9AM HOUR: AI Leaders Call For Slowdown, Chips Slide, OpenAI's Altman Rules Out 2026 IPO 9/14/26

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1:13Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanillo with Sarah Eisen, David Faber at Post 9 of the New York Stock Exchange. Kramer's on assignment, getting ready for Dreamforce out west. Watch the rotation today as the AI trade is in the crosshairs after Dario Amode's warning that Frontier AI needs to be paced. Fed meeting this week where the hike is now a base case, 10-year 498. Brent's closing in on 110 again as that Saudi east-west pipeline is now expected to be shut for several weeks following that Houthi attack. Our roadmap begins with AI leaders calling for a timeout.

1:45The CEOs of Anthropic, OpenAI, XAI and others warning the technology is moving too fast. Plus when it comes to those leaders in In terms of training new models, we are playing the IPO waiting game. Sam Altman, in an interview, tapped the brakes on the chance of a public debut for OpenAI this year, saying it would be, quote, ill-advised. And Fed expectations. Goldman Sachs and other major banks now calling for a rate hike this week. Let's begin with the AI industry. Leaders calling for a slowdown. Anthropics' Dario Mote setting the tone with his essay. Sam Altman and Elon Musk among those agreeing with what he wrote.

2:20This is what he had to say in an interview on CBS Sunday morning. There are real dangers. And I think for too long, the industry lied to people about the fact that this technology had risk. The idea was that they would present it as positive as possible. We've never done that. But too much of the industry did that. And so it starts with telling the truth. And the truth is there are risks. including this risk really the crux of his essay this this line about his fear that in in six to 12 months a swarm could be capable of taking over the entire internet with a persistent bot attack yeah that got a lot of people's attention of course you know i've been reading his essays since machines of loving grace i remember that one there's a lot of his hits and of course he has always been at least in the last let's call it three years of the of the leaders of the AI labs, the most outspoken in terms of at least trying to bring to the fore what he believed were the concerns that society should have about the continued advancement of this technology.

3:28As you well know, Carl, I've talked about a lot of those fears as well. They do seem to have come to a sort of a new boiling point recently with any number of different discussion points by people who no longer work for Anthropic or work for OpenAI. I mean, OpenAI's chief scientists were only a week or so away from that essay called The Alien Mind. And I always remind people, OpenAI itself was formed with the idea of creating AI in a safe way when Elon Musk and Sam Altman, now, of course, enemies, were partnered in what was originally that mission. And then Dario, of course, also an OpenAI employee at one point having broken off to become or launch what was a safer attempts at doing so.

4:14The question, of course, for the markets is where are we? What is this going to mean? Will there really be any sort of a pacing and a slowdown in the development of these frontier models? What will that mean for the chip stocks? What will that mean for the entire ecosystem? And Sarah, there are any number of different theories here in terms of whether you even see any sort of meaningful slowdown, maybe in the introduction of the models themselves. Anthropica, of course, is now introducing a third-party monitor to sort of look at safety for them. But will there be? And then on the inference side, nothing's going to slow down.

4:45And the use of the chips itself could, in fact, become more economical, in a sense, and even better, some would say, for the chip companies themselves, or at least for the use of the Blackwells will get even more mileage on them, so to speak, is some of the thinking. But people are trying to grapple with all of this in real time. Well, the monitoring is, I guess, the tangible impact of what he's doing in terms of if you're looking for steps. Because, I mean, a lot of people are pointing to this quote from Daria, which says, to be clear, pacing does not mean halting model training or technical progress, but ensuring that companies take adequate time to align and safeguard their models and for third-party evaluators to confirm this.

5:24There's so many contradictions here, right? You know, they want to pace because they're worried about the dangers, But at the same time, they want to IPO in the public markets and try to convince the market that there is just more growth here. I think that you can see that contradiction playing out in some of the reaction. Look at SoftBank stock, for instance, which has been a proxy for open AI. Pacing is not good for the market, right? The market has this voracious appetite for capital expenditure surging on compute, on demand. And it's why last week there were a number of positives. For instance, the new open AI model update, which Jensen congratulated them and said they're closer to AGI or they may be leading on AGI.

6:06That was good for the market. Now, this is bad for the market. So I think there's just so many contradictions. And the other big one, guys, is this prisoner's dilemma of like, OK, they're competing with each other. So interesting that they all said that they want to pace together. But then again, we're competing with China. And I think that's the biggest risk here is that if the technology is so dangerous and China's charting its own path and we don't have an agreement with them on pacing, then how can we pace if they're not pacing? Dario brings that up, of course, in the essay as well in terms of is there some sort of, Carl, a way to have a global agreement.

6:44First, he talked about democracies and then he talked about other regimes as well. Yeah. The CTO of Hugging Face had a post this morning. Open source is not going to pace. No. I don't know how you do that. No, you can't. There's no policy around that. You can't because you're providing the open model to begin with and everybody can build on it. So that's not going to pace. Yeah. Yeah. There are so many interesting questions. We've obviously brought up the idea and many others have as well that once Anthropic is a public company, which does appear to be sooner, certainly. and we've been saying this for some time, than OpenAI, they're going to have some sort of an obligation, their shareholder base, you'd expect, to try to grow as quickly as they can.

7:22Or, I mean, we're all going to look at that S1 and what is going to be included in there as the risk factors is going to be fascinating to see. Now, it is a controlled company, Anthropic, and so they can make decisions perhaps that are going to be a bit divergent from what might seem the best outcome for their shareholders. But all these things are thrown into the mix right now as investors just trying to grapple with this, in addition, obviously, to the geopolitical concerns that we'll get to later. Well, right. There's a big meeting between Xi and Trump on September 24th. Yes. So obviously, AI, you know, could be.

7:54You'd hope it would be. The president, for his part, has not indicated in any way that he endorses sort of a broad slowdown or that government should have a role in it. We have that sound, actually, from over the weekend when President Trump was talking about this, and he kind of played it down. Listen to what he said. We're leading China in AI. We're the most sophisticated country in the world. And frankly, I want to keep it that way, because whoever wins AI wins. And we can put guardrails, we can do this and that. But I think you have a lot of negative forces that are bringing it up that shouldn't be bringing it up.

8:27And they're bringing up things that won't happen. There was a comment from the foreign ministry spokesperson from China on Monday at a regular briefing was asked about some of these warnings around AI and said fear-mongering confrontation and vicious competition will only disrupt the process of global AI governance and serve the interests of no one, which I think is a signal that they're not slowing down and they're not as worried about it maybe as the U.S. So there's the political issue. They have a different approach in China to a certain extent as well to the technology, but yeah, the expectation they'd slow down doesn't appear to be one that's going to be met at this point.

9:03There's also the view that, As Michael Burry says, this is somewhat self-serving. Either you're trying to put some sand in the gears on someone else's IPO, or you are looking at midterms 49 days away, trying to get ahead of whatever regs are going to be coming regardless. Or maybe you're just trying to cover for natural slowdown in growth as the prices come down, as open competition gets more intense. Maybe it is a smokescreen. David Sachs, I mean, he's kind of leading this. He was the president's AI czar and is now head of the Technology Council advising the president. And he I mean, he responded.

9:42I think a lot of people are quoting him saying to them, to these companies, fine, you want to do that, do that. You see what's going on in the frontier models, but don't pretend like you're being altruistic. You know, you have a lot of product liability risk if you do not get ahead of these issues. For instance, the hugging face, I think, wake up call on the cyber attack he pointed to on that front and just said, look, they do this for the business excuse. but don't pretend like you need the government's help when it comes to doing this. Or whether or not you need an antitrust exemption to work together.

10:10Which is right, something that was brought up as well. And obviously, Hugging Face sort of plays a role in all of this. It's interesting because it was much more than, of course, a cyber attack. We've talked about it many times on air in terms of the capabilities that it showed these agents can actually have and the way that they operate and the fact that they didn't communicate at all with their human masters, so to speak, and immediately defied what the task was and then went about spending most of their time trying to cover it up in the first place, and the way they operated with each other, and on and on from there was truly frightening and does seem to have gotten a lot of people's attention.

10:40And it sort of culminated, I think, in this last week. Well, it's one of the reasons the Dario cites for why he's calling for this paper. It was interesting to see that in there, in his latest essay as well. Speaking of all of this, of course, OpenAI's Sam Altman, who, by the way, also talks about pacing the frontier and sort of sides with Dario on this, did rule out an IPO for the company that he is the CEO of this year. He explains why in an interview with Fortune. Take a listen. We're not rushing into an IPO. I actually think that given everything happening with safety, this would be, right now, would be an ill-advised moment to go public.

11:23And we don't feel pressure on that. We've said for a long time we'll do it when we're ready, which is when the business is ready, when we feel ready from a kind of what the moment is like in society with this technology um that sounds like not 2026 2027 potential i would say not 2026 yeah i don't like we got a lot of stuff to do um and like meeting this moment of what is going to be required for safety and alignment and how the industry and governments can work together i'm happy to be able to do that as a private company. It should be said, I don't think many of us, at least those have been following us closely, had it on our scorecard that they were going to become a public company this year.

12:07Anthropic still seems likely, although that's something that is certainly worth monitoring given the latest developments. OpenAI, no. I think many, at least, that I've been talking to, anticipated public offering for that company would come next year for any number of reasons, including just get, you know, they've had so, So, Sarah, so many different executives coming and going and so much, I think you could call a tumult to a certain extent in the upper ranks of the company. Obviously, Altman's been there. Sarah Fryer's not been there for a while. Brockman is there. But beyond that, that, you know, people want to see some management stability in addition to all the other things that we're talking about right now that are coming out.

12:47I mean, it is weird to go public at a time where you have employees saying publicly that they earnestly believe that the technology that this company is producing could wipe out humanity. Yeah. And having a CEO come on and say that he doesn't fully disagree with it. You know, that like, where does that leave you? I know. Listen, they've been, it's funny because I go back to, you know, my first interview with Elon Musk and preparing for it and actually talking to him a bit about it and looking back at the relationship between him and Sam. They always said, I mean, back then, Elon was saying it was 10%, 15%.

13:21It could wipe out humanity. That's, again, why they went, if you go way back, why they were talking about building AI safely. But, yeah, there are a lot, you know, you have to wonder here. Now, I would love to know. Anthropic has been, I guess, the latest numbers are it's been on an adjusted EBITDA basis earning money. They told the FDA they were profitable. Right, not so much for open AI. having raised, though,$122 billion not that long ago. Of course, the race for compute, I would add, by the way, in all of this, and obviously it's very early, I've heard nothing that indicates there's any slowdown in the deal-making, in the money that's coming in for compute, in the need for compute.

14:00And Thropa continues to seek it out wherever they can find it. Open AI, which is in a better position in terms of having secured more, nonetheless, also continues. Those deals continue. That would be a key moment, I think, Carl, if we were to hear that in some way somebody said, OK, we're pulling back. We don't need as much. We're canceling a potential order, for example, of some kind or a commitment. Yeah. Judson's still talking about growing 70 percent next year. Yeah. Although, I mean, there's been plenty written over the last week about tax breaks in various states that have been rescinded or backwards.

14:32Moratoriums get putting into place. We'll see what happens after the midterm. But a lot of this is going to happen outside of their control, outside of their own PAPEX spending decisions. In what way? What do you mean? Just to be more friction? Yeah. Fewer opportunities? More scrutiny? I feel like the politics need to get more nuanced. I mean, it can't just be Bernie Sanders banning, you know, super intelligence. Well, tomorrow it's Sanders, Steve Bannon, and Jacob Coxson at this event, which is a strange gathering of bedfellows. Strange bedfellows. And listen, recursive self-improvement, again, is here, or if not here, is very close.

15:10And that is this sort of point at which essentially the machines can create, you know, the agents can create their next generation of agents or the models can create their next generation of models. It's an important point. It's one that Dario mentions as well. And you don't know what can happen. We're still figuring, they're still figuring, they're still figuring things out from not just the hugging faces in it, but other things that have happened that they were unaware of. so-called rogue agents that were operating on their own and breaking into various things and doing things. They clearly operate with a mind of their own, so to speak, to the extent you can actually say they have a mind.

15:47Yeah, those were the two things, the hugging face incident and the fact that these models can now improve themselves, right? Self-procursive improvement is sort of the key. There's the technical term. Look, even you saw the Times report, President Obama's telling a private group of Democratic fundraisers that they need to make AI, the core theme of their agenda on a regulation basis. And I think it needs to be, everyone's trying to figure it out. You know, it's not obvious what to do. No, not at all. Certainly pre-market reflecting some of this core weave, Nibius down 8 to 9%. When we come back, the surge in oil and gas and diesel prices ahead of this week's Fed decision on rates.

16:26Take a look at the pre-market. We'll watch some areas too that might actually benefit from today's rotation. Software is one example when we come back. 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. VantageScore is changing that by modernizing credit scoring. VantageScore 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. Vantage Score safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market.

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17:41A limited number of ETFs are subject to a service fee of$100. See details at fidelity.com slash commissions. Fidelity Brokerage Services, LLC, member NYSE SIPC. At Jared Jewelers, we know the right gift can bring a lifetime of meaning. A memory cherished forever. 20 % off storewide. Exclusions apply. See Jared.com backslash radio for details. Jared, make the holiday last forever. Shop Jared Jewelers. Brute oil prices are rising again this morning, including Brent hovering around$109 now per barrel. Saudi Arabia closed an east-west pipeline following drone attacks by Iranian-backed militants in Iraq.

18:17In the U.S., the average price of gasoline has risen to$4.32 per gallon, according to AAA, with diesel hitting a new record high of$6.23 per gallon in the wake of all these supply disruptions. All of this ahead of the Federal Reserve meeting on interest rates this week, guys. And now the market is definitively pricing in that the Federal Reserve hikes interest rates this week. That came after a little bit of a hotter core CPI number last week, a little bit more of a hawkish message from Fed Chairman Warsh in Jackson Hole. I think the big question is... How much does it matter? is my question. I know it sounds funny to say that.

18:55Of course, it's the Fed. Of course, it matters. But right now, this market's being running by oil more than it is by concern around the Fed. And the bond market has already done the work for it in terms of tightening financial conditions and higher Treasury yields. I think it matters in the signal it sends for the long end of the curve, that they are credibly fighting inflation and not just saying we're not tolerating inflation, but we're going to make moves. And it also matters, David, because usually when the Fed hikes, it doesn't just hike once. Like, are they going to hike in October? Are they going to hike in December?

19:26Are they going to hike into next week? The period between this week and the October meeting only gets one CPI report and one unemployment report. So unless anything changes, then the expectation is that we're going to keep hiking. Now, I do think, you know, look, it's interesting that yields are starting firmer this morning because we've seen a big sell-off in Treasuries. Matt Milley of Miller-Tabak, who looks at the technical says, I mean, very oversold. Maybe it's kind of a sell the rumor by the fact kind of situation on bonds when it comes to the Fed if they do ultimately hike this week as the market expects.

20:01Even Goldman. I mean, you read the Goldman notes. Yeah, Goldman has been dovish, and they did turntail along with JPM, I think, this week. I mean, Goldman argues they probably shouldn't hike. I know. But they're not going to fight this trend right here with odds so high. And look, there's still an argument that a lot of what is driving inflation higher is one-off things. And yes, oil has now remained firm for several months in a row. But, you know, according to Goldman, that's not necessarily a reason to hike. And yet, you know, this is a Fed that wants to show that it's serious about fighting inflation.

20:36Yeah, there's also, I mean, Atlanta wage tracker last week took a little bump, especially for job switchers. And then you missed Friday the inflation expectation, the long term, the 5 to 10s, definitely moving higher, curling up as something to watch. Yeah, and consumer confidence going lower on those expectations. I think that until there's more evidence necessarily that there's a big hit on the economy, the Fed has room to go, right? Because overall, market, economy, employment has held up relatively well. Yeah. Wasn't it Druck who said anyone who argues that we're restrictive at these levels is ridiculous?

21:11Right. And we and we know we know, well, at least we know how he was positioned, which is betting against Treasury's higher yields. One more look here at the pre-market as this Monday edition of Squawk on the Street continues. Don't go anywhere. Hey, Fidelity, can I get a second opinion on stocks in the Fidelity app? With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade U.S. stocks and ETFs with no commissions. That's right. I am always right. Investing involves risk, including risk of loss. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader.

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22:3120 % off storewide. Exclusions apply. See jared.com backslash radio for details. Jared, make the holiday last forever. Shop Jared Jewelers. Take a look at some S &P leaders. Software is going to benefit from this AI frontier slowdown idea, along with some cyber protection stocks like Palo Alto. Big week this week, not just the Fed meeting. Congress is back. We'll get some retail sales. Talk about all of that in a couple of minutes. Don't forget, you can catch us anytime, anywhere. Just listen to and follow the Squawk on the Street opening bell podcast. Counting down to the opening bell, let's bring in Mike Santoli, co-anchor at Closing Bell Overtime and our senior markets commentator.

23:10I know you're watching more about the rotation today than any sell-offs. Right. The market's getting it from both sides, which is to say, you know, higher rates, higher oil. That has normally meant the market attempts to take shelter in big tech, especially the AI trade, and vice versa. When you've actually had a little bit of relief on oil and rates, you've had the broader tape been able to kind of absorb things. Here you see AIPO is the AI power and infrastructure ETF. It's basically the industrials that are levered to the AI trade. And it's been pretty rough. It's going to open down a lot. This is like Vertif, Eaton, GE Vernova, all those stocks we're constantly talking about.

23:49Cat is probably in there as well and not in one of the top. But I just think it's key because that to me has been, first of all, an expensive group, but the one that is most dependent on the out years build out. Right. Three, four, five years from now, because they're sold out today for whatever they make. So I do think that's where you're going to see some of the sensitivity. All those stocks are indicated much lower. I don't know if we should. You guys have been talking about it. You can't draw super broad, you know, certain conclusions about what this is going to mean. But whatever conviction level and enthusiasm you had on Friday for the durability and the force of the AI hardware build out, it's got to be a little bit lower today.

24:27I don't think slowing down is a bad thing. In fact, I would have expected the bond market to get a little relief on this idea. They won't have to raise as much. Problem is, oil's up three bucks. And that's not allowing the bond market to relax. Mike, stick around. Let's get the opening bell this morning. The big board on Wall Street today is First Bank, celebrating its 10th anniversary of listing 120 years since the founder. At the highest at the Times Square, it's harmonic, celebrating its transformation into pure-play broadband. And it's SIBO in Chicago. Chicago, it is the SIBO for operations team.

25:01Mike, it does look like it'll hold 7 ,600 at the open. Well, we're going to shoot there and try and see if it holds. I mean, that's been the rule. Last week's low was around 75-80. So that's the support zone that we've been trying for. Definitely, the way it was looking is you need financials and health care to take up some of the slack. You mentioned software has been this kind of, you know, kind of a tail as opposed to the dog trade on on AI. So 76.01. The other dynamic has been Apple. If you look at Apple relative to, let's say, NVIDIA or the semis in general, Apple against NVIDIA. It's been a seesaw.

25:39It's been an inverse trade. So there is the last three months of Apple versus NVIDIA. And so Apple has been the you know, if the AI food chain is is under threat, then, you know, you can buy the one that's not spending as much. Apple's very expensive. The rest of the market has obviously had some valuation compression. I think it's also worth mentioning that this little crisis of faith we're having in exactly where AI goes and how fast from here is happening with semis are still 20 % off their highs. The Nasdaq 100 has not made a new high in three and a half months. We're talking about June 3rd.

26:12So it's already been a little bit of wear and tear on the story, which is to say we're not coming off of some exuberant perch of maximum belief. We're actually kind of just having this debate reinforced in another term. You know, if you look overseas at places like Samsung or SK Hynix, I mean, they sold off more than 4%. I mentioned SoftBank, which is a proxy down double digits, more than 10 % on the open AI news. So, you know, it'll be interesting to see what happens within NVIDIA today. For instance, if we're really talking about a slowdown sort of weighing on the increased spending and the increased demand for compute, Amazon and Microsoft as well.

26:52I mean, there is a world in which if we start to believe that there would be this coordinated slowdown from, by the way, whatever pace they say they're going at right now. Like we don't really know how they set the dials and what it means to maybe throttle some of the development. But there's a world in which you could say, OK, if we can take a beat, Microsoft, Amazon, Alphabet, Meta can can maybe have a few breaths here before raising the maximum amount of debt, before plowing all their cash flow into this. You know, maybe that somehow solidifies their value as defense, if nothing else. And you see Microsoft up a little bit there along with the rest of software.

27:31So we see Alphabet as well. So I do think that there are kind of two sides of this. some, you know, we'll see how much we're going to overreact in the short term, I guess. Yeah, I mean, a lot of this debate comes back to alignment and being able to spend more time essentially creating models and agents that are created by the models as well that align with human behavior. Human values, as they say, as if we all agree on everything. Right. And by the way, the best of parents sometimes raise not great kids. So, I mean, you can align all you want, And it doesn't mean you're going to end up with what you expect.

28:09For sure. And that, you know, the hugging face incident, a point of that. I'm not sure how much parenting was really going on there. But again, back to the alignment. One person we haven't heard from, which is odd in a sense because he's so communicative, is Jensen Wong. We've heard from all the other leaders at this point in many ways, Carl. I mean, certainly Dario Moday, Sam Altman, Satya Nadella, the Google guys, well, certain Hassabis at DeepMind. I don't know if Sundar is actually, Sundar Pichai is actually. I mean, today it's about this Microsoft code of conduct, which they just posted a few moments ago and are in.

28:48I guess they'll be in the kind of a public commentary period for six weeks. I haven't even, it's a long piece. Yeah. I haven't gotten through much of it, but that'll be Nadella's attempt. I'm trying to think, Wong probably has responded to some blog posts where he's suggested maybe it's an attempt to drive demand for cyber protection products. I mean, he has been notably positive on the impact of AI. And in the many interviews, both that we've done and so many others have done, when you look back, he rarely, if ever, talks about any real societal concerns beyond, you know, saying things like, yes, you're going to have to figure out new norms and new ways to do things.

29:27and on the jobs front and things like that. Was it last week that he said AGI is here? Yes. Yes. At the beginning of the week with the OpenAI new model of Astra. But he did reportedly push back at the Goldman Sachs conference against the Jacob Coxon post from Anthropic, called the comments deeply untrue, criticized them as wrong, arrogant, dismissive of the safety being done. So, yes, he continued his perch there, pushing back against the pessimism. He has been consistent in being sort of almost always a positive voice for what the technology will bring. And also, you know, on the cybersecurity thing, that's kind of the next frontier in terms of fighting these risks.

30:07CrowdStrike is at the top of the S &P 500 this morning, and so is Palo Alto. George Kurtz, the CEO of CrowdStrike, also weighed in on all of this this weekend. They clearly see themselves as having the role to play when it comes to defending. I talked to Kurtz last, was it Wednesday? Yeah. Last Wednesday at the Goldman Sachs conference as well, obviously seeing this as an opportunity. Not as afraid of the swarms as perhaps Dario Mode is because they believe they can counter what the AI can do, I guess, which would be great for their business, obviously, to see if they can do it. And, of course, I mentioned it comes from all sides.

30:43I mean, naturally, pricing in a Fed rate hike. Friday, the market's response was, OK, we now have certainty. We've already figured out this was a likely move. At least we know what's going to happen on Wednesday. And again, in the absence of oil going up again, I think maybe there is an argument that the Treasury curve could get a little bit of relief. It's just it's not really happening. It's kind of pressing the case, although it has been a slower grind. If you look at measures of bond market volatility, they've actually come well off the boil. And so usually it's the fast disorderly moves in the bond market that really get the stock market's attention.

31:18So, you know, we'll see where it goes. Maybe the Treasury Secretary was successful in slowing it down. I mean, no, I think he was successful in picking an opportune moment when the market was already stretched to actually stake out that position. I think he's smart enough to know where the market's leaning. And maybe we get lucky by saying we're going to do this thing. We're going to be on that side of the market when it already was starting to feel as if the move had been made for the short term. Tens are up 20 bips since that initial update. I've been 20 bips in like a few weeks. Right. No, there's no doubt.

31:46And it's all happening. I do think it's really and we're going to talk about this for days. I know. But it's quickly becoming conventional wisdom that they hike and 10-year yields come down. It's not really clear because as the hike probabilities have gone up, the 10-year yield has kept going up. And historically, when you do get short-term rates hiked, the longer-term yields do go up, not as much as the hike. So you do get some, you know, it becomes anchored, it becomes more measured. And that's the ideal case. But the 30-year, too. I mean, that's what The 30s are more about inflation. Yes. And Fed credibility in the very long term.

32:23Yeah. It does feel like the locus of the concern on on A.I. is vertive. Yeah. There's a new sell rating on GEV. Exactly. That's where that's where the leverage is in the earnings models, without a doubt. And, you know, it also is a little bit of a reminder. I know B of A is out there talking about it's four stocks responsible for 27 percent of earnings. It really is. Next year's everyone's oohing and eyeing over the revisions to 2027 earnings estimates. It's semis like that is what is driving it. And so, you know, you have to, I guess, have to scrub your models and figure out how sensitive they are.

32:56Because, look, we've been going on this assumption that it's all shortages and bottlenecks and there's not enough and demand's inelastic. And so these guys, therefore, can have their way with the marketplace for a couple of years. Maybe that's still the case. You know what I mean? I mean, maybe if the model's slow, as you said earlier, David, I mean, they're still going to be running them. You're still going to be doing inference. And, in fact, you may be getting more for your money, so to speak, out of the current chips because they're not going to have to move to the faster chips because they're not training the frontier models as actively.

33:24Who knows? If data center construction gets hung up, that's another thing. It becomes cost pretty quickly. Yes. But, you know, we don't know. It's all very speculative. We have talked, obviously, about the capital markets activity that's been associated with the build-out, so to speak, and it has been nothing short of extraordinary and continues. The numbers associated with so many of these deals, whether it be a custom chip deal for a particular company or a compute deal of tens of billions being thrown around, and obviously the banks, certainly the nation's biggest banks, have been beneficiaries of a lot of that activity.

33:58I would note they are weaker, and Goldman and Morgan Stanley in particular down a little bit more than the rest of the group this morning, maybe talk around a delayed IPO of a company such as OpenAI. Again, also, as I said earlier, I don't think many people were expecting that that company would see a public offering in 2027. Nonetheless, to the extent this delays it and the fees that would be associated with it, you might imagine there'd be a bit of a reaction. And there is. Goldman's down about 2%. From a market-wide perspective, though, it is amusing that one of the bare talking points was too much new equity supply.

34:32And OpenAI and Anthropoc are going to rush the market. It's going to be too much to handle. And now the idea that maybe we don't get those deals is seen as net bearish. But, of course, because they need the money. Like, they need the money to make good on all the orders that they've now fattened up the food chain with. So I do think that it's worth being concerned about it, but for a different reason, not just a pure equity supply demand. I mean, no surprise. Because Nvidia's down 4%. It's the biggest weight on the triple Qs right now. Micron, AMD, Intel. I mean, these are the beneficiaries, right?

35:02Oracle's also down about 5-plus percent. I mean, speaking of equity, of course, we saw after their earnings, they'd already sold$20 billion at the market during the course of the summer, earlier in the summer. So they did their raise, so to speak, at least. But that stock down. Dell, by the way, Mike, had been doing nothing but going up lately. But it is reversed as well. Not surprising. Exactly, yeah. Yeah, Dell last week seemed like almost a beneficiary of everything going on, whereas some of the other stocks did back off on their, you know, Broadcom didn't trade well off its numbers, even though it reaffirmed.

35:36But Dell seems to be kind of in this sweet spot. It's a smaller market footprint and can be moved a little more easily than some of the other trillion dollar guys. On consumer, we got downgrades of Dix, Nike, VF Corp. Evercore cuts numbers, Kraft, Campbell's, ConAgra, General Mills on the food inflation input stores. I mean, this is just marking opinion to market. I would be more inclined to see it as part of a capitulation process by the sell side than it is new information that the stocks did not recognize before. We've already got the dividend cuts. We've already gotten the sense that Nike back to where it was 12, 13 years ago.

36:19So, I don't know. It's certainly not the case that the consumer is about to pick up a lot of momentum and sort of rescue the market or anything like that. But when it comes to the stocks, they've already been just such persistent underperformers that I feel like it's a little more sort of telling the market what it was already doing than anything else. They cite, I mean, beyond just some of the consumer sentiment numbers in this note, Baird cites potentially warmer weather with the record El Nino pattern. WTI crude back above$100 a barrel. U.S. tenure Treasury rates around 5 percent, an uptick in promotions and discountings.

36:55Also, the waning sales benefit from the tariff refunds. I mean, all of this, they say, ultimately, why earnings expectations look too high on this group. But, you know, the continued, I guess there's Hilton recently. Chris Nassetta just had some really bullish comments at an industry conference. So there's the experience economy, and then there's everybody else. And the experience economy, particularly in travel, still looks good. Bank of America Institute puts out their consumer spending data, and they put out a new number today that said it's very solid. In August, total card spending per household rising 0.9 percent month over month, 4.5 percent year over year.

37:34Despite some moderation, discretionary services continue to be really strong. That is true on a macro level. I do have seen some people raising flags, though, about the hotel stock performance and how they have not been able to withstand this latest bout of concern around the consumer. Hilton peaked in June as well. I mean, check Carnival. It's down almost$100. Yeah, Carnival, that's at least a 52-week low. Right. As much as that is an oil story. But yeah, I mean, the lodging stocks are not leading to downside or anything. But I do think it shows you that the market is finding reasons to be concerned on yields in oil and how it's going to flow through for a lot of the stocks that we thought were a better position.

38:19David, did you see this new sell on Charter? I did, actually. I did. From Wolf, I think it was. Not having an impact, but obviously the stock already down 30 % for the year. got hit last week when Comcast, at the conference that I was attending, actually talked about pricing from competitors in fiber that was non-competitive, or I think Jason Armstrong, the CFO of Comcast at the time, calling it irrational. But there it is. And I actually asked John's thank you about it, because, of course, AT &T has had a very major fiber build-out. And he says, well, you know, when you put it together with mobile, maybe the economics are different for us than they are for some of our competitors.

39:07But that had another negative impact on a stock that has just had a brutal run. And it's not just, Carl. Of course, as you well know, this year it's been a long, long period of time. Something I discussed with the CEO, Chris Winfrey, last week when we did get a chance to sit down briefly. Yeah, and obviously, I mean, you know, the balance sheet is, you know, is always a concern. Yeah, well, you know, it's like a little equity. Or, obviously, they just completed the Cox acquisition. This is charter. Part of that. The equity is a stub almost. I hate to say that compared to the debt loan. Yeah. And it was interesting because the same Wolf notes that, you know, Comcast kind of in the same boat.

39:42But we've got the NBCUniversal spin. So suddenly that's now, you know, a stabilizer as opposed to a cause for concern. I also noted DSL sun setting. Like all these things you never thought about that were going to be issues for these companies are hitting. Yeah, I think it's safe to say you haven't wanted to own either one of these stocks for any period of time for the last five years. Yeah. Or, yeah, five years? Pretty close. Close, yeah. I mean, interestingly, Mike, the market is holding up. I mean, it's down, you know, S &P is down a little more than half a percent. But, yes, some defensive names are working like Staples.

40:16And, yes, some of the AI names are not working. But it's not. I mean, you also have health care, communication services, energy is up, no surprise, because of Iran. And financials actually remain higher as well. It's not a big sell-off, which you might have expected going into today, talking about pacing the AI frontier and closing off the east-west pipeline because the Houthis are attacking Saudi Arabia. This has been the rule for a while, where the market just sort of finds just enough of a branch sticking out of the cliff to hang on to on a given day. And during the trading day, there's also been this kind of like churn around the opening levels.

40:53And then, you know, kind of this the options flow is a little bit of a source of stability, believe it or not, over the course of the day. So we'll see, you know, how it goes from here. We are going to kind of go into the pre-fed trading mode, most likely. If oil is not making new highs every day, you know, maybe it's going to release some of the market to do OK. And that's one of the reasons that, you know, the volatility index has been stubborn and going up. People yell at the VIX because there's all these global concerns. But the VIX doesn't measure mood, really. It measures how much do we think the S &P 500 is going to move over the next 30 days.

41:26And the S &P 500 has been kind of held in these kind of opposing weather systems and hasn't moved very much. It doesn't have too much of a cushion, I think, though, below a little bit of a breakdown. You know, like I said, that 75-80 level from last week, if it did crack, people are going to say, OK, we're back in the June, July range and we're going to have to test some things. So that plus the lows from July in the semi ETFs. I mean, it's still well below where we are right now, but that's sort of the situational awareness liquidation lows. You know, you certainly don't want to see those broken.

42:00Mike, thanks. Mike Santoli. As we're going to break, let's watch bonds. Data calendar is going to be a little bit light until Wednesday when we will get retail sales. But, of course, it's all about the Fed, as we've been talking about for a while here with the 10-year, about a bip and a half away from five. Stay with us. Jim is en route to the West Coast after the Eagles win last night. Big show tonight on Mad Money as he kicks off a week of interviews in San Francisco getting ready for Dreamforce. He'll have the CEOs of Broadcom, of Lyft and CrowdStrike. Make sure you tune in at 6 p.m. Eastern time tonight.

42:34It was one of the more momentous developments, so to speak, during what was certainly quite a crisis. I'm talking the financial crisis 18 years ago, led by what else? Lehman Brothers. It's 18 years ago today, in fact, that Lehman was allowed to go bankrupt after failing to find a buyer. And the Fed's not coming to its rescue, so to speak. Of course, Merrill Lynch also agreed to sell itself to Bank of America. That price tag was about$50 billion. And on and on from there, I can remember it was a Sunday, I think, Carl, if I remember. We all came in. What a momentous 24 hours, not to mention, of course, then the following, let's call it, I don't even know, a couple of years, really, as we dealt with the fallout of all those securitized mortgages that had been made to people who couldn't pay them back.

43:22Well, we had Lloyd Blankfein on the show Friday talking about 9-11, but also the market posture and the amount of leverage back then and today, which I think you could argue Lloyd sees as comparable, at least, maybe. Yeah, but not necessarily from the banks now. Yes, exactly. There's no disputing that the banks today are safer, better capitalized, more profitable on the combination of low interest rates, the government support, the fact that they have just been able to grow. They have, but they have given up certain parts of their market as a result of the regulations that follow the financial crisis and has therefore created what we call the private credit markets.

44:05Kind of shadow banking. Yes, to a certain extent. And obviously, we've talked a lot about that as well and the potential risks in here and there. But all these anniversaries, amazing to think how much time has gone by. That did, of course, reorder the financial system to a certain extent in the months and years that followed. Remember that video? I think that video of the stationing the cameras in Times Square outside of the Lehman headquarters, people packing up their back box. Yes. It was sad. That was a moment. It was absolutely a moment. And it was followed by, of course, the decision then to not let other companies fail.

44:44Well, people forget AIG. It was the name I followed most closely during that period in the decision there to rescue it. After it did lose, I believe it was$99 billion in a quarter. AIG? That's a bad quarter. Yeah. AIG. Yeah, we talk about companies earning that much, but not losing. No, it was a bad moment there, of course. Goldman, Kat, sort of the AI trade, NVIDIA, among the worst down names of the moment. But there's a lot of things working. We talked about some software, some staples, some health care, and we are off of the opening lows here, 76.12. The Dow down 162, making up for some of those delinquencies, or at least the Cat and Goldman pulling some points off the index.

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