12-month average, so not a real worry right there. Meanwhile, household spending plans rose 3%, 0.3 percentage points, highest since May 2023. Unemployment expectations, they did better. Declined by 0.5 percentage points, remaining above the 12-month average. The outlook for job losses declining by 0.3 percentage points, lowest reading since December 2024. Probability of finding a job in the event you lose one, that also went up. So all three of those major employment indicators doing better.

3:42However, the shares of households facing tighter credit conditions, that rose. And you also had a decline in expectations for household financial situations. It worsened for the next year. We're waiting, Sarah, as you know, for the announcement of the buyback situation. We're not necessarily seeing that yet. The Treasury had been doing$6 billion in buyback. We're not seeing that just yet. But we'll come back when we find it. Overall, Steve, I mean, I guess the for the Fed, the most important in terms of inflation expectations are what what's happening in the market. And that really hasn't shown the market based inflation expectations.

4:21Any any kind of problematic move, has it? No, it's the three and the five. You're right that they're watching. The one year, though, keeps them on edge. Right. If this if the one year were declining, they could feel a little bit better about holding the line or even cutting rates. But right now they have to watch that one year as potentially feeding into the three and the five. The three and the five remain elevated, but they haven't moved very much. And now I am getting this information. They are keeping the enhanced buybacks, the auction tomorrow, at$6 billion. That's where they've been. They did fulfill the amount last week on the 10 to 20-year one.

4:57This is a 20 to 30-year buyback, but they did fulfill it. And there was a huge offering of$46 billion. So there was interest in the market in the Treasury taking out those off-the-run securities. People were not expecting the Treasury to raise the amount that they were willing to buy. Sarah, the question becomes, what good could it do, given what's happening with interest rates? Would a couple billion more here or there on the off-the-run securities really have a measurable impact on what's happening with interest rates? Which, they're off their highs a little bit today when it comes to yield, but they're down a little bit from where they were earlier this morning.

5:34Steve, thanks for that. Steve Leisman on New York Fed this morning. For more on how the markets are digesting some of those numbers, let's bring in Wells Fargo Chief Equity Strategist Osung Kwong joins us here at Post9. Great to have you back, Osung. Thanks for having me. We were joking off camera during the summer. You did say sell World Cup. And then you got more cautious in September. Where does it leave your head right now going into year-end? Yeah, I think it's just going to be choppy through the year-end. And we're starting to get a little more concerned about the AI capex cycle beyond 2027.

6:02So we tried to estimate how big AI has to get to justify CapEx through 27. And the overall AI demand has to get to about$1.4 trillion by 28. And that's about$9 ,000 per worker per year. So that's a pretty significant number. And if hyperscalers were to do another big CapEx in 2028, that number jumps to$2.2 trillion. So the bottom line is, every year it becomes increasingly more difficult for hyperscalers to justify another big capbacks beyond 27. So I really think the risk is that capbacks cycle is starting to not roll over completely, but flatlines after 27. And I don't think the build-out trade is necessarily pricing in that risk yet.

6:49Well, we're essentially, when you look at consensus expectation on hyperscaler capbacks, we're kind of at the peak in terms of year-on-year growth, right? I mean, consensus has been habitually wrong on the downside, but this is where they think it essentially tops out on growth. Yeah, so the rate of change argument, the rate of change is essentially going to peak now. Hyperscalary capex as well as semi earnings. So the rate of change argument is going against semis, basically. And we're starting to like hyperscalers because of that reason, because the rate of change on capex is slowing down, whereas the revenue side is starting to accelerate.

7:27So I think the free cash flow argument, the bear case for hyperscalers, that's weakening into 2027. And I know it's a little too early, but if I have to start thinking about 2027, I think it could actually be a year where AI applications win over the AI buildout, meaning hyperscalers, infrastructure software over semis. So less picks than shovels and start buying the ROI from the users. Yeah, exactly. That's essentially it. Yep. But even in a period, if we continue to see these rising rates, because I know you said the cash flow concerns weren't as problematic, but the debt binge is real. Yeah, I mean, rates are concerning.

8:07I don't think it will really have that fundamental impact on hyperscalers or semis yet. What I'm more concerned about is the valuation aspect of it. So a lot of people say the S &P 500 has derated enough. And if you look at the Ford multiples, it's trading at about 19 times right now versus the highs of 23. But the entire de-rating has actually been driven by higher rates. And if you adjust for higher rates, the equity risk premium has actually compressed quite a lot. And right now, it's actually negative. So if you just look at the Ford earnings yield versus the 10-year at 530 right now, it's about negative 10 basis points.

8:49And it's at the cycle low. the only time it went negative historically has been during the tech bubble. So I think it's going to be hard to argue that the equity risk premium is going to compress even further from here. And that's been really the offsetting factor of higher rates, meaning if rates were to climb higher from here, there's not going to be that offsetting factor from the equity risk premium. So I think higher rates from here is going to be a lot more painful going forward. And you actually put some numbers on how many basis points in the increase in rates, what it means for the S &P, right?

9:23Yeah. So all else equal, just mathematically, every 10 basis point increase in rates should translate into about 2 % hit to the S &P. 2%. Is there any discussion to be had about consumer discretionary value staple? I don't know. Even the rollover in financials has been a little bit unnerving. Yeah, I mean, I think the consumer is probably the biggest pain trade in the market because positioning is not there. I am struggling to find what the catalyst is going to be other than oil potentially falling and rates coming down. But a lot has to go right for consumer to start working. And a lot of people think about the seasonality.

10:05I mean, right now, consumer is also being pressured by tax dollars harvesting because mutual funds are selling their laggards, which basically consumer into their October and tax season. And we typically see the laggards rallying in November and December. So a lot of people are starting to think about it. And last year that worked. But last year we had that one big proof of bill tailwind. This year we don't have anything. So I don't think the setup is that favorable versus last year. So hyperscalers, that's the that's your favorite part of the market and then and nothing else. Hyperscalers, I do like industrials over semis, I don't think you want to completely give up on the AI infra trade yet, because 2027 is still going to be very strong.

10:46And if you look at semis versus AI industrials, semis are trading here, AI industrials are down here. So I think that gap is going to start to merge. A lot of people argue against AI industrials given valuation, but I think they do garner higher premium versus semis because they typically are longer cycle. And there's also going to be a lot of aftermarket activity after the cycle ends. So I think the backlog actually deserves higher premium. So that's one area that we like. Finally, you know, this week in particular, a lot of screens show up of, all right, days where you're at at all 52-week high and you got more lows than highs, you know, analogs to 99 and 29, basically.

11:29Do you think those are silly? I mean, you know, we're not paying that much attention to those stats, but market breadth is actually concerning. I mean, we were actually in the camp earlier this year that the narrower the market, the better, because the S &P competition is very concentrated in big stocks. But at the end of the day, the buildup and the economy is being actually driven by the overall economy, because hyperscalers, yes, they're using debt too, but they're really using their operating cash flow to fund debt, which is tied to the overall economy. So a lot of those cyclical stocks are showing some warning signs about the economy.

12:11I'm not bearish on the economy yet, but rates are concerning. Oil prices are concerning. So we're looking at it as a potential warning sign. That's good stuff. Thank you. Good to have you back. Thank you. Appreciate it. We are getting some news out of Disney. Julia Borson has that for us. Julia. Sarah, Disney announcing that this coming Super Bowl, which is on ABC and ESPN, for the first time will also be made available to Disney Plus subscribers, not just in the U.S., but also in more than 55 international markets. And Disney Plus subscribers will get access to two regular season Monday night football games.

12:45Now, this all fits into Disney CEO Josh Tomorrow's plan to make Disney Plus the centerpiece of the company's digital strategy. and this content could drive streaming subscriptions by giving people more ways to watch could also drive digital ad revenue. Disney did say it's seeing record advertiser demand for this year's Super Bowl. Guys? Really quick, Julia, a couple of stories we haven't really touched on regarding Disney. One was the court hearing up against the FCC and then these announcements of ticket hikes, ticket price hikes at the parks. Yeah, there's been a lot of question about how much price elasticity there is when it comes to the park pricing and how much more people are willing to pay.

13:27I'm seeing reports that as prices go up for the tickets, that maybe people will be spending less in the parks on things like food and beverages and consumer products. So we will hear from Disney in their next quarterly report where we'll get a sense of how things went in those key summer months. But the question is how much higher ticket prices will be balanced out by perhaps lower spending once people are in the parks. Yeah, or maybe shorter visits, too. Thank you very much, Julia. Julia Boorstin, when we come back, Sequoia Capital Partner Sean McGuire joins us. We'll discuss the investment opportunity in Israel right now and how the tech economy has evolved there.

14:04T. Rowe Price Portfolio Manager Tony Wong is going to be with us. We'll get his take on this new push for the home over at Apple, Microsoft's event later today, and a lot more when we come back.

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15:29This 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.

16:03Welcome back to Squawk on the Street. Today marks three years since the Hamas terrorist attack on Israel. Since then, the Israel ETF, EIS, has rallied nearly 120 percent and posted its best return in more than 15 years in 2025. The strength in equities mirroring a surge in Israeli startup funding, which is on track to surpass 2025's total by year end. And let's bring in Sean McGuire, partner at Sequoia Capital. Sean, it's great to see you. And, you know, tough, tough day. Just you have been uniquely outspoken, I think. And before we just get into the funding and what Sequoia has done, I did want to ask you how October 7th changed you personally.

16:46Thank you so much for having me. obviously October 7th was an unbelievably hard day for Israelis but I think for Jews around the world and also candidly for the West I think this was a moment where you know you saw it on October 9th in Sydney where you know thousands of people went into the near the harbor and were chanting gas the Jews and that for me was a moment where I hadn't seen that type of sentiment in the West in my life. I mean, you heard stories in the past. And like my takeaway from that was like, this revealed some of the divisions in the West that I had not seen and kind of maybe suspected, but didn't fully understand were there.

17:28And so that, that moment for me was about something much bigger than just Israel. It was, we're in a battle for the West. And I think people are starting to wake up to this, but did not understand it at the time. So how has that changed what you do and what you think about your role is? So for me, I've lived multiple lives. And I think this is something that people don't understand about me when they see my Twitter back. First of all, many of the men in my family were in the U.S. military. Both my grandfathers, one bought in World War II with three of his brothers. One died on Omaha Beach. He's buried at an American National Cemetery in Normandy.

18:08Two of my uncles were military officers. One was a career naval officer, retired as a captain, 06. I grew up around the military. I didn't have the courage, honestly, to serve in U.S. military. But when I was doing my PhD, I got recruited to work at DARPA, the research arm of the Department of Defense. Worked at DARPA for two years, deployed to Afghanistan, supporting DARPA. And so from 2012 to 20, sorry, 2010 to 2012, I was full-time, candidly, trying to find terrorists and unravel global money laundering schemes and understand how weapons move around the world, also helping to build weapons.

18:52From there, 2012 to 2018 or so, I was about 50 % involved in these things. In 2018 to 2023, I stopped being involved. and candidly this moment just reactivated something in myself that was already there which was this kind of coming from a family of people that cared about america cared about the west and want like just feeling like had to fight and i'm sorry i know that's not uh the cnbc answer but but that is the truth and i i think we need more patriots in the west more people that are willing to accept personal sacrifice. As crazy as it sounds, we need people that are willing to get death threats, do service, lose money for what they think is right.

19:41We don't get to keep the West for free. Ultimately, I do think it's the most CNBC answer because ultimately that's what this all depends on. And I think you characterize the stakes really well. So, Sean, how do you do that as a venture capitalist or as an investor, which are so many of our audience? First of all, this is one where, so I really believe in giving credit. And there were some venture capitalists that I think were better than me and better than Sequoia earlier in backing things that helped the West. And so I give a lot of credit to Founders Fund where they incubated Palantir. And then, you know, Anderil, you have people like Joe Lonsdale who co-founded Palantir and then started APC and did a lot of defense tech investing.

20:29For us at Sequoia, after the war in Ukraine started, we started before that for the kind of decade or two before we had not done much, if any, defense tech investing. And so the invasion of Ukraine was a moment for us where it was like, OK, we need to rethink that. And we started to invest much more actively in defense technologies. And then after October 7th, it was something broader. And to me personally, I believe in the resiliency of the Israeli people. And there was one conversation in January 2024, so a quarter after October 7th, where a board member of a company said, how can these Israeli companies perform when they're fighting a war?

21:16We're not going to make any more investments there. and I was trained to be a contrarian. And when other people are pulling back from the place, I think it's actually a signal to think from first principles. Like, is that true? Is that accurate? And it turns out that the Q4 data for a lot of these Israeli companies was incredibly positive. And I think there was something in just the resiliency of the Israeli people, something in, you know, like, just there's something about Israel where people rally when there's disaster, a distraction from the war where people threw themselves into work and their families and kind of nothing else, like no other distractions.

21:57And so at that point in January 2024, we as a firm started being much more active in Israel. We hired someone on the ground, Dean Meyer. So while a lot of other people were pulling back, we reopened an office in Israel and we started backing Israeli companies in a very aggressive way. And there was a cohort, I would say that 2024 cohort is pretty spectacular, where it's like the people that were contrarian enough to start companies during the war, and they were able to recruit just unbelievable teams because there weren't as many companies getting formed. And the people that were joining were really doing it for the right reasons.

22:36So anyways, we are extremely active in Israel. And I think some of our best portfolio companies in the last five, six years have come out of there, one of which was Whiz, which was acquired very quickly by Google. By Google. Yeah. And one of the biggest exits ever, I think, for an Israeli company. I mean, what sort of technology and innovation is being born from this disaster? Because so much of it, Sean, as you say, is the resilience of the people, but also the existential threat that they face and the fact that they have to innovate to survive on defense tech, on cyber. I mean, what kind of companies are you most excited about over there right now?

23:12Yeah, a lot of people view, oh, I love this slide. It's great. Some more portfolio companies. I think a lot of people view Israel as just a cyber economy. And that's not true even historically. So historically, Israel has been one of the world's kind of cyber powers. But they They also have an incredible history in semiconductors. You know, in semis, Mellanox was created in Israel, which was acquired by NVIDIA kind of right before this giant semiconductor boom. And Mellanox played a huge role in building the combined system for NVIDIA that has let them be so dominant in the GPU era. Sequoia was actually the first investor in Mellanox.

23:54But there's many others. A lot of Amazon's semiconductor efforts came out of an acquisition of Annapurna Labs in Israel. There's a long history of semis in Israel. So today we have security and semis, but now we have a bunch of other things. The AI industry is booming in Israel. They don't yet have a foundation model company that can compete either with the best American or Chinese companies. And candidly, I'm skeptical that they'll get there just given the scale of those projects. but kind of for everything else in the AI ecosystem, Israel is doing very, very well. In that slide, you had two companies.

24:34One is Descartes, which is working with many of the top AI companies and others. Regular, which is probably the leading AI security company right now, working with all the foundation model labs except for one. And so anyways, AI is booming. semis. Defense tech is just kind of like having a reinvigorated moment. But there's a lot of other things too, you know, energy, solar, etc. Sean, I don't have to tell you that there is so much hate and vitriol and accusations of genocide on social media in the world in protests right now around Israel, threats of divestments and boycotts and not just threats, actually.

25:17So as an investor in Israel. Do you worry about that and what's happening? Some of these fracturing relationships with countries that don't see it as the way that you do? Yes, I do worry about it. I think I would be irresponsible as an investor if I didn't think about the tail risk there. That said, so I've been to over 120 countries. And the number one lesson I learned in my travels was that the reputation of places comes from the past. You know, like the reputation of any country, almost by definition, is based in what it was like 20, 30 years ago when people would go and come back and tell their stories and those stories would become consensus, et cetera.

26:00And I think, to be very blunt, I think a lot of the countries that are threatening to boycott Israel are countries that meant more in the past than they're going to mean in the future. And to me, some of the countries that have huge potential in the future places like UAE, United Arab Emirates, or India are big fans of Israel. And so I also factor that into my kind of calculus. And then I'll also say like in economics and specifically behavioral economics, there's this idea of the difference between stated preferences and revealed preferences. You know, like what someone says they're going to do versus what they actually do.

26:41And even with a lot of these boycotts, like what people are saying they're going to do just does not match the reality at all. And I think the lesson there is for anyone, when you make things that are very, very valuable and you're the only one that makes them, people are going to work with you in almost any circumstance. Well said, just before we let you go, I know you've led a lot of the Sequoia investments around Elon Musk. And I do wonder if you characterize this also in your framing of how you started about the fight for the West and just how you think SpaceX is doing. I remember we last talked to you when the company went public, how has it lived up to your expectations and the news today that it's going to be borrowing$40 billion for NVIDIA chips if the story is evolving?

27:25You should have me on to talk just about SpaceX. I know, it needs a whole segment. I'm obsessed with the company. We have a giant position in the company. Very lucky to have worked with the company. And I believe SpaceX is going to be the most consequential company of the next century. And I think very few people understand the company today. Look, on the first lead into the question, I believe Elon is one of the West's most important, I believe he's the most important warrior and one of the bravest. I think one of the things that people really deeply misunderstand about him is he's doing things not just for himself.

28:04I believe that the thing that motivates him is actually greater than himself. And I think very few people understand that. And there was one investment, Twitter, where we invested$800 million, where a big part of it, the main part, we have fiduciary duty is we thought it would be a great return because when you line interest with Elon, it has a track record of making everyone money. But there also was some element of believing in the principle of freedom of speech for the West and believing that Elon would fight very hard to instill that. And so, like, the answer to me, like, to me, it's an and.

28:44It's, I believe that Elon is going to build the most important companies of the century and that he's going to really try to have a positive impact along the way. Well, Sean, we certainly appreciate you joining us to talk about that. We'll, of course, have you back on to talk more SpaceX, but especially for helping us honor the victims of October 7th and that tragic day. Thank you so much. Sean McGuire, the partner of Sequoia. When we come back, pain in private credit might be less about faulty loans and more about the retail investor. We'll get you details and talk about just how long the pressure might last.

29:20Also, we've been watching these shares of Webull. They are sinking on this new congressional report detailing the trading platforms linked to the Chinese government. We'll share the details when we come back.

29:34Hey, what's up, guys? It's Haley Bailey. OK, I need to tell you about something. I just got YouTube Premium. It's got tons of awesome features like offline downloads, so I can download my favorite videos before I travel and watch them whenever I don't have Wi-Fi. Because we all know airplane Wi-Fi is the worst. I get ad-free, I get backroom play, and there's like a ton more in there. You should try it. If you like YouTube, you'll love YouTube Premium. Try it now for two months free at youtube.com slash premium. Trial eligibility varies. Terms apply. Cancel anytime. That's a mouthful. Weren't agents supposed to take things off your plate?

30:07Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No 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. Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. it's as simple as picking your stocks and etfs sort of like your meats and other topics and managing it as one big juicy investment now that's pretty good learn more at fidelity.com slash baskets investing involves risk including risk of loss fidelity brokerage services llc member in yscsipc

31:05Pretty broad sell-off on Wall Street right now. Just consumer staples and health care higher. We'll get a CNBC News update. Pippa Stevens has it for us. Pippa. Good morning, Sarah. A top lobbying group for the pharmaceutical industry suing the Trump administration today over its efforts to bring U.S. drug prices in line with lower-cost ones overseas. The specific rule being targeted tries to set hospital drug prices for Medicare patients. The lobbying group argues it's an illegal overreach by the U.S. government. In what could become the first Atlantic hurricane of the season, Tropical Storm Isaias formed earlier today in the Gulf off eastern Mexico.

31:40The National Hurricane Center's initial projection shows the storm could come ashore somewhere between eastern Louisiana and the western Florida panhandle Friday and into the weekend. And Jaguar is jumping into the luxury electric vehicle market, unveiling a$130 ,000 model. The all-electric model has a range of up to 450 miles, has 23-inch wheels and low roof and long front hoods. The iconic Jaguar emblem is no longer on the front and is now etched on the side of the car. Luxury rivals Ferrari and Bentley have also launched their first electric models this year. Carl? All right, Pippa, thanks so much.

32:18Still to come this morning, T. Rowe Price Portfolio Manager Tony Wong is with us. We'll discuss Apple's new push into the home and his expectations for the tech sector at large. And big day here at the NYSE. CNBC's halftime report celebrating 15 years ringing the opening bell and has a special show on tap for you at the top of the hour. We're back in a moment.

32:43Welcome back. Apple teaming up with LG to develop accessories for its smart home devices, according to a new report. Mackenzie Cagallis has the scoop. Mackenzie. So, Sarah, this is Apple trying to make the home a much more significant part of its hardware ecosystem and ultimately its services business. Bloomberg is reporting that the Apple LG collaboration includes a broader lineup of smart home devices now in development, including a video doorbell, smart lock, thermostat and then several security cameras. They're all designed to work with Apple's highly anticipated new display-driven smart home hub alongside an upgraded HomePod Mini and Apple TV box that are expected next week.

33:23The products themselves will carry the LG name with LG handling manufacturing, warranties and customer support, while Apple has been involved in the design, features and engineering. And the regulatory filings here give us an actual look at some of this hardware. The FCC records include schematics for the smart lock, along with technical details showing support for features like ultra wideband, which could let the lock recognize when you're approaching and then unlock automatically. Now, Apple has used this production model before, helping shape products that are ultimately manufactured by another company, including Belkin and Logitech.

33:59It essentially gives Apple a way to expand its ecosystem without having to make market and then service every accessory itself. The larger challenge, of course, is that Apple is coming into a category where Amazon's Ring and Google's Nest already have a big head start. So the bet here is that Apple can make up ground by tying more of the home into the devices that people already carry and use every day, with Siri AI increasingly sitting at the center of that experience. And it's worth noting here, guys, I am out to both Apple and LG, but haven't heard back yet. All right. Great setup, though, Mac.

34:33Thank you very much. and Mackenzie Sigalos. Our next guest runs a portfolio that owns more than a billion dollars worth of Apple. Joining us today, T. Rowe Price Portfolio Manager, Tony Wong. Tony, always good to check in with you. Thanks for the time. Definitely, thanks. It sounds like you think there is some good white space for Apple in the environments around us, areas that go beyond the phone and the PC. Yeah, definitely. Well, look, I think that AI can actually make the smartphone really smart. And, you know, what Apple could do is, like, develop that personalization for you on top of a really trusted brand with privacy.

35:06And I think that, you know, with that, they can extend, you know, beyond the mobile phone and into the home, which is a logical frontier for personal computing. So I definitely think it's a big opportunity and it's exciting to see what they'll be doing. You think it's enough to move the revenue needle in the short term? Well, I think it's going to be a long-term play. I mean, you look at, like, the iPhone, it's so big and the ecosystem's very large. But I think it increases the TAM of the company. And in addition, you think about just where the consumer will go, logically, home is going to be the next frontier for Apple.

35:42But I think it also will be like what you see as the ecosystem continues to develop, and you just increasingly add TAM to the revenue base. More broadly, lately, Tony, I mean, we've moved into this environment where we talk a lot about agentic work. Sarah's using Muse like all the time. It sounds like you think, I mean, the demand's not going to be an issue. It's more about the capital formation, the physical buildup that's going to be the gating factor. Yeah, definitely. When I've talked to other companies over the last few weeks, you know, demand is absolutely there. And I think that we're going towards a world where there's going to be kind of digital workers that are working alongside us.

36:23We're 24-7. And I think that unlocks, like, you know, kind of the economics of productivity and labor, if you think about it. So, you know, I think that the capital is being formed right now. And I think it's an interesting time. And to me, like, this is like a big opportunity that everybody sees investing behind, for sure. So is the best way to own that or play that still in the semiconductors? Or have you moved on to the applications? Yeah, I think that there's multiple ways to play it. Longer term, I think semiconductors will be the infrastructure backbone. And you see that the world's law is essentially slowing.

36:59and has been slowing. And so that creates like a really good structural kind of bull setup, I think, for the industry. So I think it's going to be brought into not just compute, but networking, storage, memory. In addition, I think you're looking at the application layer is going to be really important. Like cybersecurity, you know, we've got to be able to like monitor and put guardrails around these agents. Maybe traditionally, you've got to like get your data in order. So you're seeing a lot of infrastructure software companies do well too. So I think it's going to be a broader set of not just semis, but also applications.

37:32And then I think the incumbent internet players are also going to be able to leverage this technology across their install base. Tony, we've seen some pretty good price action over the last few weeks in some major names. I mean, NVIDIA, Microsoft, AMD, Meta. Is there one, though, that stands out to you as more impressive than the rest? Yeah, well, I think that they're all growing at really good rates. And you think about NVIDIA, what they're building and the growth rate there is really impressive. I think the market hasn't ever seen growth at this scale before. So I think the multiples are actually pretty reasonable for these very high quality companies.

38:09And so, you know, to me, like NVIDIA, Broadcom, AMD, you know, those semi-chip companies. And Marvell has had a really good move when you look at what needs to happen. It's not just compute, but connectivity too, right? That was definitely his message today, talking to us here on set. Pretty remarkable and a slew of target increases on Morvell today. Tony, appreciate it, as always. Good to talk to you. Tony Wong, T-Row. Still ahead, private credit's pain may be more about retail investor sentiment than faulty loans. We'll discuss that story next. And do not miss David Faber's exclusive interview with the newly appointed White House AI czar, Jay Clayton.

38:49and the CEO of Palo Alto, who was also in that White House meeting last week. That's today, closing bell, 3.15 p.m. Eastern. We're back in a moment.

39:04Welcome back. The pressure in private credit actually might be less about faulty loans and more about retail investor sentiment. Leslie Picker joins us with more. So you've been digging into this. And what have you found? Yeah. So that is actually the view of Avi Kalikstein. He's the CEO of Hunter Point Capital, and his firm focuses on something called GP Stakes, which means they take minority positions in a slew of alternative asset managers, giving them a high-level view of what's going on across private markets. So I wanted to get Kalikstein's thoughts on private credit now that we're about a year into the headline turmoil the asset class faced.

39:39The elephant is still being digested by the snake, if you will. It's still going on. is that individual investors who were investing in interval funds, those investors started to want to redeem, whether it was for economic reasons or other. And that's not finished yet. And so I think we need another few quarters of performance to kind of let all of that pass until we get to some kind of stasis. So we're not done yet. Now, that view is underscored by some of the recent redemption figures we've gotten from major retail products in the market. The third quarter showed some signs of improvement, although the proportion of requests were still elevated and most managers still needed to cap those requests at five percent.

40:26Now, as GPs continue to work through issues in the wealth slash retail channel, the institutional channel has largely held up and some managers are turning more focused toward insurance as a source of capital. Blue Owl co-CEO Doug Ostrover said in an FT and Latham and Watkins event that they plan to make a, quote, big push into insurance, looking to increase the pool of capital from that channel specifically. The firm currently has about$40 billion in insurance capital, I'm told. For more on the alternative space, please subscribe to our newsletter, Inside Alts, using that QR code on your screen, guys.

41:02Been crazy times in financials since you've been away. It's good to have you back. Thank you. Good to be back. And earnings next week. Yes, get ready. Just in time. Leslie, thanks. Still ahead, shares of Webull are tumbling today on a new congressional report outlining national security risk due to ties with China. We'll get your details after the break.

41:22Welcome back. Shares of Webull plunging today on the heels of this new congressional report detailing the trading platform's links to the Chinese government. Our Eamon Jabbers has more on that this morning. Hey, Eamon. Yeah, good morning, Carl. The online trading platform Webull is responding to an exclusive CNBC report today about a Capitol Hill committee report that's raising questions about the company's ties to the Communist Party of China. Webull shares were down nearly 30 percent in the wake of our initial report this morning. And in a statement, the company said, in part, it is deeply disappointing that the select committee published a report containing significant inaccuracies and unsupported unsupported conclusions without ever seeking clarification from Webull.

42:04Webull has made every effort to cooperate with the committee, but did not hear from them for more than 20 months before this report was released. Webull's U.S. business is conducted from its global headquarters in St. Petersburg, Florida, and its office in New York City, while U.S. customer data is stored in the U.S. And access to sensitive customer data is controlled by the U.S. Now, the new report alleges that the company, which has 28 million global users, is quietly tied in structural ways to the government of the People's Republic of China, representing a national security threat to American finance.

42:38CNBC obtained the new 25-page report exclusively from the bipartisan Select Committee overseeing U.S.-China relations, which finds a profound gap between the firm's public marketing as an American company and the actual control of the firm. The report asserted that national security concerns around the company have escalated since October 2025 when Webull began carrying customer cash directly, which the company alleges creates a structural exposure of billions of dollars in American capital. Webull, which trades on the Nasdaq Stock Exchange, says it operates a global network of licensed brokerages offering investment services in 18 markets.

43:17But the Congressional Committee says the online brokerage represents a national security risk because critical back-end systems, personnel and data flows may remain exposed to the Chinese Communist Party's mandatory intelligence laws and coercive demands. Guys, back over to you. So what does it do with that information? Is it going to shut it down? No, I mean, the committee doesn't have the authority to shut it down. So the question is, you know, whether regulators will take a harder look at this company now. You know, it went public via a SPAC and, you know, their shareholders are certainly taking a beating this morning.

43:52So there are going to be some questions about what was disclosed and what was not disclosed. And obviously, Webull is fighting back, arguing that there are significant inaccuracies, although they didn't name any of the inaccuracies in their statement to us this morning. Eamon, I'm just thinking of the state dinner that we had not too long ago in which we called China a great partner. I wonder if all of these things that have been in the works were waiting for that to clear and that we might see more of this kind of work from Congress, at least. Yeah, I can't say that for sure, Carl, in terms of the timing of the report.

44:22But you can certainly imagine why people in Washington wouldn't want to stir up gorilla dust before that summit. If they're going to do it, they might postpone it until after. But I can't say that for sure in terms of the timing of this report. I can tell you that I got it after the state dinner, of course. All right, Eamon, thank you very much. Weeble shares, as Eamon mentioned, heads back. They're down 20 percent on this news with questions about disclosure. The markets come back a little bit. We're still red. The S &P is down a third of one percent. The focus is on that 10-year Treasury yield, which has marched higher steadily and today made a new high since April 2002.

45:02So higher yields, higher oil prices, all of that, what that will ultimately mean for the economy, which raises everything from mortgage rates, which we saw marching higher again today and energy and electricity costs. Yeah. Not like it's the only place in the world where this is happening. French bonds, of course, not quite back to their highs, but I think their 10 year was back above four nine as there was that report that maybe the government tries to surpass parliament in instituting some spending cuts, which Rebecca Patterson really didn't think was going to lead anywhere. No, because this is the vicious cycle, right?

45:36The spending cuts you need to close the deficit and help fix the fiscal situation are not popular. You're already seeing protests in France that haven't happened yet. And people can't stay in power once they do those tough kind of austerity moves. So then you get this bad cycle. I mean, what she said to me was actually pretty striking. I asked her where safe because she also warned about the U.S. and the debt situation. And, you know, certain equities, I think she pointed to, and then also certain bonds that are not that available, like Singapore. Right, where there's just not that much supply to buy.

46:05We're going to get earnings tomorrow. So Pepsi reports, and we have an exclusive interview with the CEO after earnings. That's going to be tomorrow at 10 a.m. on Squawk on the Street. As we look for more data and evidence about what's happening with the consumer in the U.S. and globally with some of these new headwinds. Yeah, Pepsi certainly not coming into the print hot. A lot of discussions about GLP-1s. We saw some of that in Constellation and their earnings and their results and whether or not that's just changing the overall tastes of the consumer. Yeah, the scanner data hasn't been good, which is basically how analysts and investors track what's going on with some of those brands going into the quarter.

46:42So as you noted, it's looked weaker in recent weeks. And from there, we'll just move. I know Jim's got Levi's tonight, Pepsi, and then we'll get Delta. And then next week, the gates unlock with the banks. And their share price is under pressure, which is interesting given higher rates sometimes thought of as good for the banks. Capital markets are still really strong with these big debt issuances from some of the AI players. Did you see the judge ring the bell? Yes, that was so exciting. Congratulations. Yes, our congrats to the judge on 15 years of the half. Let's get to them. 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.

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