11AM HOUR: Squawk on the Street 10/15/26

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1:04Carl Quintanilla: Good 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. Today, spreading AI debt fears, putting the Nasdaq on pace now for its worst week since June. We'll tell you what's driving the tech sell-off.

1:18Sara Eisen: CEO and co-founder of defense tech startup Andurals with us, the company giving employees a chance to sell stock through this tender that would value it at roughly$90 billion.

1:28Carl Quintanilla: And on the heels of today's inflation data, are companies still optimistic about the economic picture? KPMG out with a new survey of 400 top executives. We're going to dig into the results with the firm's CEO.

1:39Sara Eisen: As for the markets, really interesting spread here between the Nasdaq and the Dow. You can see the difference. Although S &P has gone green, Russell benefiting from some of this downtrend in rates. We're not quite to session lows, but 507 is a lot better than 531.

1:55Carl Quintanilla: It has been interesting to see the bid for treasuries maybe as a safe haven with some of these credit concerns around AI, which has been the main driver of the market lately. And there you see across the curve, there's buying with yields lower. As you mentioned, most sectors in the S &P are higher, but not energy, not technology, and not industrials. Another tough session for tech here as fears grow around the debt loads tied to the AI buildout. Seema Modi has been tracking the action. Seema. Well, Sarah, Corrie's story has gotten worse this morning with its 2032 bond remaining above 15%. That's considered by the credit market as distressed debt levels.

2:31Carl Quintanilla: I spoke to a few credit firms this morning who say they are receiving more inbound calls from their colleagues who track the equity to better understand Corrie's financing options. The key concern being how much more debt can it raise and will lenders demand stricter terms? Can it refinance the existing debt? But Mike Orter, the CEO of Corweave, in a memo to employees yesterday, attempting to calm those worries, pointing to its strong backlog. Additional financing options like raising equity should it need to. But you could argue a tough environment to do an equity offering given the volatility we've been seeing in the stock.

3:05Carl Quintanilla: However, it would substitute high price debt. Worth noting, though, a number of analysts coming out defending Corweave's business model in the past few hours. Bank of America, writing that long-term contracts with large hyperscalers and the AI labs provides a high degree of revenue visibility. Remember, Corey does have deals with the likes of Microsoft, NVIDIA, and Meta, which is expected to report earnings next week. And that's sort of seen as the next crucial read that we'll get on CapEx and just in general on the AI build-out, guys.

3:38Sara Eisen: A couple of things really dented the space yesterday, Seema. One was this podcast with D.A. Davidson's Gil Luria, who we talk to all the time, who did suggest that if the AI trade falters, Corweave, in his words, would be the first to go. And then that report out of Gartner that suggested that in a few years, some 80 percent of neoclouds might have to stop independent operations.

3:59Carl Quintanilla: Yeah, it's important to note that as we look at the different stakeholders in the AI ecosystem, Every company has a very different business model, and some have been relying and resorting to leverage and the credit market more so than others. And companies like Nebius and CoreWeave have a different credit rating than the likes of Ameda and Google. They're all participating in this AI infrastructure build-out, but their credit profile is so different. And I think to what Gil Luria was talking about when it comes to these neoclouds, Their business model is essentially buying loads of GPUs and then leasing them out to the hyperscalers, the Frontier Labs.

4:36Carl Quintanilla: But in order to support this big financing measure, they've been leaning more on the debt market. And I think what the CEO did yesterday was significant, coming out midday with that internal memo to employees, trying to calm concerns and also saying we have flexibility on the borrowing side, but also other measures like equity if they need to.

4:56Sara Eisen: Seema, really interesting story. Probably one of the most important in the market at the moment. Thank you, Seema Modi, watching some of the neoclouds. For more on the markets and these broader AI spending concerns, let's bring in MedLife Investment Management Chief Market Strategist Drew Mattis. Drew, always good to have you. Thanks for coming on. Thanks for having me. Let me get you on the PPI print. It sounds like you think it does ratify sort of the cycle narrative, but doesn't necessarily mean the Fed has to move any faster. That's right. I mean, I think all the inflation data we've seen justifies kind of the idea of rate hikes, I guess, assuming that inflation is actually what's been driving yields higher, which the Fed seems to assume.

5:38Sara Eisen: So then it would suggest that they should keep hiking interest rates. But they don't know where they're going. And so when you're in a car and you don't know where you're going, you tend to slow down. And the Fed's going to be going real nice and slow because they don't want to miss the address.

5:54Carl Quintanilla: So does that mean no hike in October? I mean, it's interesting. You know, Kevin Warsh is in Bangkok right now at the IMF meetings. He's going to be speaking later this evening to the head of the IMF. And then they go into blackout period. And the market's not assuming anything for October. But what do you think?

6:11Sara Eisen: I don't think there's a reason for them to accelerate the rate hikes. You know, with the inflation data that came in strong, you also got retail sales where the control number, So excluding a whole bunch of different things actually didn't look all that great. And then you have, of course, you know, finally, you know, some sense of uncertainty in the markets with regard to how certain things should be trading. And you're seeing kind of like, you know, a reduction in U.S. Treasury yields, which also, you know, why is the Fed hiking rates? Because they were usually because they're somewhat afraid that long end yields were moving up too fast or had the potential to move up too fast.

6:46Sara Eisen: and now that kind of justifications moved, you know, down the spectrum of concerns. So what you do is you signal that you're going to keep moving rates higher. You're going to do it on a slow pace. And, you know, without giving forward guidance, you're basically going to argue your data dependent. You did, though, I think, revise up your inflation forecast, right? And I think you're looking for the S &P to end the year a little lower than we are? a little lower now it's kind of an interesting question you know you you could just say that's a that's a probability of something bad happening you know times kind of a very very big move which is kind of the way i'm thinking about it or just kind of alternatively we kind of you know we have to kind of reset where everyone feels things can go and then you know in that resetting process it's just going to take some time for people to get comfortable thinking about kind of Are they comfortable with their assumptions for revenue?

7:45Sara Eisen: Are they comfortable with their assumptions for multiples? How do they really feel about kind of the longer term trajectory? And I think actually the move we've seen in treasuries today suggests that people are beginning to kind of, they were estimating those answers and now they're actually taking a pencil and figuring out what the real numbers are that they believe.

8:05Carl Quintanilla: There's also the whole AI build out, which is driving so much of the economy and so much of the investment part of the economy. Drew, do you have concerns about that too?

8:14Sara Eisen: I do. We're on a high wire. So we're not on a balance beam. The parts holding up the economy are the AI trade, either investment in AI or alternatively, the equity wealth effect helping U.S. consumers. And that's being driven by the tech trade, which is the AI trade. So if you begin to lose the AI trade, the rest of the economy doesn't look so great. Housing hasn't looked all that good. So the consumer without a wealth effect is going to look a little weaker, especially given kind of the inflation story and expectations for real incomes going forward. So, you know, if you lose that trade, you know, the risk to the economy begin to accelerate.

8:54Sara Eisen: And it's not a linear acceleration. It would be an exponential one. Yeah, you did post some New York Fed data earlier in the week. You looked at the share of households reporting their financial situation was somewhat or significantly worse than a year ago. Forty two percent. That's that's New York Fed. You believe those? You think that survey data is kind of reliable? I do. I think what's going on, though, you know, it's not people responding in terms of their own situation. I think it's quite frankly, I think it's a lot of parents who are worried about their kids, worried about kind of housing prices for their children.

9:29Sara Eisen: You know, parents kind of grew up with this idea that their kids are going to move back to the town they grew up in and they're going to raise their families near their parents. And then you see what's happening with housing prices and you see what's happening, you know, and you become concerned that, you know, jobs are going to disappear, which is not a narrative we believe in. But a lot of people are believing that narrative. And so then all of a sudden they look out and they say, well, my kid's going to have a much worse life than we're currently having now. You know, why should I feel good about that?

9:58Sara Eisen: And then, of course, they check their 401k statement and it looks great. So they go spend money. So they're depressed and spending at the same time. Yeah, that's a theme we keep coming back to in our conversations over the last, say, year or two, Drew. Really interesting. Please come back soon. Thank you. Drew Mattis over at MedLife. Thank you. Meantime, Ukraine's president says his country will resume striking Russian oil assets as accusations fly that SpaceX throttled the military Internet service over there. We'll check in on the defense complex with the CEO of one of the nation's biggest players in that space.

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11:49Sara Eisen: Coverage you shouldn't miss because there will be a test. I don't make the rules. It's the most trusted fake news in America. Comedy Central's The Daily Show. New weeknights at 11. Geopolitical tensions rising from new Ukrainian strikes on Russian refineries to more threats out from the Houthis. Let's get to Eamon Javers in D.C. with the latest. Morning, Eamon. Yeah, good morning to you, Carl. A defiant Vladimir Zelensky telling the Financial Times today that Ukraine is going to restart attacks on the Russian energy sector, despite President Trump's attempt to impose an energy ceasefire, which was ignored by the Russians.

12:26Sara Eisen: After a three-day pause at President Trump's request, during which Russian forces continued to bombard Ukrainian targets, Zelensky told the newspaper, we're done. The block on attacking refineries, he said, is out. Zelensky also told the publication he believes President Trump has a natural affinity for autocrats and the super rich, saying he loves such people and he respects such people because for him, people who can be leaders 20 years, 30 years, 40 years, it means they can be very strong. Zelensky also said the U.S. had not shared early warning alerts for incoming ballistic missiles and that Elon Musk's Starlink service had been slowed across the country for a period of time.

13:06Sara Eisen: Now, Musk himself responded to the controversy endorsing a social media post that said that his government-focused Starshield service is under the control of the U.S. government and that the U.S. and not Musk made the decision to slow the service in Ukraine. Now, all of this coming as conflict in the Middle East continues to put pressure on the global oil industry. Houthi forces struck the headquarters of the Saudi state-owned oil company Aramco last night. The Associated Press reported that in an attack that damaged the offices of the firm's chief executives and top officials in the eastern Saudi Arabian city of Dharan.

13:44Sara Eisen: That pressure is fueling the global oil price and President Trump's eagerness to deal with the Russians to lower U.S. prices ahead of the midterm elections coming up in November. For his part, guys, President Trump this week has called Zelensky a dictator and suggested that he should step down as Ukrainian leader. The president doesn't have any public events on his schedule today, so it's not clear whether we'll see him respond directly on camera to those latest comments from President Zelensky. Guys, back over to you.

14:13Carl Quintanilla: Okay, thank you. I was in Durham, remember, last year for covering Aramco, their headquarters. Thank you, Eamon Jabber. Sticking with geopolitics and defense, contractor Andrel announcing a new line of affordable missile interceptors and the launch of a new multi-billion dollar shipyard in Maryland, which includes a nearly three billion investment from the U.S. Navy. This, as the company allows employees to sell insider shares of the company as part of a tender offer that values the defense tech firm at now roughly $90 billion. Let's bring in Brian Schimp, Andrel's co-founder and CEO, first on CNBC interview.

14:47Carl Quintanilla: Brian, we're happy to have you. Thank you for joining us.

14:50Sara Eisen: Thanks for having me on.

14:51Carl Quintanilla: So, so much to get to. You're at the center of a lot of stories right now. But first, maybe on this tender offer, $90 billion is an almost 50 % increase in the valuation from just five months ago in May. What's the story there? What's happening in the business?

15:06Sara Eisen: We're seeing just an incredible demand across everything we're working on. And the biggest story for us right now is just the sheer volume of production ramp that we're seeing. This is across munitions where there's, you know, critical needs that the U.S. has with all the ongoing conflicts along with all the allies. We're seeing this on the autonomous system. So across the board, We're just seeing a massive demand and uptake. And, you know, I think it's reflective of the fact that, you know, we built the right products for where conflict is going. And we're responding to the signal we're getting from all of our customers.

15:38Carl Quintanilla: I mean, if the business is worth that much, why not just go public? Let the broader investing public participate.

15:45Sara Eisen: The reality is for where we're building right now, the biggest ramp is leaning into production, leading into inventory, doing all the things to supply the capabilities our warfighters need. In the private markets right now, we can get the capital we need, we can stay focused, and we're not going to have our employees distracted by stock prices. You know, the tender offer is a way to get them the liquidity they need, early investors, all these things, and we're happy to do it. But now this allows us to stay really focused on what we need to do, which is a massive, unprecedented ramp in defense production that we need to execute on over the next couple of years.

16:21Carl Quintanilla: All right, let's talk about that. So what are you seeing the biggest demand for in terms of what you're making?

16:27Sara Eisen: So right now, the biggest demand we're seeing is really around, you know, kind of all of the sprite capabilities, as well as, you know, what we've launched recently around defensive capabilities. And the U.S. has consumed something like 1 ,500 Patriot missiles in the Iran conflict. And the ability to produce and scale with that is very, very hard. You know, Lockheed is leaning in on this. We really appreciate all the efforts they're doing. It's critical for the nation. And we think competition here is a really good thing. We've had too many of these monopoly programs on the U.S. side, and it removes the incentive to really just be able to be responsive and provide the warfighters with what we need to actually defend the nation.

17:07Sara Eisen: So we're really excited to get into this and be able to supply critical capabilities.

17:13Carl Quintanilla: I always thought of Andrel, And I feel like you guys painted yourselves as a disruptor in the defense industry from some of these well-established players like a Lockheed or a Northrop Grumman. But increasingly now, you're dependent and you're becoming a direct contractor yourself.

17:29Sara Eisen: Yeah, I think we've reached the point where, you know, because of our scale, because of our track record of delivering on what we say, we're getting trusted with bigger and bigger programs and bigger and bigger capabilities. When you look at the shipbuilding work we're doing, this is a massive investment. You know, this is something that is, you know, the nuclear submarines are the most complex and critical weapon system that the U.S. has. To be able to supply and work on that at scale is an incredibly large and hard undertaking. We're taking it very, very seriously. But I think that the reason the Navy came to us to work with us on this is they needed new and different approaches of how to solve these problems.

18:06Sara Eisen: out novel manufacturing methods, novel strategies for managing the supply chain, and complementing the existing industry that's honestly doing quite well and solving really hard problems, but just needs more capacity to scale. And so we've just reached the point of credibility, delivery, and just the capital we can bring to bear on these problems that enables us to work on larger and larger and more critical national security issues. It's really interesting, Brian, The street's kind of working through PPI and even some survey data today regarding manufacturing pricing intentions. When you talk about navigating that supply chain, I mean, is it getting hard?

18:44Sara Eisen: Is the cost of production a real challenge? Look, the defense industry has been this weird Galapagos Island of manufacturing for a very long time. And it's one of the, you know, that and auto are some of the last domestic manufacturing areas that are really at any scale in the U.S. For us, being able to build out that robust supply chain, find these suppliers and develop that over a period of time, that is the critical challenge of this. You know, can we hire an amazing workforce and create thousands of jobs to be able to drive assembly and build these systems? Absolutely. But really what we're focused on is building out that network of suppliers, really looking at where does China have critical strangleholds on the supply chain, what needs to be reshored.

19:31Sara Eisen: And this is something that we've seen bipartisan support on. People want to have a resilient strategy for the U.S. that enables us to do what we need to do, have control of our country's destiny.

19:43Carl Quintanilla: You know, you mentioned the reason you're being chosen as a federal contractor. Well, how do you respond to some of those that will say, OK, well, Palmer Luckey is one of the leads of this Project Meridian, which is the Department of Defense looks into basically their technological capability that the U.S. has, that he's a big Republican fundraiser, that you guys are very close to this administration, which could be a reason why you're winning a lot of these contracts.

20:08Sara Eisen: Look, we've done incredibly well under Biden. And, you know, that was one of the biggest ramps that we've had as a company. I'm a lifelong dem and have great relationships on both sides of the aisle with us. And so what we've seen is that solving national security in a more efficient way, actually being able to deliver. Everyone agrees that is a good thing for the taxpayer. It's a good thing for the warfighter. And so we've had just unbelievable support on both sides of the aisle. And the reality is that the department has just an incredibly structured process for how they evaluate all these incoming bids, these different solutions.

20:51Sara Eisen: And so everything goes through these very competitive processes. And we win based on the merits.

20:57Carl Quintanilla: OK, got it. Well, so on the merits and on sort of the new technology and warfighting, what do you think we've learned from the war in Ukraine? Because I feel like it's a total rethink of drone technology, for instance, which you're also involved with.

21:11Sara Eisen: Yeah, I mean, I think you're seeing how new technology is fundamentally changing warfare, right? And in a lot of ways, you look at what's happening with the strikes, and I think there's a lot of parallel in Iran, where Zelensky is now targeting critical commercial infrastructure. And the reality with a lot of these conflicts is it's about creating deterrence, and that is largely through things that your adversary cares about. Iran understood this very clearly. They understood that the commercial infrastructure in the Middle East was the soft spot. Striking military assets, degrading that, that didn't really move the needle.

21:49Sara Eisen: You start attacking data centers, oil and gas infrastructure. You chokehold all of those commercial shipments that run through the strait. That is what creates an immense amount of political pressure on the West. I think the same thing's playing out in Ukraine. So I think a lot of the future of warfare here, while the technology has changed, I think it shows that a lot of these very precision capabilities that were honestly a monopoly that the U.S. had for a very long time are now quite proliferated. And our adversaries are going to use that to impose real costs on us. So being prepared for that and having a deterrence concept that is both making clear that you can create funding.

22:28Sara Eisen: Are we ahead?

22:29Carl Quintanilla: Do we have it?

22:30Sara Eisen: Are we ahead right now? Absolutely, right? Like, if the U.S. was to go to conflict with Russia, the ability to deliver, like, significant precision capabilities, way ahead, right? The air defense capabilities we have are top-notch in the world. The issue is we just don't have enough. When you look at these conflicts, there's tens of thousands of munitions that are being consumed. We have set up a production system that is designed for two-week wars. very intense, and we just do not have the stockpiles necessary for what has historically been protracted conflicts. So the ability to have the inventory stockpiles and industrial capability, that is a massive deterrent in and of itself.

23:11Sara Eisen: And so for our part, being able to contribute to that, being able to say that the U.S. has the ability to sustain in a resilient way that our adversaries can't turn off, that is a critical capability that the U.S. needs to have. Yeah, no, it's, I mean, Think about history. Rosie the Riveter. I mean, protracted wars do end up being real supply chain stories. One last question, Brian. I hope you won't mind while we have you. You've done a lot of technical work on autonomous vehicles and we've covered driverless trucking and we monitor Waymo and Tesla. I just wonder where you think we are inflection wise, whether that's on the technology or sort of municipal policy.

23:49Sara Eisen: Anything else? You know what? These autonomous systems are always really challenging. Right. Because when you when you look at the safety expectations we have, we're never going to hold it to as a society that it's better than humans. It's been better than humans on a statistical basis for a very long time. And I think that's OK. We've kind of said if you're going to replace this with robots, I want this to be nearly perfect. The choice we're making is society. It's you know, it's the same thing we view in a lot of our work, which is the obligation. once you go to these autonomous systems is not just that they're like a little bit better than people.

24:22Sara Eisen: It's that they offer you a level of precision, reliability, performance that is a step change from where you were before. And so I think as we look at parallels into the self-driving world, the expectation is that these are nearly perfect. And I don't know that's a bad thing. That will mean it takes a lot longer to adopt than people might hope. But I think that as technologists, that's our responsibility. We actually have to deliver something that meets the safety and reliability and performance that everyone expects out of it. And I think those expectations are quite a bit higher than people anticipated going into this.

25:01Carl Quintanilla: Well, it gets into this whole AI safety debate now that we're hearing. The frontier models are warning about their safety, the self-recursive technology. It improves itself as you implement AI in weapons and warfare, how do we maintain human control?

25:17Sara Eisen: Yeah, look, I think fundamentally everything we've designed is really about how do we empower human decision makers to make more precise decisions. When you think about what actually happens in military decision making now, they have, you know, a lot of human enlisted soldiers that are taking huge amounts of information, trying to turn it into, you know, what is actually happening on the battlefield. And then commanders have to make these decisions with all this imperfect information. That's really hard, right? That is a really hard problem. To the extent that AI can massively increase the quantity and quality of information you're getting, can make it a lot clearer what's actually happening in a way you have confidence.

25:56Sara Eisen: And then can take a lot of the more mechanical parts of how do I plan a mission? How do I route these robots or aircraft in a way that can actually be able to accomplish this objective and do it in a way that you have a lot of confidence in? That's really key. But fundamentally for us, anytime you are making critical decisions about use of force or how to employ these or what the consequences are of your actions, that is fundamentally a human decision. And the military is really structured around commanders are responsible for the decisions they make and the consequences of those decisions. I think that's a good thing, having that human accountability at the center.

26:35Sara Eisen: And that's how we've designed it.

26:37Carl Quintanilla: All right. Let's keep it that way, Brian. We need an hour. Please come back. We have so much to talk about here. One of the hottest startup companies here, Brian Shemp, the co-founder and CEO of Andrel. I should say hottest private companies. Coming up, what's the top concern for CEOs right now? Now we've got details from a new survey out of KPMG.

26:56Sara Eisen: Plus how this week's inflation numbers might change the math for the Fed. Former Philly Fed President Harker is with us later in the hour. We're back in a minute. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get wise business.

27:33Sara Eisen: Download the app. T's and C's apply. Get The Daily Show's ongoing coverage in Decision 2026 daily. This ain't your grandma's coverage. This coverage has full-hit mobility. It's the most trusted fake news in America. Comedy Central's The Daily Show. New weeknights at 11.

27:54Sara Eisen: Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting and then another meeting. Hit your booking point, book with Southwest, and enter airplane mode.

28:22Sara Eisen: Keeping an eye on CoreWeave here. Up until now, so far this year, the low for the stock has been about$60. We got there today. In fact, we got to$59.51. A little bit of bounce here off of those session lows as NVIDIA's Jensen Wong now at this event in Sweden reportedly says the company's financial position is improving every day and that its cost of capital is, quote, actually decreasing. At the same time, you've got the best day of the year for retail stocks, XRT. Best day since June for the home builders as these rates do come down.

28:55Carl Quintanilla: Yeah, worth noting, I think, in the positive comments about CoreWeave, that NVIDIA has about 11.5 % stake in CoreWeave, right? They've invested a few billion dollars in it and work very closely to build and operate data centers together. I think CoreWeave requires customers to use the NVIDIA chips. But CoreWeave off the session low is now down 4%. Time now for a news update. Dom Chu has it for us. Dom.

29:18Sara Eisen: Good morning, Sarah. Good morning, Carl. A group of lawmakers led by Democratic Senator Elizabeth Warren and Representative Robert Garcia are introducing a bill in Congress today that would require financial institutions to disclose any records related to Jeffrey Epstein. The Epstein Wall Street Records Act would force regulators to investigate any Epstein-connected banks and executives. It would also impose penalties for those people who aided in his financial operations. Republican Representative from Kentucky Thomas Massey is also backing the bill. A new bridge linking North Korea and China has officially opened.

29:51Sara Eisen: The long-delayed project spans just under two miles long. Chinese officials say its opening will promote economic and trade cooperation, despite international sanctions placed on North Korea. And one of New York's most iconic landmarks is closing its doors for a four-year renovation. The Plaza Hotel is going to shut its doors in January for a restoration of its 18-story facade. The hotel, which is now operated by Fairmont, has had several renovations since its opening back in 1907, including a partial conversion into condos in the early 2000s. And Carl, I know you're a movie fan. Home Alone 2, Sleepless in Seattle.

30:27Sara Eisen: The first time it was featured in a film was 1959 for Alfred Hitchcock's North by Northwest. You ever stayed there? I never stayed there. Before I moved to New York, I stayed there. It was amazing.

30:40Carl Quintanilla: I've had tea there. I have eaten there, yes, Sarah.

30:43Sara Eisen: I've eaten there, but I've never stayed there before. Dom, thanks. You got it, Dominic Chu. After the break, KPMG out with a new CEO survey. We'll look at what CEOs are saying about the rising cost of AI, how it might impact their businesses next.

30:56Carl Quintanilla: Plus, Tesla about to reveal its long-awaited roadster, and Elon Musk is promising one of the most spectacular demos ever, in his words. What to expect this hour.

31:06Sara Eisen: Welcome back to Squawk on the Street. KPMG is out with the results of a new survey of 400 U.S. CEOs this morning. Topics range from AI investment to cybersecurity and even the outlook for headcount. Of note, the vast majority of CEOs say they expect more hiring than firing over the next three years. Lots to unpack this morning. Joining us here at CNBC Post 9 exclusive is KPMG U.S. Chair and CEO Tim Walsh. Tim, welcome. Good to have you. Great to be here, Carl. Headline, it seems like, is they're pretty confident in their own company's growth prospects. maybe a little less so on the macro here and around the world.

31:40Sara Eisen: Yes? That is a great way to summarize it. I mean, the CEOs are investing most certainly in technology and AI, and they're doing that, obviously, because they see the returns that they can get from that. At the same time, those returns are taking some time. And with all of that disruption happening, they're obviously focused on the geoeconomic environment. That is something we're all preparing for. Is that spread pretty common in the survey to be more confident about the things you can control and the things you can't? It is. But there are some changes in the trends that we're seeing there. So if you were to go back a year or even six months ago, CEOs are really focused on investing, investing.

32:20Sara Eisen: What's that ROI? And then how do I govern my investments? Today, you're seeing a much more focused view on front office transformation, innovation, and of course, cybersecurity and risk. Cybersecurity and risk. Where does that rank in their level of priorities? Oh, number one. Really? Oh, number one. There's not a conversation that I have with the CEO that we don't talk about cyber risk and security.

32:42Carl Quintanilla: Is it your sense from your clients that, I mean, they're all investing in AI. Are they seeing enterprise level productivity gains from it?

32:51Sara Eisen: Some, some, Sarah. But what I would say is what we've all realized is that the returns will take time. And what I mean by that is investment in AI and deploying AI in businesses, it's not plug and play, right? This stuff takes process redesign, AI cleanup, and then engineering the AI into processes both in the back office and of course in the front office. Parts of businesses are seeing real returns faster are those types of things that are highly repeatable and that don't have a lot of judgment. For example? For example, processing, finance processing, let's say payables, receivables. You'll see at call centers, for example, a lot of AI productivity being seen there.

33:33Sara Eisen: But when you think about those things that require more judgment, right, certainly human in the loop. And proprietary data, I assume. And proprietary data, of course. The talent versus AI discussion is interesting because not that many, I would argue on a percentage basis, expect to reduce their headcount because of AI. Does that make sense? If it's so transformative, why it wouldn't change the headcount? It does make sense. And this is one that I've been sort of waiting to see come through. Because again, a year ago, if I were to be sitting here, the first question would be, when are you going to let go half your white collar workers?

34:07Sara Eisen: And when are you going to stop hiring on campus? Right. That was the question. And I kept saying neither of those are going to happen. And that is because, number one, the technology certainly increases capacity, right, in terms of what you can put through. But taking a person out of the, first of all, Taking the process out eight hours a day, 365 days a year, you're in, you're out. Not happening yet, right? But the actual improvement, the effectiveness in what we're delivering and the speed at which we can do it, it will be transformative.

34:39Carl Quintanilla: But do the kids graduating college now have the right skills to prepare them for where the hiring is happening?

34:46Sara Eisen: So universities have done an amazing job in terms of changing curriculums to get much more focused on tech and AI. And, of course, that is developing. but I am very optimistic about our graduates and our levels of hiring are at what they were. Now, I would tell you the mix of professional that we're bringing into the firm is changing in terms of, yes, we still need our consultants and our CPAs and our tax specialists, but we need a lot of data engineers as well, and we also need data scientists. Right. Yeah, I think that's one realization that's pretty universal is you can't just stop onboarding forever and expect the organism that is the company to live, right?

35:26Sara Eisen: No, of course not. And what I see with our business, right, the capacity is opening up in terms of the volumes of work that we can put through our platforms. So I see our volumes increasing. That's how, why I think you see the CEO survey results indicating that workforce will, you know, expand, but businesses will expand as well. Right, right. Tim, fascinating. Everybody should take a look at it. Thanks for coming on. Great to be here. Good to see you. Tim Walsh, KPMG.

35:50Carl Quintanilla: Tesla is the only Mag 7 name that's actually down now on the year. But could the new Roadster change things? What the street is saying and what to expect from tonight's big reveal after a quick break. Welcome back to Squawk on the Street. Tesla set to reveal its new Roadster sports car tonight. Big expectations. Let's get to Phil Lebeau with more on what to expect. What do we know, Phil?

36:11Sara Eisen: We don't know a whole lot. We have a lot of speculation based on some reports that have been leaked out, as well as things that have been teased by Tesla. This is the expectation for tonight. By the way, if Elon Musk is there when they show the new Tesla Roadster, expect there's going to be a lot of fireworks involved. Elon likes to put on a show, and he puts on a good one. Zero to 60 in approximately one second. That's if there are cold gas thrusters. At least that's the speculation. I mean, that's drag racing craziness in terms of zero to 60. 1 ,000 horsepower on the new Roadster. Base price,$200 ,000.

36:45Sara Eisen: Could go up to a quarter million dollars if you're looking for the one that's fully outfitted. The deliveries, now they're saying, hey, look, it might happen within the next 18 months. Almost everybody I've talked with has said, look, I would think 28 is the earliest that you will see deliveries of the Roadster, which will be built at the Gigafactory in Texas. And this also raises the question for investors, is this the kind of vehicle at that price tag, but with limited volume of maybe 2 ,000 being sold, is that going to move the needle? No, it's not going to move the needle. deliveries. This is where Tesla is for 2026.

37:20Sara Eisen: 1.32 million delivered through the first three quarters of the year, about 8 % more than last year. So they probably will snap the streak of declining year-over-year sales in 2026. Don't forget, as you take a look at shares of Tesla, it reports its Q3 results next week after the bell on Wednesday. And guys, we have said this for months now. What moves Tesla? It's not new vehicles. It's not deliveries. It's the speculation that ultimately this will be folded into SpaceX. And you can bet those will be a lot of the questions for Elon Musk after the company reports its results next Wednesday. Yeah.

37:56Sara Eisen: And we even saw some notes out of the likes of Barclays last night, trying to argue that that might happen sooner rather than later. I am curious, though, on the roadster, Phil, what is the closest competitor at that price point? Well, I mean, you're starting to get up there. I mean, if you look at the Ferraris and if you look at, for example, the new Ferrari electric one, that sells for more than the$200 ,000 to$250 ,000. But this whole area, once you get over to about above$150 ,000, you've got a number of these performance electric vehicles that are being developed or have been announced, which is interesting because performance vehicles at that level, often you find people want them because of the performance of an internal combustion engine vehicle.

38:42Sara Eisen: But the electric vehicle, for all the reasons we've talked about for years in terms of instant torque, the way it can respond, what you can do with software now, I think that gets a lot of the excitement going in that part of the markets.

38:54Carl Quintanilla: Yeah, there's this good debate about whether like a hyper roadster like this could beat an F1 car in a race. But I guess not for long periods of time, but right out of the gate, if it's like a quick sprint, like drive race, then maybe.

39:06Sara Eisen: Phil, good stuff. We'll see what we get tonight. And you may not use it. Look, guys, we all know. What are the odds that you're going to go zero to 60 very often? Not very often. But, you know, you want that capability. You're paying a quarter million dollars for that capability just to say, I know I could do it if I need to do it. Yeah. Phil, thanks. Phil LeBeau watching Tesla tonight. Still to come is an October rate hike. Really out of the cards? Not according to our next guest. Former Philly Fed President Harker joins us after the break.

39:37Carl Quintanilla: Welcome back. Wholesale prices in September coming in much hotter than expected this morning, posting their biggest annual increase since 2022. Data, our next guest, says how it makes the case for a rate hike in October. Joining us now is former Philadelphia Fed President Patrick Harker. I don't know. The market doesn't see it happening in October. They said market signaling more December. Why do you disagree with that?

40:00Sara Eisen: Well, I think the committee is going to move. No, there are odds here, but I do think the committee is going to move in October. This result, the CPI result yesterday, they weren't good. And I think the committee wants to get up to something beyond where they are, which is just a little bit restrictive, if at all, where they are actually restrictive. There's things they can't do anything about, like diesel. I mean, the price of diesel is filtering through the economy. If it comes on trucks, it's going to cost more bucks. That's the reality. But I think they will move, and they probably will move again in December if the numbers don't start to get better.

40:40Carl Quintanilla: I'm going to throw my same counter argument at you that I did to Joe LaVornia, Yeah, which is, should they move, though, if the bulk of inflation is coming from oil prices, filtering through, sure, but that's something they can't control. And this incredible AI build out, which also is just affecting a very specific part of the economy that doesn't really get at raising rates. The people that get affected by that may not need that.

41:09Sara Eisen: Yeah, I don't think it's going to make a whole lot of difference from a macro perspective, given that the long end of the curve has already gone up. I think they need to move mainly for credibility's sake. They have to show that Chair Warsh, as he said, he wants to be tough on inflation. It can't just be words. It has to be action.

41:30Carl Quintanilla: But ultimately, then, do you think that ends up harming the economy?

41:34Sara Eisen: No, I don't think so. I don't think that that's going to make a whole lot of difference. What I think is going to harm the economy is the long curve of that is going to harm the economy. And that is being caused by the fiscal situation and also the AI build out and so forth. But what's really the risk to the economy is the fiscal situation. Interesting. Your point about diesel is good. I mean, people were dissecting CPI yesterday. Services X Energy does accelerate four tenths. And people were pointing to that as the real sign that your trucks and bucks comment. That really that that gets to it.

42:13Sara Eisen: Yeah, absolutely. I mean, my best guess is you look at what that's going to do. Diesel to goods prices. It's probably going to increase inflation by 10 to 25 basis points in the next few months as this continues to filter through. And it's going to take time to recover. This is not something that's just going to turn around on a dime. I mean, this is going to take time to bring diesel production back online.

42:36Carl Quintanilla: But that's not a demand problem.

42:38Sara Eisen: Yeah, but you can't just look at one supply shock. It's supply shock after supply shock after supply shock. And at some point, you can't keep making that argument. You have to take action. Market's not counting on a move, at least this month, although I keep thinking what Goolsbee said last week, And that there's nothing in the Securities Act that says the Fed can't surprise. That's right. And again, my intuition tells me they're going to move again. I could be wrong on this. But if they don't move, you will see some more dissents for sure.

43:14Carl Quintanilla: Oh, right. Because there's the hawkish wing of the party. You're talking about as soon as October even.

43:20Sara Eisen: Yeah. I think October should be on the table.

43:24Carl Quintanilla: A lot of people think that's too close to the midterms for them to actually go, I know they're not supposed to consider political events.

43:29Sara Eisen: I've heard that argument, too. But I think in this case, the numbers just cry out for them taking action, in my view.

43:36Carl Quintanilla: So two more this year and then even more next year?

43:40Sara Eisen: Maybe just hold for a little bit and see how things turn out. Is this Lisa Cook situation adding to term premium? I don't think so. Not really. I mean, I think that this is going to end up being a nothing burger. So I don't think the markets are really pricing that in. And you think she's responding to it in the right way? I mean, that's up to Lisa to how she's going to respond. But really, I just don't see this. I don't know the details of the case, but I just don't see this as really being something that the markets, again, will react to.

44:17Carl Quintanilla: Do you think Kevin Warsh is going to have to give more forward guidance? He hates forward guidance.

44:22Sara Eisen: I know, but everybody else is giving forward guidance. You got the 18 other dots, right? And so he's not going to be able to quiet the other 18. And so people are looking more toward the vice chairs, both Jefferson and Williams for hints and others. So, you know, even though he doesn't want to give forward guidance, the forward guidance is out there.

44:45Carl Quintanilla: All right. Patrick Harker, thank you for joining us. I always appreciate your perspective. Someone who is in the room, former Philadelphia Fed President Patrick Harker. As the market, you know, the S &P 500 has certainly recovered. The Dow is always having a decent day and is now up 454 points. But, you know, it was tech that was under pressure. But the Nasdaq only down about a quarter of a percent now, which is a big improvement.

45:09Sara Eisen: It's true. I mean, it is really fascinating to watch the market pivot. Nike leading the Dow up almost 6%, followed by UNH. I mean, Home Depot, Sherwin-Williams, Amgen. We talked about Walmart kissing 120 or awfully close. That would be that stock's best performance, our best level since June.

45:30Carl Quintanilla: And healthcare, the leading industry. It's like the old school economies come and run back a little bit here. We do have lower yields, and that is potentially helpful. We've seen the second day in a row here where there's been buying of treasuries, even with the credit concerns around AI, like core weave spreads blowing out a little bit.

45:46Sara Eisen: Right. So we just move our way now to the Fed meeting, yeah?

45:49Carl Quintanilla: Well, next week is quiet period, and then the Fed meeting is after that, October 27th, 28th. But in the meantime, we'll get a lot more earnings and goals on the economy.

45:58Sara Eisen: Yeah. 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.

46:10Carl Quintanilla: You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer.

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