9am Hour: Big Bank Earnings, Apple’s New Home Products, UNH Jumps on Results 10/13/26

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0:33Schwab 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. 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 Quintanillo with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange.

1:08That early morning wobble for some of the banks has proven to be short-lived. Most of the names that reported today are positive. Wells is the exception. Memory, though, under pressure. The cost be down five and a half overnight. Some weakness in crude, although we've now tied 2022 for the most calendar days in a year, with gasoline averaging above$4 a gallon. Our roadmap begins with the banks kicking off a busy week of earnings. We'll break down the numbers from JPM, Wells, Goldman and Citi. Plus another earnings mover we're keeping an eye on, UnitedHealth. It's the top performer on the S &P pre-market.

1:39The company's earnings did top estimates. It also hiked its outlook for profits. And Meta releasing its latest AI model. It is called Muse Wonder. And it says it is very close to the frontier now that OpenAI and Anthropic have been pushing for some time. Let's get right to the banks here. We've worked our way through a few since the early morning hours with Leslie Pickers help. Jim Goldman, the star here today. Yeah, look, Goldman showed you what kind of balance it has. It is not an IPO, an M &A shop. It's a wealth management shop. It's a shop that will be able to do a lot of different things to facilitate trading and issue a lot of bonds.

2:20Plus, they do have Anthropoc, which will be great. They'll have some open AI. They'll have SpaceX. So, look, I think that this is a ratification of what they're seeing. David Solomon, I'll tell you, we're buying back a huge amount of stock. This is a great opportunity. I think they found, David, that their multiple was regarded as being a little bit too low versus what the marketplaces see. Yeah, well, as we pointed out, all of the big bank stocks have been down sharply, dramatically over, let's call it the last, I don't know, six weeks, a couple of months, with the rise in rates in particular, and also some questions about the so-called pipeline.

2:55Right. And I know Jamie Dimon had some comments on that as well on the JPMorgan conference call that we'll share with you most likely as well. But yeah, I mean, you know, for the highlights for Goldman Sachs, record revenue, right? up 23 % year over year, although down 8 % quarter to quarter, Jim, as well. Look, if the stock were at$1 ,200, it would be very easy. I'd say, I want you to short it until the cows come home. But when you have a stock that's at$8.93, it sells at 12, 13 times multiple, it does seem an opportunity. I mean, everything at a price. I think Goldman would be the first one to say everything at a price.

3:34The fact is, their stock overshot how badly things are. and people betting that there was nothing else going on except for IPOs and that the Aura deal was defining Goldman. And I think it's rather amazing to be like fit but defining Goldman. What do you mean, a delayed IPO? Yeah, yeah. I'm just using that as a metaphor. Right. No, I understand. I understand. I mean, book value per share there is$372, right? So that just gives you a sense. It is trading at a nice multiple of its book value. Right. As opposed to Citi, which, as we pointed out many times, 115 is book value. Getting closer and closer because she's doing such a good job.

4:12And look, I thought Goldman was not a layup necessarily, but a sense that, look, we have many different businesses. We've always had many different businesses. Wealth management, by the way, has come on very strong. That was not a great business during the years I was there and after. It was an afterthought. It's no longer an afterthought. It's a big cash generator. You know, Citi had a quarter last time that people didn't like. It's almost like that they're small enough that they can figure out what they want to do. I am going to take issue with Wells Fargo. Yeah, let's do the one revenue miss that we really got.

4:45Although, you know, debit card up eight, credit cards up 12, charge-offs are low, delinquencies really aren't trending in a bad direction. Nope, expenses were terrific. He delivered the debt interest income. He delivered, I mean, missed debt interest income a little bit. He's moving up in the tables. I don't think that people understand the narrative, which is that he's buying back a lot of stock. He thinks the stock is very cheap. He's trying to change the company. He thought that people felt if they got net interest margin where they wanted, it would matter. The expenses are coming down dramatically.

5:17It has become a hated stock. Why is that then, Jim? You know, I've mulled that over, and I think that there's a sense of who the hell are they? Who are they? What are they? What do they stand for? What are they trying to accomplish? And I'd come back and say, they're moving up in all the cables. The answer is that they were a really bad bank, and it took a long time to recover. But now it's doing very, very well. And I think the people at the end of the day will say, you know, why did I sell it at 80? Why did I sell it at 80? It just wasn't worth selling at 80. We were talking the other day about the price earnings multiple.

5:49And you get a price earnings multiple of a Wells Fargo. It's 11. I don't expect it to get the price earnings multiple that it had when Warren Buffett decided, you know what, I'm taking a big stand. But this presumes that Charlie Sharpe, frankly, doesn't know what he's doing. And I would say that's something that I have never made a lot of money bet. No, that seems highly unlikely. You know, we do like to look at the return on equity at Wells. It was 13.8 percent. To put it into perspective, Goldman Sachs' was 17 percent. And I'm sorry, 18.7 percent, excuse me. And J.P. Morgan's was 17 percent.

6:25That's return on equity. And, of course, as has always been the case, Citi is at the low end. But it's in double digits at 10.1%. How about the fact that J.P. Morgan can do no right for the first four minutes and then can do no wrong for the rest of the day? The initial Mike Mayo was some interesting analysis about how there was some money that people didn't initially understand. Well, we did have the FIC. FIC down four was a slight miss. But then they whipped right around and tweaked higher NII guidance for the full year. Yeah, I mean, again, what's happened is that we've got this metric. Charlie told me something that I think people should realize.

7:03Charlie Scharf. Yes. I'm sorry. CEO of Wells Fargo. Yes. He said, we do well in a higher rate environment, bring it on. Now, I like that because we're going to have a higher rate environment. You don't have to bring it on. It's going to happen. And I don't understand a world where the guy who's probably best set up for higher rates, his stock is down. But you know what? I think his stock trades erratically. And I think that it's been a not understanding ever since the cap was taken off. People said, well, this is going to be Charlie's time. Next year should be good for money coming in. But look, on all the group is just the group is good.

7:39Yeah. Yeah. The big banks. I mean, we haven't heard from Bank of America yet. And that'll be fine. Bank of America will be a penny better. Yeah. And there's going to be a very good health in the consumer. They did a lot of good stuff in technology. The underwriting was very good. The international was good. I read the quarter. No, I didn't. But that's what they delivered. Why not just say what happens? Is that bothersome? I mean, I'm not Carnac, but I mean, that's what Bank of America delivers. What? Bank of America. I just gave you what I think Bank of America is going to deliver. Oh, you did?

8:11Yeah, it was kind of like. Oh, I didn't. I was just trying to look here. No, they didn't report. I'm just telling you. Right. I always like to point out, J.P. Morgan, just the size of the institution, is always worth mentioning. Its market value obviously does reflect that. It's almost$900 billion, so far above so many of these other banks that all, I mean, Bank of America, and then they all congregate around the$250 billion market value number. But that's, of course, because in a quarter they're earning$15 billion, and everybody else is earning closer to$5 billion. Right. And just, you know, important to point out, this is by far the largest financial institution we have is J.P.

8:48Morgan. It's so enormous and into so many different things, it's almost hard to quantify, which is another reason why we do want to hear from Jamie Dimon on the call, which I believe is still going on. Are you concerned that Jamie Dimon will express concerns that maybe transcend the common stock? Well, he can do that. Of course, we've chided him in the past for his weather forecasts that always haven't ended up being correct. I don't know. I'm looking quickly through some of the things he said here, but it doesn't appear that that's the case yet. But I don't want to get ahead of myself. That's just from the earnings release.

9:23It's become, Carl, one of those stories where no one ever got hurt owning J.P. Morgan. it's kind of like when you're doing a portfolio analysis, an individual comes in and says, oh, well, what do you have in the financials? I say, we have J.P. Morgan. He says, oh, good. It's just not, it's become the least controversial name in the group. And I think that is, when a stock was down, that's the one to go to. I did not go to it because I have Goldman. Goldman's one of my largest positions. I think Goldman was probably, and still is, the cheapest. I like Goldman here, quite relative to growth. and I think that Goldman's going to have a terrific day.

10:02Right. You prefer, at this point, Goldman over JPM. Yes, I do, because I think that David Solomon and his team chronically undervalued because they're just pegged to M &A, pegged to IPOs, and yet that's quite false. One of the great things about Goldman is wherever there's most money being made is what they're pegged to, and they pivot constantly. They have a lot of really smart people who look at their numbers five or six times a day and say, look, we got to pivot right now to Japanese IPOs. And the other guys are saying, hey, what's going on? How's the day going? Let's go have a beer at Morgan's.

10:40And Goldman is, all right, I want right now, everyone who's working in Singapore, I want you to switch to German. That's what works. I did want to highlight a couple of things. We've got a transcript here. Of course, it's ongoing of Jamie Dimon's comments. But, you know, there is so much question around the need. You've raised this so many times for capital, given the enormous capex needed for the AI build out in particular. And so and you heard, you know, with Andrew, in terms of the concerns there as well. Paul Tudor Jones. Yeah, Paul Tudor Jones. Thank you. About crowding out, crowding out of the U.S.

11:18Treasury market even or raising rates as a result of all of those demands. Jamie Dimon did say, I'm not going to give you very specific stuff, but we are tightening up a little bit on credit. Right. But that's kind of interesting. I think some of the credit terms have gotten a little bit loose. You've heard us talk about that before. Other people, a little too much pit, that is, pay in kind. A little too weak on the covenants, a little too much priming good assets, a little too pushing on that. He says we don't have to chase that kind of stuff anymore. So kind of interesting on the credit side from Dimon.

11:48What am I speaking to? To David Solomon, one of the things that I really like to hear and I'm glad about is, you know, this two-way market in compute, it's going to be there. And it's interesting enough that last night there was a squib about Mark Zuckerberg saying, how long is H100 from NVIDIA last? Now, I know right now if there's a stock that's more hated than NVIDIA, I mean, maybe Seagate. But the fact is, if they get a two-way market going, then you're going to see how little depreciation there's really been on these. Sometimes there's been appreciation. and the value of these is going to make it so that's going to be a very, very good asset.

12:22I mean, it's not quite the same story, but there are advancements reportedly being made in some chip architecture. That's why memory has been so horrible. And by the way, chips as a group are down six days in a row. That's the longest of the year. So I've done a lot of work on it. Six is not unusual. And for the most part, when you get six, you tend to get a rally. However, there have been some serious periods. that's five days, 6.77 is an average when you get a turn. But there are some periods. 2001, 10 days, down 33%. 2006, nine days, down eight. 2001, again, down 25 after eight days. 2002, down 21.

13:02There are at least 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 times that it fell 12 or more. So as much as I like those stocks, as much as I think they're oversold, be aware that historically... It can go on. It can go on. What was your prompt to get this? What did you ask? You said, what happens when... No, you see, I asked a very specific prompt. I said, Zach, how are we doing here on the SMH? It's really interesting. It comes up. It says, Zach, here we're doing. Zach is actual real person. Right. Not like Claude. I think the numbers are very... Who's not yet a real person. No. Although some anthropic may believe that Claude does have consciousness.

13:41No, Claude is just, Claude's feeling bad because of the stuff that Zuckerberg's pumping out. Claude's got inferior. We've got to get to that. We've got to get to Anthropik's latest warning. Of course, there's one every day now about, you know, the self-replication that's going to take place on your Android TV. Absolutely. But I will tell you, since 2025, after five down days, except for one, you've caught a bottom. And the selling that is going on is so heavily shorted it's hysterical. So it's hysterical because, you know, you got Mike Grinning five times next year. You got SK Hynix at four times, you know, 4.5 times next year.

14:18You want to sell him? Go right ahead. I'm not sending any invitations to funerals. That's going to get us to what Hawk Tan said about memory and the next few. Hawk had to go. I thought Hawk was on the team. I thought Hawk was on the team. We will get to Meta. We'll get to Apple, DPZ, J &J, UNH, ACI, all 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.

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15:41No 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. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

16:23Apple just unveiled its new lineup of smart home hardware products this morning. Take a look.

16:36I need the bathroom. There's one downstairs. Fine. Keeps touching this. You promised French toast, bro. I'm not your bra, brah. Thomas says we're made, Vincent. Fine. Hey, Siri. Find the French toast recipe that mom sent. I found a message from Mom with a link to a French toast recipe from Taste of Home. It's called Home View. Recognizes users by their face. Got a new version of Siri AI, Jim. Yeah, look, I've been using Siri pretty consistently. I think Siri's gotten better as it is. But this takes it to another level. Would I want this? I think that you want to settle for whether the intrusion versus convenience.

17:19It is. Yeah, David, Alexa hears everything I have to say. And Alexa does not necessarily produce anything that is all that coherent. I find Alexa to be disappointing, but I still use it. This could be a change. It could be. But when it comes to sort of personal assistance, so to speak, or what we now call agents, I think Meta and Muse have caught the attention most, and certainly in the stock market. And that is only going to proliferate. and I would expect we'll see many different entrants from all the different players in terms of personal agents. I don't know if they're going to help you make French toast or not in the morning, but they might.

17:55Right, well, look, some of these have a bit of a kind of excitement about them. And you say, listen, that's something different in the kitchen rather than just having them listen to you and have a picture of Ty when you said, I need Cascade. I don't find this to be an ad machine, the way I feel, unfortunately. from Alexa. Alexa, I kind of, I would love to be able to press a button, which is to, you know, I want to have a private conversation, Alexa, stop it. Versus Siri, I can say, listen, how many yards did Josh just crush it last night? And I think it would have what I wanted. So be aware that it's going to be exciting for people, but it's a little bit prurient.

18:38And I don't think prurient makes it. This is a duo story, okay? You're really into the duo, and we'll start to talk about it more after Friday. This T-Mobile, I understand, T-Mobile deal that you can get at Costco. Wait, a T-Mobile deal you can get at Costco for a duo? Yeah. Okay, just making sure I heard you right. Yeah, well, those of us who shop and... Apparently what you really want to buy at Costco is wine. Well, they're not allowed to here. Oh, in New York. It's a West Coast phenomenon. Now, they are the second largest after Total Wine. Total Wine is about$9 billion. They're about$4.5 billion.

19:14They do have their own Cheetos compare, which I think is pretty good, frankly. But I just point out, David, that this could be fun. I think you're right about PETA. But I want an Alexa, whatever this is, that is actually coherent and doesn't pronounce names wrong in some sense. You know, I don't want to hear. When it comes to Apple, what was this thing called again? The Vision Pro? Thank you. Oh, God. But, you know, you were excited about that for a little bit. Oh, he was. He was very excited about that Vision Pro. Well, I'll tell you what, at 344, that would be a new closing high for Apple today.

19:54We'll see if we get there. And by the way, what I meant was at Costco that you can get a good T-Mobile deal for an Apple. Not that T-Mobile is going to merge with Spade with Starlink. Is that what you were thinking of saying? No, I didn't think that at all. You didn't say that. You made it clear. I just was trying to understand the process by which you get a T-Mobile phone at Costco, and then it's a duo. Yeah. By the way, we do have a downgrade of AT &T on some of that Starlink stuff. We'll get to that. Mad Dash and the opening bell in a couple of minutes. This message comes from Wise Business, the only account your business needs to scale globally.

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21:56All right, let's get to a mad dash with Jim. We've got, what, six minutes before we get started with an opening bell here at the New York Stock Exchange. Want to talk a little VF Corp? Yes, I do want to start by saying, David, this is the kind of Mayfly name. Remember the Mayfly? They don't really have a lot of. You can't play them very effectively because they don't last very long. Right. But, and I'm being suspicious, but it's a$6 billion company. But you see, if a$6 billion company goes from here to here, they take that at the bank. They don't say, you know what, I looked at that. You didn't make that with Meta.

22:26I'm not taking that money. No, money is money. I don't know what else to say. Yeah, I think we can end the segment right there. Okay, so I've been waiting for Bracken Darrell, who's this great CEO, turnaround Logitech, to turnaround VF Corp. But he's been hurt by Vans, which is this big brand that has been the fulcrum. And it looks like they've stabilized. Now, where did I get that? Piper Sandler does this amazing teen survey. And I devour it because if you have a significant change, a delta, it can really make all the difference. And we got it today. And I think that if Vance changes, you're going to see all the great things that Bracken Darrell's going to do.

23:02And this one is a buy because it looks like the bleed is over in Vance. You believe that? I do believe it because I believe in the Piper T. to serve it. OK. Turnarounds are tough. I know he's been struggling. Yes, it's been a while now. I know, but I think that the turn is at hand, and it's 16, 17. It's a good buy. Okay. We got an opening bell five minutes from now. We don't go anywhere. It still feels like 1999, a two-speed market. You've got it completely, perfectly baffricated in the sense that you have, obviously, everything that's adopting AI and everything that's not, and they're going in opposite directions.

23:43And that was pretty much the case in 1999. that. Paul Tudor-Jones on Squawk this morning talking to Andrew, sort of reiterating his fears that there's an analog here to 99. He did say, Jim, we might get a good push into December 31st. He did say that in 1999, including Paul, we all obviously respect him, know that we did have companies that were fly by night. There were 330 that didn't make any money at all. Many of them didn't have any revenue. These kinds of companies that we're seeing now, when you have a mic on a five times earnings. Well, maybe, of course, the earnings could fall apart. We take a look at what happened with Meta and so they had a new product with the balance sheet.

24:24Not great, but not what we would think if they start making money. Microsoft doing quite well. David, I'm just saying that the analogy of 1999 must look. It does not hold up on your close street. Okay. I'll accept that. There are other areas where we have seen it. and stars go to the screen. But we had Amazon, and we had Alphonse, the pageants from public. And then the rest really were, for the most part, not really much at all. David covered many of the companies in 1999 that were fraudulent. I don't think the companies we're seeing that are going up or anything other than R.I.P. is best. Maybe they pushed through 27, let me take another look.

25:12But the 99, look, what that says is if you're an individual investor, you better get the hell out of this market right now. You should sell everything. I have spent my life trying to make it so that that doesn't happen because the returns have been so extraordinary. But when I listen to him, I say, you know what? If I was a hedge fund, I should short. If I'm an individual, what am I thinking? And that's not right. Yeah, I think that was his broader point about diversification. Certainly credit is re-rating faster than equity, as we can talk more about that. Right. I mean, look, by the way, a few months ago, we were worried about every single software company and what would happen to them because they had been rolled up in private equity.

25:50We had Toma Bravo. Well, no, those were the ones to be. Opening bell here at the big board on Wall Street this morning. It's Movado Group celebrating 25 years, 145 years of its Swiss watchmaking heritage. At the NASDAQ in Times Square, it's Tyra Biosciences, developing treatments for oncology and genetically defined conditions. At SIBO in Chicago, it's the Lynn Sage Breast Cancer Foundation to mark Breast Cancer Awareness Month. That nonprofit has invested more than$50 million in breast cancer research, education, and clinical trials since 85. Kind of would be a nice transition, Jim, to J &J, where MedTech did disappoint a bit.

26:30Yeah, look, I think at J &J, I told club members, I said, listen, the data reports it tends not to have. the true reflection of the power of J &J. What's the power of J &J? That they have so many different divisions that are working right that when you sell it, you end up like a buzzsaw or you sold it off of MedTech, which they would tell you is disappointing, without revealing that they've got more drugs in the pipeline, that could be blockbusters than any, that they have almost no loss of exclusivity for a long time, that they might have, in a good time, one of the greatest performing drugs of all time.

27:03And they'll address what's happened with MedTech. They got a lot of this in-apposition to me called a VIA med. And they also have problems with governments around the world, which are strapped a little bit more than we thought. So how do I feel about J &J? Same as I've always felt about J &J. Let it settle by some. It's been one of the greatest performers of all time. It's a dividend king. And it has historically done very poorly today. Yeah. Staying in the broader health care universe, UnitedHealthcare, of course, the largest private insurer. And as our viewers well know, had fallen on very hard times.

27:39Some time back, you can take a look, you can see if we go back a couple of years, but a good quarter. Obviously, Stephen Helmsley, who was formerly the CEO, came back, and they are doing a better job on the key thing, which is managing that medical care ratio was 88.4%. And what they say is that reflects improved medical cost management, benefit and pricing alignment and care delivery enhancements, and the operating cost ratio of 12.8%, also reflecting ongoing investments, they say, in operations, consumer and clinician experiences, and on from there, Jim. You've made a point of saying that Helms is a serious guy.

28:21Yeah, he's rigorous. And by the way, you've got great tailwinds here. You've managed it for the four on the ratings. CBS did not do as well, but David Joyner still, the stock was up three bucks when they announced the raise. This is the group that people like right now. Carl, I remember there were periods of outperformance in this group that lasted forever, and then, frankly, Helmsley left, and everyone kind of lost their way. Well, it's the right group now. I'm not saying you should just come in and buy a 10. I am saying that it's the right group, and it's got extraordinary performance. I believe CBS, by the way.

28:56Well, I'll tell you what, between that and Goldman, that's the reason for the split here between the Dow and the S &P. JPM as well. Yeah, look, I mean, Goldman's an odd animal. I remember once when I was working, there was this market. Business was killing it. Immunity bonds that were backed up by AAAs in Puerto Rican drugs. And it was just crushing. We were, like, doing it. And then one day they had a bad quarter. So I went down to the 27th floor to see how they were doing it. It was empty. They cleaned them out because they were dead wood. Now, it's interesting. I did not use that term. That was management's term.

29:34I thought I was a little more feeling. I said, boy, these guys are losers. No, Jim, they're dead wood. It was kind of, you know, a contrast. We haven't really touched on Kroger, going to cut 3 ,000 corporate jobs over the next three years. That's more than a third of their corporate workforce, Jim. Yeah. Greg Foran. And between that and the ACI, not just their comps at ACI, but this lawsuit. The lawsuit,$8 billion they're seeking Albertsons for, of course, the dissolution of that deal, which we talked about for so long in terms of the antitrust implications, which did ultimately come to bear and stop the deal.

30:09Right. At the same time, it turned out this is Walmart and Amazon and Costco's time, and these guys needed to scale. Yeah, it was an interesting market definition. There's no doubt about that. But Albertsons wants a lot of money. I hope that they do OK. I hope that they can get back in the business. But I do know that when I speak to Costco, wow, I mean, they're going to hold the line on prices. Walmart holds the line on prices. And I don't even know what Amazon's doing. But I got to tell you, when you go on Amazon, there isn't anything that I see anywhere else that's not cheaper on Amazon. No, I know.

30:44Albertsons' comps almost a full point lower, negative. And then they pull the guide just sort of as they do this business review. Yeah, that was disconcerting. By the way, Costco and the re-ups have been questioned. It turned out that the problems with Costco were that they had brought in this huge inflection of Gen Z people. Not all went to the store, but the numbers have turned up. You're talking about the re-ups and membership. Yes. You're looking at a 42 times earnings situation. Nobody wants a 42 times earnings. They prefer to have a TJX, which at one point was down to 20 times earnings. And TJX is a very good company.

31:21That one's starting to make a big comeback. Last is Walmart. These are value stores. Although you look at the year performance of many of these stocks, and it's not much to speak of. No, these are bouncebacks. It really is not. You know, Damon, I think you just raised a good point. When you look at the year performance now that the semiconductors have come down, like, Jesus, it's not a lot of good. No, no. It's kind of getting to be a bad year with the average in it all time. Well, we talked about the fact that many stocks, and not to mention groups, are in a bear market. Yes. Or down at least 20 % from their highs.

31:58Right, then periodically you have a Microsoft because the software stocks came back, or you have a Meta because they developed some new tool. And because they're so large, their moves obscure a lot of pain. There's a lot of pain. There is. You know, you speak about new tools and you talk about Meta, the shares of which are actually down fractionally this morning, but of course have had a great rally on the introduction of their Muse AI agent. I raise that because we have been, I talked about this yesterday as well, you know, what Muse and or other agents' instinct and any number of others that will be coming, if not here yet, will be able to do for people in terms of allowing them to do transactions.

32:38And if you give them access to your bank account, what do they do? This has become a key question because, of course, let's say they make a transfer in error. It's not their liability. The customer is then told, well, go deal with your bank. Sorry about that. And then it's the bank's problem. And I mention this because on the conference call this morning at J.P. Morgan, Jamie Dimon was asked about AI agents and liability. and he certainly indicated they're not going to allow the agents onto their platform, at least, as a result of those concerns. Take a listen. There is a defensive side, which is you've got to make sure our customers aren't hurt by it.

33:22And so that is a concern, but I think that's an AI agent of concern, which is heightened because, you know, you don't want rogue agents and there could be thousands of them. And so we've always been literally on the side of the client. If people are using them, they should understand the risk. There's a liability transfer. They should understand the liability transfer. If that is being misused, they should understand it's being misused. So, you know, we have to make sure we protect our customer in the right kind of way. So we're building tools to do that, too. In the meantime, we're not going to allow just any agent to come, you know, outside agent to come in inside the company because it's just too risky for clients and for Jake and Morgan.

34:00That's why I believe that we're not going to see this wholesale. well, let's get out of this one because he yields three and a quarter and go into three and three quarters. Well, that's another thing. Time is telling you what the hell you, for what, for half? You're going to like go? That's another thing we've raised, which is this idea that these agents are going to be able to introduce efficiencies for people that allow them to move quickly or deposited funds where they're not getting a return into higher yielding instruments. But overall, I think what the bank CEOs are going to tell you is we don't, it's too much liability right now until we make sure we can protect ourselves and our clients, our customers.

34:34They don't want these agents on their platforms. And I don't think people realize that the productivity gains that news can give you are productivity gains that are much more suited for the 200 million small businesses than they are for individuals who don't get up each morning and say, you know what, I'd like to be able to pick up another$135 by switching to the first national bank of, I don't know. Although, I mean, what they offer on checking or money markets or CDs is like its core tenant of banking marketing, right? Well, yeah. Look, the banks make a lot of money. Watch Schwab this week. Yeah, we're going to get earnings out of Schwab.

35:11I think Schwab's going to have good numbers. I think that they've been able to figure out that if some people want to switch to having some money in a market where they weren't, it'll be done. Look, I just don't think people are that aware, but they're getting more aware. But what I care much more about in terms of what people are doing is what my favorite Hawk Tan said this morning. Yes. A lot of investors have no clue what they're investing in. They're set very extreme expectations. They're only finding it almost like they are in a casino. I was looking for Paul Tudor Jones to say this. I was not looking for Hawk Tan, the CEO of Qualicom.

35:45Well, I think the context of that quote is investors, he argued, who were selling on short-term data points. That's true. But I just think that when I hear casino, everybody gets mad about casino. And I do think that I don't like the term. I think the term I like is that there are a lot of investors who are traders. And that enthusiasm to trade is going to leave them, I think, with a lot less money than they have. The other thing he said, Jim, he suggested that memory shortages could ease in a year. Western Dig is down 20 % in a month. Right. But I mean, look, I think Western Digi's did not put a lot of money in and Western Digi's not known as an innovator.

36:27Micron has told me, listen, 28, they actually have these long term agreements that actually pretty much put them in a situation where they are in what the old natural gas companies in the 80s were. It's take or pay partner. And take or pay means that, Micron, you can build a model. Now, does that mean micron's going to go up? I'm not in. You know, I have eyes. Chinese memory warning. Well, you know what? Tomorrow will be, there is a neocloud company that's based in Bolivia that handles most of northern South America. And it was supposed to come at$50 trillion. I mean, this has to end. What's the this?

37:09I'm not going to sell a group because there's some neocloud that I never heard of that was mispriced on the Australian market or that someone I really respect. Blackstone saying that these things are all wrong. I mean, Code 2 was supposed to come in on that, by the way. You're referring to Firmus in Australia. And I think you're referring to Air Trunk in Singapore. Yes. I mean, look, there was a time when everyone wanted nuclear power and suddenly they bought a company called Fermi and it was much more of a business plan. And I am not going to, like Blackstone's fine. Yeah, Blackstone's fine. It's not a Blackstone-related thing.

37:43I'm just saying that when I begin to worry about a hyperscale that I've never heard of, then I should say to myself, well, maybe people are a little bit too nervous. There are too many related to Bitcoin neoclouds to keep track of. And I don't want to own any of those. They, to me, feel like you're in a casino. You know, a lot of people come on and talk about them. And I'm like, guys, guys, I'm sorry. Where's the clicker? I got to turn it off. I want to put on whatever baseball game is on right now. So you don't think CoreWeave deserves to be at a two-month low? No, CoreWeave's the one. CoreWeave's the only one that I think is actually in traders for real.

38:21He did move from, he was Bitcoin. He was a coin. Well, yes, they were, many of these were Bitcoin miners because they had powered shells already. But he was the first guy to have Microsoft as a partner. He was, he's Jensen Wong's preferred partner. I think he knows what he's doing. There are a lot of companies that are legacy miners, and I don't want them. You don't want them. Okay. No, I don't want them. And I think a lot of people come on and talk their book, and like, you know what? I finished their book, and I didn't like it. I took it back to the library. When was the last time you were in a library?

38:57No, but, you know, my daughter goes to the library all the time. Oh, yeah. My kids go all the time. It's a good thing. Library. Really? Works well. Yeah, I got the library pulled in. They say, Jim, Amazon's not a library. And I said, tell that to Andy Jassy. They said, Dad, who's Andy Jassy? That is the conversation. Guys, I did want to discuss the latest from the Frontier Red Team at Anthropic, which produced papers virtually every day that can scare you. This one is about the ever-improving AI capabilities that make a longstanding concern, what they say increasingly realistic, namely autonomous replication and adaptation, which involves a model, that is an AI model, deploying and propagating itself without human control.

39:42These are sort of worms. It's a program that copies itself from one computer to the next without human input. And they've shown already that AI agents can act like one. They can scan their network. They can execute an exploit, copy model weights, and move on from there. Now, where you would expect they would do that would be in the data center, where GPUs obviously are abundant. But what Anthropic is saying is that a distributed botnet of IoT devices, I don't know, think of the things in your home, an Internet-connected refrigerator, an Android television, are enough, have enough RAM, have enough gigabytes to allow for these agents to self-replicate.

40:27Not as quickly as they could to data center, given they don't have nearly as much compute. But it's another sort of scary input from Anthropic. But I know what Anthropic should do. And their frontier red teams. I know what Anthropic should do. They should close so they figure it out. They should what? Close so they figure it out. Close. Slow down. Don't get antitrust to be able to say everyone should slow down. Just like, look, if you're really a problem, Jensen says this. If it's really a problem, slow down, close down. I mean, anthropics, you know, come back. We're trying to make everybody understand all of the basic threats across the broad frontier.

41:03And yes, the idea that anybody's going to slow down seems to be a fallacy. Mark Zuckerberg's certainly not going to slow down. Also, by the way, when an aircraft fails a sea maintenance, agencies shut them down for them. Yes. I mean, I think that, look, obviously, if there's an agency, if there were an FAA, then they would say, you know, we just read this, and we're not going to, you know, I'm not going to climb that hill to be killed by my washing machine.

41:31Understood. That's a fight that ain't worth fighting for. Understood. But it gets back to, of course, safety, alignment. Well, which machine are you thinking? And the threats that are coming conceivably very soon. Look, I know I'm worried. Am I worried? If you're not worried, you're wrong. But I trust it. I trust Anthropic to be able to stop their job, stop working in the quarter, despite the IPO. That's why they put these 30-page papers out. Well, instead of 30 pages, why don't they just close, take a little hiatus like Boeing had to, figure it out, and then, you know, so what? Far from closing.

42:08They're going to be having their meeting tomorrow. We'll see what they decide to share. You mean they're all systems go? In terms of information. Even though my dishwasher uses Cascade and it could cascade and I'll drown? There is an expectation that they will file an S-1 still. Let's call it in the next couple of weeks, Carl. My toaster oven doesn't work. And, of course, we'll see how long is the, you know. If you're worried, slow down, shut down. If you're worried. Right. Boeing did. Now, maybe Boeing was taught, but Kelly Ortberg would tell you, listen, if we're putting out a product that's dangerous, we're going to shut down.

42:43We're not worried about the quarter. You think he's worried about the quarter? The risk section of that S1 should be interesting reading. Yeah. Stephen King's what, 75 to 83? The one where the cell phone goes off with the dead man in the coffin? Yeah. Evercore is a nice note. There are 19 states where data center construction is really concentrated, meaning more than 5 gigawatts planned. 12 of those 19 are electing governors in three weeks. Well, I've got to tell you, if you use the plan that Dean Powell-McCormish, come on, you'll want that. $50 ,000 bonuses for teachers. Electricity comes down.

43:19I mean, what, a chicken in every pot, a car in every garage? What do you want? It's like the 50s. I see it. He was using anthropic. I'm not good. Like I said, I'm not dying on his hill. So wrong. I'm not dying on your anthropic hill. You keep that closed until the commercial break. By the way, we mentioned the bell ringers this morning. Wanted to make sure we showed you who did the honors of NASDAQ and Times Square. As we said, Tyra Biosciences, developing treatments for oncology and genetically defined conditions. Bond market's back to work today. We'll see if they play some catch up here after some of the data that's still on deck for tomorrow and Thursday, CPI, PPI.

43:58Don't go away. Take a look at AMAT here. Potentially one of the first case studies in AI productivity. Company today says it expects revenue to double over the next few years, but without a proportional increase in the workforce, Jim, as they say, AI-related productivity could reach as high as 50 percent. Well, look, I think that Gary, the CEO of Gary Dukes, I think he's been adamant that most in front of what can go right when you're spending the money on technology because he's spending it. I just think he's a terrific CEO, but he's got to keep expenses due. Doing a good job. I think B of A is calling it the margin mirage as these costs sort of do add pressure to results that we're getting so far in this earnings season.

44:43Hanging on to 7 ,800, though. We'll get to stop trading with Jim in a minute. Let's get to Jim and stop trading. Yeah, I'm looking for situations where people overpress their shorts. And the games that I watch, I watch Oracle very closely, and that's been a nice comeback from the morning. David mentioned Meta. That's had a really good comeback from the morning. And I just think, remember, day six is the beginning of the unusual. The one to watch is Micron, because Micron is the lowest price-earning multiple of any company I follow, even more than GM, which I had Mary Barrowing last night. I feel that stock is very inexpensive.

45:16If Micron can rally here, then the shorts would have to say, you know what, maybe day six was this positive day. Yeah, autos have been interesting. BMW delivery is down six year on year. Mary's doing it. Mary Barrow is doing so much better than that. She's totally just done it so great. Well, we talked about, obviously, Micron, what goes in a data center. Speaking of, don't miss it, exclusive with Michael Dell. That'll be at 11 a.m. Eastern, just a little while from now. You've been listening to the opening hour of CNBC's Squawk on the Street. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.

45:58You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit CNBC.com forward slash Squawk on the Street disclaimer. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

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