9AM HOUR: AI-Fueled Nasdaq Records, Meta's "Muse" Momentum, McDonald's CEO Exclusive 9/23/26

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0:49Make every moment unforgettable. Find great gifts starting at$250. Jared. Make the holiday last forever. Shop Jared Jewelers. Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street. Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Sarah Eisen, David Faber at Post 9 to the New York Stock Exchange. Cramer has the morning off. NASDAQ up four straight days at all time highs. Little wobble in futures here as bond yields are not following oil lower. Two year gets near four, eight today, 10 back near five.

1:26Brent's stable at 100, but as Apollo writes this morning, the diesel shock is a core inflation shock, as the president voices support for an export ban. Our roadmap begins with the AI FOMO trade roaring back. Tech stocks hit all-time highs, but geopolitical uncertainty weighs on stocks ahead of the open. Plus, AI's muse, Meta's new consumer product, reignites AI disruption fears. As investors await more from CEO Mark Zuckerberg about his AI vision, we may hear more on that later today. And McDonald's meeting investors, pledging to spend billions on AI and a big restaurant upgrade, seeking to drive growth and fuel the stock turnaround.

2:04Let's begin with the AI trade fueling some record highs for both the NASDAQ and the NDX. It's largely been a meta story, guys, over the past few days. Although yesterday, the SMH up 2%, up six days in a row, hasn't done that since April. Interestingly, the other wrinkle regarding meta, Sarah, is just the disruption. We talked about some of the brokers and what I think Goldman's calling consumer inertia stocks. Yes, it's a little reminiscent of Sasspocalypse, but focused on different stories and consumer names. And, you know, another research note calls it the agentic roadkill FOMO trade. basically pursued losers that, you know, if we get Muse starting to do people's tests and buy things for people online and sort of disaggregate products and go book trips and everything, will that be as much need for the bookings or Expedias?

2:59Will that ultimately hurt pricing power for certain companies? And so I think that there's a big sort of rethink of what all of this means. I downloaded Muse this morning because David told me I need it, which I do. I have a lot going on with the kids and life. You do. I haven't really gotten into it, but I will say in my early experimentation, you have to give it a lot of permission to do things. Like, are you okay if we go through your calendar? Are you okay if we start booking things in your calendar? Are you okay if we start going through your emails and booking things in your calendar? And then are you okay if we start making purchases for you?

3:35And I think the Amazon warning, right, that it doesn't want agents making purchases on its platform is something to think. You know, there's safety concerns, right? What happens if an agent buys something that you haven't authorized it to buy? It's more than that, of course. I mean, Amazon makes a lot of money from advertising. We didn't really make this point as much as we might have yesterday. And you need people to actually look at ads, right, for your ad business. We have a world where agents may proliferate connecting, as you said, to the API. And it obviously could negate what is an important component of revenues for some of these companies in terms of the ad layer that they have.

4:15We're also going to see competitors to Muse. There's no doubt about that. Mentioned it again yesterday. OpenAI expected to have one. Everybody, all these companies are expected to have personal agent assistance that they will market as such. And, Carl, we also talked about that friction. How much will you let it do? And over time, what will it do? But I think there are a lot of investors trying to understand the broader ramifications. I'm looking at a piece today from, I think it was BlackRock, arguing that the intersection of AI and digital assets remains underappreciated because as agentic AI scales, machines will increasingly need to transact with other machines.

4:53And so you could have stable coins. And again, this is their contention and programmable blockchains making that easier versus traditional payment rails. And that could actually help for tokenization and all those things on that digital realm that we talk about. But that has yet to really fully, I guess, take off. Yeah, but it does feel like we're moving to a world where my machine talks to your machine. We do know the information says already half a million users on Muse. The Times review kind of glowing, in a sense. Best AI app I've used, even though it does ask for permission to go through a lot of your personal life.

5:33Yeah. Actopia says faster downloads than ChatGPT in the first 12 days. Sensor tower data. There's obviously a lot of anecdotal data. We'll hear what Mark Zuckerberg says tonight. I mean, man, think about meta slash Facebook and privacy concerns around that company and the lack of trust amongst some of its customers through the years and what they've done and what they've said they did and didn't do. It's just interesting how short memories may be when it comes to this company. Or that people just don't care. They want more convenient lives. They don't care. Right? We don't care anymore about putting, as you said yesterday, about putting our credit card numbers saved in our phones.

6:13Like, if it saves me time, efficiency, and money to put my data in, I don't know. It's interesting that Zuckerberg came out last week in response to the Dario Amodei and Elon Musk and Sam Altman sort of call for, I don't know, what are we calling it, pacing? Yes. And Zuckerberg's take was more of the kind of trust us. We got this and we are taking responsibility for what we are putting out. And we will not do it if we don't feel good about it. So it's interesting that this comes out, right, and all this picks up momentum. a week after that. Look, the administration seems to be much more in the Zuckerberg camp, right?

6:56We heard from President Trump, he doubled down at the U.N. General Assembly in his speech yesterday, that they are not going to stifle innovation. We are going to lead and encourage superintelligence. And now, you know, this report from Semaphore that Scott Besson, the Treasury Secretary, might be the AI czar, although a final decision hasn't been made. I mean, they're on it, But they're definitely not of the view that they should be regulating it or pacing it in any way. I mean, pacing, yes. But at the same time, Anthropic just released a new model yesterday. Claude Opus 5.5. What was interesting here is that it wasn't necessarily about the power of the model, which is somewhat similar to the last model.

7:39But I think they said workload costs, what, 40 percent less with Opus 5. And so they're talking about output tokens falling 20 percent to, you know, you're talking about 20 percent to four dollars and twenty dollars per million. And just keeps coming down from there. so you you know it's interesting the economic model from these companies because of course they can continue to produce new models that conceivably will be more powerful but as importantly are going to be more and more efficient in terms of their token use and yet they obviously need you to use a lot more compute. Right. Chevin's got to win.

8:17Otherwise right. Otherwise what was all that about? I know. Not to mention of course the pressure on these companies to continue to increase their revenues when I say these companies I'm talking Anthropik and OpenAI in particular Anthropic, of which we're still waiting potentially for an S1 at some point, not to distant future. I can't wait for the risk factors. It's like number one risk factor has to be like we're going to 10 % chance we wipe out humanity, right? Yeah. What happens to the stock in that case? I don't know. It goes to zero. I mean, I think haven't we already digested that 10 % chance?

8:47We moved on from that. That was so two weeks ago. I know, but you mentioned the S1, And I'm just wondering how they're going to explain that. No, the risk factors should be fascinating. There will be a lot of interesting reading. Obviously, they filed confidentially as has OpenAI. We're not going to get OpenAI's IPO until next year. But we are still thinking that Anthropoc will come this year. But again, you know, how do you continue to increase revenues at the pace they have? Right now, I mean, they're going to end the year. Maybe people are saying at$110 billion annual run rate. I don't know what the appropriate multiple for that would be.

9:22But again, if you are presenting models that are more and more efficient, can you back? You just said it, Carl Jevons. I mean, right. Will it only increase the use of company? Maybe it will. No, I know. Fidelity's got a chart out today. Looking over the past three months, token expenditures and GPU lease rates are flat to down. What's up is DRAM. So that's where the inflation is coming from. But this model has got to work at scale, given the price war that continued. We got new price cuts today on GPT-6 All. Yeah, exactly. I mean, right, both of them. OpenAI also, I should have mentioned that as well.

9:58They're calling it efficient, but they're cheaper models. Right, but the efficiency, I think, is something we've got to keep a close eye on because it sort of does go to this idea of can token consumption accelerate even while token prices come down dramatically? I think everybody expects token prices to come down, right? Yes, yes. And in China, I mean, as a comparison, they're so much cheaper, the token prices. So when you look at that, I mean, that is part of the debate on whether these are going to be good, obviously, investments and be able to be profitable. I mean, we've been talking about OpenAI spend and Anthropics for years now, in particular, in terms of how much they're spending on compute and cumulative negative free cash flow.

10:42Others have reported on OpenAI through 2026. You know, the numbers are incredible. $278 billion.

10:52Sorry, you know, important people text me during the live show. You know who you are, and I want to read this, so I'll take a moment. Thank you. I think that it says the safety and security, though. It's not just the economics of this that are up for discussion, but the safety factor as well. You know, today, the U.N. Security Council is going to get briefed by Sam Altman and Dario and Amadei, and also the Hugging Face CEO, who can talk a little bit about that rogue incident of this swarm of agents. I guess, although the CEO of Hugging Face saw it from one side, but I'd rather hear it from some of the people who actually investigated it broadly, because remember, it was a lot more than just hacking Hugging Face.

11:28It was really about the rogue agents and everything they did together and how they acted as a collective and how they all agreed never to tell their human masters and how they spent most of their time covering it up. It's still fascinating. All with President Xi in the air on his way to Joint Base Andrews. And by the way, you got something? Yeah, well, no, just on the you might imagine on the anthropic potential valuation because it is important. You know, people are looking for as much as 200 billion in revenues in 2027. So a 10 multiple on that would be a two trillion dollar market cap. And by way of comparison, SpaceX did go out at 50 times revenues.

12:10you're not going to get 50 times revenue. So you're not Elon Musk? No, I've never claimed to be. No, not you. Anthropic is not Elon Musk. No, you're not. There's the Musk kind of premium in that. I will note, you know, back to the MetaMuse trust, what it's going to mean ultimately for consumer companies. And they do continue to make partnerships. We mentioned Shopify yesterday. Instacart is one for grocery shopping and delivery. PayPal for checkout. Expedia for trip planning. So it's not like they're partnering with a few of these merchants and payment companies, not necessarily circumventing, which might help.

12:48Like the SaaSpocalypse, there's partnerships with, for instance, Anthropic and Salesforce. It might help in the narrative of, hey, they're not going to destroy us. We're going to partner with them, and then that's going to drive a lot of growth. It's going to be a busy day of consumer check-ins. We're getting General Mills. There's some chatter on the airlines. And it's also McDonald's Investor Day. Stock's been under pressure, as you might know, lowest since 2024. But today they're going to roll out some new targets. They're looking to support franchisees with about$8.5 billion by 2036. Some aspirations of taking share on chicken and beverages by 2030, two categories in which they under-index.

13:31But all of this is coming. We talked to Chris Kamchinski, CEO, about the backdrop for quick service and restaurants in general and the prospect of inflation sticking around for a while. Take a listen. One of the things I've talked to our team about is we need to stop talking about that being a difficult environment and just say that is the environment. Because I think as we look out forward, we're not expecting things to change. We're not expecting that the industry all of a sudden is going to go to having robust traffic growth. We think that's going to be largely flat. We do think inflation is going to be with us for, you know, unfortunately, I think many more years at an elevated level.

14:10And so in that environment, how do we make sure that we're set up to win? So they're trying to we're going to talk more about their their internal targets, what they're doing for franchisees, how they can potentially grow cash flow by about one hundred thousand dollars for individual restaurants. kind of coincides with Ryanair today. The CEO is saying that if oil stays about at this level, airfares, in his view, would have to rise 10%, 15%, maybe 20 % in 2027. What's been the problem with McDonald's? I mean, Jeffrey has put out a note a few weeks ago pointing to strategic missteps around marketing and menu innovations in the summer.

14:50Is that why they fail to grow? They don't have absolute control over their franchisees. So when they roll out corporate-wide initiatives like a value plan, you know, some of the franchisees kind of rebel, don't want to invest the CapEx. Maybe they're not as attuned to the pricing directives as some other franchisees. So that's been difficult. As we said with Chris, it's kind of like wrangling cats. But they believe that with additional support for those franchisees, helping them sort of put a bed under the CapEx commitments, that that might help them provide a more consistent dining environment.

15:26In their view, they want to be first choice for a consumer who's looking for that kind of opportunity. I know they're excited about the new drinks, too, right? Yes, beverages. Everyone's all over beverage. We're going to talk about that, too. There's Red Bull now at McDonald's, apparently, as of August. When it comes to beverage, the name you've wanted to own this year is Coca-Cola. Coca-Cola. It's been steady. KO. And really outgrowing Pepsi, by the way. Remember a long time it was Pepsi? They got the food. That was the growth. I figured I'd just give you a little something there, Sarah, because you said you weren't going to talk much.

15:57When we come back, record high diesel prices becoming a campaign issue for the midterms. We're going to go to Iowa, check in with Farm Country and see how the Farm Belt is dealing with some of these input costs. Take a look at the pre-market here as we're still south of the flatline on this Wednesday. Don't go anywhere. Legacy Credit Scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments.

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17:17Start building with Gemini at cloud.google.com slash AI. Citi wealth investment products and services are provided by Citigroup Global Markets, Inc. Member FINRA and SIPC. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box, that smile they can't hide, knowing you chose exactly right. Because the right gift can bring a lifetime of meaning, a promise, a milestone, a memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers. We've been talking a lot about record high diesel prices.

18:01They've also become a major political issue, of course, as we approach the midterm elections. According to AAA, the average price now at$6.52 a gallon a year ago. You can see it there,$3.69. Pippa Stevens is on the ground in Iowa. Of course, diesel costs there taking a significant toll on farmers. Pippa. Good morning, David. I'm here on Kevin Middlesworth's 1 ,200-acre farm south of Des Moines. Yesterday, he was filling up his combine. It cost him$5.90 per gallon of diesel. That was up from$2.76 at the end of February. And it's just one of the higher costs that farmers are facing. Land, fertilizer, feed, it is all going up.

18:48And it is a tea topic of conversation here in Warren County ahead of the midterms. I'm here in part of the first congressional district where Democrat Christina Bohannon is gearing up to face off against Republican incumbent Marionette Miller-Meeks for the third straight time. Now, she lost this election in 2024 by fewer than 800 votes. So it's very much a toss up here. And Middlesworth told me that this time around, he is seeing a difference in the community. So I travel a pretty large area here in our counties. I'm seeing a lot of blue signs this election cycle that two years ago, four years ago, I was seeing zero.

19:32And this year it's just the opposite. I'm seeing zero red signs and all blue signs in areas that typically I wouldn't expect to see them in. And so to me that's telling me something. then somebody's out there and they've changed their mind. Now, we did also speak to farmers who said they feel disillusioned by what's going on in Washington, with one telling me that he feels his crop is being used as a negotiating chip in D.C. I spoke to another who said he's very happy with what Miller Meeks has done for the community. So it is still a toss up here. People are still deciding on their vote in Warren County.

20:13But one thing that is clear is that this rise in diesel prices is now essentially offsetting any gain from higher crop prices. And after a few difficult years in Iowa, farmers are hoping for a good harvest this year. Guys? PIPA, so now it opens up this debate about whether America should ban diesel exports. Did Trump really voice support for this idea? I mean, if you talk to folks, and I'm sure you do, and I've read some stuff from the industry, it's a terrible idea that would only raise global prices, making the supply crunch even worse, and wouldn't even help in the U.S. because we don't consume as much as we refine, so you'd have this big surplus.

20:57That's right. So the U.S. has about a 1.5 million barrel per day surplus of diesel. And so what we will likely see is, first, the refiners would likely utilize any storage tanks, But after that, they would be forced to cut their runs to the tune of probably about 10 percent. And what that would ultimately do, the industry says, is raise prices for other fuels, including gasoline and jet fuel, because, of course, all of this is refined together. And so, you know, here in Iowa, both Hinson and Turek, who are fighting over the sea, they have both come together and called for this diesel export ban.

21:30There could be some relief temporarily, but longer term, the industry says, this would only raise prices for consumers. Pippa, really good look at a key issue for the middle part of the country, especially. That's our Pippa Stevens in Iowa today. One more look here at the pre-market before we get an opening bell. In about eight minutes, Squawk on the Streets back in a second. From kickoff to the final whistle, trade the biggest moments in football with Kalshi, America's number one prediction market platform. Next Sunday, Pittsburgh takes on Burrow and the Bengals. Pittsburgh is currently trading at 42 % to win.

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22:37If you like YouTube, you'll love YouTube Premium. It's destroying athlete, creator, and YouTube Maxer. YouTube Premium enhances how I use YouTube with awesome features like offline downloads so I can download my favorite training videos before I hit the gym. So no Wi-Fi doesn't turn leg day into loading day. Plus, I get ad-free videos, background play, and so much more. YouTube Premium is like YouTube got some extra gains. Try YouTube Premium for two months free at youtube.com slash premium. Trial eligibility varies. Terms apply. Cancel anytime. Your financial life rarely fits between nine and five.

23:11And the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi wealth team, built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com slash AI. CitiWealth Investment products and services are provided by Citigroup Global Markets, Inc., member FINRA and SIPC. First Lady Melania Trump is at the NYSE this morning headlining the inaugural Imperia Summit, which is a group focused on the global economic power of women.

23:50They'll hear from the first lady directly today. Some fireside chats with female CEOs from nearly 90 public and private companies today. Lisa Su is here, CEO of AMD. Karen Seidman-Becker, CEO of Clear, is here. I see. We'll get that opening bell in just a few minutes. All right. With the opening bells just moments away, let's bring in closing bell overtime co-anchor and senior markets commentator Mike Santoli. Talk us through the markets. And we've been talking about how NASDAQ, back at the highs, we saw some life in the memory stocks again ahead of the micron quarter next week. And a lot of the conversation without a lot of economic data appears to be focused around views, AI, and a new chapter in the AI trade.

24:34Exactly. So you've got a spark lit in some of the AI trade. It's really consuming most of the option. I think that's what the market is contending with here. It's fine if it outperforms, if it leads in an uptrend. If the rest of the market is backing off, that could be an issue. We actually have NASDAQ 100 relative to the equal weight of Russell 1000, which I think is a very comprehensive view of what's happening in the meat of the market. And you see massive divergence here. That's a year-to-date chart. But just on a month-to-date basis, you know, NASDAQ 100 up 4.3%. That equal weight of Russell 1000 down 3.6%.

25:09So financial condition tightening, Fed, higher Treasury yields in oil, they're being felt. It's just not at the S &P 500 or NASDAQ level. Below the surface, we're registering the pressure. Yeah. We go into the open here with the S &P less than a percent from all-time highs. NASDAQ at all-time highs. Transport's down 20 from all-time highs. Mike, stick around. Let's get this opening bell. I have a big vote on West. It is the First Lady, Melania Tartt, joined by NYSE President Lynn Martin, as we said earlier, headlining the inaugural Imperial Summit, focused on the global economic power of women.

25:45At the NASDAQ in Times Square, it's Nucleo, a nuclear fuel technology company based in Paris, recent listing via SPAC. And at SIBO in Chicago, it is a SIBO quant conference, which concludes today. Hanging on to 77.60 here. There was also this notion of the S &P within 1 % of its high, all with the number of 52-week lows we mentioned yesterday. And then just deteriorating breadth. This was Monday. That was this extraordinary number of new lows when you had the market of a percent and a half and it was very close to the highs. And it is the breadth issue. And so, again, you don't want to see the underlying majority of stocks actually rolling over and declining.

26:28If they just kind of underperform, that's fine. I do think it is largely still where the macro forces are being felt. So, you know, this morning you see the index futures wobbled a little bit as treasury yields took a little bit of a tick higher. Oil came off of its overnight lows. You do have the two-year yield pushing 4.8 percent. Tens, they've really had no give to them, even though oil's down 10 percent from the highs recently. So I do think that remains the focus there. I don't think people are talking about how, you know, there's really risk to the underlying economic expansion. It's not really about that.

27:04It's much more about around the edges of the market, liquidity perhaps being soaked up just a little bit and really being funneled all into the AI trade. One thing is for sure, you know, we've had some Fed speak over the last 24, 48 hours, and it's all pretty hawkish. Yes. I mean, this is a Fed that has now pivoted to fully focusing on inflation and concerned about overheating demand and signaling that there's more work to do. Definitely. I would say we got two non-voters, Collins and Barkin, yesterday, and they were both kind of of the same. We'll see if we need to hike more, but we need to return inflation sustainably to the cheaper.

27:37So they're all kind of singing from the same hymn book, which is very much how Kevin Warsh is framing it, too. It's like, we will not tolerate higher inflation. You know, at the same time, diesel prices, oil prices, that's really what's dictating, right, the inflation story and the yield story. Today, we're seeing oil prices slightly higher. Not much news. I mean, President Trump did say that U.S. officials did have what he called very good talks with Iranian envoys in New York. We don't know who the Iranian envoys were. The U.S. delegation was Steve Wyckoff, his special envoy, and Jared Kushner.

28:12And he also met with the Gulf nations, called it very productive, but no sense of whether there's some sort of deal to reopen the strait or anything that would move the needle on oil prices. The Iranian president is here today, by the way. There's a lot of focus on how long oil prices and product prices have remained elevated. And that arguably creates a greater chance that it sort of bleeds through into some core prices. So I do think that's where the bond market is at right now. In fact, if anything, the short end of the bond market is kind of overshooting where the Fed has sort of implied it might get to in terms of Fed funds.

28:46I know our Steve Leisman has been on this a little bit. And I think there's always going to be a little bit of a risk premium in there in terms of if we're going to be surprised, which direction are we going to be surprised in? And there might be a sense out there that we may end up getting surprised by, you know, higher for longer inflation or the need to tighten a little bit more than just the two or three times that we have baked in. This was the focus of the Greg Giff piece this week, just how long it's staying at these levels. It's allowing it time to bleed in. And then this Apollo piece saying diesel is not like gas.

29:16Gas is a one-time tax on discretionary spend. Diesel is an input that goes into every physical good delivery. Exactly. Well, and even to the point where so many of the companies, you know, direct surcharges, right? It goes to the customer right directly, dollar for dollar on a weekly basis. It changes. So I do think that's part of the concern here. And then, you know, the other hot versus cold parts of the economy gets exacerbated by, you know, no let up in CapEx. There's massive demands on the capital markets for that. And yet, you have housing continuing to face a pretty tricky spot. Well, we were mentioning before the show, ITB, best day since June yesterday, on the Lenar-Berkshire thing.

29:57There's a little bit of that, a little bit of the Lenar thing, a little bit of yields came off a bit. We got through the Fed and all the rest of it. KB's numbers last night were okay, but they were on very low expectation, much reduced expectations. Those stocks are starting to look cheap, but nobody thinks, based on the outlook, they're screaming buys. Well, they had to lower their housing gross profit margins. because they said that when we first put it out, the conditions have worsened since then. They now expect it to be 16 to 16.2 percent, down from earlier guidance of 16.1. As you mentioned, kind of weak conditions across the board on this idea that mortgage rates are high.

30:34Southern California had a slower than expected sales in the quarter. They've lowered some prices in response to the mortgage conditions. So, I mean, that explains why the stocks have been weak over the last years. For sure. And, you know, the KBW Bank Index, right, the big banks are down, you know, it's like five or six percent this month or six percent since really the Friday before the Fed meeting. So, again, it's filtering its way through. And everyone is just saying, yeah, but meta, you know, yeah, but the MAG-7 seems to be defensive against a lot of the things we're worried about. And even though on a given day you have no idea whether you're supposed to be betting on infrastructure or AI agent plays or something else, something within that group seems to rescue the overall tape on a given day.

31:21Not a lot of individual movers today. I'll have something in a minute on a particular situation. But I did want to come to SpaceX, guys. I'm broken record here, and it's not clear that this will have any impact on the stock. I'm talking about yet another lockup coming undue for the company tomorrow. 328 million shares, followed by another 328 million on October 9th and another 328 million on October 24th. It's about a billion shares in, let's call it, a month. But of course, stock has performed extremely well since its IPO, essentially. And it has withstood the previous expiration of lockups. So not clear that this will have any impact other than where the stock is, which time's left in the year, any number of different things.

32:12But I did want to mention it because it has come up a number of times in conversations I've had of late as at least something people are once again looking at. And don't want to overlook the fact that, let's call it another 20 plus percent of the company is going to be floating in the not, meaning if it's sold, in the not too distant future. For sure. You know, you can kind of tell the story that it's done really well since the IPO, or it's down 30 % since the high print in the initial burst higher on the IPO, but it has held its value. I think that's the bigger story. You know, it's holding a couple trillion dollar valuation.

32:45It's right. 135 to 153 at this point, I think most people would say, we'll take it very nice. Two trillion clean, two trillion at least in terms of its current market cap as well. I know you guys were talking about the disruption trade restarting again. That's the bottom of the S &P this morning. It's the travel stocks, Expedia, Airbnb, Booking, Applovin is down there. Paychecks as well. So all of these kind of gatekeeper, fintechs. Yeah, this whole notion that, as you guys were saying, any business where it's just a hassle to change or find the best price. Or that there are inefficiencies in pricing, I guess, or discounting, where the AI can kind of disrupt that.

33:26Right. They can hunt out the best deal. And so, therefore, you're attacking profit margin across that middleman space. We'll see. I mean, I don't know how much we're going to have to kind of price it. At some point, it just gets locked into the trading rules. And it's like, oh, OK, if we're excited about Meta and AMD and Dell, because that's the business of expanding the agent market, then I guess we have to be negative. But do the financials make sense? Because they got hit pretty hard yesterday on this idea that I guess they get disintermediated somehow. Deposit strength if AI can optimize banking and flows.

34:00Or even the insurers. Allstate yesterday. Yeah. Well, that's the whole thing, right? So if it makes it that much easier to find the best deal possible. The Cetrini folks were saying, Muse will stay on the line for five hours with your health insurer to get something covered. You won't do it. Oh, my God. I'm signing up today. Right? That's it. It's really helpful. Oh, my. Wow. Right. I didn't think of that. Right. So that's the whole thing. You are going to love a new friend. Or find the best way to spend your membership reward points wherever. Right. And that's going to happen at the greatest expense.

34:36All of your subscriptions. Review all of them. Make sure I'm canceling the ones I should be and not the others. Planet Fitness, Siri, Spotify, not as much today. But all of these sort of subscription-based names, maybe would you attribute the Amex weakness to some of this? I don't know. It's a good question because, in theory, it does make it that much more expensive to be in the membership rewards business. Shopify shares were up, right, on their news of saying, hey, welcome in news. They're considered to be an instrument of how this stuff filters into the e-commerce world, I guess. Yeah. Guys, I'm going to go into the world of activism for a moment here as well.

35:16report a story. Devon Energy is the subject of an activist campaign from the hedge fund Tom's Capital Management. It's urging the Houston-based oil and gas company to review strategic alternatives, including a sale. That's according to a letter that Tom sent to Devon earlier this month. Tom's over$4 billion in assets says in the letter it is one of Devon's top five shareholders. Now, last May, Devon closed its merger with Katerra Energy. It significantly increased the size of the company's portfolio in the Delaware Basin. That is a key oil and gas producing sub basin of the Permian in West Texas and Southeast New Mexico.

35:51The deal also brought together a portfolio that now includes the Marcellus Shale, the Eagleford Powder River Basin. That's amongst other properties that Tom's claims brings an undue level of complexity to the company and contributes to what is, in its view, a discount to its peers of at least one multiple point. And that's significant given the stock trades at about four and a half times next year's expected EBITDA. Devon has caused frustration amongst other investors as well of its energy focus investment firm Kimmeridge, for example, has publicly urged the company to streamline its property portfolio and articulate a post-Cotera merger strategy.

36:30Now, in meetings prior to sending its letter, Tom's had encouraged a similar strategy. But it's now urging the company to sell itself, asserting in its letter that a potential strategic buyer of the entire company could subsequently divest assets, shifting the execution risk of such sales away from Devin Holders. Times Capital is joined in the activist campaign by the noted litigator Alex Spiro. Spiro is known for his successful track record, of course, of combat in the courtroom. He has an advisory relationship and friendship with the likes of Elon Musk, Jeff Bezos, Ken Griffin, amongst others.

37:04He's now apparently adding a career in activism to his growing resume. Spyro and Toms did both decline to comment beyond their letter. Whether Toms, which has waged activist campaigns at companies such as Kenview, kind of sold at market level. Denberry sold it. It was sold, but again, not a huge premium. And Kelanova, which was a big success. Whether it will succeed here in pushing Devin to sell is far from clear. Major oil companies, Exxon, Chevron, Conoco, even Diamondback, they certainly might have interest in Devin's core position in the Delaware basin. But negotiating a transaction, certainly at present, given the volatility in oil prices, that is not a given.

37:45And while Tom's claims of comparable deals in the region are indicative, they say, of Devin's undervaluation, I should point out that each deal is quite specific given the importance of contiguous properties. So if you buy something that's next to something you already own, it creates a lot more efficiency and drilling. And guys, I'm always reminded as well when I report these stories, we talk so much about technology. But technology in the oil business is astounding as well. Certainly something that I learned firsthand a number of years ago when I did that documentary on Exxon. And speaking of Exxon, of course, consolidation here, we've seen it, right?

38:20Exxon bought Pioneer. They got a lot bigger in the Permian. We know Chevron with Hess as well. Obviously, Guyana was an important component of that. But even what Exxon's doing with Pioneer and what they took there in the Permian as well, in terms of the way they're fracturing certain surfactants that they use and the things they put in the well to obviously increase the refining productivity is amazing. And they show it. So would there be interest? Perhaps. You can see the stock not moving that much. I should say Devin's stock price not moving that much this morning as well on this news. Devin has not been able to reach Devin.

39:00Their advisors have declined to comment. They do have investment banking advisors, you might imagine, on the activism front. It's the typical window in terms of opening for a proxy fight, not until next year. Annual meeting, obviously, later next year as well. No control shareholders, a board that is made up of five of Katerra's former directors, which is another point of contention both for Cambridge and for Tom's capital. So between that and Jana, Six Flags, are we going to start seeing activist stories? You know, they're out there. This one, it's a$50-plus billion company. If it were to actually be forced to potentially consider a sale, that would be a pretty significant story.

39:43Activism is out there. It's funny, Elliot, which is by far the biggest activist, still out there doing stuff, but haven't had a headline from them in a little while. But sure, Carl, there's no doubt it is out there. You know, the question also sometimes becomes, well, if you are pushing an M &A scenario, it can be more difficult to achieve, certainly when you have volatility in oil prices and or volatility in the stock market. Rates moving up doesn't help if there's borrowing involved. So any number of different aspects to it when it is at least an M &A-focused activist push. There's a target too, right?

40:16Yes. There's a target campaign as well? Yes, that's right. There wasn't really a huge campaign there, but yeah. It wasn't like an M &A push. No, it wasn't. It was more of, well, it might have been if they'd gotten to it. But yeah, so they've been active and growing as a firm as well. And I thought Spyro also, that guy never tires of doing things. He's a young guy, I guess. Maybe the other interesting element is Microsoft, one of the most buy-rated names on the street, finally gets an upgrade out of Stifel today. They go to$5.75. Less concern about cash flow, raising equity, things like that. It is literally the biggest upside contributor to the S &P this morning, up 1.3%.

40:51It's really come back, you know, in a hurry from the depths. You had this massive gap between kind of the consensus rating on it because everyone was just looking at the near-term cash flows. So it does seem like scale, and for the same reasons some of the sort of mission-critical enterprise software names have come back and have not seen as vulnerable. I guess that does sort of help there. You know, we'll see. I don't think that anybody is getting back to their former valuations. The stocks are coming back to some degree. I think it's still like 10 % below its highs. In fact, Meta's move, I had this chart made too, it quickly closed whatever gap it had in five-year stock performance relative to the NASDAQ 100.

41:30It's now on parity, right? So it was laggard, laggard, then it's back. And even in valuation relative to the S &P, it was cheap, cheap, cheap, and now it's right back to its average. So it's almost like in a couple weeks' time, whatever you thought was the opportunity that it was dislocated from its trend or from its valuation, it's kind of back. And so people are believers again. We'll see what they say tonight. Yeah. Back in the green for the year. At one point, it was down almost 30 for the year. That move in Microsoft feels like it was a different year. I mean, it was down almost 25 % at one point this year, right?

41:59Definitely. Amazing. Yeah. Mike, thanks. All right. We'll see you in a bit. We got some flash PMIs. Let's get to Rick Santelli this morning. Morning, Rick. Good morning, Carl. Buckle up, folks. These are strong numbers. Look at yields go. Over 5 % in the 10. Preliminary September, S &P Global. The manufacturing PMI, a whopping 57.0. We're looking for a number that was south of 54. This would equal where we were in May of 22 to find a higher number. You're all the way back to April of 22. On the service sector, a total blowout number, 58.7. That's a cycle high. And if we look at the composite, 58.4, also a cycle high.

42:42I can't get databases much beyond the spring of 22, and these are all higher than that period of time. We do see that interest rates, well, they've had one close. That was Fed Wednesday above 5 % all the way back to 2007. We may be on pace for another one today, hovering right around that 502 level now after these data points came out. And do keep in mind, of course, the dollar is back on track. As interest rates seem to firm, we seem to see that dollar doing better as well. And if we consider the notion that the Fed certainly seems on a rate hike cycle, we have to pay very close attention to the red developing in the equity space.

43:22Do come back because Squawk on the Street will return after a short break. We're watching General Mills today. That's the owner of big brands like Betty Crocker, David's favorite Honey Nut Cheerios. sales declined 3%, but actually that was better than the street expected. Organic sales, flat. We'll talk about how to turn the business around and get back to growth with the CEO, Jeff Harmoning, in the next hour of Squawk on the Street. Don't go anywhere. If you're using Meta's new personal AI assistant, Muse, it turns out the person on the other end of the phone line might not actually be an AI agent.

43:56Reuters reports the company's been testing a so-called human concierge after launching its phone calling feature. Really interesting look at some internal comms over there. Meanwhile, a lot of chatter about not so much Muse today as they go to MetaConnect, but Watermelon, which is their next frontier AI model. I don't think we're getting that today. It's probably an October thing, but already looking ahead to what would follow Muse or Avocado, as they call it internally. I don't know why they're going with food. It's hard to keep track sometimes, but the models keep coming. Pacing be damned or whatever that means.

44:28Pacing is just potentially more safety and guardrails and alignment being... Or nationalization, if you ask Alex Karp. Or nationalization. I mean, that was such a fascinating conversation you guys had with him. He didn't finish the thought, though, in saying that the U.S. government, basically, they want them to own 50 % of Anthropic or something. No, his point was that... They're inviting it, right? What Dario is really saying, as he reads it, is you've got to take a stake in us or nationalize us because we have so much liability. And there's no way we can possibly stay alive against all the risks that we're facing.

45:03Interesting viewpoint. And it would not be, as Alex did kind of communicate as well, particularly good for current holders of the company. Which, by the way, we're still, again, back to Anthropoc. We started talking about this just because, you know, maybe we get an S1, let's call it. Now I'm hearing October-ish. So what's that? A couple of weeks? And then a public offering after the midterms? The FT had Claude write a risk factor statement for the S1. Oh, I didn't see that. Where I was just going to look it up quickly. Large scale loss of life, severe and irreversible harm. The occurrence would likely result in the complete loss of your investment, along with consequences substantially more severe than the loss of your investment.

45:50I was wondering how they would be able to put that. That may be it. They're warning that risk themselves. So they have to put it in there. I would assume Claude will write their S1 for them. Although, of course, you've got lawyers who will look it over, right? They definitely will. You've been listening to The Opening Bell on CNBC's Squawk on the Street. 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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