9AM HOUR: Stocks Rally As Oil Retreats, Huang Slams AI "Doomsday Narratives," Paramount and WBD Surge 9/21/26

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0:39and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

1:09Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Kelly Evans and Mike Santoli at Post 9 of the New York Stock Exchange. Cramer in favor of the morning off. Dow is coming off its worst week since March, down three weeks in a row. Looking for a Monday bounce here as the U.N. General Assembly and the China summit might offer some policy catalysts. Ten-year 496, oil's below 98, although diesel continues to decouple, now higher for 13 consecutive sessions at$6.51 a gallon. Our roadmap begins with the street awaiting the president's coming China talks. The two leaders set to meet this week to discuss a range of issues, including energy and AI.

1:45Chip stocks rally ahead of the open as Secretary Besson sees a successful start to talks. Plus, Nvidia's Jensen Wang rejecting AI extinction warnings, calling them doomsday narratives and saying there is a, quote, 0 % chance AI destroys the world. And we are watching crypto markets this morning as Bitcoin hits its highest level since January up in the mid-80 ,000s. Let's begin with the markets on track to kick off a new week with a strong open. It's a treat to have Kelly in. And viewers might not remember, we used to do this show together when we were all a lot younger. I was almost going to ask them to pull the tape, and then I thought, maybe not.

2:21But I will say, it is so nice down here now. I mean, in this, I know, exciting day, there might be some special people this week for the UNGA. But, wow, downstairs, upstairs, everywhere? Slowly, most of our demands are being met. So, you know, we'll see how it goes. Mike, as far as the Open goes, we were discussing before the show, So tech's trying to do a lot of work here and saving the broader market. Kind of the story of last week, and maybe it's going to persist into this morning. You know, it's been this debate. You've had the average stock actually kind of underperformed for a few weeks here.

2:53The eco-weight S &P has struggled. You obviously had that downside test after the Fed press conference that, you know, seemed to actually put in a little bit of a low in the S &P 500, around 7 ,500. But you have pronounced weakness in all the cyclical parts of the market, at the rate sensitives, transports, utilities across the board as well as banks. And now the question is, does that mean we narrow back out and rely on MAG7 and AI-related stocks? That's been kind of the story. At least it's kept the S &P 500 sort of in this range that was defined by the, you know, proximity to the August highs.

3:28It doesn't necessarily seem like we have any kind of escape velocity off of that, but it's been remarkable how it's been pockets of weakness offset by pockets of strength. And I think there's an argument that the AI, you know, kind of doomerism drama has created this sense out there that, look, we've been dealing with this for a while. We've actually sort of discounted some of the long-term earnings power of these companies. And maybe MAG7-type platforms are going to be net beneficiaries. They're going to figure it out. Maybe the spend can ease up. And they can just exploit what's happening. I think what's happening with MET is very interesting here.

4:03I don't know if we have to be excited about the Muse product or not, but the stock has started to act better. I've got some stuff. Did you see the Amazon stuff today? No, no, no. Do we, you want to talk about it now? No, no, no. I mean, I think Amazon is trying to say, hey, we're not going to let Muse just shop randomly. Oh, you mean Amazon versus Meta? Is that what you mean? Yeah. Yeah. On the Muse product. What? Lay it on us. Listen, I'll save it for, let me talk about September 1st. Sure. We're starting the last two weeks, are we not? Yeah. It is supposed to be spooky season. So we've come into, where are we on the month so far?

4:33We're still, you know, this was the big concern. Everything that you've thrown at this, we did get the rate hike. That was maybe seen as the catalyst. And that afternoon, it looked like, to your point, Mike, that that was going to be where the sell-off came in. But I don't know. Here we are now. It's a stronghold. And no one even knows why. They say, look at everything that came out after the bell on Friday. You had Anthropic. I don't know. We don't have the S1 yet. We were thinking maybe we'd already have that by now. They're talking about, you know, revenue. November. And yet that whole part of the trade, the AI supply chain, still trading pretty well this morning.

5:02Yes. Now, in terms of the month to date, so the equal weight median S &P stock is down three and a half percent. It's down five percent off the highs. The S &P itself is closer to flat last week and on a month to date basis. So I think that's part of the answer. Also, just look at yields in oil. I mean, that's kind of just taking the pressure off today. Do you mean yields in oil or do you mean yields in diesel? Well, oil actually, I think, as the macro toggle for equities, I think it's much more just a stand-in for, you know, kind of disorderly commodity. But diesel is much more about how parts of this market are performing.

5:41And that's where the friction is. So that's why the consumer cycles, the transports, and all that stuff we talked about is struggling. Still, I think it was Nick Hollis or whomever this morning talking again about that relationship between oil and the 10-year. It's so tight. It hasn't always been this way. And you just wonder, look, I don't know if it breaks to the higher or to lower, but if and when it ever breaks lower, if we do get some positive developments, there's the relief on the long end you're looking for. I mean, it's interesting. Page one of the journal today is not so much about crude as it is about tanker rates, which are now a million dollars a day.

6:12It's essentially a quarter of the value of a crude, a boat full of crude. The problem is a lot of boats have something else. They have helium. They have fertilizer where it's not as lucrative a cargo to pay for that kind of shipping. There's a look at what those rates have done over the past. You can see the convexity. We kind of knew this day would come. It's arriving. Well, you throw in, and Sully's been talking a lot about this, but you throw the insurance rates on top of that. The interesting thing has been Saudis, with all the issues about the east-west pipeline being hit, apparently have been able to get more crude out through the strait.

6:45So that's helping to some extent to keep the oil price from doing worse right now. Yeah, I mean, I don't know if it's a matter of the market is resilient to those concerns or it's just trying to localize them. I mean, I think that has been the story of how this market, which has this kind of, you know, clockwork, mechanical, rotational energy behind it, how it essentially says, well, if that part of the market's weak, we obviously have to buy the other part. And it's almost mechanized in that way. It works till it doesn't work. I know there's this really interesting debate going on. You've got Jonathan Krinsky of BTIG out there.

7:19He's been a little bit net bearish for a while. Doesn't think you can have all these parts of the market fall away and spare the S &P 500 itself. So he kind of thinks to be a catchdown move. The momentum stocks, interestingly, had a good week last week. We had this momentum washout in July. And the other side of it is, I would say, more like the Jeff DeGraff side of things at Renaissance Macro, who's saying, look, the majority of the market is starting to look oversold and washed out. They can bounce. Give the other guys a rest. I mean, I know it sounds silly to feel like you're anthropomorphizing the market this way, but that's how it's behaved.

7:53Now we anthropomorphize everything. Now we talk, you know, you try to talk about AI and what they are doing, and you say you can't call them they. There is no they. Well, you have to talk about them as a group to some extent. Mike, you talk about pockets of weakness. Goldman got some attention last week. Yes. Worst week since April. For sure. I think it is due to bounce relatively strongly this morning. And I think that was another part of really challenging one of the, I think, bedrock core bull cases of this market coming into the year, which was capital market strength was going to override everything.

8:28If you took what Goldman said about maybe some softness this quarter in fixed income commodities trading, you layered on top of Bank of America saying, you know what, investment banking fees not so hot. And it reinforces this notion, which I think the whole market's been dealing with was, wow, the second quarter was everything working, guns blazing. We're not there now. You know, we've kind of come off the boil of that. And I think the real debate is whether this is just a lull or whether that was kind of as good as it gets moment, at least in terms of how much the market was going to give credit to the AI momentum and the capital markets activity around it.

9:02But that's exactly it's all related. You know, if we're talking about where is the Anthropic IPO and where you'd think, look, you have strong economy. Pretty much you have all time high stock market, more or less. This would seem to be the kind of environment that would be great for deal making. And yet they're talking about everyone thought the kind of bust period would be into next year. And now is it already arrived? The delays in these big IPOs. Again, I'm not trying to overdo the delay aspect. They're still coming, but they're just not here yet. But Anthropic in particular, that is weighing.

9:32Yeah, I mean, you know, if we talk about the second quarter kind of peak excitement moment, it did coincide with the SpaceX IPO. I mean, you did have that's when retail kind of aggression in the trading activity did peak and all the rest of it. I do find it interesting, though, how coming into the year it was like, wow, can the market handle all the supply of the new IPOs? And now it's, oh, no, what if the big IPOs don't happen? You know, what does that tell us about the market? So I think, you know, you kind of always are going to find something to worry about there. One last coda while we're in the neighborhood of financials.

10:01We've talked about AXP in the last few days. There seems to be a debate, I guess, maybe with you, Mike, about whether it's a tell-on consumer and the discretionary sell-off that we've already seen in some names or the ongoing expense battle in the credit card business. Yeah, I do think for American Express in particular, it does seem as if people are a little bit sensitive about margins because of all that marketing spend and because how cutthroat the kind of rewards arms races. in credit cards. But I think in general, you know, the whole consumer spending food chain has definitely come under a little bit of pressure.

10:39It's interesting because, you know, Kelly, the Fed last week, the whole projections, the summary of economic projections were universally, we have a lot of economic momentum. That's why it's going to justify further hikes from here, et cetera, which at least leaves the direction of surprise toward we get a little soft patch here. I mean, not to say that it's going to be recession risk, but it's much more about maybe you have these lagged effects of what's been going on in terms of oil and rates. And quickly about AXP, sometimes it's also a small business tell. And, you know, it's one of those areas.

11:09I remember going back to 08, one of the early warning signs that that big slowdown was hitting was actually that American Express started talking about small businesses were under some pressure. So this kind of environment, look, small businesses are the ones that just had rates raised on them. Yeah, yeah. You know, they are the ones who are exposed to they themselves might be paying higher fuel prices. They might have that consumer on the margin. So I think broadly, yes, there's a lot of strength. But just in pockets, I'm sure people this is one area where you might get a little bit of a tell.

11:34I mean, it's interesting. It's the fourth worst Dow name of the year. AXP. Let's move on to some continuing fears over A.I. NVIDIA's Jensen Wong over the weekend refuting the doomsday scenario in an interview which aired yesterday on CBS. Yes. I believe the claims of the end of the world, stirring fear across America,

12:03and doing it by the people who are doing it makes no sense to me. So they must be doing it for ulterior reasons. I don't know what is the reason for it, but however it's characterized, 2030 is not going to be the end of the world. There is zero percent chance that's going to be the end of the world. And so I think that scaring people is unnecessary. It is irresponsible. Zero percent chance. I guess that's reassuring, Mike. Where do the odds go in 2031? I want to know. I mean, I do think that it's fascinating. You can definitely say almost everybody involved has a little bit of a secondary motive here.

12:47You know, NVIDIA needs people to keep sprinting for the frontier and moving it forward and spending. Not to say it's disingenuous. I actually do believe he's a complete AI optimist and thinks that it's creating, you know, these intelligence factories that are going to change the world for the better. I do think that something is being lost, though. Maybe there's a lot of room between human extinction and everything's going to be great, which is a lot of these kind of hacks and these messy intrusions and unintended consequences that just create a little more friction and nuisance in the economy than not, but don't necessarily threaten humanity.

13:24So it's fascinating. Here's where I think Muse is potentially important. Muse might be it. I'm too touchy to give these things too much access. You're referring to Meta's new product. Meta's new product with a cute little, I don't know what that guy is. Is he like a snowman or something? Anyway, this thing has been number one on the App Store for significant periods of time. If you look online, all the testimonials, I'm sure you've seen them from people experimenting with it and saying, oh, it saved me$1 ,200 and extending my car lease. It saved me for this purchase for sneakers and this purchase for airlines.

13:58And so here for the first time, I think, is an app for the consumer when it comes to AI that might genuinely take off and hit the zeitgeist. And if so, I think it flips the narrative a little bit. It takes the edge off of that experience most people have, which is just I'm hearing about it. I'm worried about data centers. I'm worried about my job to more. Hey, did you see what kind of deal you can get if you connect news with this? I wonder if it flips the script a little bit, especially for younger people, which it seems like where a lot of angst is coming from. Concern about job loss and all the rest of it.

14:26But you think it'll be considered like glorified search or something more powerful? It's better than that. It's better than that. It's really it's it's you know what it is. it's people who don't have time to learn all the tricks. And AI itself is good at that. You can say to Gemini, hey, what do I do about it? But when you can go and give the app power, and I'm too scared to do this. And the joking line going around is, yeah, AI is out of control, so give it access to your credit card. Nevertheless, that's what people are doing. They're connecting it up. And now the discussion that you've all seen moves to what happens to the intermediaries, what happens to booking, what happens to Uber, what happens to Shopify, what happens to Nike, what happens to all of these different companies who are highly dependent on a one-to-one relationship with the consumer.

15:06Margin compression. So it's Groupon, but you don't have to open the email. And what I was referring to before is apparently people are getting messages from Amazon saying that they're going to block Muse from just like randomly prowling around and doing the browsing. That didn't take a while. But I want to, you know, we got to see exactly what that's about. Well, we'll just go to Temu or Shein. Probably. Take a look at the pre-market here. We'll get into the U.N. this week and what the Treasury Secretary told the guys on Squawk this morning about their discussions with the Chinese over the weekend.

15:34Got some corporate news as well. We'll get to Novo, Peace Sky, Bitcoin,$85K. Stay with us.

16:01It pays to discover. Terms apply. See discovery.com slash five for details. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously. Make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

16:41Schwab 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 market update podcast or find Schwab Market Update wherever you get your podcasts. Here in the past hour on CNBC, you've seen Phil Lebeau in an Aurora autonomous 18-wheeler making his way through Texas. Let's check in with him, shall we? Phil, I still don't understand how this is legal, but I guess that's where we are now.

17:21How are things going? It's not only legal, Kelly, but this is the beginning. I'm with Chris Ermsson, the CEO of Aurora Innovation. This is the beginning of your first commercial runs without a driver, a safety monitor behind the wheel. We're actually making a run up to Dallas. Kelly asked the question, it's starting. How does this grow from here? It's exciting. So we've got the hardware and the software in place. We've got the customers. By the end of the year, we expect to have a couple of hundred of these on the road, and next year will be a thousand plus. Big selling point right now. It's cost inefficiency, right?

17:55Cost and efficiency. You can run the trucks twice as much, you can save on fuel, and you can get goods there more quickly. Eighty-five cents a mile with your truck, you think it's about$1.18 if you have a truck driver in here. When you talk to truck companies and shippers, is that the primary thing that they're focused on, in addition to safety? Number one is always safety, and then number two is that they just can't get enough drivers. And so this is really to complement the people they have driving trucks today. You know, as we've been out here, Kelly, just to give you some perspective, people sit there, and I hear this all the time.

18:28People will say, yeah, the technology works for a few vehicles, some test runs here and there. Chris, the main question I get from a lot of people is, when's the inflection point? When do we start to see more and more completely autonomous Class 8 tractor trailers out on the road? The inflection point is now. We are going to begin ramping and building more of these. Later this year, we'll be producing 20 a week. So that'll get us to a couple hundred this year, and then, like I said, off to the races next year. But you're not close to profitability yet. When do you get the profitability? So we expect on a unit economic basis to get profitability next year, and then we'll hit free cash flow positive in 28.

19:06A friend of mine said to me, saw our last live report, and he said, how do they stop and get gas? Let's say you're doing a run between Houston and Los Angeles. How do you stop and get gas with nobody there to pull into the truck station and to say, truck stop and say, I want gas. First of all, they've got a big gas tank, so it's not that big a deal. But then we're working today on pilot programs to have the truck be able to call ahead and say, I need to get fueled up. They'll tell the attendant to come out, put fuel in the tank, and then it'll get on its way and keep going. Kelly and Carl and Mike, it's one of those things when you're in here, it's no big deal after you've been doing it for about 15 minutes.

19:45It's a little weird every once in a while to look over and to see that there's nobody there behind the wheel. but it truly, it is not that big of a deal once you're out on the road. There are a few double takes, though, from other truckers as they go by and they look over and they go, excuse me, what did I just see? Or not see? Yeah, we talk about range anxiety. I don't know about wheel anxiety. You might want to keep your eye on that driver's seat. Phil, appreciate that very much. Phil LeBeau, we'll come back to you later on today. We are getting some breaking news out of Washington. For that, let's turn to Eamon Javers this morning.

20:18Hey, Eamon. Good morning to you, Carl. We're getting a new report now from CNN, which just reported a couple of moments ago that the Fox News Bureau here in Washington, D.C., which is the current chair of the TV pool, which controls overall TV pool coverage access here at the White House, It's put out a statement this morning saying this is to advise that effective today. The TV pool will not be covering events designated as pool coverage of the president. The statement goes on to say this follows the White House's position preventing CNN from fulfilling its assigned pool duties. There will be no replacement pool put into place.

20:55So, Carl, to put this in context for you, this is a historic announcement from the joint television pool. The five television networks that are responsible for bringing us all of the live images of a president at any time, day or night, when he appears in public, are all saying now that they will not participate in pooled events because of the fact that CNN has been banned from access to the campus here at the White House and, of course, as a result of that, banned from participating in the pool itself. The other networks are saying here that they will not step in and pick up CNN's coverage And furthermore, they themselves will not conduct coverage, according to this statement that went out this morning and was reported just a moment ago first by CNN.

21:37So this is a historic moment, Carl, in the sense that television pool coverage of the president has existed day or night for decades going back. As far as the Kennedy assassination, the reason the TV reporters are constantly on alert here at the White House and constantly covering the president is because just about every utterance of a president of the United States is important to document for historical purposes. Today will be the first day in living memory that there has not been television pool coverage of the president. He is traveling to New York today. We will likely not see those images coming out from the White House press pool here at the White House.

22:15We might see some coverage that the White House does of its own self and puts out on the Internet, but we will not see the five media organizations that participate in the TV pool covering any of that throughout the day today and into the indefinite future. The statement seems to suggest that this will continue as long as the CNN ban is in place. And we'll look for more response from the White House. We saw a social media post from the president this morning lambasting what he calls the fake news and saying that it has grown to be a cancer on the United States and that it is a national security imperative for these news organizations.

22:50to be kicked off campus here at the White House. Carl, back over to you. I'm Amon. We also got that joint statement from MSNOW, our sister network, Politico and CNN, notifying the White House that they are filing a lawsuit to, in their words, protect our First Amendment rights. Yeah, that's exactly right. Lawsuit is scheduled to be filed this morning. I don't know as we stand here whether it's actually been in the process physically filed, but the lawsuit is a suit on First Amendment grounds that seeks a temporary restraining order to block the president's denial of credentials to those reporters.

23:24What happened over the weekend is after the president posted on social media that he was banning those three organizations, when their reporters showed up here on Saturday morning for their normal shifts at work, the Secret Service at the guard hut, which is just about 30 yards from me right here, confiscated their credentials and would not allow them on campus. So they have TV positions like we do here to cover the White House during the course of their daily operations. CNN's is just to my left, two spots down. They are not here today, and they do not have any access to the campus. And that is the crux of this dispute, and we'll see how the courts handle it.

24:01Eamon, it's Kelly here. You know, the Treasury Secretary was asked about this as well on Squawk Box this morning, and he suggested that those outlets should change the personnel that they had staffing the White House. Right. Whether or not that becomes part of this, who knows? Practical question, when this step is taken, how else? So all other press, obviously, I would imagine, is now going to try to descend to cover the president. These other outlets could maybe do so in a different way, because there's probably going to be a huge appetite, even more so now, to see the president without this particular access being offered.

24:31So I'm curious about the practical aspect of that. And if this might be the start of, is it just the New York trip? Or how is that defined and what happens after that point? Sure. Well, a couple of things. One, in terms of what the Treasury Secretary said this morning, you know, the principle that's at stake here is whether or not the U.S. government gets to tell the press what it should say and who should cover it. And whether that is a free press that has access to the presidency. Traditionally in American history, presidents have taken tough questions from reporters they don't like on subjects they don't want to hear about because they respect the fact that we live in a country that does have a free press and that the government is not allowed to tell the press what to say, what to do or who to hire.

25:16Right. That's the principle. So what you heard the Treasury secretary say today was that this administration would like to dictate who actually covers it. And Kelly, we can talk about the logistics of all this on the other end of the bell. Eamon, thanks for that. Eamon Jabbers in Washington. We will take a break and get you the opening bell after this. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished.

25:54No 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.

26:30Or 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. And rule number one, have it all without spending it all. Happy holidays from House of Burl, Burlington.

27:06Secretary of State's in town for the U.N. General Assembly, set to get underway tomorrow. In a few moments, he will ring the opening bell here at the NYSE. Ahead of the Assembly, you see there Lynn Martin of the NYSE, Jeff Sprecher of ICE as well. A lot of discussion about what deliverables, Kelly, might be coming the market's way. maybe lift some tariffs on LNG, things like that. Well, as they say, it's improving the mood of the oil market today a little bit. But, you know, the fact that the president was open to talking with Iran potentially at this meeting about some kind of deal. And WTI is down like three months this morning.

27:40Yes. Yeah, definitely keeping an eye on West Texas below 98. Let's get the opening bell here at the big board on Wall Street. It is, as we mentioned, the U.S. State Department and Secretary Rubio recognizing the 81st session of the U.N. General Assembly. At the NASDAQ, it's SS &C Technologies, provider of software to the financial services industry, live from its annual Deliver Conference in Orlando. And at Steve Bowen, Chicago, it's the Pat Tillman Foundation, which awards scholarships to military service members, veterans, and their spouses. Last little 300-point bump here for the Dow at the open, Mike.

28:16There's not a lot of data on our way. It's going to be a ton of Fed speak this week. It will be Fed speak. A lot of it, the regional Fed presidents. There'll be some elucidation of the decision. Remember, it was unanimous, right? So it's going to be much more about characterizing where we go from here and what the inputs were to determine things. So right now, I think that the market is kind of OK with being in suspense to some degree about October. I know there's a lot of back and forth about, is this a cycle? as this kind of just a snugging up, taking back those cuts from last year. Bond market, you know, the Treasury yield curve has flattened out.

28:51I don't know if you'd want to see the long-term maturities rally that much and bring those yields a whole lot lower because of what it might mean for financial conditions and general tightening. But for now, I think it's at a kind of manageable zone. And if that was their intent, if they think it's too hot and the intent is to slow it, then you're going to see that, you know, across the long end real quickly on that. Though as we see yields down a little bit today, oil prices down, you are seeing the Nasdaq outperform up eight-tenths of a percent. Yeah, Intel actually, the biggest gainer in the S &P 500 out of the gate.

29:24And so it is, again, that sort of hardware food chain. If you wanted to point to one part of the market that kind of took its medicine, it is semiconductors. Obviously, we had a very, very crowded and aggressive peak in June, a huge washout, like 30 % peak to trough as a sector. Haven't really gained a whole lot of it back. I don't think it's giving a lot of confidence that it's going to get up and carry the market higher on its own, but it's definitely been in healing mode. But look at that, 9 % today. Oh, yeah. No, this is kind of the whip end of enthusiasm about semis for sure. But, yes, there's no doubt about it.

29:58I mean, AMD is a big gainer as well. The other note, you know, Carl, I was sort of alluding to it earlier. Accenture is one of the biggest gainers in the morning. And, you know, the magic, if you're considered to be a disrupted software type company, services company, you do a partnership with Anthropic. I mean, to see those headlines, you know, you go from AI is going to wipe out humanity to Accenture will be sitting inside. OK, but it seems like such a ho-hum way that this is all going to develop. I know. I mean, you see that downdraft into the late part of May. Stock was down 50 percent for the year at that point.

30:36It's come back quite a bit, obviously. Yeah. In fact, if anything, that category of company got hit worse than core enterprise software because it was considered like, wait a second. First of all, nobody likes paying these folks. I think that's kind of the standard take on there. And they've been benefiting from just kind of creep of layering on of services. So we'll see. But to your point, look, Anthropic has to have something in its S1 about who's going to distribute this stuff? What's our enterprise strategy at this point? And, you know, is it beyond coding, I think, is the idea. So we'll see if that rescues it.

31:09The sales force, you know, hasn't given back its gains from when it did its own anthropic deal as well. Now, it's been incredible to watch some of these areas flip from the very epicenter of disruption by AI to, in some ways, the biggest beneficiaries potentially from it. So you can see like a heat-seeking missile. The market's looking now to the next set of companies, and maybe it is those in the online travel space and what have you. I mean, there's already been a lot of notes written about how that would be ridiculous to even suggest that they could be disintermediated when you start chatting with Muse and saying, hey, I want to go to Europe.

31:39Find me a great deal on a flight at a hotel in a warm country. Yeah, your point about Meta is a good one. We've talked about it several days in a row now, Mike, and its attempts to get past 690, which it now is by about six bucks. Yes. I do think there is a little bit of a revisionism going on about the strategy and just the optionality about all the investment that the company's made. I know typically it's been, well, they could just, you know, throttle back on the spend and the stock would rip. But I don't know if that's really it. It's almost like the plan B is you basically become a neocloud.

32:12The plan B is what if it actually works? Exactly. You're right about the neocloud. But even the consumer app, is it going to be that lucrative in the long run? Can you really migrate a lot of ad load in that way? but I have to give them credit. They've thrown everything at the wall. They bet 70 % of revenues on this. 70 % of revenues. Alexander Wong and his team are basking in the glow right now of hoping that that is going to work out. Yes. Well, we all remember the metaverse and Reality Labs, and we're swinging again. 100%. But also the fact that that didn't actually, in a lasting way, knock the core business off course.

32:51and it's like, oh, AI is this kind of like insidious algorithm that works inside to change customer behavior and keep them stuck. Well, Meta knows about that. I mean, and that's kind of the idea. Be more useful, be more engaging. But the argument was they could have spent nothing and basically just used AI to optimize the ad load and Bennett almost more of an Apple strategy. And they went in a different direction. I mean, we still don't know. We still don't know what's going to happen. There's like a 15 ,000 word profile of Zuckerberg that hit last week. It's in Colossus Magazine. And what they actually trace that to is the being completely burned by Apple's App Store.

33:28We don't own the distribution. We're at their mercy. This will be different because we'll at least have, you know, kind of the furnace that's creating this energy. I don't know if that's true. I don't know if it's worth the cost, but it seems like that might be the pivot. There's one other wrinkle, which I do notice a little bit of this, Carl, now this kind of second layer to first layer with AI, a lot of people's experience is, wow, you know, look at the options and the opportunities. The second layer for some is a little bit of this, does it really live up to my expectations? You're seeing this on the enterprise side a little bit where people are talking about having to clean up code that is just generated and not working that well.

34:06You see with a lot of people's personal experience. I actually wanted to quickly reference something. I don't know if you saw this with Bill Gurley at the All In Summit over the weekend. So obviously, We all know Bill, incredible tech entrepreneur and investor over the years. When he was asked what topic regarding AI he'd like to speak about, he actually took it in a slightly different direction. Take a listen. In December of 2019, COVID-19 caused 15 million deaths, disrupted every life on the planet, and cost our globe$45 trillion. It was particularly hard on children. You've read about learning loss.

34:44My kids were in high school and college and missed three years of the most formative years of your life. I never want to live through this thing again in my life. But guess what? For all the other catastrophes, I told you what root cause is. Six years later, we don't know. So forgive me if I'm unafraid of what some AI guy's chatbot is going to do to humanity when you can't tell me what this thing already did. This whole speech is pretty quick. It's certainly worth a listen. He goes over some of the big crises we've dealt with from Challenger to Boeing to the collapse of that condo tower in 2021 and talks about the people who tried to get to the bottom of it and suggest the same effort needs to be made here.

35:35But also more broadly is saying, look, I'm given the platform to talk about how AI, this goes back to Jensen Wong's point, is going to destroy humanity. He said, I can't even, this tool, we want all of these tools to try to help explain, for instance, what happened with that event. And not least, other news over the weekend, Anthropic, with this wet lab. So, you know, to see both of these kind of making the news at the same time is going to, I think, further that conversation. Yeah, no, the political circularity, and Bill's retweeting Lena Kahn on this stuff, saying, if your product is not safe, you fix it.

36:05He is worried about regulatory capture and some of the other. I do find it fascinating that a lot of the folks who are now saying, well, product liability laws are on the books and this can kind of take care of itself after any harms are done, are a lot of the same people who are like, whoa, whoa, whoa, section 230. You can't spare Facebook and Google the protections of not being responsible for the content on their platforms. It'll kill innovation. So it's kind of like, where are the guardrails and how much harm has to be done before you get the kind of, you know, action that compensates for it.

36:38And how exactly would those laws apply, right? I mean, is it, I heard your interview with Roger last week where he said, you know, it's liability and others say, but intent matters as well. You know, and is this the intent of the, these, this software or is this a, you know, an accidental byproduct? A defect, yeah. Yeah. Which way you'd think you'd still be held liable to that. Look at it if you're a chemical company. They didn't intend for Tylenol to be a problem. Absolutely. Absolutely. A ton of news in media. You see Warner Brothers at the top of the the list there after all the reporting over the weekend.

37:06Wish Faber were here. On the prospect of a settlement talk in progress regarding the AGs and Peace Sky, that's going to be the post-merger announcement high for WBD. Yeah, I mean, this is the market essentially saying we think the path is generally cleared for a more timely closing. So it has been an ARB situation. Obviously, it's all about exactly closing that ARB gap. A little bit of a wrinkle here, given that some of the state AGs wanted some assurances about the treatment of CNN at the same time that CNN's having to be in this position of trying to defend its right to be at the White House.

37:41But it's not clear that that was going to hang up the whole deal anyway. And when does the ticking fee start? October 1? Yes. So we're, you know, we're in the final couple of weeks here for something to move on that front and shares of these, look, Warner Brothers up 54 percent, but Paramount Skydance, complete polar opposite story. And if the reports of, you know, a commitment of like a billion and a half spend on production in the state of California, if that's, you know, something like what happens, I just think an investor would be like, you know, we can swallow that, probably would have done something like that anyway, you know, over the course of making 30 films a year, as they're also going to be held to.

38:18Bitcoin, highest since January here, after the collapse of the Clarity Act. You got ideas on what that's about? I think it goes back to, I never really understood the urgency around clarity. And it's weird that there were the two issues around stablecoin kind of clarity. And then this ethics issue, which seems to have been the real hang up. And apparently it could still Democratic Party could still move on that. I don't know. I'm not in the weeds enough. But look how we've cleared this event and in fact cleared it to some extent to the downside. But odds were only like 25 percent at TD Cowan. This was ever going to pass anyway.

38:46And to see immediately outcomes, the SEC talking about tokenization. Here's how we're going to try to represent those voting shares. I mean, they are taking this and running with it. You see all sorts of analyst notes now talking about impact on bullish and all these other companies that would be involved. Coinbase, they're companies that are now going to launch single stock. I mean, the idea is not passing clarity, did nothing to set back, I think, this innovation around financial products. And if anything, you're now seeing it take off even further. I mean, I just look at it in terms of the way the market gets fixated on one factor and then over discounts it.

39:19It happened on the upside. What was the top? What was the top of Bitcoin? when Bitcoin and the industry got every single thing they were hoping for. They got the election outcome they wanted. They got the regulatory structure they wanted. They got approval to be in all these different ETFs and retirement funds and everything else. And that was the peak. And so now you kind of lose this sort of tailwind. By the way, I think the industry did show its hand by desperately wanting it so badly. Like the fact that Brian Armstrong at Coinbase just made this his job for all this period of time, I guess tells you something about how important they thought it was going to have to be.

39:51So you get a relief bid in Bitcoin. What I do think is interesting, tokenization of stocks was never going to, I mean, maybe it's going to happen. Maybe that'll be interesting. But even Secretary Besson over the years has said, we need stable coins because we need a big, dumb, constant buyer of treasury bills. And they, you know, I mean, honestly, you totally need it if you want to be able to finance the deficit in this way for a long period of time. He says, I'm going to be the world's leading bond salesman. So it's happening, but maybe not happening in as comprehensive a way. And this comes as we hear the bill share is hitting 24 percent of what, you know, we're historic norm 2021.

40:26We're up to 24. And if rates end up coming down because there's a good outcome when it comes to oil and, you know, who knows, then, yeah, all of a sudden that could be a good bet. But it is a big gamble as that increases. Crypto could help with that front. Like you said, big source of demand for those Treasury bills. If they ever do financial deregulation, that could help, too. Oh, yeah, that has to be a part of the puzzle. And, you know, that way the banks can can load up, you know, more than they are already as well. So I do think that, you know, a lot of the sequencing of this, you know, has not really it hasn't been manageable that way.

40:56But, you know, we're trying. Keeping our eye on the GLP one wars. Novo got an earful from from analysts on pricing. They did argue they took some share points in the U.S. on obesity. But the spread I'm looking at the spread between Lilly and Novo year to date. It's widening. You can see that. I love how they already have to lay out their post-WeCoV. I mean, that's how fast these things move, how quickly we go from Lilly's the first trillion dollar health care company to, you know, what do you have for me lately? And even the innovation on this front continues so quickly. Yeah, the the the stocks basically trade on your next act after this.

41:31I mean, you could just go back and look at Gilead. Right. Oh, they kind of they kind of cure Hep C. It's this massive market. And the stock gets super cheap because it's like, OK, we got it. Now what? And so they had to basically come up and refill the pipeline. Right. Healthcare, biotech, these have been better areas, you know, lately. I don't know if that continues, if that's just a one-off. But everybody's saying, look at the pipelines. You look across J &J, all sorts of different companies looking to backfill and some of the breakthroughs we've had on the cancer front this year. You know, there's a lot to get excited about.

42:02The news flow has been good. And then there's also been this other theme of negative beta stocks or stocks that just essentially are a hedge versus the AI trade. A lot of health care certainly qualifies or even is a net beneficiary of AI. VIX below 15 now. How low can it go? This is like our annual. How low literally can it go? It's been single digits over the course of history. And not usually. What's interesting is usually the trough for the year is, you know, August or something like that. And we should be uptrending. We're not. And a big part of it is, like, you can't attribute emotion to it.

42:37It's how much is the S &P moving and how much has it moved recently? And, you know, we're at less than 7 ,700 on the S &P right now. We've been trading almost entirely inside the one-day range that was set August 4th. We went above 7 ,500 on May 14th for the first time. It's less than 200 points of change over the course of four months, four plus months. And so the rotation that we keep talking about is what is suppressing index level volatility. So it's volatility at the stock and sector level, not at the index level. I'll take it. So, yeah, exactly. It's not about the mood. It's about the mechanics.

43:17Even as earnings estimates continue to go higher. Earnings estimates higher. Yeah, the market, I mean, basically the market arguably is up like as little as it could be with 30 % earnings growth. The multiples are down. I mean, this is what Yardetti was talking about. Even if you look at something like the industrials, the earnings are growing. The stock prices are growing, but not quite as much. The multiples are actually coming down. Things are a little bit less frothy than they were. Not to bring it back to the rate hike. But I just say, you know, there are signs that the economy broadly has some momentum behind it.

43:46But the stock market, as well as it's done, and it's been more of a sideways move lately, the valuations are down. The valuations are down. I think that the tricky thing to interpret that is when the valuations were at their highs last October, 23 times forward, industrials especially, super expensive. Was that just the market saying, guess what? We have an earnings bonanza coming in nine months, and now it's what are you going to do in 2027? You know, in 2018, earnings grew 20 % almost every quarter that year. And you had this near 20 % drop in the last quarter of the year, and it was because I think the market got way overworked up about the rate hikes then, but it did force the Fed to go on pause after a little while and then eventually cut.

44:27So tell me again, because what would be the analogy? Analogy now would be if the market finds a reason to get a little bit agitated about where yields are going, what the Fed is up to. Does the Fed really want to choke off growth and financial market activity? Sounds like Goolsbee today. There'll be a price. There will be pain in bringing inflation to target. And maybe the price is just 3 % real yields long term. And then we sort of like have to adapt around that in terms of which parts of the market work and don't. I am watching, Mike, Exxon lower a lot of the, I mean, not the Valeros of the world, but certainly the integrated.

45:02And then you're starting to see like Carnival, for example, some of the cruise lines a little bit higher on this modicum of relief. Well, that's good. These are the areas that the consumer, the pressure on some of the consumer areas is starting to build. And that's one part. We talk about this rotation that had been doing better lately, a little bit more weak, as you mentioned. I mean, you could talk about the rising fuel prices, the drop in consumer confidence again. And I even think mortgage rates, all this stuff in the economy, until people kind of feel like that break happens, it's good to know.

45:32I mean, look, at least it's up 1 % today. Yeah. I mean, look at JBHT. Fell below the 200-day on their warning last week. City's got a good note. They visited Home Depot. And the word out of the depot was, I mean, obviously housing's troubled. And until affordability improves, that's one thing. The other is the people who are locked into their homes are also dealing with material costs and supply chains broken. And even renovations are prohibitive in some sense. Oh, they're so expensive. It's a great point. I mean, let's put it a friend of mine, Carl, is involved in a real estate transaction right now.

46:03A close personal friend. The market is not as frothy as it was six months ago. Nowhere near that. It's really a lot of people I talk to and say, hey, what happened? They said it's kind of over the summer. Things really started to quiet down. Good color. Speaking of all that, watch bonds today. As we said earlier, kind of a light data week, but there'll be a ton of Fed speak. And we'll, of course, watch the U.N. and the summit as she goes to D.C. later on Wednesday. There's a look at the 10-year 497. Stay with us. There's the Dow up 140 off the session highs. We're watching crude here. The Iranian president and foreign minister are scheduled to travel to the U.N.

46:42this week. There is some hope perhaps that maybe who knows if the administration were to meet with Iranians. Oil's lower. But then look at FedEx Freight. That's the lowest it's been since the IPO. This was a$200 name the day after the new issue. We'll take a break. Be right back. John Summitt made history on Wall Street Friday night. The superstar DJ took over the big board with a set that turned the NYSE floor into a dance club. First live music performance down here ever. The event was a lead into his experts-only festival, which took place on New York's Randall's Island over the weekend. This is a guy's big deal among my daughters.

47:19Educators, yeah. Although he used to be a CPA. So his journey from the corporate world to the world of music made his performance here kind of poetic, some said. I wanted to do like a wedding reception here, and I was turned down. And this guy's having a rave. This is right behind us. How did all the people get in through security? Were you on the list, Mike? No. Not on the list. Somehow not. I did see a lot of folks using these clips and saying, they don't ring a bell at the top, but maybe they play a good DJ mix. They could make so much money off of this. And what's David Solomon thinking right now?

47:56Oh, he's the next act, I'm sure. A DJ gets to work the New York Stock Exchange, and it wasn't him. Although I think he's on high rate. If they're open to it, they would have a long list. Everybody would want to come through here and do that. Yes. maybe we'll be in for his encore performance someday Meantime, slow and steady, grind here to the upside S &P now a few points above 7700, we'll take a break, be right back 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 You 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.

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