9AM HOUR: Nasdaq Extends Record Run,  AI Trade Goes "Meta," Paramount Settlement 9/22/26

0:01Introducing Fidelity Trader Plus, the next generation of advanced trading from Fidelity. Customize your tools and charts and access them seamlessly across desktop, web, and mobile. For faster trades anywhere you go, try the all-new Fidelity Trader Plus. Learn more about our most powerful trading platform yet at fidelity.com slash trader plus. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration.

0:40Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. 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 Sarah Eisen, David Faber at Post 9 of the New York Stock Exchange. Kramer has the morning off. Coming off NASDAQ record close.

1:14Best day for S &P in almost three weeks on that MAG 7 strength. President addresses the U.N. in about an hour. Oil two-week low on some hopes for some revival of diplomacy between the U.S. and Iran. Brent's down five straight days, although diesel new high 653. Our roadmap begins with the AI trade going meta as the excitement over Muse helps drive the MAG-7 and the Nasdaq back to record highs. Plus, Paramount is all clear now to close that transaction to buy Warner Brothers after settling a lawsuit with a group of state AGs. We're going to take a look not just at the concessions, but what's next before they get to that close a couple of weeks from now.

1:53And Wall Street continues to monitor geopolitical risks. Oil prices, as mentioned dropping on reports that Iran is willing to reopen the vital Strait of Hormuz. This as President Trump prepares to return to the United Nations this morning with Iran, the global economy and AI anxiety top of mind. Let's begin, though, with the markets after that rally yesterday, including the Nasdaq's new record high. We talked a lot about Muse and Meta guys in your absence. Meta was responsible for almost a fifth of the S &P gain yesterday. It turns out a good new chatbot plus some lower oil prices is a recipe for a nice rally.

2:27I guess, David, there was a lot of skepticism around Meta and just what the AI strategy might have been. I guess so. You know, it's funny, though, Sarah, because people have been speaking very positively to me about use and also another agent workforce, so to speak, called Instinct. And, you know, I think any number of investors already assumed that much of that was in the stock price. And so I actually talked to a number of, I wouldn't call them frustrated because they still own Meta, but people this morning who are at least questioning sort of the efficient market and wondering exactly what they might have missed and thinking that everyone knew or at least many people knew and was already reflected in the market price of Meta, that news was a success.

3:07And yet I guess it took for it to be the top of the app store for people to or perhaps another group of investors, Carl, to say, hey, wait a second and send that stock even higher. Obviously, along with any number of other names, including I know you guys covered AMD yesterday, crossing the trillion dollar mark. The need for CPUs apparently in an agentic world is only going to increase exponentially, I suppose, is some of the view there and on and on from there. But, yeah, quite an interesting day that you guys were a part of yesterday with that NASDAQ move. Then the added wrinkles yesterday were Amazon sort of saying Muse is sort of not appropriate, doesn't comply with the terms of service.

3:47if you're going to shop on their site. And some discussion about whether Muse is bearish for frontier models and AI labs, because it's not cutting edge. It's not state-of-the-art, but it's so sticky, obviously. And you mentioned its performance on the App Store. Maybe that's the new standard for getting consumers to latch on. You know, it's not clear to me how many consumers need the frontier model, right? And that may be the point. But that said, I think there is still a business case that is being made by Anthropic and OpenAI and others that when it comes to the enterprise, you're going to want frontier models for certain things and you're going to be willing to pay plenty for it.

4:23But yeah, I mean, we're entering this agendic world. I don't know if, you know, you have two young boys still. I mean, you need one of these agents, Sarah, to go through your Gmail every day and tell you everything that needs to happen in your household. Are you using them yet? I don't use it like that. But my kids, my kids have active discussions like with Claude and ChatGPT all the time. But you're not using an agent. You're not using Instinct or Muse yet. I'm not using Instinct or Muse. Are you? I'm not. No, but I got nothing going on. What do I do? I got nothing. I'm old school. I still just manage a calendar in my outlook.

4:57That's the thing. They will do that for you and send you reminders every morning via text as to what you need to do, including things like, don't forget, today is whatever at the school and da, da, da, you know, those kinds of things. Yeah, maybe I'll forget less and miss less if I get that. And or even, you know, all those subscriptions that you don't want to keep and then they send you an email and today's your last day to opt out before we that kind of stuff. And you always miss them and use the credits and they're very useful, obviously. No, but I think this is the world that we are now entering.

5:25But maybe why what surprised people were just the level of adoption. You know, consumer AI has kind of been like how big of a business is it actually going to be and how are these companies going to be able to monetize it? And I think maybe the numbers on the App Store showed that, look, there can be greater adoption than maybe thought. And that's the meta play here. And, you know, ultimately the success story, it's free, right? But unless you're a heavy user, then they start charging for it. So it also takes meta off the advertising model a little bit. Yeah. By the way, you mentioned Amazon. I just want to say also Shopify, though, went the other way.

6:01Yeah. They're going to let users actually use Muse to make purchases. Yes. And Shopify's own stock has actually benefited pretty nicely. Well, that's why this tweet from Nikesh Arora of Palo Alto is so interesting. In his view, this is going to be a bigger battle, he writes, than anyone anticipates, because every app that's a service, that's a marketplace, a commerce app, is going to need to existentially decide whether you open up your API to consumer agents. Right. This one sort of conflict between Amazon and Meta is going to be replicated all over the Internet. And then what does that mean for the websites themselves when the agents can just connect through the API and then just do everything?

6:42Do they matter anymore? The agents? No, the websites. Oh, the websites. Yeah. That's the problem. Like all that stuff. Does it mean anything? Who cares? I don't know. And I don't know what's going to happen to the Internet when a billion agents are crawling over Expedia every day. I don't know. I think people see, for instance, the Shopify, not that that's the Internet, as this is actually a proof that it can coexist in a world with AI. You know, there was a lot of concern in Shopify about disruption and about whether you'd need such a platform. But this is actually an endorsement of the uses, the fact that Muse is going to be able.

7:16It's basically they're using the ShopPay, which is Shopify's one tap checkout service, which retains customers payment and delivery details to speed up future transactions and then lets Muse go in there and help you do that. I think the point, and they were trying to make this meta, that is, is it's controlled by humans, though. Right. It's not doing it on its own. No. But meanwhile, we're going to end up having a lot more competition, one would expect, with every company we'll have, you know, OpenAI, they'll all have their own set of personal agents or whatever you want to call it, sort of competitors to the likes of Muse and Instinct as well.

7:51Right. So that's the world that we're a part of. see what that all means. Each person stays in control of their muse and decides how much access it gets. Yes. That was critical. Like certain people are happy to give it your credit card information, but you don't want to give it your social security number. But we see how this goes over time. Think about when the first time came when you actually bought something over the Internet. We're old enough to remember that. Maybe you're not. Yeah. It's like, oh, my God, I'm going to share my credit card number. And now nobody even thinks twice about it.

8:18Yeah. Well, Well, it's much easier and faster. Yes, exactly. We're all willing to trade things off for ease and efficiency, right? But it also means that, you know, cyber spending, I think this is a conclusion of just the last few weeks. Cyber spending is going to go up, right, because of all these safety concerns. And now potentially chip spending as well, which is why we saw the AMDs and the Intels rally so much because of this new update. And I think this new sort of proof of concept that consumer AI chatbot adoption is actually growing faster maybe than expected. Final point for me on Meta, just with that move, there's still a lot of chatter around about will they at some point hit the market with an equity offering?

8:57I don't know. The last time I was sort of talking about this, of course, I was talking about it in likes of Oracle without having been fully informed at the time that they already done that at the market and raised 20 billion. That's not the case with Meta. That said, there is still a lot of Not a bad time to do it off of an incredibly strong day and narrative that they now have around this non-advertising part of their business that's obviously growing very quickly. The narrative problem is around the data centers, which affects, I think, Meta and some of these other companies as well. I know there's a lot of chatter, right?

9:30Delayed IPOs because of the data center political backlash. This just continues to be a political problem for some of these companies that are spending the most. We're going to talk about that in a minute. And by the way, MetaConnect is tomorrow, so we'll get a lot more granularity on their strategy, especially regarding AI. But blowing past 690, as we've talked about with Jim, got the 753 yesterday. They basically added a Pepsi in market cap. That's amazing. Yeah. Sarah mentions some delayed IPOs. It does appear that recent talk of an AI slowdown is impacting one data center firm's plans to go public.

10:07Published reports say SoftBank's SB Energy is delaying its planned IPO until later this year. company, which is also backed by NVIDIA and OpenAI, reportedly waiting for investor sentiment toward data center to steady before pressing ahead. A couple of weeks ago, David, it was Holtec that was delayed. So that's two. See if we get a third. Yeah, usually coming through, right? I mean, there's no doubt that there is a lot of concern about the ability to continue to build data centers, which really, you know, it's a powered shell, right? So that's what you're doing. You need not just the permit to obviously put the building up, but you've also got to get everything in place in terms of power to it.

10:43And then there's also need for water, although that, frankly, has in the newer data centers not been the issue. It once was a number of years ago. I would reference Greg Abbott, the governor of Texas, yesterday directing the Texas Commission on Environmental Quality to halt all permits sought by data centers until ERCOT, which is the Electric Reliability Council of Texas completes its audit. They require information to make informed decisions, he says, and no state agency shall move forward with regulatory approvals related to data center development until they get, until it's acquired, namely that being those audits.

11:25This follows his August 3rd memo in which he said that there would be, well, ERCOT was currently considering 474 gigawatts of requests to connect to the Texas grid, more than five times Texas' record peak electricity demand. Again, this was back in August. And he issued that directive saying that they must conduct a comprehensive verification and audit of all data centers. So just continuing that move where basically you're not going to get any new permits until those audits are done. We'll see how that goes. It also reflects that it's on the left, it's on the right, it's local, it's federal, it's Congress.

12:06I mean, the House, this didn't get a lot of attention, but the House did pass the Ratepayer Protection Act. And, you know, it doesn't have a ton of teeth, right? They just, they want states to basically consider federal standards about having power paid for. However, the important thing is that it passed 417 to 3, which I think speaks to just how widespread the backlash is and how much the appetite is high for Congress to do something about this. It's not a moratorium or anything like that, but it still shows the politics and how bad they are around data centers. And going to play a role in the midterms, one would think, which are, what, 44 days away now?

12:42Something like that, yeah. And then I'm sure you've seen Goldman leading a junk bond sale of some core weave tied data center debt. So some of that is yielding, you know, in the 11s, right? Somewhere in that neighborhood. That's a pretty big number. That's a pretty big number. Obviously, we've talked in general about with the move up, although not it's below 5 % today, obviously, in the 10 year, the cost of capital generally and how much that will change any of sort of the longer term, the longer term thinking in terms of return on that invested capital. I think they need to look into, you know, who is funding a lot of the backlash against data centers, because there are reports.

13:20I mean, Senator Tom Cotton has gone to the DOJ saying that there are alarming reports and that we should look into, for instance, the Chinese Communist Party. We've been talking about that, the fact that there are Chinese bots that may have been. Foreign influence, but also political groups. But it does appear that it may have been successful. In other words, if they were able to generate concern, that concern is now reflected in public opinion. Correct. It just would be interesting to hear why. And potentially prove that it's not all grassroots local opposition. I guess, but does it matter once it becomes grassroots?

13:56I don't know. If they've actually succeeded in making an issue. No, but I think Americans should know if it's like a psy-opt. No? Sometimes I wonder if you're a psy-opt. I'm not. Just a human, just real thoughts that are not AI-generated. Just a lady working really hard every day. So genuine. When we come back, David, with the latest on Paramount Settlement with those state AGs over its acquisition of Warner Brothers Discovery, one more look here at the pre-market countdown begins to the president's remarks. And he's got a busy day meeting with Takeichi, Burnham, Zelensky, Rodriguez, and more.

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15:11With higher predictability and greater access to credit, everybody wins. Get started at VantageScore.com. 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. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules.

15:53Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Welcome back. Yesterday, of course, it played out the settlement between Paramount and the state AGs that were suing it, saying its deal to acquire Warner Brothers was anti-competitive. We've talked a great deal about that, obviously talked a couple of times with California state AG Rob Bonta, who was leading the opposition to the deal.

16:37Many of the antitrust experts that I've spoken with, and as I've shared, doubted the ability of the state AGs to actually win in court, But that might not have been the point if you had gone as late as April when this would have taken place early April. The court case, it would have had a debilitating effect on the deal. And so after a lot of fits and starts, they were able to reach a finish line on a settlement that frankly appears to be more favorable to Paramount than some might have anticipated. With the belief, at least among some parties, that it would have had to include some sort of a commitment to divest cable networks.

17:13Not the case. and that's a good outcome for Paramount. I'll explain that in a moment. There is what they've agreed to, five-year commitment to release at least, and they've said they will release 30 films, but now they are obligated to do that or at least have a five-year court-enforceable commitment to increase the film output to 30 to 32 films a year, meaning a minimum, a billion and a half commitment as well to bolster domestic film production, another$47.5 million fund for workers who are impacted by the merger. An independent monitor, you saw that to oversee compliance and cable negotiations as well to remain separate for five years with that editorial independence board for CNN and CBS.

17:56But again, you know, the idea of having to sell cable networks at a far reduced multiple, that is EBITDA multiple, given where things trade right now. And sadly, the comp is our own parent company, Versin, versus being levered at six and a half times. The math just doesn't work. You'd rather take the cash flow from those cable networks to help you pay down what is going to be an enormous amount of debt, more than that in a minute, rather than sell them at a reduced multiple that is nowhere near your leverage ratio. Right. You get the math. It doesn't work. So they avoided that. Happily so. And they are going to avoid the ticking fee in large part.

18:32Maybe they leg maybe a couple of days, but we're talking a close that's a couple of weeks away. And that gets me to the second part here to remind people. $47 billion in equity financing. I mean, these numbers are kind of almost appropriate for the AI world that we all live in every day in terms of the latest financings around whatever it is, a chip deal or a new data center complex. But a$47 billion equity check,$22 billion coming from both the Ellison family together with their partners at Redbird Capital Partners. Most of that Larry Ellison, but certainly a sizable chunk as well coming from Redbird.

19:06And then$25 billion coming from Saudi, Qatar, and Abu Dhabi sovereign wealth funds. Remember recently the FCC actually raised the foreign ownership cap to 49.5 % from 25%, sort of an outdated rule it would seem in some ways. That was important here as well. And then you're going to have a$49 billion bridge that's going to be replaced and is already starting, the marketing for which is already beginning, to get the permanent financing, Sarah. Again, these are large numbers. Bank of America, Apollo and Citi all going to be marketing that debt for for permanent permanency, so to speak, for the forty nine billion.

19:46So they're going to close this thing. A lot of capital coming into place, you might expect. And then it's up to David Ellison to deliver. I feel like now comes the hard part. I mean, even after that crazy saga of how he won the deal. And I think to find what most people expected and thought would happen here. Remember how many people came on this show and said, it's Netflix's deal. They're not going to get it. They question the financing. They question the regulatory. They question the state demands and divestitures. And ultimately, they prevailed. But now comes the hard part. It's a challenged media environment.

20:21They've got the high debt. There's a lot of politics around CNN. Yes. And that I'm much more curious about, how they're going to execute on all that. That executing is key here because they have to secure at least, I think it's over six billion in synergies from putting this thing together. Again, given the debt load that I just outlined and the leverage ratio that this thing is going to come into the world with, it is incumbent upon them to deliver on a lot of that. It wouldn't be the first time somebody overpaid for Warner Brothers, Carl, if in fact that's what we look back and say, but we'll reserve judgment.

20:57Yes, not to mention the commitments to film production spending in the United States and the number of releases, which is now getting parsed. Is it is it being made? Is it just distribution? Is it one studio? Is it two? Right. Complex. Yes. In addition to just running the business. Take a look at the pre-market here. We'll get a look at this open in just a few minutes when Squawk on the Street comes back. 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.

21:34and 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. It's the holiday season at House of Burl, which means that it's the perfect moment to review some key rules. Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended.

22:13And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington. Computers are getting smarter, Silicon Valley's getting weirder, and AI is taking over. At least that's what everyone keeps telling us. Welcome to Machine Gods, a new NPR podcast that will be your field guide to the AI-powered future. We're veteran tech journalists with front row seats to the industry. And twice a week, we'll make sure you get smarter about AI, so you know what's real, what's hype, and what might come next. Listen to Machine Gods from NPR on the NPR app, or wherever you get your podcasts.

22:52McDonald's stock down about 19 for the year. It's the third worst Dow name of 2026, lowest since 2024 now. But tomorrow is Investor Day, and we will talk to Chris Kamchinsky tomorrow about McDonald's next, their plans for growth, how to redo the menu, just what's going on all over QSR. In the meantime, the opening bell a few moments away. And don't forget, you can catch us anytime, anywhere. Just listen to and follow the Squawk on the Street opening bell podcast. All right, with the opening bells just moments away, let's bring in closing bell overtime co-anchor and senior markets commentator Mike Santoli with a new column today.

23:27Hard to believe the S &P 500 now less than a percent away from a record high. Yeah, and the last one was mid-August. It was a marginal one. We've traded around these areas from June. What was interesting yesterday is NASDAQ Composite gets to a new high. That was its first since June. So you have a little bit of this kind of rolling first in, first out dynamic where semis peaked in June. They had their nasty reset lower, 30 percent drop. They've been fighting it out. A little bit of a potential technical hurdle cleared there. So I think that was part of the story yesterday. It was hard, though.

24:00And you see the Nasdaq 100 versus the Russell 2000 has completely kind of taken control of the overall tape. And that's really the old leadership, not the more recent one. And yesterday's action was a little bit, I don't know if it was overheated or if it was a little bit grabby. But it was after Friday's options expiration, people felt underexposed to any blip to the upside. Once meta started going and oil was down and everything was working, you found a real chase. So we'll see if that continues. Today's a little more standard kind of activity where yields down, oil down means small caps can get a little bit of it back.

24:37But the meta move, I definitely think, caught people offside yesterday. Mike, don't go anywhere. Let's get this opening bell this morning at the big board on Wall Street. It's the Water Resilience Coalition, hosted by Water Tinker and Hygiene Company, Ecolab. At the Azad and Times Square, at the outdoor ad company, Lamar Advertising, celebrating 30 years. And at Seabow in Chicago, it's Women Investment Professionals, a nonprofit focused on advancing women in the investment industry. 77-71 here at the Open. Mike, the other thing about yesterday was it's not that often where you're 1 % from highs and there are more 52-week lows than 52-week highs.

25:16Yeah, there was definitely a little bit of funky action below the surface. There were 160 new lows on the New York Stock Exchange, fewer than 30 new 52-week highs. And that does just show that what's been going on for a few months now is you've had this pull lower on the cyclical sector. So, yes, macro has definitely had its gravitational pull on consumer cyclicals, on industrials, on banks more recently. And I think the market's been fighting through this idea that there might be some macro chip wires. We got through the Fed. Turns out, in retrospect, the reaction to the Fed was a good downside shakeout.

25:50It definitely did not really create a comprehensive rethink. And with oil down and longer-term yields being tame, I think it takes a little bit of the edge off the hawkish message, at least for now. I think we have the market that definitely resets sentiment to a fair degree. Positioning among professionals got a little bit more cautious. And so that's why you have a kind of cleaner setup going into earnings season. This market wants to be in earnings season. It doesn't want to be in macro oil Fed type of an environment. 36 percent earnings growth for 2026, according to Goldman Sachs, which is actually pretty stunning.

26:27And to your point, the market's taking these hawkish comments very well because we don't have a lot of macro economic data to chew on this week. But we do have Fed speak. And yesterday, you know, Goolsbee, he was talking about overheating demand. And how if the through line is that it's coming from overheating demand, I think the implication is that a rate response is more aggressive and more front loaded than it's coming from supply shocks. So they're not just talking about high oil prices and supply shocks. They're talking about overheating demand. And the market is seemingly OK with it. Moussalam also, I thought, was pretty hawkish.

26:57We'll hear from some more voters today, including some hawks like Beth Hammock. I mean, they're talking like it was a 12 to 0 unanimous decision to hike. And I agree with you. The market is taking it well. The two-year note yield is staying by the highs. So it's not as if the market is saying, we don't believe they're going to have to hike a little bit more. They're saying, if they do, it'll still be a relatively limited number. It's going to be a mini cycle if we get it. And I think, you know, bigger picture, there's this other bullish talking point that is, the Fed is now not going to out-hawk the market.

27:30You've heard this a couple of times from the sell side. Basically, we got priced for a few hikes. and the Fed is unlikely to try and force the market further hawkishly than that. And so, therefore, the direction of surprise is maybe they can wait, maybe they take a couple off, maybe it's not going to be three. I don't think three would matter. We're not talking about punitive levels, but it is still interesting, and maybe the market's going to have to contend with this. You still have a Fed chairman who on Wednesday said we are removing a dose of accommodation. That means there was more than one dose of accommodation.

28:02That means he also said financial conditions are nothing close to tight. Maybe they have to get tighter. NASDAQ making new highs. VIX below 15. Not getting tighter. And yields going down is not financial conditions getting tighter. It's not today's business. I think that's why, you know, you can kind of link to the revival of the AI story, the fact that you still have some MAG7 stocks 10 % off their highs like, you know, Amazon and Microsoft, that they hadn't fully participated. And that's where, you know, the latest little dose of rotation has happened into those names. Meanwhile, today, B of A raises its forecast for Brent for the rest of the year.

28:40J.P. Morgan looks at food inflation. They've been pretty hawkish on next year. And then Jamie Dimon had some comments about where inflation may take us in the coming, say, 12 months. Take a listen. Of course you're data dependent. I mean, can you imagine the Fed saying, I don't care about data. We're going to do whatever we feel like. But I would say, what is data? Is data like today's data, monthly data? The data itself is not good because if you look at it and you actually analyze it, you say, I wouldn't rely on those adjustments and how they come up with. Is it the past six months? And what about data that's kind of we know about, but it's in the future?

29:15Remilitarization, infrastructure spending, AI spending, ongoing government deficits, because those will affect inflation too. So part of that inflation number may be the die has already been cast. It isn't about what the Fed does next raise. And so, and of course, they have to react to what they see. So we'll see. I'm hoping that inflation stays here and starts to come down. I don't bet on that. I think there's a chance it won't. And it may even go up a little bit. By the way, quick programming note, Leslie Picker will have an exclusive with B of A's Brian Moynihan on Closing Bell tomorrow, 3 p.m., 3.45 p.m.

29:49Eastern time. He'll be joining her live from B of A and Mass General Brigham's World Medical Innovation Forum in Boston. where the commentary certainly has been resiliency out of the consumer in nominal terms. I mean, Brian has been consistent on this for a long time, even at times when Jamie Dimon was very negative on the economy. And the resilience has shown through. And he points to things like credit card balances. They have obviously a great look at consumer balance sheets and deposit data and continues to show growth there despite some of the volatility around inflation and high oil prices.

30:24A couple of weeks ago when I sat down with Ryan McInerney, the CEO of Visa, same basic. And Wells Fargo CEO, Charlie Sharpe. Same basic thing. We've been hearing it from various people. That said, Mike, the banks, it's notable how much of the lead they've given up. For much of the year, they were outperforming the S &P no longer. Definitely. And it's part of the story of the commentary from last week, what might be going on with the yield curve, And just this notion that the second quarter was kind of a wild level of everything going right, not just for the banks, but especially for them. And, you know, you've seen a bit of a of a lull off of that.

31:01You know, it's really interesting that there's this chart that's going around from Bank of America also that for all the fear that equity supply would swamp the market with new IPOs, IPO proceeds have not kept pace with the volume of take private LBOs. So in other words, there's been a net removal of equity from the public markets, even though everyone was expecting it to go the other direction. So, you know, the banks still look kind of OK. They're still closer to their highs than a lot of the other cyclical sectors are. But it's one of those things where it's almost like you had to have a little bit of a crisis of faith hit those.

31:38People didn't think they could hide there anymore. And I just always think of it as part of this process where, you know, people have to be shaken out of their comfort zones and their complacency in certain segments. And maybe it's just a temporary thing. But that's what's gone on, I think, with the capital markets levered banks in particular. One, I was just going to point out a mover, which is on running because, you know, they had that big news on Mbappe and then they also had their investor day. And they put out some really aggressive and positive long term targets, three year targets for the company.

32:08high teens growth, for instance, 65 % plus gross margin, 22 % adjusted EBITDA margin plus a$1 billion buyback. So that's definitely positive. If you look through the commentary on Wall Street, maybe a little bit on the third quarter numbers coming in a little less than expected with only 17 % growth expected versus the 19%. But I think the long term is what's keeping investors happy on On. Also, this move to get Kylian Mbappe and start a soccer business. Actually, CNBC Europe had a chance to speak with Mbappe. They interviewed him and here's what he said about breaking the relationship with Nike and going to On.

32:49It's a process. Of course, I had 20 amazing years with Nike. I can only say thanks to them. But I think as a person, as a player, wasn't the time to change and when I saw the project of On, the value of the brand, the people around. In my mind I was like, okay, it can be the brand who makes me feel comfortable and when I want to spend the next 10 years of my career. And after we start to talk and after every discussion I was a little bit more convinced about the fact that I have to be part of the family, I have to be part of the project, to be part of the journey, of the start of this journey with online and football.

33:31and yeah, it's such a privilege to be here. It's a big step in my career and my life also and I'm really proud to be here today. Mbappe talking about his new partnership with On and clearly investors not thrilled about it on the Nike side of things. I talked about this a few days ago, which is Mbappe resonates with young consumers. He is the next gen on global soccer stars and yes, Nike has other stars. I mentioned Tallinn, for instance, But I don't know at the level of the power of Mbappe. And from what I was told around all this, Nike let him go. They did not fight for him. You reported that last week, yeah.

34:09And it wasn't like On stole him. But clearly now On has to execute when it comes to growing an entire soccer business off this athlete. It could be if they do a good job, he's the guy. If they don't, it's like Seth Curry, you know, Under Armour. Yeah, Under Armour 2013, which was massive and splashy and worked for a while. It was successful for Steph, not necessarily long-term for Under Armour. Right. For years, it was fine for Under Armour. I did want to get back to the AI trade, so to speak, if I can. But this time, take it to China, because we're taking a look at shares of Alibaba. They introduced a new chip yesterday that they say delivers three times the performance of their previous generation chip.

34:48And can be put into clusters that contain as many as half a million of the chips, which will allow them to train their latest frontier model to go from 2.4 trillion parameters to as much as 5 to 10 trillion parameters. They're also talking about Alibaba Cloud getting to over 20 gigawatts of global data center capacity by 2032, so a little more than five plus years from now. That's a pretty big number. That brings them right up there with any number of, or close to, any number of our major players as well. Some other announcements as well about recursive self-improvement from Alibaba, where they said, and I'm quoting you, they've identified their own, they made progress getting models that can identify their own weaknesses, design experiments, and generate trading data with limited human involvement.

35:43And you were talking earlier, Sarah, about whether there's been Chinese involvement in fomenting dissent here in this country around data centers. You think it doesn't matter? Well, I mean, it may have been successful, is what I'm saying. But that said, the Chinese continue to move forward as well without the latest chips, but developing their own, whether it's Alibaba or Huawei or others in that country that are doing that. And obviously that race is on as you take a look at the president getting ready to arriving at the U.N. His meeting with Xi Jinping, of course, is going to include a lot of people expect perhaps a lot of conversation around A.I.

36:23Accompanied by his wife, of course, Melania, the first lady. Nothing scheduled between in terms of bilats between the U.S. and Iran, although Secretary of State was interviewed by NBC today, said he would be open to it. I think the president actually echoed those remarks. So we're definitely watching his schedule today to see if they squeeze in a pull aside. Yeah. I mean, I think that's just the air of diplomacy is maybe giving the oil market a little bit of optimism here. We have seen, as you mentioned, five straight down days of oil prices. The incredible resilience of the Saudis, I think, in trying to being able to figure out how to get oil out.

37:01reports overnight that they're going through the Strait of Hormuz, even in this kind of precarious time, and that maybe they'll be able to open the East-West pipeline. I mean, I read a Goldman note this morning from Jan Hatsias, who said that their oil guys are saying that it's 80 percent back in terms of what's flowing through Strait of Hormuz and oil in general. And so that's why you're seeing some pressure on prices. It's hard to confirm. Saudi production is down dramatically, though, from what it was a year ago. And it's still about distillates. I mean, we've got Grassley now pushing for a diesel export ban.

37:37Ashley Hinson, Mike Rogers all saying, let's stop sending diesel to other countries. Yeah, and I think there was some chatter yesterday that, in fact, you might even see a little bit of demand softening in response to prices where they are, which would flow through to crude. I think the question is whether it's kind of a timeout during UNGA, in terms of frictions and hostilities over there, or if there's something that's going to be durable that comes out of this, that loosens up supply. I do want to get you on Lenar today and Berkshire buying 10 % after their Taylor Morrison buy. It's interesting.

38:11It's not a big number for Berkshire, but pretty significant for Lenar. And it's funny because they've always talked about how, well, we don't look for sectors. We're not looking for thematic things. But they keep coming to housing. and housing related. It's already kind of a big franchise internally. And I don't think it's dirt cheap. Like if you looked at it historically, price to book and all that, Lenar, but, you know, kind of shows that there's something going on where, you know, this is a sector that's been out of favor for years. And demographically, it's not, you know, necessarily going to get any worse from this level, or at least in terms of, you know, loosening up the whole turnover rate.

38:54So at this point. I guess it's the other small takeaway. Finally, guys, just a quick, I know I spent plenty of time talking about Paramount, but it is the share piece, guys, about 4.5%. The one thing I did fail to mention, and it's important here, is that$47 billion equity raise, remember, as much as$25 billion coming from those three sovereigns in the Mideast, the rest from the Allison family and Redbird. They're buying the shares most likely at what will be$12 a share. Take my word for it. Most likely 12. It was a 12 to 16 range. It's based on a weighted, 20-day weighted average of the trading, it's going to be$12 a share, it would appear.

39:28Just to put that in perspective, the stock right now, after two strong days, or at least a strong 15 minutes right now and yesterday, is trading at$10.50. Also, some of the consumer names are doing well this morning after oil prices continue to decline. Yields also come off the sort of high levels. That's helping some of the other homebuilders, some of the cruise lines on oil, the airlines near the top of the market. You know, it's been kind of one big concern around high oil. And Meta holding its gains is the other piece. That isn't doing a whole lot, but it's holding the gains. And, you know, I was saying after the close yesterday, if part of the story for some of the AI trade is, you know, a lot of buildup of skepticism, it gets burned off in terms of people feeling like they don't own enough and maybe the story is turning.

40:14Meta probably has more of that reservoir of skepticism built up than the rest. And so the valuation got low. So we'll see if this is just kind of a quick little mean reversion move or something more than that. And yesterday, it was also the CPU semi-names and everything else. So this idea of like it was an AI consumption theme a little more than the pure infrastructure. But I did speak, Mike, at the opening of the show of frustration on the part of some who thought much of the news already was out on Meta in terms of the success so far of the launch of its Muse product and failed to realize it had another at 11 plus percent, perhaps just from that headline alone.

40:55I feel like there are times when a full weekend, everyone keeps kind of citing it's one in the app store, it's first in the app store, and it has this sense of momentum about it. Plus, you have the, you know, their event coming up. Zuckerberg's done a bunch of press, there's been these profiles. So it feels like they're loaded up for something that at least is going to address some of the investor concerns that have been out there. By the way, did you see that? Like an equity offering. It could be that, too. Speaking of the U.N., I know we're awaiting President Trump's speech, but that both reports said that both Anthropics head Dario Amadei and Sam Altman of OpenAI will be addressing the U.N.

41:31Security Council. I'm not sure in person or remote, but, you know, clearly, A.I. is the topic du jour as we wait to see whether anything can come out of Trump and Xi. Alibaba's update, David, only highlights the fact that they're not slowing down and they're not putting any kill switches or guardrails. What was the report today about a probe into DeepMind? That sort of break? China looking into it? Nobody saw that? All right. It felt as if it was something that would be like, you know, Kind of a move as a gesture ahead of the Trump-Shee meeting. We're also paying attention to this. Right. We did get another piece yesterday from OpenAI about building standards for the next phase.

42:17So that continues. Maybe the U.N. Security Council will do something about it. Doesn't do much. I can imagine how you feel about the U.N., Sarah, yes. My thanks. By the way, our bad. It was not Ecolab that rang the opening bell. It was ChargePoint earlier this morning doing the honors. Want to make sure we get that right. CHPT, which has had a pretty nice year so far for 26. Watch bonds as well. As Sarah said, the Fed speak continues, if not a lot of macro did. Although ADP, now four-week average 20K, is about the best since midsummer. Ten-year, 4.95. Stay with us. Watch Netflix on Friday. We talked about that downgrade out of Wells as they went to underweight.

42:58Today, HSBC actually cuts to hold. Target is 76. Their prior was 96. The thesis is that YouTube continues to expand its share. In their words, at the direct expense of Netflix, shares down about 1 percent. We'll be right back. The president slated to address the U.N. General Assembly after the top of the hour. While we await his remarks, let's bring in Megan Casella at the White House to talk about what he might emphasize this morning. Morning, Megan. Carl, good morning. That's right. We have gotten a little bit of a preview from the White House on background from a White House official about what we expect the president to hit when he starts speaking at that after.

43:33That's Brazil's president there. Once he wraps up, we expect President Trump to take the stage. A number of highlights here to bring you the president expecting to discuss using America's power to reshape the world to America's benefit. He'll mention Iran's nuclear program, cartel violence and Greenland as well. There is a trilateral signing with Greenmark, Greenland and Denmark later today. And one interesting point to me from this White House official was that the president will be highlighting efforts to prevent the U.N. from, quote, infringing on American sovereignty or, quote, imposing a radical left-wing agenda.

44:03Guys, I highlight that one because, yes, the president is giving this speech, has traveled to New York to speak to the United Nations, but still maintaining and emphasizing, as he has throughout his term, that these multilateral organizations are not something that the United States is particularly pleased with these days, guys. And the speech is really just kicking off what will be a jam-packed day for the president. We expect a number of bilateral meetings after this, that trilateral signing that I mentioned, and a hugely important, what could be consequential meeting between the president and the Gulf leaders as well, with so much going on in the Middle East.

44:33Lots to watch with that one as well, guys. Yeah, I think one question investors might have into this speech is, will he signal anything about what comes next with Iran? The war there now, almost seven months old, and questions about, you know, whether the economic pressure is working and as accomplished, you know, as what he wants to accomplish, what he might do about the Houthis, reports that he was considering an attack there after they attacked Saudi Arabia. I mean, there are some real unanswered questions. Real unanswered questions. We definitely expect the president to talk about Iran, but it's not clear to me, and I wouldn't really expect major policy announcements as to the path forward in this venue.

45:11With so much going on with the Houthis, the new front being really opened up in Yemen, and so far the president hasn't been willing to join the Saudis on that, despite some discussion from the Saudis trying to get him to do that. I would think maybe that Gulf leaders meeting is where we expect more on that later today. Yeah, definitely a full docket this morning, Megan. We'll come back to you all day long. Megan Casella at the White House. 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.

45:48You 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. It's the holiday season at House of Burrell, which means that it's the perfect moment to review some key rules.

46:19Rule number five, more style means more celebration. Number four, buy gifts, but remember to treat yourself too. Number three, there is no dress code, but always leave them talking. Number two, show off different outfits. No party remains unattended. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington.