9am Hour: Exclusive: BlackRock’s Larry Fink, CPI Runs Hot,  BofA’s $1.2B Fine  10/14/26

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0:58Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC's Squawk on the Street. Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures stumble here as September CPI runs a bit hot. 3.7 on headline is the highest since May. 2.6 on core, up from a prior 2.4. Yields are responding two year at the highs of the month. Oil is pretty steady. We got reports of Saudi Aramco's HQ getting hit by the Hoosies. And just now, the Iranian reports of a container ship sinking in the straits.

1:33Our roadmap begins with consumer prices up six tenths in September. Annual inflation now three seven. Plus, semis riding their longest losing streak in 16 months. This is ASML posts a profit beat. It also says it's receiving order interest that goes through 2030. And BlackRock's chairman and CEO Larry Fink. He's going to join us right here at Post 9 on our set, breaking down the company's latest results, which were quite strong assets under management growing to$15.5 trillion. Let's get right to this morning's CPI number. Pretty important as Fed odds for October, Jim, do increase. Not much relief, even in rent of 4.1.

2:13That was a surprise. I mean, I was trying to think about something positive to say about this, because I said the the other day, I think the quarter point will matter. You almost have the flip here. You have housing going up as a percentage of your income because of mortgage, so therefore you stay in a rent-rented apartment, and then the rent goes up because of such demand. So that didn't work. Many of these are just so traceable to both tariff and right to the president. Look, if you want to mandate, I feel like telling you to say this today. If you want to mandate higher prices, you're going to have a hard time doing it better than this guy.

2:51I mean, there's so many of these things right to gasoline, right to diesel. I mean, food is right to diesel. Food did not go up, but it's right to diesel. And textile, okay, apparel. I could go and survey. I have surveyed every single body, every single body on apparel. Apparel is tariff, and apparel is getting it to you, okay? Soda is getting it to you. So, I mean, I don't know what to say. I mean, other than the fact that, you know, if you believe that this war is going to get over sometime soon, you're going to have a pretty good, I mean, this is the bull case, you have a pretty good run. Costa diesel, though, which war are you talking about?

3:28I'm not worried about diesel as much. Which war are you talking about? Well, I'm just saying energy. The one in Iran or the one in Ukraine? Or the one in Saudi Arabia. Or the one in Saudi Arabia. Okay, the one that we are most likely in control of, which would be Iran. Okay. Okay. But that's a great question because, frankly, all these figures, I'm just saying that if you could get the war to ran over, you could get a lot of oil coming, that people wouldn't even know where to put the oil. So you'd have like a$50 oil. But the fact is that I can't find – look, it's not really traceable to shortage of manpower.

4:02It's traceable to oil and gas. And, you know, look, I feel bad for the Fed chief. He can't really do much about the ones that are bad, new vehicle, old vehicles. maybe old vehicles, new vehicles cost too much? We did get a negative print on used cars. That was helpful, I guess. But I just feel like that, okay, listen, you know, glass half old, glass half old. You couldn't have a better president if you felt that we're going to have inflation go down if the war's over. How about that? Put a positive spin on it. Well, since the war began, Jim Diesel's up 67. Jet fuel's up 80. Sugar's up 50. Cotton's up 23.

4:39Rice up 60. Transport, transport, transport, transport, transport. Mark it up, mark it up. Who eats it? You do. It's got to get delivered. Look. Physically delivered. Look, American people are eating this. This is not some, I'm not giving you some sort of ideological deal. Ideological stuff. I mean, the American people, stopping with the American people. Not a lot of people are, with the exception of maybe Walmart, some degree, Costco. Eat, eating the margin, it goes to you. To some degree, by the way, is the important caveat there. Because they're not eating all of it. No, but I praise Walmart.

5:10for doing a job of trying to keep prices. I praise Costco because that's their job, to keep prices low. I see those two as offsetting a lot. Like, I don't know where—one of the great mysteries we have, and I hope that Chairman Worsh solves that, is all this stuff seems very anecdotal, all the numbers. I would love to see what they do to get to calculate these, but I can tell you right now that what's happening is the American people, particularly the people who are between, say,$60 ,000 to$30 ,000 in terms of what they make. They're the ones that are deeply—this is just a regressive tax on them.

5:46I'm very conscious of the fact that I sound like a Democrat, but it's much more like the 10 courses I took. It's really kind of—that's just who it's falling on. So do you think a near-term hike is the right move?

6:00If you do a near-term hike and the war's over, that would be—you'd have to take back the hike. I think you've got to give the next hike a couple of months to see if there isn't some sort of break in the action. I know it all seems to be going the other way. I'm not a political scientist here. I mean the Hooties. We know that they've been acting badly. I saw the tweet. I'm sorry, I saw the post. I see. Yes. I didn't see that. I have. They're acting badly. Yes. They now, they most recently bombed the headquarters of Saudi Aramco. Right. And this continues, obviously, what are fairly accurate missile strikes on various targets in Saudi Arabia.

6:38Clearly, things are only getting more heated in terms of response from Saudis as well, none of which seems to point to a good outcome here right now. I mean, look, you come in this morning, I've been working on this for a little while, and I'm kind of developing a positive narrative somewhere other than J.P. Morgan's net interest income. And it's really hard. Today's like a hard day. BlackRock's good. BlackRock's good. We're going to get a chance to talk to Larry. That'll be positive. All right. And we've got 10 years above 5.3 again, right? Right. Well, no, what I'm saying, that's negative. That's negative.

7:11And yesterday, I know you don't, you know, but he was talking a lot about flows. You know who I'm talking about, of course. And 2027 going to be a bad year. We're in the, Jim doesn't like rich hedge fund pessimists. Well, they're so easy. Classic. It's so easy. Look, I mean, you know, I did well at hedge fund. I'm not in the billionaire class. But, you know, if I were a billionaire, the last thing I would say is, things are real good and you should invest. You're right. I'm talking about Paltrow Jones yesterday. That's a sucker game. Why say it? The only guy who says it is Tepper. Like, Tepper will say, you know what, it's the right time for X.

7:46You know why that is? Because Tepper doesn't care. I had another rich guy We'll get to him yesterday In fact, way richer than all of them And he was pretty positive Michael Dell, you've heard of him But what does he know? He runs a large technology company That was downgraded today Did you tell him his stock was downgraded? I didn't It's late in the game for Michael Dell Well, he saw the Gartner Q3 PCs Preliminary, down 22 For the quarter Smartphones, down 20 That's all memory, by the way Yeah, that's all memory, which he was talking about. But obviously, their business is focused, at least the market is focused on servers.

8:24Look, if you believe that you have to get these chips, whether they be done by AMD or by NVIDIA, to where they can be useful, that's Dell. And that's a great business. And frankly, it's Dell and then HP and then some outfit that I think that a lot of people are worried about, so they don't want to go to Supermicro. Oh, Supermicro. So I thought Michael Duff at the interview was great. I know today's the downgrade day because everyone's decided, you know what? This is a sales force I've worked at a night. Wait to see how great that's going to be. It's a sales force. It's a surface-nale economy. It's an Atlassian.

8:59And forget everything that we've liked, particularly SK Heinex, which is toxic. What does that thing do? Because that thing goes down. Someone asked me, what does SK Heinex do? I said, it's easy. It goes down. Yeah. Kospi's down 14 of 17 weeks. Do you know that I think there's... Do you still look at that before you come in and then you know what we're going to do? Do you want to see my Cosby? I have a Cosby sheet that is made up that literally shows you how there's literally no chance that tech rallies. Only days when Cosby's down. I think you must have missed it. I don't know where your Cosby sheet is.

9:28Yeah, we're back to 6K over there. Yeah. No, look, they were crazy over there. I mean, they had the bars where there was all the betting and stuff. And you could bet on every single hoop. No, that's Robin Hood. But I really just think that what I see is that we are linked to SK Hynix. And as long as that's the case, and Hynix was down badly, then it didn't matter what ASML did. I got the ASML earnings. It's like, why bother? This was a great quarter. Yes, they raised guidance for the third time this year. Yeah. It was very strong. But it doesn't matter because SK Hynix was down. I know people think I'm making this up.

10:06It is not. It is an algorithm. them, you, I don't know what the genius of the reason, you sit there and you say, you know what? Elon Musk comes out and says, Micron has been reasonably guarding future memory prices while others have been extortioned, which is something today's customers won't forget. And I said, hey, maybe this is going to move Micron up. No! Micron's SK Hyonics. What about ASML, though? Again, to your point, you mentioned it as well. What do you want? Oh, look at this breaker. Chili's, not SK Hyonics. Could go higher. Chili's, great margin, five bucks. Wow. I'm getting started early this morning.

10:41The American people are winners. Our producers want us to get to the financials. I don't know. How do you feel about it, Carl? Are you going to veto that? I see that. Well, I just feel like we're in an interesting place here. Cosby's big moves. Look at this. Do we have, like, a camera here? We used to have a handheld thing here. This is the Cosby's big move. I can't find a—there's, like, one instance, July 8th, where the SMH went up if the Cosby went down. If the Cosby was lower? July 8th. Oh, that's a good one. I don't know why that was. That's a good find. What was that all about? That's a very good find.

11:09That was the August 3rd. Cospi was down 5 percent, and the SMH was up 0.91. So I've got three instances. So there is a linkage between the movement, the Cospi, and the SMH, which, of course, then has a lot of broader implications. That's what I'm here for, to state the obvious. That's all I ever do. No, no, no. I did the work. Cospi, never mind. I thought this was just positive, and I bothered to do it. Well, Citadel had a nice note yesterday. the growth in Q3 earnings, 36 % is Micron and NVIDIA. Top. That's what we're supposed to say. People have been telling me top and NVIDIA since it was at$3 moving up from$2.

11:49I guess they were right. Well, it's not a call on NVIDIA. It's a call on the... No, but NVIDIA is trading with SK Hynix now. It doesn't matter. NVIDIA was up$1.25 at 4 o 'clock. And then it ended up being down at 6.15 when we figured out that SK Hynix was down. NVIDIA started turning down. And you know what? I said to myself, this is nuts. All I know is ASML is talking about semiconductor manufacturers saying that demand is going to remain strong well into 2030 with equipment purchases. Yesterday, Michael Dell saying the same thing to me during the interview that we had as well. You know, yeah, any number of concerns, but demand is just through the roof.

12:26We can't even satisfy it. Perhaps the empirical data that ASML says and Dell gave you should trump the crazy, wild, drunken trading in SK Hynix. But right now, SK Hynix is more important. Look at ASML. I saw that. I said, that's even better than Mike Rod. But it's happening on a day when SK Hynix is down. Do you understand how ridiculous this market has become? Well, do you understand what you're saying? What that sounds like when you talk about how ridiculous this market has become? So what am I supposed to do with that? if I'm a viewer listening to you, Jim? Say that maybe we should be listening to Michael Dell.

13:04Maybe this is an opportunity. Now that all these firms have, you know, the sales force is getting upgraded 100 points later. Maybe that's late. You want to listen to Michael Dell? Because I can play a mic for it from yesterday. No, I'm saying that perhaps we listen to people who know, recognize that the market has to RBC, has turned hard against tech. And maybe say, you know what? I don't know. Hardware's not bad. Well, you're mentioning Lori of RBC who does downgrade tech today, right? Look, Lori has a splash. This is a nice splash, okay? In the end, after they come down, I want to look at them again.

13:42I know that the Korean market was wild and crazy for some time. And I'm just saying, David, that maybe the Cosby's big moves makes no sense, and we should be looking for opportunity. But right now the algo says sell. I think Tudor Jones is right about flows. And maybe mutual funds buying has stopped as of the end of September because rates are 5.3%. He said not until 27. We were supposed to party until 27. You got that wrong. Yeah. You were so busy doing that Dell interview. By the way, all right, you want some positives? Take a listen on Michael Delft talking about all the things coming at him and how he sees the world right now.

14:19All right. I think all these things are concerns, right? Maybe it's regulation. Maybe it's capital. Maybe we don't have enough memory chips. Maybe some of all of the above. But what we see right now is a lot of those are being addressed. And there's incredible demand. And we're still at the beginning of the S-curve of this. I mean, any cycle for technology is sort of a combination of excesses and incredible opportunity and skepticism all at the same time. And this is all in the mix. One of the benefits of having lived a while is having seen it before, and you have as well. Do you think this is a bubble?

15:04I don't think there's enough supply for it to be a bubble. And what we see from our customers is they're using what we provide them immediately, and they want more of it. And the things that you've talked about as sort of risks and challenges, I think those are mitigants to their actually being above it. You feel any better now? No. Look, I believe that we're in the fourth industrial revolution. I think we're early on, and I think the world's going to change. I think that when I listen to the banks, only Charlie Scharf from Wells Fargo yesterday even talked about the idea of how to use integrated AI.

15:43I do believe that at times the hardware gets a little too hot versus software. But I think that the people who are making the point now to buy software, where were they 50 percent ago, 70 percent ago? I'd say that this is starting to, you know, that Dell is more an opportunity than not. But I wouldn't put all I wouldn't buy it all at once because the call that works, the splash call, is going to be imitated tomorrow by other splash calls saying, listen, we ought to make the change, go from hardware to software. And all I'm saying is I don't want to play that game. I want to play the Michael Dell game, which is that we are in some some wild ass time.

16:18Technology is becoming more and more part of the economy. And I listen to the banks and they haven't even really figured it out yet. I agree with you. And by the way, when it comes to listening today and trying to understand where things stand in terms of technology, everybody's going to be listening for Anthropic today. A private company that I had mentioned so many times, of course, is perhaps one of the most important barometers of what's going to happen. They have a meeting later today in San Francisco, Carl. And everybody's going to be listening very closely to what we hear from them. Including SK Heinex treaters.

16:50Yes. Who know nothing. Nothing. Okay. They know nothing. Wow, haven't heard that in 20 years. They don't know what SK Hynix is from SK, I don't know, hybrid. SK Pastrami. Take a look at the free market here. BlackRock's Larry Finkel joined us in a few moments. You'll hear what he had to say on the call when we come back.

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21:49Watching shares of Netflix this morning. The Journal has a piece. The company laying off about 6 % of its staff. The biggest cuts there since 2022 comes on the heels of another report out of Kroger earlier in the week, as we mentioned yesterday, Jim. Yeah, look, I think that there are people who are just saying, you know what, the war went on a little too long. We don't really, we've seen people with a little less disposable income. It's not going to go back into the bottle. So let's take some action because things are just slowing down a little. Yeah, a thousand jobs, you know. Listen, there are going to be continued efficiencies sought in all these areas.

22:26Obviously, I sat with David Ellison in on cries last Thursday right over there. Certainly going to be plenty of potential cuts that are going to have to take place to deliver the six-plus billion in synergies that Skydance wants to do. And Wells Fargo, again, they're the biggest cutter of employment down for six, three years. And a lot of that's AI. So you're seeing AI playing a real role here. I know that it's out-of-fashioned in the next three hours. Yeah, I have no idea how much AI played a role in whatever Netflix is planning. But again, 6%. Not 20. I will give it this. It's an exciting market.

23:08There's news. Speaking of which, when we come back in exclusive with BlackRock's Larry Fink, don't go anywhere. Ahead of the open, let's hit the banks. Morgan Stanley, Bank of America, BlackRock, all with results. Jim, BlackRock is the standout as their AUM goes to$15.5 trillion. Clean, clean, clean. They have done so much organically. Remember, this is just organic. They're getting new accounts. Aladdin, their software program is doing incredibly well. They are the winner in an environment where you're trying to figure out BPS gains. How about 38 percent? You know, you're up 38 percent. That's game, set, match.

23:46We don't have to worry about all this other stuff. It's clean, and that's what I like best about it. Bank of America, if it actually opens now a minute and a half from now, down 7.5%. It's going to be the worst loss of the big banks so far in terms of the stock price. Cara, looking at the numbers, net interest income,$16.4 billion, up 8 % year over year. Non-interest income,$13.5 billion, down 2%. 100 basis point upward parallel shift in forward rates was estimated to lift the next 12 months NII by$1.4 billion in terms of outlook and guidance, just trying to sort of work through here and see where the disappointment may be.

24:24Well, thick down 17 was a great. Consumer banking, though, up four. And charge-offs, I think the best in a few years. Yeah, look, the plain and simple stuff where you turn the lights on, they made big money. That's why I hope it isn't this OCC. The treasury order. Yeah, the money laundering, fine. Yeah, but I read through the case. I mean, you really can. Again, if you're selling bank of America on this, this is the actual consent order that they agreed to. If you're selling bank of America on this, you're going to have to rethink. I think bank of America's gotten a little bit cheaper, but I understand it's not as clean as the others.

25:00Yeah, that was going to be probably the first peak below 50 since May. We'll talk to Moynihan later on this morning. Let's get the opening bell at the big bar this morning. It's VSR REIT based in Ontario celebrating a listing today at the NASDAQ and Times Square. Stewart's, a publicly traded private credit capital management platform. And at CBO in Chicago, it's Maine Management, an independent partner-owned asset manager based in San Francisco. Headline jam, I don't know, 30 points away from 7 ,800. We've been in this neighborhood for a while. Yeah, I mean, I think one of the problems that this market has is we're always so close to where the top is in the S &P.

25:38And then you look at the makeup of those that have done it, and it's, yeah, it's Meta, it's Microsoft, it's CrowdStrike, it's Palo Alto. There's 12 stocks that are responsible for most of the lift. Some of them are under fire here today. But it's not any of the ones that we're talking about. It's not BlackRock. It's not J.P. Boyd. J.P. Boyd is really big back. It's not responsible for much at all. Right. Just a few stocks. And then everything else is kind of in purgatory. And I keep waiting for purgatory to end. Because right now, we just forget. We're hostage charade increases. We're doing classical investing.

26:09When the Fed is getting tight, don't fight the Fed. Don't fight the tape. Sell. And that's really, thank you, the late Marty Zweig for that. But that's what's going on. We don't want to overthink it. You have so many stocks down because you're fighting the tape. So you don't really see anything about this period that's different or new. Look, I look at the numbers that came out this morning in CPI, and I just say, I can, other than mortgage rates rent, I can pretty much draw a straight line to the consumer, being the buck stopped with the consumer. And that's why you look at like a raw store. So that's the antidote to the textile numbers.

26:51Each one I can tell you there's an antidote to. But obviously it's just all flowing through. And the American people have, you know, they're piñatas. They're just piñatas because of this. Because these companies don't want to eat it. They want to beat the quarter. David, beat and raise means you are fodder. But again, if Sarah Eisenberg were here, she would remind you of all the different metrics that show that consumer spending remains strong. Well, the consumer spending is strong. But the people who are trying to save can't save. That's one of the reasons why I want Larry on. I mean, people are spending, but that's almost post-COVID.

27:31But in terms of saving, if you're making between$30 ,000 and$80 ,000, you're not saving. You don't have enough money left. And you're not being profitable yet. They're not being profitable. They're taking cruises. They're not going to four seasons. Yeah, well, real average hourly earnings down seven-tenths on the month. That's the sixth straight month. How are they saving? And if you don't have the wealth effect from stocks to fund your spending, that's going to be hard. Yes, I mean, look, rich people are making a lot of money. God, I sound like Marx. I really don't want to sound like Marx. It's just I'm looking at the data.

28:06I took seven courses on Marxism. Where did it get me? Although I did really well on this. The banks, by the way, guys, starting off in not great shape. No, it's not where it may. I was going to talk to Larry Fink in a moment from BlackRock, an asset manager, but Bank of America is down about 7%. I don't know, the big bond portfolio there that we remember talking about back in 23, of course, with the initial rise in rates and what that meant. You mean the unrealized losses? Thank you. Thank you. Is that still an issue? I mean, it's, I mean, what, 100 billion in paper losses on this print? It's part of the equation.

28:39But look, this is a market that wants other things, OK? Yeah. It's OK. It's a market that wants to look health care. Look at the Amgens of the world. I mean, they're going on nothing. There's nothing there. Except for the fact that they are not sensitive to the economy. Guys, really quickly, right before we get to Larry, just take a look at SkyDance, because it's going to be confusing to people. The stock is down almost 20 percent. This is not on news. This is on the issuance of those warrants that are going to those who own the public float. So 471 million shares float publicly. Remember the Ellison family, Redbird, the investors in Saudi Arabia and Abu Dhabi, they all bought$47 billion in equity at 12.

29:21They don't get these warrants. The warrants are exercisable. At 12, they have a cap to 30. There are 10-year warrants. and their work when you do the Black Shoals somewhere around$2,$2.25, maybe as much as$2.40 a share. They are being separated from that public float. That is why, and they will trade separately, that is why you are seeing that significant decline in Skydance shares. Don't mistake it for some sort of a news event. It's not. It is the issuance of those warrants to the public float. Jim? Okay, thank you, David. BlackRock shares rally. Thank heavens and financials rally today. Firms' assets hit a new record of$55 trillion in Q3.

30:05Asset managers also put a new client inflows, revenue, adjusted income, all above expectations. I also like what's going on with the lab, but we can get to that. Larry Fink, chairman and CEO of BlackRock. How are you doing? I'm good. All right. Look, I can start with a plus 38%. I can tell you the huge amount of money that has come in. It's tremendous success. But I have to tell you, there's a line from your opening today from the conference call. I'm just going to read it, which is that the first time in my career, and that's 50 years of career, I'm seeing genuine shortages of capital. Governments are running historically large deficits, while at the same time demand for private capital is rising across the economy.

30:47People need financing. This seems to be seminal to me. Well, I think some of that is some of our success. I mean, we are seeing demand for capital in all different segments of the economy. You know, every quarter when I'm here, I talk about the spectacular nature of the U.S. capital market. And we're just seeing more and more of the economy flow through the U.S. capital markets. I mean, even yesterday, we announced a big transaction with Humana, you know, and elderly care. Last week, we announced a very large transaction with AT &T. I know everything related to AI and data centers is sexy and appealing, and we want to talk about it.

31:25But more and more organizations are coming to the capital markets. BlackRock is at the center point of those conversations. You know, I like to say about our quarter, our year, markets move our assets, but our clients, you know, move our growth. And, you know, our growth this quarter. If you think about it, the U.S. equity market was flat in the third quarter. Bonds were down 3%, and we grew$205 billion. So we are seeing more and more companies come to us and try to find financing. And that's the issue that we are seeing. But let me step back and say, because I talk about this all the time. Yes, we are at a point now where we are starting to unlock private capital.

32:12So, Jim, you and I have been yelling about this, yelling and opening the private markets, opening this up. But at the same time, our U.S. deficits, which we don't talk enough about, are starting to have a serious impact. You know, we went from$8 trillion of a deficit in the year 2000 after 223 years. And national debt of 8 trillion, not deficit. National debt. Now it's$40 trillion. We grew$32 trillion in 26 years. So let's talk about that as a massive impact on the demand for credit. Our government is demanding more and more credit. The bond auctions are getting larger and larger and larger. Now, at the same time, I've talked about, I think even last quarter, we need to unlock private capital to grow the U.S.

33:04economy by 3%. You have the largest pool of capital in the world, basically. And I know that also, I notice more and more international investors are coming to the U.S. to invest. But, Larry, there is this concern when it comes to what is driving, in many ways, our economy right now and our markets. There's a CapEx. Right. The CapEx numbers, which we've never seen in our careers. Two-thirds of our economy is being driven. So what about this idea that there may be a shortage of capital? that some firms, maybe smaller than yours but still very large, are like, you know what, I'm full up when it comes to financing data centers.

33:41And that could be a limitation. And so this is why I speak about how we have to unlock new ways of financing this. You know, as a kid who started in Walters in 1976 on something called the Mortgage Back test that nobody ever heard of. Okay, we started that, and that was in a few billion dollars, now it's$15 trillion. And you're the only one. All these different bank quarters, I keep waiting for someone to talk about the compute. We have to securitize the compute. Every one of these banks has shied away from what they committed. Because a lot of places are pretty full in these. But if we can, we need to unlock this compute because, yes, the big hyperscalers can afford this.

34:27But the foundation of the U.S. economy is young startup companies. Every startup company is going to need compute. You're talking about the securitization effort, which you were part of that big announcement right here on CNBC with Jensen Wang. Yes. About creating a market that would essentially make a GPU a securitized asset. And so we had package them into ETFs and other ideas. Where are we in that effort? We are working with all the different hyperscalers, all the chip companies on securing more analytics and data. So we understand how long a chip life can last. And then once we understand that and we have good data to justify this, we can go to the rating agencies.

35:06We can secure credit ratings based on the value of the chip, the residual value of the chip. The H100, we know. We have a seven-year H100. What's the matter with that? Correct. And it's 10 years old. Yeah. So why don't we just move? Why are you the only one who's really speaking about this, which is just nuts? Well, I know Jensen's talking about it. I know. I know, look, I've spoken to every one of the chip manufacturers in the last two weeks on this. You know, AMD, Broadcom, you know, everybody's focusing on it. Now you have a Google having a TPU chip. You know, everybody is now creating these new ideas.

35:44But we're going to have to, if we're going to unlock this and create the normative that we could have the building out of our economy to the scale that we need, we have to do this. And we'll unlock a lot of potential capital, is your point. How long? I mean, this is a major effort. It doesn't happen in days or weeks. No, it's probably hopefully a year. I mean, hopefully. I mean, we're going to get the data. We'll go to the radio and work on it and start it off. And we're going to sit here one day talking about an ETF that's a securitized ETF. It's going to be a CBS. Yes, but because of I like that.

36:20But because of BlackRock's Aladdin, which, again, had 12 % growth again, because Aladdin, which is a private market analytical data company, having that, I think we will have the foundation to build from that. And that was the genesis why we bought pretty quick. And that's why Willis Parker would agree. Charlie talked about it first thing. There are jokes on the tape about collateralized chip obligations. Yes. And MBS got us into some issues years ago. Sure, they did. Why wouldn't this? It could. Keep in mind, the MBS market is a$15 trillion market. No one is saying it's always perfect. And so excesses happen all the time.

37:08But the foundation of the mortgage-backed security market has transformed housing in America. Let's be clear. We have, you know,$15 trillion of home mortgages being financed in security. $15 trillion. Okay, that took 50 years. There was an episode in 2007, 2008 where it became obscene and they securitized poorly. So there's no question that was an anomaly over the course of 50 years. Because I think over 50 years, other than that one moment, you saw basically a great market doing great things. I am not here to suggest we're not going to find some times where maybe our assumptions on a chip life, or maybe there's going to be a new technology that transforms it, that makes the duration.

37:55It changes the duration or the efficiency or the underlying value, one way or the other. But we should not run away from that. We should find a way to make this market work and function. And we should assume that there are going to be new technological changes that change that. But you, look, Martin Spalt, who I do not know, said something that to me is everything that you and I talk about. He said, I don't believe we can evaluate the investment environment as risk on, risk off any lower. No more trading. It's a whole new way of financing. It is not about, look it, I mean, here's a great fact that you went out.

38:29We've talked about this in the past. If you invested in the U.S. markets, let's say the S &P, over the last 25 years and went on a 25-year vacation, they didn't touch it. You came back, you had 11 % compounded return. If you missed, so that's about 6 ,300 days. If you missed 10 of those days of the best markets, your return was 6%. Okay, you missed 40 % of the return. Now, what's even more outstanding, out of 6 ,300 days, if you missed the 40 best days over the 25 years, your return would have been negative. Speaking of returns, Larry, I can get a pretty nice return now lending to the U.S. government at 10 years.

39:11You can. At 5.3 percent. You know, oftentimes when we see a move, as we have in rates like this, things break sometimes. We don't know where. We don't know how. How concerned are you about the move itself and how durable do you think it is? I think, actually, since the last financial crisis, I think the capital market has done a very good job of navigating credit. And I'm not suggesting there's not going to be bankruptcies, but even private credit right now, even private credit is showing about a half a percent of loan loss. OK, that's below historical average, even with all the issues on the variable fund.

39:45If there's going to be breakage, and we're starting to see rumors of that in France with our credit market. So it might be government markets like what happened in Greece or other places like that. And let's be clear, our$40 trillion federal deficit should be of concern if we don't grow our economy at 3 % or more. So it's about growing our economy. And this is what I'm trying to tell every politician. You know, there's a lot of rumors and fear about data centers. Most of it is on misinformation. Most of it is wrong. You know, whether it's use of water. You know, golf courses use more water than the data center.

40:28I mean, I can go on and all the different things. Wingfoots. But if we have a moratorium of some sort in this country, we will be in a recession. So much of our economy, as you said, David, is based on the build-out of this CapEx. But we all know the golf course. Why does it resonate? Because we have a lot of candidates who aren't listening. They point to whatever golf course is in their neighborhood, and they just say, it doesn't matter. It doesn't matter. But it does matter. Why can't that message get across? We need more voices. Let me just say right now, data centers are not the problem. They're creating more new jobs than ever before in terms of workers.

41:09I mean, the one thing that doesn't, you know, let's be clear. We're sitting with a 4 % unemployment rate. People should be saying this is fantastic by all historical measures. We have shortages of electricians, shortages of plumbers, shortages of welders. I had a group of 40 different health institutions at BlackRock 10 days ago. And before I started my talk with them, I asked the question, I said, how many of you have shortages of nurses? And 80 % of the health care systems raised their hand. We have shortages of workers in this country. We're not talking about the positives. Maybe since his election year, we're three weeks away from election.

41:50Most of it is about negativity. And there is a lot to be proud of. There's a lot of opportunity in growing our economy. Well, maybe it's, as the IMF said yesterday, it's because they think 40 % of jobs are going to be either augmented, displaced, or eliminated because of AI. I mean, it's not all about the water, is it? No, but there is going to be shifts in jobs. Like any technology, there are shifts in jobs. There are going to be some jobs that are going to be removed. There are going to be jobs that are going to be created. I believe countries that have, that had this demographic time bomb, meaning they were having shrinkage, are going to have a demographic blessing because they're going to rapidly use AI.

42:34Think about Japan. Japan has a debt to GDP of, like, 230-ish. Yeah, way above ours. Okay, 230. They have declining population and aging population. They have the opportunity to rapidly use robotics and AI to produce productivity and get out of their debt time bomb. So, once again, we're talking about the negatives. We're not talking about how this can supplement countries. Now, countries that, and the IMF represents the world. So, they have to be worried about countries that have rising population growth. So that's where I don't have good answers for those countries. Can I just come back to capital for a minute?

43:10Because I think it's certainly the center of so much of the conversations. You seem to be saying that this effort to securitize GPUs or chips is going to be consequential to allowing capital to flow, not just to the five biggest companies in the world. Am I hearing you right? The democratized compute, that is the only way it's going to happen. Keep in mind, startup companies don't have credit ratings. For them to compete, they're going to need compute. Okay, everybody's going to need some form of compute. These things are really expensive. But getting less expensive. But they're still very expensive.

43:44And so if we could securitize and package them and use an asset-based financing technique, then they have access. And so to me, the only way we could really broaden this and make this economic miracle a miracle for many is through commoditizing this. One last question. Are you changing your view that we can grow out of this problem with a deficit? I don't want to hear that. You're sticking with your view. I'm sticking with my view. I'm going to end it right there. Larry Fink, great quarter, great work, BlackRock. Thanks, guys. Thank you, Larry. As we go to break, watch bonds. Yields are higher across the curve.

44:21We almost got to 5-3-1-ish on the 10. That would have been a fresh cycle high, backing off a couple bips at the moment. Stay with us. On the back of that CPI number today, check out some winners in health care. UNH, Lilly, Merck, and Pfizer further down the list, up 2 % to 3%. Intuit! They're extending enterprise software to Intuit, which have a decent quarter. Yeah, Lilly trying to get past 12.10, which it's failed at a couple times so far this month. We'll take a short break. Dow's up 119. Jim, what's up tonight? Okay, so enterprise software, they're all moving. I'll make a prediction. I have work day one.

44:57You know Bushry is going to be incredibly good. I think the stock goes to 200. Does it go to 200 tomorrow? If Kospi's up, yes. No, I mean, let me be clear. This cost speed is going to be hardware. I think that Workday is a really great company. And Neil tells a great story. And people should recognize that these stocks were oversold, that this company was always good. They did have a transition to it back to the old CEO, Neil. And Neil, I think, and I can test this, David, I think you can too. Really one of the great tech executives. Not software, but great tech executives. So I can't wait to hear it.

45:28I thought Larry was great. I thought the show was really good. I don't think that this is the time to get really aggressive in anything. But remember, software has been up for quite a bit. You didn't just discover. Yes. Now it's been a huge comeback. Jim, busy week. We're chopping some wood today, that's for sure. Oh, man. We'll see you tonight. You've been listening to The Opening Bell on CNBC's Squawk on the Street. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.

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