9AM HOUR: Apple and Palantir Slide Despite Earnings Beats, Binance Co-CEO "First on CNBC" 11/3/26

0:00This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Something amazing is happening. Despite a citywide blackout, this company is still up and running. That's because CDW deployed and managed a cost-effective Eaton Triplight Series SmartPro UPS to safeguard equipment easily and reliably.

0:47Keep the power on and protect your IT equipment from electrical challenges. Triplight by Eaton and CDW. Make amazing happen. Find out more at cdw.com slash triplight. Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street. Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Cantoneo with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Might we get a much-needed relief rally at the open? NASDAQ 100 now in its third 10 % correction of the year. It is election day. Apple and Palantir are down pre-market on earnings. Oil's a mover.

1:22Brent below 102 as the president on Fox says the U.S. will end billions in military aid to Israel at the end of the year. Our roadmap begins with Apple's first quarter under John Ternus, the stock the biggest Dow laggard pre-market following a weak margin forecast. We'll dig through those numbers. Plus, Palantir shares, they are dropping as follows its third quarter results. Revenue nearly doubled from one year ago, but investors perhaps concerned about slower bookings growth. And the co-CEO of Binance is going to join us on this hour. So first on CNBC broadcast, first broadcast interview he's done following the crypto heist.

1:59Impacted$6 billion in customer funds. Let's begin with shares of Apple, though, under pressure despite this quarterly beat. John Ternus warning of weakening profit margins due to higher memory chip costs. As for the iPhone Duo, Ternus tells Jim, quote, Duo is constrained as of today. The ramp is going well, and we're working very hard to get them into customers' hands as quickly as possible. But at this time, we're not able to predict when supply and demand will be in balance. Jim, that did weigh on at least the gross margin guide for the coming quarter. Yeah, look, I want to talk about Apple.

2:34Apple has been the best one. It's been the best performer. I think they could have said that they're going to raise prices, and yet everything is being bought and services are going at plus 10. But it didn't matter. This stock was headed lower. OK, this stock was preordained to go lower. If you watch the way the stock was going as the call was going on, as soon as they said a couple of things that were somewhat negative on gross margin, you had this problem if you back out the tariff, the gross margin wasn't what we thought. And then when they get to the surface now going eight at nine to eight, it was just going to go down and it didn't matter.

3:08OK, it didn't matter. And the call itself, they were not necessarily helping themselves. David, it was a clipped call. It was somewhat of a, I would say, a little more canned than I thought versus... Canned. Canned. Okay. Versus, you know, freshest day was canned. Versus in the moment. Versus the moment that Tim Cook had. I think they've got to get it. It's very hard to duplicate the unbelievable call that Tim Cook had. But it didn't matter. I mean, honestly, I think the duo, they shouldn't just say what they said to me when I talk about duo. You're not going to be able to get them. There. Okay?

3:43How about a product that's so hot that you can't get, that's a major new product, that there's no question about it? How about that? And did you know what to talk about price? It didn't even matter. But no, did they focus on that, David? Did they focus on that? No, they focused on services. Because services dropped 1%. And of course, because it was set. Yeah, but services has been an important growth component of this company for a very long time. It gets a far higher multiple as a result of the belief that it is much more reliable than the ups and downs, potentially, of iPhone sales. And now you're talking about that growth reversing, slowing.

4:24Not to mention, of course, post-margin guidance of 45 to 46 percent, which is 100 to 140 basis point below consensus. OK. Well, I'm just saying. Look, the stock is going to go down, all right, because it's been the best performer. Yes. I mean, look, there was. It has been the anti-AI trade. Right. And remember, you know, it isn't like. There's another company today, David, that placed a lot of shares below the market. Oracle. Oh, so that's good. See, that's the winner that it was up for. That's what I like. Nobody said that's the winner. It got crushed yesterday. You know that. What are you trying to do?

4:58I'm trying to create the. I'm going to call. OK. Say here's the deal. Wait, you're going to ignore me now? Yeah, no, I'm not going to ignore you. But I think the price is determining everything. Right now, people are so beleaguered, unless they own Clorox and Colgate, they are so beleaguered. They just say, you know what? Oh, my God, it must be bad. By the way, Palatir. We're going to get to Palatir, but you're right. Clorox is up in the free bar. Clorox, you know what, David? I'm talking technology. I'm talking AI. You're actually raising a really interesting point because today a lot of the discussion is, all right, How much are we going to bid up Costco on a forward P.E.?

5:36Enough! To 50? Whereas NVIDIA is at 13? No, we learned. I mean, NVIDIA actually has a lot of money. I mean, I spent a lot of time on Costco, and I was going to tell Jeff Marks today, we got a big annual meeting on Friday. Maybe we ought to trim some Costco. Why? Because I'm worried about food inflation. Maybe they ate a lot of food inflation. I'm worried about Walmart eating food inflation. Okay. I guess the question is then, Jim. You did the age of Walmart. I did two documentaries on Walmart. Yes, but I guess it's so old. people can't even remember. It's a long time ago. I'm so old people can't remember.

6:04I can't remember. Are there limits to the flight to safety then? Are there limited avenues? I mean, we've got to stop. I mean, when they went to Clorox, I mean, really, are we that big? I went over the Colgate quarter. The Colgate quarter, they talked for about 10 seconds. You know, they didn't even talk about, you know, brush your teeth with Colgate, Colgate dental cream. It was nothing. It was nothing. But it didn't matter. You see, because it was up a penny. So super. 155, we were looking for 108 on Clorox. That's a pretty handy beat. Okay, but Clorox, Yeah, that was a good beat. But I will not pay endlessly for Clorox and hate Marvell till kingdom comes.

6:39I mean, the Marvell deal, I happen to like Matt Murphy. I think the stock was up on the conference call. But, David, three straight days down 10 percent? Three straight days? The reception for that deal was bad. And two downgrades today out of Cowan and B of A. You don't see that often. No, you don't. We have seen it. Certainly, we've seen bad receptions. This is amongst them. And one of the larger deals, obviously. I think a lot of it is simply, as we said yesterday, and this was a key part of our questioning, is the timing. It's going to take a very long time in a world that is changing so quickly.

7:14And yes, there are certainly supply constraints around the key products of Lumentum right now. But will that really be the case in 18 months or more from now? No, we don't know. When this deal finally is able to potentially close, assuming they get the China approval, which he said he has great confidence in that. I don't know if it was to get China approval for Kenview and Kimberly Clark because of diapers. It can be a very difficult thing. You know, Jim, you talk about not wanting to necessarily own the Cloroxes or some of these higher multiple, but names that are now attractive, perhaps because they are anti-AI.

7:45But I come back to sort of where we stand right now in terms of AI. I mean, it's the same headlines as yesterday in part. I mean, open AI continues to not be able to raise the 30 billion that they thought they would. Maybe they can get to 20. I don't know. I'm not hearing they're quite there yet. No, I'm not either. In fact, they may be a ways away from that. That's a bad. All right. People don't want to own OpenAI equity, at least at a$1.25 trillion market value for the company. Interesting. The Oracle deal was not well received. They got it done. They got it done. They got it done. Maybe people prefer the debt to the equity.

8:17I don't know, because you get nice yield these days on that. And then to your point, Marvell, these are, you know, and the reaction there. Not to mention, of course, Marvell and Intel were amongst two of, let's call it, what, the 10 best stocks that people loved. They're gone now in terms of potential plagues, right? Yeah. For a while. These are stocks where you look at them, you say, what was I thinking? Like, for instance, there's a stock called Intel. And I look at Intel every day and I say, suck fast. You, when you look at Intel, do you say to yourself, what was I thinking? I say it was a mutual decision to be wrong.

8:53management's in mind. I mean, the other one, Jim, that I noticed yesterday was CAT, which at one point on June 30 was up 86 % for the year. Now it's up 7 % for the year. You know, CAT had the unfortunate aspect of only being able to bump up a little bit, if not at all, because Caterpillar, it turned out to be, a lot of us talking about Caterpillar were this idea of using engines to be able to hook them up to natural gas. and that project was one and done. You can look at, I mean, this has been a brutal month for many investors who were deeply into this, to the overall trade, especially a lot of the hedge funds, some of whom I talked to, the large multi-stats, brutal, brutal October, and by the way, continued at least during the first day of trading for November.

9:37That said, when you look at some of these names, I mean, to your point, the demand side has yet to really, I'll sit here and say it all day long, We don't. You come back with Microsoft CapEx. Yeah, which ran a little bit light in the recent quarter. Right. We love them. But other than that, and that's open for interpretation, I would argue, there's no, nobody has said anything about wanting less compute. And PropEx S1, amended S1 yesterday, showed them spending even more, $5 billion now in part on much more expensive, significantly higher compute costs. There's no let up. And so I do wonder, when do we just get back to that?

10:14Did you read Palantir's conference call? They used to call it Palantir, but now because it's down, it's called Palantir. Okay, so did you see L3 Harris noted that by fine-tuning open-source models on its own data, a sovereign model outperformed the Frontier model they've been using in less than 48 hours and cut costs by 95 % preliminary results. The issue is, David, not that you want compute and it's overwhelming. It's what you get out of a computer. I know Palantir has been the anti-frontier model company. I mean, Karp was here with Carl and Sarah railing against that a couple of months ago. He was doing some railing.

10:52He was doing some railing. Look, people were saying that. And it may be true. It may be true that the frontier models, and this goes to why maybe people are starting to pull back a little bit and say open AI or 1.25 trillion, maybe with Anthropoc, like the idea that 2 trillion is just a bridge too far because they do wonder about the sustainability of these business models. In March, you bought that thing at one-third. How did it go up? What happened during March in this? Well, we found out we all needed compute. They weren't able to get that two-way compute model that everybody said they were going to do with Goldman and BlackRock.

11:23I don't know. I'm looking at this. But you're talking about securitization. That's still underway. I like that. Where did that go? It takes a while to create a securitized market for chips. It's not something that happens overnight. Why not? Why not? Because it's hard. There's a lot of things that have to go into it. A hard rain is going to fall. I mean, I'm in a deal this morning. It's a hard rank. OK, the executioner's face is always well hidden. As for Palantir, U.S. commercial sales did more than double, surpassing government for the first time. Here's what Alex Karp had to say about that on the call.

11:57In commercial, our real approach is, you know, hey, enjoy the one you're with till you just you find out it's not the one you want. You know, there are very, very, very few times where we're trying to go and compete and take their customer away. It really is not happening. And conversely, you know, you know, once you go Palantir, you don't go back. And that's just that's how it is. And now this morning, Jim, you basically accused the bears, I guess, of willing the stock lower. Oh, they do. I mean, get in the door and expand. Business accelerated. Growth produced profit and cash were terrific. The acceleration of growth was good.

12:34Commercial passed government. I have so many things that were good. And people just keyed on the idea that some of the contracts were shorter. Well, maybe a pounder gets done faster. I thought it was a great quarter. And there was a good quote about smaller getting models, better results from NVIDIA. But it didn't matter. See, the stock was going down. So suddenly people say, you know what? There must be something wrong. Let me find out what's wrong. They nailed ServiceNow on this when it went to 82. too. Now, service now, we still understand the bizarre decline. But I think people are just saying, analysts, everyone's doing the same thing, Carl.

13:08I am really belied. Stocks down. OK, let me find something that's bad. You know, turn us. Oh, yeah, he said the service, you know, even though he guided up the over. It didn't matter. Let's find something bad. I can't take it anymore. Unless we're talking about Kimberly Clark and the diaper comeback, great diaper comeback. That's what I'm focused on. The Chinese He's diaper comeback. They've got new diaper technology. Oh, how about, oh, listen, you want technology? You want technology? Yum. Okay, yum. Voice AI is now in more than 900 Taco Bell restaurants. And how about the comeback? Same sort of sales, 3 % in the last four weeks.

13:45Yeah, if it hadn't been for Cyclospora at Taco Bell, it might have been a better quarter. That was a suboptimal thing. That was suboptimal. But it is up a little bit pre-market. Right, because this is what people want. They want this. I can find things. Everything that's up today, I will find in tech, I'll find you something that I don't like. I promise I can. When does this end, Jim? And what turns this around? It ends when Carl said it. It ends when Clorox is at 120. And we say, you know what? It turned out to be bleach. That's it. What about the return to the AI trade? Or maybe just a 7 % bond equivalent for now.

14:22The duo. Try to get me one, will you? The duo is minimal in terms of the impact it has on Apple's income statement. Now, look, I asked them about services. They have some word. I said the wallet. They didn't say no. How about the India bag? No, that doesn't matter. The India bag. A lot of people in India. A lot of young people. I mean, China Miss didn't help. But it wasn't really. Okay. Okay. That was a high note you just said there. Sell Apple. Sell Palantir. Okay. Just sell them. Hey, is my Philadelphia accent worse than corpse? I've got to know that right now. Haberford's finest. Take a look at the pre-market.

15:01A lot more names to get to. We'll get to Shopify, down double digits pre-market, our own parent, KDP, others, in a minute. 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. Vantage Score safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market.

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16:24and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts. North Korean state media says the country denies it played a role in that$6.3 billion dollar Binance heist, calls the accusations a grave political provocation. Meantime, Binance co-sahill Richard Tang spoke about the situation overnight at this fintech event in Hong Kong. Take a listen. We have always been by our users and users know that, you know, we stand ready.

17:03We are always here. We put their interests at the forefront. And that consistency has earned the trust of users. I'm very, very confident we will rather this storm together with the support of everybody. and the community has come together very, very strongly on that front. Shortly after the opening bell, we'll talk with Tang in his first broadcast interview since the security incident. Jim CZ is on the tape saying that maybe banks are more vulnerable than crypto exchanges. Yeah, I don't think that's true. Banks have really spent a huge amount of money and are very well organized. I don't think these guys could ever spend the amount of money they did.

17:39It's well spent. I had George Kurtz on tonight and he revealed what we've all been looking for, the holy grail, which is the kill switch. He said, working with these companies, there'd be no problem. It was an amazing thing. It's going to be ignored as his stock was at 180 when he said that Dario and his Anthropic are going to self-police and self-supersecure. He said that's nonsense, but his stock was cut in half, and of course then his stock triples. This is a huge thing. Go look at his letter X post. Everyone says there's no kill switch. We've heard it over and over again from OpenAI. We've heard it over and over again from Ant Proby.

18:16It's not true anymore. There's a kill switch. You can shut these down. And it just started. And you should just go by CrowdStrike because it's going to go through an house. I don't think there is a kill switch. What? He says he wants there to be a kill switch. No, there is a kill switch. That was the point. He's going to reveal it on that money. He's got the kill switch. It's here. Really? Is that easy? Just a kill switch and now we have nothing to fear? It was an engineering issue. Jensen has always said that, Jensen. Jensen won't. Yeah, like, sure. Like, sure. Jensen's always said it. And I've got to tell you, Georgia has engineered it.

18:51And I think it's going to change the world. No one's going to believe what happens. He says every agent will need a kill switch just as every employee needs an identity. Right. It's for real. It's for real. You can doubt him. Go ahead. Go ahead. It's important. I'm going to send you a nice invitation. It's vitally important. By the way, the cybersecurity risks just continue to elevate every single day, particularly when it comes to financial institutions. And it's something we need to keep very close to. Jim called it a game changer this morning. Crowd stream. Go to crowd stream. Make sure you watch that tonight on Mad Money.

19:21Speaking of mad, we'll get Kramer's mad dash. Countdown to the opening bell in just over 10 minutes. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required.

19:57Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Zero dollar commission does not apply to customers designated by Fidelity as a professional equity trader. A 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. brooks brothers quality tailoring that lasts a lifetime the 1818 collection italian crafted suiting for your important occasions explorer suit separates crafted from lightweight wool built for travel and ease brooks brothers tailored for the moments that matter

20:46let's get to a a mad dash we got seven minutes before we get to an opening bell here on this Tuesday. Of course, Eaton is a name you want to discuss this morning. Eaton is a company that has adjusted and gone very heavily into the data center, also has aerospace. It had a really good quarter. It bought this thing called Boyd Thermal, which is inside the data center to keep things at the right temperature. Q3, it bought it from Goldman. I don't know. I don't know why Goldman sold it, but Goldman's not in the thermal business. they wish they were this morning. Q3 revenue growth, triple digit. Order growth, triple digit.

21:21Backlog growth, triple, three times. This is a very nice substance. And I'm going to mention this because this is the test case. This company has had an unbelievable year. It is down, first of all. Second, this has to last if we have any sort of bottom in the data center because this was a clean, beaten raise. But I don't know if it can last, even though I thought it was a beautiful quarter and the stock is down $100 from its high. Okay, why is that then? I mean, to your point, your performance has not been particularly good. No, because you know what it does? The data center. Right. And that's become a curse word, a two-part curse word.

21:58Right. Data center is a kiss of death, Dave. No, I'm aware. I'm aware. And by the way, let's not forget, we do have midterm elections today. And if for some reason the governorship of Texas should change hands in terms of party, I would think that's unlikely. The anti-data center guy? That would be, I think it's a woman. But he's not really anti-data. No, Greg Abbott. No, if Greg Abbott loses, then these stocks are all going down. He can't, the data center depends on him. Right. I don't think he's, I mean, isn't he favored to win significantly or no? Is there something you know that I don't know?

22:36No, I don't know anything. I'm pointing out that when it comes to data centers, today in particular, Jim, there are people very focused on the midterm elections. Ohio? Because this has become a key issue, as you well know, in states like Texas and Ohio and others. Will they, like, take sledgehammers and smash the data centers like the loom? Is it like the loom? Is it like the loom? I don't know if it's going to be like the loom. Is it the cotton gin? What are you talking about? I don't know. If it's the loom, then we really have a major setback. All right. Meanwhile, we've got five minutes before we get an opening bell right here at the New York Stock Exchange.

23:09That'll be followed by a first-line CBC interview with Binance's co-CEO Richard Tang. Keep it here. As you know, millions heading to the polls today to cast their votes in the midterms. Looking at market history, Deutsche has a note today saying, quote, indeed, the S &P 500 has been higher one year after the midterms for all 20 midterm votes since World War II. Actually, Jim, S &P's up six and 12 months since 1950. None of those elections had what could be a contested race, maybe even by the Justice Department, every place that the Democrats are even, you know, don't win big, which I think is certainly a possibility.

23:52None of those have had a question about the election integrity brought by the president. So I just think it might be different. I don't know. David, do you think the Justice Department is ready to fight every Democrat who is win by a small margin? I don't have any idea. I do know that, at least according to a lot of reporting from various news organizations, the Department of Justice has spent a lot of time focused on trying to get a hold of the voting rolls and bringing actions against secretaries of state and others who oversee the vote in various states. They have been rejected by the judges almost every time.

24:31Right. But let's say you're in—he actually had this in Louisiana in 1865. was the last time I saw it. You're in, and someone comes in to take the job, and the first guy won't leave. Because he's enforced by the president. And you do think that would be market negative? I do. I do. And I think if the president still cares about the market, which he used to, they should allow the orderly change in control. Because that's been, you know, that was something that founding fathers still have some gravitas, still have game. I'm going with the founding fathers over the president. Dave, the founding fathers.

25:12Founding fathers. Got it. Like them. We're all in favor. Let's get the opening bell. At the big board here on Wall Street, Bowdoin Marine products maker Brunswick, celebrating over 100 years of listing and their upcoming CEO transition. At the NASDAQ and Times Square, it's Democracy Works, a nonprofit organization dedicated to helping Americans vote. And at CBO in Chicago, wealth management firm Pintra, investments doing the honors. Jim, all kinds of interesting levels here in the mid-7500s. The Sox, at its 200-day, hasn't really gotten tested in over a year. I was looking at a lot of the companies that reported, and you take Cloudflare, okay?

25:50There's a very good upgrade of Cloudflare, and Cloudflare I like very much. You have a company that's got tremendous growth, but it is arguably the single most expensive company in the entire market. So you get an upgrade and you say to yourself, I've got to go buy it. And then you look at the chart. And the chart says no man's land and head and shoulders pattern. Now, should the chart matter at all for something that Matthew Prince has created that has really been able to stop bad actors? No. But there are very few people who at 212 times earnings want to step up to the plate and say, you know what, that stock is now down from$370 to$260.

26:31This is the level. And the problem is that this is the level is defeating a lot of buyers. Why should this be the level? I saw it yesterday with the DRAM, with the memory stocks. Like, why here? That is not a sign of a bottom. It's a sign of confusion. And you need a crescendo cell where people just say, I can't take it anymore. Right now, people, my first guy came in to me and said, listen, Jim, I can't take the NVIDIA anymore. I can't take it. And I said, well, it's up to you. No, you don't understand. I can't take NVIDIA every... It goes up, and then it goes down. It is totally beleaguering.

27:06And I say, David, if NVIDIA, which has the greatest balance sheet in doing super, is beleaguering, like, why is it up five? I mean, who's buying it up five? Who's doing that? Why? Did something happen? Why? It goes down every day after it goes up like that. Who was doing that? The machines? Some hedge fund jackass? I don't have an answer for you, Jim. Yes, there are lots of algorithms. Many quantitatively driven funds certainly are a huge, huge part of our overall market. We don't talk about it that often. Well, but Elliott partners, Elliott talked about it. Elliott talked about it. Yeah. I mean, Elliott is known for putting out a letter, in particular Paul Singer, that scares the heck out of everybody.

27:53Because their approach, typically, and it's worked very well, is the world is a really scary place. We will keep you safe. Okay, that's true. But I just say NVIDIA up five. But don't. I mean, if a stock goes up really strongly at the beginning of the day, every day, and then goes right down, why are you the guy who says today's going to be different? I'm buying it up five. Why are you doing that? And nobody likes it. No one else named their dog NVIDIA. And I say don't buy it up five. Okay? Because the times, they're not changing. But you say own it, so why not just buy it now if you don't? Why buy a five?

28:30Why not wait until the bears come in, sell it down to$200, you can buy what you want. Why don't you wait? Aren't you talking about it as a long-term hold, something that's going to generate great value? So why are you arguing around$6? You really did go to college to get stupid. Listen to me. Up five is not a great idea with the stock of Invinia. Okay. It's not worked. Okay. It's not work. All right. What? You've forgotten more about NVIDIA than I'll ever know. Look, Jensen Wong, I tried to get to him yesterday about whether he liked the Lumentum deal. He does. I think Lumentum deal is not a good deal for this moment.

29:10You have to read the room. But two years from now, that deal, I think, would be good. Okay. But when I look at NVIDIA, I just say, can we please, unless you think the buyback is going to walk up right behind you, which has not been the case, I think, let it come in. Now, I like to have a good basis. I like to have my basis be lower. This is how you beleaguer people. This is how people get beleaguer. They say, you know what, it's running. It's running. I'm going to get involved. It's not running anywhere. Well, that was definitely the story of the NASDAQ yesterday. Yes. 1 % intraday gain to a 1 % loss.

29:44And you're saying that repeated pattern is what depresses people. If we get the pattern broken, it could be terrific. But the way the pattern breaks from the 45 years I've traded is it opens down and finishes higher. Not if it opens up and finishes lower. All that does is encourage more selling. You have to wait until it opens down, no particular reason, and then you come in and buy. Are you at least encouraged by, A, what oil has done today with Brent back near 102? The other one interesting, Jim, is oil has come way back and treasuries really haven't moved. No, and that worries me because the whole thing is oil down, interest rates go down.

30:26Then you can go buy all the stocks that David's kidding me about, like the Colgates. But we don't have that today, which is not a good sign. And maybe some of this is because people are worried about the election and contested elections. Wherever Democrat wins, maybe that person can't take the seat because the Justice Department is blocking it. We have a Justice Department. I thought Bobby Kennedy owned it. I thought JFK owned RFK, and RFK's just part of it was for the dead office squad. Yes, so you're talking about the early 1960s now, yes. I thought that was so corrupt and horrible. It looked like it was pretty business as usual.

31:04Yeah. Guys, I want to move it to alternative asset management for a minute. We did get earnings from Apollo. Yes, yes. And not being that well received. I've got the big slides in front of me here. But just to sum it up, they did seem to beat on fee-related earnings, but not on AUM, which came in up 2.5 % quarter over quarter. It's about$1.73 billion now that they are managing at Apollo. Of course, a key part of their overall is the theme, their insurer that offers annuities, takes the money in, and as we know, is a huge allocator to so many different parts of the economy, including, of course, AI and AI infrastructure.

31:54On the conference call, Mark Rowan, who's still the CEO of the company, but hasn't been as public of late. Have you noticed how Jim Zelter has been out there much more often? Maybe even Zito. Kind of interesting in terms of what may be coming there in terms of the change, but we'll see. But Rowan saying, you know, in some ways not dissimilar from what we heard from Paul Singer in his letter at Elliott, that the world is a dangerous place and a confusing place, but that doesn't scare them. Take a listen. The world can be very confusing or the world can be very simple. We look out and we see valuations in almost all markets relatively high.

32:34We see risk relatively elevated. The logical conclusion from high valuations and increased risk is to take risk down. In our credit business, taking risk down means moving from below investment grade to investment grade and moving from unsecured to secured. In the equity business, the way we take risk down, we reduce leverage, we move toward hybrid structures, and we increasingly focus on the sorts of businesses that we think are enduring franchises and are relatively immune or will actually benefit from technology cycles. So reassuring words, of course, when it comes to their credit portfolio and what they see as the opportunity and how they change their approach, guys, depending on the market environment in which they find themselves.

33:22Taking risk down means moving from below investment grade to investment grade and from unsecured to secured, for example, Jim. stock getting hit, as you see right there. I thought that this group would be an example of a group that had been punished so much that people would look the other way for that. But it just shows you, once again, people just don't... This is a different kind of market where people just say, you know what, I woke up, I heard negative, I'm going to sell it. I don't care that it's down a lot. And I'm going to sell Blue Owl and let me, by the way, sell some Aries. And maybe I'll sell some Carlisle.

33:59I don't know. Yeah. It has been a very poor year for the performance of virtually all of these alternative asset managers that you're looking at. Blackstone down 24 percent. Apollo now down 21 plus percent. And on from there with Blue Owl, of course, down 30. But, you know, Carlisle also down 31 percent. And to your point, Aries, we had Mike Arrighetti join us last week. Despite what was strong earnings, that stock also off about 19 percent for the year. So you have not wanted to own this group. Is that a reputation of their model? Is it that they can't bring in a market where we're bringing these trillion-dollar IPOs?

34:35Well, it was both a lot of, I think, a lot of the focus on redemptions from their retail-related products and, of course, the inability to return as much capital as people wanted back, which got a lot of attention, the gates, so to speak, that were part of the products to begin with. And then it's the overall concerns we talk about, which is they are helping to finance the AI build-out. And so it comes back to that question as to whether a lot of that money is going to be well spent. Well, not just AI, but real estate, this journal piece on Brookfield walking away from this tower in L.A. Yeah.

35:07Apollo now trying to sell that loan. But rather than refi, I mean, we've been talking about this for months. Given where rates have gone, they're happy to walk away from the equity. It's a loss for Brookfield, as you say, a significant one potentially because downtown L.A. has not come back after the pandemic the way they had hoped. Yeah. Yeah. All right, guys, want to get to the story involving Binance. Of course, we've been following it since that crypto heist impacted more than six billion dollars in lawsuit. Joining us now in his first broadcast interview since the security incident is the company's co-CEO, Richard Tang.

35:46Richard, nice to have you this morning. Appreciate you taking time. You know, I guess just starting off in terms of where things stand right now in terms of the security of your customers. Your report on this says the attacker used an internal AI tool to gain control over two more engineers. And I'm curious about things like access to that tool that let one compromised user take over others. Have you cut off all of those kinds of things? And how do you change your approach going forward to make sure nothing like this ever happens?

36:47Thanks for having me. So this, we are sorry this shouldn't have happened. We take full responsibility on that front as we have released on different points in time. We are fully accountable and the losses are made up. Yeah. You recently made, I think it was today, you made a public appearance and on stage I think you did pitch sort of AI agents. You discussed AI agents running money 24-7. But I am curious, Richard, your own AI tool was used as a springboard by these attackers. So why should customers trust your agents with their accounts? Well, so if you think about it, AI has really changed the dynamics and economies.

37:34So we went from roughly one tech to one tech to about one a big tech. And this is today four different exchanges. So AI actually believes that that is the speed of speed in all the time. And it is a reality that comes from this. But the same technology is also our stronger defenses. So it helps us detect anomalies, trace funds in a small space that was simply not possible in a year's go. And that's exactly why we tend to go with AI first. So as I mentioned, we built the different devices, we have trained the wallet system on that front, and we will continue to invest daily for the security system.

38:19We have just released our initial findings and response, and you can see on Twitter, as you can see, it's a very sophisticated attack. multi-month campaign. The FBI has executed in the year. They use a combination of malicious software disguised as development tools that are trying to work that way. And they execute that at a speed our industry has never seen before. So we have closed all the entry points and replaced all the networks. Richard, I apologize. We are having some audio difficulties. It's been very hard to hear you. We're going to end it for now here, but certainly hope that we can resume this conversation in the near term.

38:59Again, my apologies. Thank you for joining us. Richard Tang, co-CEO of Binance. Guys? Jim, some thoughts on the time it took to get withdrawals resuming. Was this something that you think is going to be a long-lasting scar? If you have crypto, you have to spread it among many different institutions. That's the takeaway. I'm not hearing anyone do that takeaway because the people who talk about crypto don't really care. They're in love with crypto. They don't care where it is. I mean, if you had put, I would put 5 % of crypto in 10 different places. You would. And another five, you know, put it overseas.

39:33I mean, I don't think you can afford to keep it in one place. None of them want to hear that. I hope they go either to CrowdStrike or to Palo Alto. But why would you ever risk? Well, the original thesis was that it would be decentral enough. That would be the risk suppressant. I don't want to have my institution say, listen, we don't have Binance's money. We can't make good. I don't want to hear, hey, idiot, there's no FDIC. What did you think? Didn't you know that this is caveat enter? It's caveat enter. I got George Kurtz. Speaking of caveat enter and George Kurtz, on CrowdStrike, it is trading at about 200 times earnings.

40:12Does that give you any pause? No. Why not? Because CrowdStrike faces is something that can stop the greatest, I think, problem for financial civilization there is. I think Palo Alto, too. They are the only two that I find that are doing work that can equal the bad guys, if not Trump them. And I do think, by the way, that when George Kurtz says that he has a kill switch, I think as long as he works with institutions, I agree with him. Maybe we can throw— We do have a piece of sound cut. Does it sound like it's in a bathroom in Korea? This is a taste of what Jim will show you later tonight on Matt with George Kurtz.

40:47We routinely see North Korea activity, and we routinely stop it. If you look at what they're doing in this particular trader-trader group, this is something that we've seen reported on and stopped many times. But it's important to remember that the epicenter of these sort of attacks is on the endpoints, on the workloads. And if you can have a laptop that's compromised, if you can have identity that's compromised, bad things will happen. To your point, Jim, about valuation, I mean, the risks are asymmetric. If something bad were to happen, it would be theoretically quite bad. I mean, that's why, look, I believe in George Kerr's periodically.

41:23I believe in, look, I think Nikesh Roura is doing a great job at Palo Alto. I don't want to, they're the two that I think are our hope, okay? When I say our hope, I mean them working with an institution is creating an engineered way, engineering, to stop these, I think is the way to go. Right. And what I, I asked George three times. I said, there's no kill switch. There's no kill switch. I'm told there's no kill switch. And three times he said that I was wrong. And I think that when any CEO has the temerity to say, listen, you're wrong, there is, I'm not looking at the head and shoulders pattern.

42:00I need to understand what that means. He's not building the agents, so I don't understand. No, no, he's engineering. He is able to, when working with a client, create an engineering strategy that so far has defeated all attempts to get through. So, like, agent swarms and things of that nature. Yes, agent swarms. It's able to stop them by ending the agent's life. What agent swarms are you, like, the lioness? To be a lioness with Taylor Sheridan? What are you talking about? I'm talking more about Maxwell Smart, actually. Yeah. Barbara Felden, come on. Come on. Come on, Jim. I had such a crush on Barbara Felden.

42:37Oh, my God. You stood by that much. What? Yeah. What? Kona Silence for you. Kona Silence, baby. Would you believe a school full of angry children? The best. As we go to break watch bonds today, obviously we'll be watching election results tonight and tomorrow. For the time being, though, even with this decline in oil, as we said earlier, that 10-year, a little stubborn today, closer to 494. We're back in just a moment. Got an important print tonight. That's AMD. There's a one month down about 22. We look forward to talking to Lisa Su on this program 9 a.m. tomorrow, Jim. Oh, boy, it's going to be so big because we have to find out whether Intel was experiencing a PC problem.

43:15that they're experiencing, or was she taking share from Intel? I don't know the answer. I sure want to find out. Yeah, look forward to that. Make sure you join us for that tomorrow. In the meantime, Dow down about 3.14, the Apple effect. Stop Trading with Jim is next. Time for Jim and Stop Trading. I remain convinced that it was a great Apple quarter. I do think the duo will matter. I think it's going to be the greatest selling thing that they've ever done. I think the fact that they guided up was, actually did guide up, was very good. I think they can overcome services by offering some worse services.

43:46I talked about that with Mr. Ternus last night. I do believe that this story just—you took a big hit this morning if you sold, and I think that was wrong. The same way if you sold Oracle on that deal, you got it wrong. I think this thing can mark time, but I don't think it was bad. I just refuse to believe it was bad. But do you admit memory costs are going to be a problem beyond the December call? Well, I think that there are people who believe, if you look at the stocks, that that's too dire. I happen to think that Micron, I believe Micron and Sanjay Muratio, when he says, listen, things are going to go up, up, up.

44:18The stocks are saying otherwise. The stocks are saying there's a peak in memory. And if they are rewarded with a peak in memory, I think that that's probably the best stock in the world to buy. I'm telling you, look, my charitable trust is Micron. I don't think there's a peak. The stock is saying to me, listen, you moron. I almost cursed. Listen, you moron. You have to understand. Don't you see this is a peak? You're so in love with it. Are you really that in love with it? Are you transfixed on it? The stock is telling me I'm wrong. There's a peak. It is remarkable. I mean, you look at that name.

44:50Most of the gains of the year came within about six or eight weeks. Exactly. Wow. So, I mean, look, I hope I'm right, but hope belongs in the stadium. Like, I hope I'm right about the Giants losing to the Eagles. but I don't want to take the Eagles. I don't blame you. Jim, look forward to George Kurtz tonight. Yes. Interesting discussion. Yeah, and I think that, again, I think that if you were, it's an engineering problem. Daria, they're working with Anthropoc, so therefore Anthropoc didn't annihilate the call. Man, I want to curse so badly. Go off stage and just let him rip. Yeah, just go off set.

45:28Yeah. Okay. All right. No, I was so much older then. You're younger than that now. Bingo. We'll see you tonight, Jim. Mad Money, 6 p.m. Eastern Time.

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