9am Hour: Tech Turbulence, Apple Downgraded, Live: DNI Jay Clayton 10/20/26

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0:43and 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 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. Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at Post 9 of the New York Stock Exchange. Faber's live at 13D monitors active passive investor summit in New York City today.

1:16Meantime, stocks look to give back much of Monday's bounce as both CoreWeave and SK Hynix are indicated to open below their Friday low. This dismal data center IPO in Korea not helping. We'll get Netflix and SpaceX tonight. Watch the action in oil. WTI briefly above 110. Brent gets to 111, the highest since May. Our roadmap begins with the return of AI bubble risk fears following that troubled debut of a South Korean data center company. Memory and chip stocks taking a hit pre-market. Plus oil on track for its longest win streak in more than a month. Brent crude hitting a five-month high. The Sun reports of new vessel attacks in the Gulf.

1:58And joining me this morning live from the 13D Monitor Active Passive Investor Summit, we're going to have National Intelligence Director Jake Clayton, Starboard's founder and CEO Jeff Smith, and Lauren Taylor-Wolf of Active Capital. Carl. A lot of volatility, David, for tech this morning. Names like CoreWeave, Dell, Micron, AMD, all under pressure in the pre-market. CoreWeave, Jim, briefly below 59 this morning. I think the low on Friday, 59 and a half. You said maybe it's a J &J kind of day. Well, it is. I mean, you take a look, you see PepsiCo, reported an okay quarter. It's up, you know, up nicely.

2:35It's Coca-Cola day, too. Coca-Cola is 94. J &J goes up a couple of bucks. Mirko's up a couple of bucks. This is very classic. Now, I don't want to call it risk on, of us off because we heard from Larry Fink. It's a perennial move higher. It's just the different ones go up at different times. You know, this Ellis deal in South Korea, it's funny. You wake up and you say, oh my God, I got up really early. I said, oh, let's see how Cosby is. And I say, oh my God, Ellis, the deal failed. And then I realized I thought it was a lease, but it's Ellis. I've never heard of it. It's$150 million and it's going to bring down the entire complex.

3:08So I say if the complex can be brought down by$150 million our deal, the complex is in big trouble. Now, I also think, though, it's not like CoreWeave is going to go under. It's just they're not going to be able to finance it. Obviously, they can go in the... I think that if you were CoreWeave, you would say, listen, I'll buy the public debt and I'll just go get a loan to be able to buy GPUs, and that ends it. They have to do that. Do they know they have to do that? I don't know. They're not arrogant, but they're solely controlled by the concept of growth. And there are moments where you have to pause your growth in order to be able to prove to people that you can even play the game.

3:47Yeah. If you have that much debt. You don't have to pause your growth at your Walmart. Yes. Core Weave today, HSBC reiterates, reduce. Their target's 39. I know you did talk to David about it yesterday. And then on social, you challenged Intrader to cancel his remaining sales. Yeah, he has to do that. I mean, look, there are times when you have to deal with Goldman Dermotton. I'm from ServiceNow. I mean, Bill canceled his sell. He waited exactly the time where he was allowed to buy. He told everybody he was going to buy, and he bought. And then the stock went down, and people laughed at him. Well, I mean, it's been one of the greatest rocket ships.

4:24I've got to salute Bill. I'm going to have him on the show because Bill knows how to do it. You see, Bill knew that there were a lot of people gunning for him, and he just said, try me, try me. And I love a guy like that because what it said to me was conviction. If in-trader wants to show that it's over, first thing he does, he has to cancel the sale. And I don't want to hear why I have a lot of stock. Because, like, rich people, you know, like, don't give me the, you know, if rich people are unhappy, it's their own fault. Thank you, Vlad Lenin. I do feel it's very, that it would be such a signal.

4:56Look, we have a blueprint. It's Bill McDermott's blueprint. Follow it, idiots. Follow it. Just follow it. I didn't mean to say idiots. I just think that Bill showed you how to do it. If you want to continue to sell, I'll continue to say I don't know where. It's a pretty simple plan. David, it's going to be interesting to see how this volatility reverberates where you are today. Yeah, we'll see. I'm looking forward to talking to Jay Clayton as well about some of the broader issues around superintelligence, as they call it. Of course, he's the chair of that task force that's on the 120-day clock to come up with that report about the threats and everything else involving that.

5:36So I'm looking forward to that conversation with Mr. Clayton. But, you know, Jim, I guess just to come back on CoreWeave itself, I think, what is this, the fourth out of the last five shows we've probably led talking about what is now a$33 billion market cap company. But it is, as we've said, sort of the poster child for the ability to access capital and access it at a rate that makes sense. I just wonder, when is this going to end? And, you know, when does this stop being something we talk about? Is there a way for them to show that they can continue to access capital? Is there, to your point, in Trader Stop Selling Stock or something else that could just sort of put an end to this narrative around a company that we like to make the point, of course?

6:20Yes, it is not anywhere near the size of so many of the giants when it comes to the AI ecosystem. system, but it is reflective of this overall concern that has sort of taken over the market's concern. Right. Well, look, I would love to be able to say we don't have to worry about it. Amazon was up 12 yesterday on a recommendation. But we have to worry about it because it's about the growth. It's about what things will be worth. It's about maybe where, when does Anthropoc come? It's about open AI. But, David, there is a way. And we saw that from David Zaslach. I mean, people felt that David Zaslav's budget, his entire edifice was based on debt, and there was really nothing there.

7:02And he said, you know what? I'm going to buy back some of the debt. And the first thing I said to him was like, geez, David, I mean, do you have the cash flow? And the answer is yes, he had the cash flow, and he bought it back. Now, in-trader would tell you he has the cash flow, but he just has such an appetite for growth. I think he's just out of sync with the market. And I think he can be reasonable. Well, it's not like he's someone who doesn't know anything. He was a Bitcoin miner and then he did this. But he's got the instincts of someone who really genuinely believes all that matters is growth.

7:31And, David, you and I both know there comes a point where if you can't demonstrate growth, you have to demonstrate not solvency but the ability to recognize that this is one of those moments where I've got to prove to the market that our stock's very undervalued. You also borrow some money at a rate that is – you go and you buy some GPUs using the loan market. and the public market is so small that you can just buy back anything if you have the GPUs that have lasted more than the depreciation period. But, David, he has to do something. He has to. He can't just sit there and say, you know what, I have made a statement.

8:10My ratings agencies are good, and I want to know where he is and what he's doing. Now, he'll say, listen, I'm in quiet period. You know what, it's possible to be able to go buy back debt in quiet period. I think that he's, the fact that he is absent, that he's AWOL is not good. No, but I would come back and just simply say none of this has anything to do with the fact that demand remains unabated. It just keeps going. Any headline you want to look at. I mean, whether it's ByteDance, buying$35 billion worth of NVIDIA chips, whether it's OpenAI accelerating its fundraising ahead of, again, what we continue to wait for, that S1 from Anthropic and the potential for an IPO not long after that.

8:55Anthropic and N-Scale in talks for another multi-billion dollar deal. I mean, the demand for compute continues regardless of what core we've borrowing costs are, Jim. You're absolutely right. And I think that we're caught in the vortex of this because a lot of the people we speak to are saying, you know what? I wish that all the semiconductors could rally, but they're stuck in core with you. This one, the Ellis, I thought, was going to be a bridge too far because it was$150 million and we're taking down the edifice. Maybe today's the day that we separate, but it's the SK Hynix reacting to the Ellis that made this consequence go down.

9:34SK Hynix is a really big company. I can't divorce it because I can't divorce SK Hynix. Yeah, SK Hynix down 30 % in about 10 days, got about 4 % recovery yesterday. It's going to give all that back this morning, even though, I mean, Morgan Stanley's pretty positive on memory this morning. But they did say Western Digital. They said some good things at Seagate, so they had to say some bad things at Western Digital. We're also laboring under the downgrade of Apple, which I think is I can take one later in the show, which I will. particularly because this is probably the best time I've ever seen Apple.

10:13But, you know, David, when I see this kind of stuff, I want to know. Let me ask you something. How about if I started, and this is just an alternative universe, I don't think it's wrong saying, you know, we can continue to focus on CoreWeave, but CoreWeave, frankly, is just a company that doesn't have its balance sheet ready. Ellis is a company where the dealer failed to be able to do a good deal. What matters is that Amazon has almost unlimited capital. What matters is that Alphabet can tap the market. What matters is that we're seeing Microsoft doing much better. That would be, I think, the alternative narrative that may be more in play that I'm choosing not to do because I pick up the papers and I look at Corwee.

10:52Yeah, but you're right about all those things. All of those companies you mentioned do have, at this point, easy access to capital at rates that are not that far above still corresponding Treasury. and they keep wanting to spend. I mean, we're going to hear from Meta tomorrow, right? We're going to get a new CapEx number potentially there as well. And there's no doubt is their ability to continue to spend, Jim. So, you know, at some point, perhaps that narrative will take over once again. Yes. I mean, at the same time, Jim, NeoClouds are almost half of NVIDIA's data center revenue. Well, the problem is that NVIDIA said, I can't just deal with Jensen.

11:34and said, I'm not going to just deal with the hyperscalers. I'm going to go Neocloud. Nebius, he's going to go. He's going to go Irene. It turns out there's always a new one somewhere, Australia, whatever. He backed a lot. And it is like the railroads. There are a lot of railroads that you backed, but only four ended up making it. But that didn't mean that it was bad investment. My problem, Carl, is that we're overlooking things like Walmart doing something great with Sam's Club. We're overlooking things like Coca-Cola's just on fire. because we're so focused on this area because it's what the people are focused on.

12:06Our viewers are focused on this stuff. Yeah, of course, although we're going to try to get them focused on GE, GM, 3M. You know, I'm on the phone with Raytheon this morning, and I'm saying, oh, my God, the Baltics are ordering what we used to order. Poland, if you're on the border of Russia, you're just saying, hey, I'll take everything you have. But people take that stock up to three-quarters of a cent. That's ridiculous. By the way, Larry Kulp, GE Aerospace, you sell that because you're just scared of what? Of what? And the answer is your own shadow. We'll get to GE, of course. GM, as we mentioned, N3M, RTX, and some others.

12:46We'll get all those big earnings movers. GM is getting pinched a bit here, down 67. Are they involved with Corby? Despite this buyback announcement. Long day ahead. Let's get this Tuesday underway. We're back in a minute. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments.

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14:00Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app. T's and C's apply. 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 market update podcast, or find Schwab Market Update wherever you get your podcasts.

14:44Busy day of some industrial earnings. General Motors, the worst S &P year pre-market after narrowing its full-year guidance, Jim. We heard from Paul Jacobson on Squawk. They did narrow the guide. $20 billion in buybacks, so they've already been in there. I think that when I look at what's going on, I measure the buyback versus the fact that Mary Barra, who was on my show recently, talked about the headwinds intensifying. Had she not said intensifying, I think we would be talking about the buyback. But when I hear that kind of word, I say, you know what, it's much worse than I thought short term.

15:22And I also know international seems like, wow, I mean, what happened there? Ford, by the way, got rid of a lot of the international, but it doesn't matter, Ford's getting taken down too. Should GM be sold here like this? GM's a very inexpensive stock, but when someone says intensify, what that says is it's not going to end anytime soon, the pain. So I just think that maybe you let it go down, let it see if the buyback's very aggressive. But it's very, very hard to come in when the CEO is basically saying, don't buy it. Yeah, well, I mean, we're going to talk about energy in a minute. But I know you took numbers up on Nucor, Whirlpool, 90 % drawdown.

16:01Steel is expensive. Steel, and if you go listen to Cleveland Cliffs, it was a good call. you realize that the tariffs really worked and that the Chinese were dumping everywhere. Canada, they're very stealth dumpers. And I mean this. I mean, I'm not, you know, the Chinese is a great country and I don't think there's a secret government. People are great, but they've been dumping everywhere. And when you found out a way to really cut off the dump, which President Trump did, you see the prices don't go up that much. They haven't versus what you were afraid of, But they have gone up. Well, we pay more for steel than virtually any country in the world.

16:41Yeah, because we're not privy to Chinese cheap steel. So you think it was worth it to save American steel production at the expense of our manufacturers? I am a, believe in fair trade, not free trade. And the answer is, I think, yes. I know that that is a high-tariff view that I think will map to the industry. But when I see what's going on with the Raytheon, when I see what's going on with the G, when I see what's going on with the Northrop Grumman, I am so glad we have a steel industry. I don't want our steel to be hostage to Chinese steel. And I think that people have to recognize this is a war product as well as a commercial product.

17:20And anyone who thinks it's just commercial has missed American history. Right. And you're willing to pay the additional cost for the security of the supply chain. We have to. And I think that those who think we don't have to are part of the sludge sacrifice everything on the altar of the Chinese. And we can't sacrifice steel. We have to make tanks. We have to make ships. We have to make weapons. And we can't do it if we're just dependent upon Chinese steel because they'll do what they did to critical minerals. Yeah. How about GE then in some of the guidance on, I mean, there was, I think, a slight FCF miss, right?

17:55Yes, but I do think when you go over GE, you know, the thing that matters, and I think Larry would tell you this, the most important thing, the orders are, I've never seen the order, 49 % order growth. I stopped after that. I just said, listen, commercial service is obviously really good at 23. But when I saw that order growth, I said to myself, this has got to be some of the strongest momentum I have ever seen. I asked Larry, has it ever been better? No. And so you can sell the stock. you can sell the stock because you see it down. Go right ahead. Maybe you're selling the stock because you've got a head and shoulders pattern.

18:30But, David, Larry Culp is money in the bank. And if Larry Culp tells you this is really good, you can't go back and say, Larry Culp doesn't know what he's doing.

18:43David? I think the last few years would indicate that, yes, you're right. That would not be the right path to think somehow he doesn't know what's going on. And it is always worth noting, again, just to go back a bit, how much value he's created. Not this year, though, Jim. You know, this year it's been a bit of a rough go for the stock to a certain extent. But over time, obviously, given the performance of GE Vranova, got GE Medical out there, and, of course, GE Aerospace as well. And you can take a look at the chart we're showing you right now. It's a good thing. A really good thing when I go back and remember so many of those employees that we used to work with, of course, when GE was the owner of CNBC, who were watching their 401ks and anything else you want to talk about that was tied to GE stock price get crushed, you know, after the financial crisis.

19:34So I would tell Larry, listen, don't worry about it. It's oil. It's oil that's keeping you where you are. Everyone believes that it's only a matter of time before we have cancellations from the airlines. And I was going over that. I mean, obviously it would not. That's the narrative that's driving it down. David, if you can find the narrative that's negative, that's the cornweed problem. You find the negative narrative, I'll run with it. That's not my style, but that's what's happening. We'll get Kramer's mad dash, countdown to the opening bell. Very busy session, and we'll get to some of this crazy action and energy this morning as Brent gets back to 111.

20:13Don't go anywhere. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies, so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app. T's and C's apply.

21:12This 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. All right, we've got three major interviews ahead here from the 13D Monitor Active Passive Investors Summit that we've been attending for a very long time.

21:53Jay Clayton also has been an attendee here, whether it was as SEC chair, chairman of Apollo. I'm not sure he was here when he was a U.S. attorney for the Southern District. He might have been, but he is here this morning looking forward to that conversation, of course, around national intelligence and specifically super intelligence in the task force that he is chairing. Start with Jeff Smith, our annual interview as well. He's got a new position that we will be discussing. And Lauren Taylor-Wolf as well will join me later on. All on Squawk on the Street. We'll be right back. Time for Craner's Mad Dash as we count down to the bill.

22:26OK, so looking for things again, I recall what Dave was talking about. That should be the narrative line of 3M reported a really terrific number today. Bill Brown turning that company around double digit numbers, big guide up. and a nice buyback, organic growth, the margins gaining, the free cash flow good, 10-cent earnings boost. This is the kind of thing that will be overlooked today. This is a great American company that I think had fallen on hard times. Brown has energized it. It's like the old days when the new products that were launched in the last five years have produced tremendous sales.

23:00So I think, look, my dad sold, he sold ribbon and scotch tape for 3M. And to see the energy in 3M right now that it wasn't my dad sold that stuff is very, very exciting. So I think that they have this deal with Amazon for the web. I can't believe they have data center. And I just the data center where Amazon buys some warrants. You know, I've got to tell you, this was an amazing deal because I don't think anyone even thought that Amazon had any connection with 3M. They really did. Well, between that, there's some CBRE headlines this morning. I mean, there's a little broadening in who qualifies as to be part of that story.

23:39Thank you. And then Amazon's hiring people and Amazon's doing a lot of stuff in Germany. 300 ,000 seasonal is a healthy number. Should we be thinking about that or are we just entirely involved with the notion of the nebiuses because we're worried about NVIDIA? I'm a little bit less worried about NVIDIA, and I just think that the Amazon deal is rather extraordinary. And we're not even thinking about it. There's Amazon doing some terrific stuff, 3M doing some terrific stuff, 3M being back to being a material sciences company. So I think that's great. And by the way, I'll throw in another. I think the Walmart and Costco kind of merger where they're basically tying each of the people who have Walmart and have Sam's Club together.

24:28This could be a real rivalry to Costco. So I think that we're seeing a lot of stuff that is very, very good. Walmart Plus and Sam's Club Plus bundle is, I think, fantastic. So I do think that we have to start focusing on these that are good. We got some Kroger today, affirms their guidance. Yeah. Targeting, I think, 3 % cops in a couple of years. There's a protest outside, though. I know that they wanted me to mention that. I mean, I didn't talk to them, but that's what they're out there for, is that they were mentioned. But I think that Kroger is one that, again, they're a survivor. But, again, no one cares if we're focused on Ellis and Korea.

25:09That's wrong. I'm giving the people a little sense that maybe there's something Nothing else surprised with David Turner and even NVIDIA, as much as I like NVIDIA. With that, let's get to the opening bell at the big board today. It's Trex, maker of wood alternative composite decking and residential railing, celebrating 30 years at the NASDAQ in Times Square. Jack Henry and Associates, a fintech company, ringing the bell remotely from their Connect conference in KC. And at CBO in Chicago, it's social responsibility. Chicago, a membership organization bringing together corporate leaders and nonprofit groups to advance social impact across Chicago.

25:46I will say that's happening. That's happening in a lot of different companies. Again, we don't talk about it. It's not added attorneys. But a lot of companies are filling in for what we thought the government was doing. Obviously, these, you know, SpaceX, let's go help people. This is a real move. I think it looks like a Potemkin village to a lot of people. It's not. These companies are trying to change, trying to be social change artists. I like that. Yeah. David, maybe a brief curtain raiser on the conference today and the themes that you want to explore with your guests. You know, I do think one thing is interesting, which is we just don't talk about activism that often anymore, guys.

26:21Of course, we don't talk about a lot of things that aren't AI related anymore, do we? But there was a time when I think activism captured the imagination of a lot of investors. It was certainly a focus. And I'm not saying that it is not still going on, that it is not significant, that there aren't potentially proxy fights. in the future that will be of interest. But I would note that it is not quite the headline grabber it once was. That said, when it comes to Jeff Smith, of course, an annual guest here who's been very active through the years. We're going to be focused in part on that. Solstice, that's a name that Jim knows well.

26:55The spinoff from Honeywell entered into that deal, that it had to end, of course, as well, not long ago, late August, when shareholders just said, no, thank you. So that'll be a focus. But really looking forward to Jay Clayton joining me here. Not going to be talking about activism, guys. Going to be talking about AI. Because what else do you talk about but AI, Jim? Even though, as you like to point out, there are plenty of other stocks that give you plenty of opportunities to make money. Yeah, I mean, I was looking at Solstice. I think they probably have a good quarter. You know, the Elemental Solutions deal broke down.

27:29This is a spinoff of Honeywell. It's not really necessarily underperforming. It does have an interesting uranium division. But, David, I think you're right. I think that if we decide that all that matters is 25 % of the market, I think we're not helping people. By the way, I'm excluding Amazon and Meta. Let's exclude Microsoft. Those companies are doing very well. We're focused on very small companies that may impact NVIDIA. And maybe that's just not the way we should be doing our jobs. A little soul-searching there. Yeah. Well, I know tomorrow this time, though, we're going to be talking about SpaceX, guys.

28:04Keeping an eye on those shares, of course, this morning. down about 2.5%. We are going to get earnings after the bell. And of course, we will be examining the conference call. It'll be interesting to see if there are any comments at all from Elon Musk as well about what has been endless speculation about a union of SpaceX with Tesla. I have talked about this. I can't tell you that there's anything specific going on with regard to any conversation, so to speak. But there is a general expectation that you're going to see these two companies perhaps in 2027, make the effort to try to become one company.

28:40I'd be curious to see if he talks about that. Of course, so many other things, Carl, as well, that are going to be of importance from Mr. Musk when we hear from SpaceX and get its earnings later today. Yeah. Cantor today reiterates overweight 485. There are some pieces on the tape, Jim, about midterms. And if the House does grab the gavel, that Musk will, he'll endure some scrutiny, especially given the fact that he's almost single-handedly bankrolling much of Paxton's campaign in Texas. Yeah, that's funny. I've been with executives, told a lot of executives in the last few weeks, and people say, you know, what's going to happen is that, Jim, those prediction markets, they're going to go after this.

29:22And I say, well, why? He said, well, because that's what they're going to do. I mean, there's a lot of circular reasoning. But anything that is a company that may be totally related to Trump, people think might be a target of an investigation. Now, it's very easy to say, and then it's another thing to actually have an investigation. But, you know, Carl, I think you're right. I mean, you know, I'm sitting here worried about I see the warrants at 3M that they gave to Amazon. The stock's almost there already. And then I think, well, wait a second. Maybe there'll be an investigation of the big companies.

29:55I mean, you know, if anyone meets and follows Senator Warren's feed, wow, I mean, Senator Warren may investigate everybody. I'm not sure the Senate's that much in play, but that'll be an interesting wrinkle. David, the other one tonight, Netflix, which has had five straight negative reactions to earnings. That doesn't happen very often. Wow. No, it doesn't. I was just taking a look at the stock, actually, seeing it up ever so slightly. Of course, we've been talking about the significant personnel changes there, Carl, that you've been following very closely. Of course, Peter Rice now taking over a very senior role there, having had a long career, a lot of it at Fox, some of it at Disney as well.

30:36It's all about engagement, I guess. You know, even if they were to have some sort of super head, it's not clear that that does that much, does it, to move the needle over any period of time other than a couple of months. People can watch it all and then turn off if they want. But it's all about engagement and competing with the likes of YouTube that we talk about so often because it is the beast when it comes to, well, to viewed media these days and video. They did tell us over a number of years engagement. You live by engagement, die by engagement. I think that there is a plethora of shows on TV and that the amount of mind should the time.

31:15The time is what's always going to be how much time. And I feel like, you know what, the time is no longer what I care as much about. I just think that the stock has become not a fascination of anyone anymore. The stock used to be so important to people. It's been eclipsed by SpaceX for sure. Yeah, and they've run through, you could argue, several rounds of ammo in, password sharing. They've gone into live events. They've gone into sports. Of course, scripted is an old, old story. but those were all sort of would-be catalysts on the horizon that they've spent. Right. I mean, look, they're not going to be, they're not cop and fire shows.

31:54They do have really good shows, but so does everybody else. And it's very funny because, like, you used to be watching so-and-so. Okay, what time? When should I do it? Where are they? Did they drop everything? And now it's like, well, it's actually on Macs. Huh? It's on Apple Plus. You can get it on Amazon. But sometimes people say it's on Netflix. Yes, yes, they do. Jim, small business software getting a lift out of this Salesforce purchase. I know. I mean, there's one where we said there was 21 out of 21 analysts who loved that thing, CRM, and I thought that Salesforce, again, wants to be dominant CRM.

32:29The stock was down eight at one time as if it was a stock deal. It's not. I thought it was very important. That is, once again, Salesforce using its powerful balance sheet to be able to buy up other companies that are doing very well. And the last one they did, the big one was Slack. People feel initially that Slack was terrible. Now Slack is in everywhere. I think Slack has become a very common product, and that's because of Mark Benioff. Guys, give us a chart of BRZE. I think it's$47.50 a share in cash, as you point out. Yes, I think that that's—look, I don't use the product, but Mark is unbelievable with this stuff.

33:08And I think that the stock has really had a big ramp. Don't forget they bought a huge amount of stock in the 170s. The last laugh was marked. And when it came to the Saspocalypse, the laugh last was marked. Hey, by the way, another one that we should be focused on, and I know it's not that big, but I have Hasbro. I was just going to say Hasbro. You know, I mean, these are things that are, I mean, does the Ellis$150 million Korean, maybe not even a data center, not even a hyperscale. Should that neocloud in Korea control us? And the answer is we can let it. I happen to love the FT. But the FT lead story when I got up was about Ellis.

33:52And I said, OK, I would do that, Joe, if I run the FT. That's a doubt. Well, but you, I mean, you're well aware that CDS spreads. I mean, SoftBank today, CDS, four-year high. I mean, credit is getting more scarce. Well, I want that. There's got to be some discipline. I mean, and look, if you think that your balance sheet is that good and you can keep borrowing forever, prove it to me that your balance sheet's that good. Go with Zaslav. I mean, honestly, when Zaslav first, when the stock was at$7,$8, he was buying back stock. And I was like, what are you doing? What are you doing? And he goes, Jim, we have so much cash flow.

34:30And that was the end. He said, listen, this stock would probably be worth$28. He was wrong. It's worth$30. Before we get to David and Clayton, one last touch on energy, because today the conversation is largely about delivery for December of next year, delivery for December of the year after that, Jim. Those are getting re-rated in the sense that this is not an issue that's going to resolve itself quickly. No, and what's going to have to happen, as we're seeing, is it's going to have to be United States producing, Venezuela producing. You have to have South America producing because we're just not going to get enough from the Gulf.

35:03That's a big change. It's happening right now. And people have to realize, although the rate count was not up, they are getting more out of the rate. The rate count was not up week to week. There's a look at delivery for over a year from now, working its way up toward 90. And then 28, not as dramatic, but I think 75-ish, where it used to be in the 60s, maybe high 60s. War ends 50. Sorry? War ends$50. War ends. Which war? The Iran? Iran. Iran war ends$50. Right, right. And I think that we're going to be flooded with oil like you wouldn't believe, because you're not going to just shut down everything just in the firm.

35:41$50, that's the hope. And it's the reality. But, you know, we're not we don't go over exactly what's going to go over because we have no idea what our president's thinking. Or what they're thinking, for that matter. Or what they're thinking, what the Hooties are thinking, what the Saudi Arabians. It's a complex thing. But if there was no war, we'd be at$50. Let's get to David at 13D. David. Thank you, Carl. Yeah, we're here at the Active Passive Investor Summit. Jay Clayton is the director of national intelligence. He's also the chair of the Super Intelligence Task Force. And very nice to have a chance to talk to you.

36:14We were saying about you've been here since you're SEC chair at some point. You've been at this conference when you're the U.S. attorney for the Southern District, the chairman of Apollo. And now you're taking this thing on. Not an insignificant responsibility. Well, look, I love coming to the conference like this. Yeah. Because we just saw Jeff Smith, activist. is the rigor that people in the marketplace put into analyzing companies is so valuable. And I just get heartened when I see it. I mean, drilling down, understanding, are these companies telling the truth? Are their prospects what the market thinks they are?

36:47Are they undervalued, overvalued? That kind of analysis is heartening to see. It's incredibly valuable to see. I'm now in the information analysis business, so I think about things that way. So it's good to be heard. Yeah, over time, these capital markets that we've been a part of for so long can do a pretty good job. They do. We're going to get potentially a chance to do that as well with a very large company called Anthropic. But I do want to start off on the SI task force and the responsibilities you have. Sam Altman is quoted as having told his employees recently about three proposals the industry has discussed for how to develop AI safely, which is one of the keys that you're focused on.

37:24One path involves developing an international organization similar to the International Atomic Energy Agency that would enforce standards. Another would involve merging all of the AI labs into a single body to develop new AI safety. And then Altman is quoted as describing a third scenario, Jay, one he doesn't prefer, in which one AI developer would obtain enough economic power that it could deprive all the other developers of the computing resources they need. I don't think any of us prefer the last one. I mean, America is about competition. And look, we've we've led in tech because of the incredible competition that has taken place in the tech sector for the last 25 years.

38:07I mean, that's obvious. And one of the great things that has enabled that competition are our capital markets. People allocating capital, you know, pursuing, I'd say, you know, rewards. But that creates incredible competition. I mean, no other no other country has been close. And it's because of that competitive marketplace fueled by capital that we've been on the frontier. No doubt. I am curious about the other two options that I just mentioned. and whether and how you're going to examine them as part of this, as chair of this task force. Is it possible, Jay, that we're going to end up with some sort of International Atomic Energy Agency similarity to an AI agency and or, again, quoting Altman, merging of all the AI labs into one single body so you make sure to develop things safely?

38:56There was a phrase you used in there, which I think is incredibly important, end up with. We are dealing with this issue today. the reason the president pulled everybody together, got them to sign the accord, put in place the superintelligence force is because this is an issue of the moment. It's not an issue for which we can wait for the development of a new regulatory body. I mean, how long do you think it would take to put the SEC equivalent for SI in place? It would take two years if that's the route we wanted to go. And things are moving so quickly, in fact, exponentially, that it's very hard to know exactly what's going to happen.

39:32So the president was like, hey, you guys are coming together. You have this four-part plan for the superintelligence accord for ensuring safety for the American people. That is a good step that we can take right now, including adding external auditors and trying to agree on standards for development. And what I would say is monitoring, control and monitoring. You have to have control and monitoring together. That was all embodied in that White House accord. Now, our job for the next 120 days, we're now in that cycle, is to get that as far down the track as we can and then put it on a path towards some level of permanency, knowing that we have to course correct because things will change.

40:12But there's an important thing that's missing from those three options. The U.S. is not the only place where these models are being developed. And you mentioned a very important word, international. Trying to get international cooperation is always a challenge. We can't wait for that to address the issues around SI. We have to address them, hoping we'll have international cooperation, but for right now, knowing that we don't. But you've also made it very clear in the comments that you've made since you were appointed to this position that the default would seem, and again, to continue to move at a rapid pace because we are in a race with some of our adversaries, such as China.

40:51Well, let's talk about a threat we all know. Cybersecurity is a threat that existed before we had these exponential developments in SI capabilities. It's exacerbated. Oh, greatly exacerbated. Greatly exacerbated. You've seen mythos up close, I assume, and it's frightened a lot of the financial services CEOs I've talked to. Sure, and everyone should say to themselves, are my systems, are they resilient? Are they vulnerable? Have they been hardened? Not just in financial services, but in energy and our other critical infrastructure. All infrastructure. We need to do that. The best way to do that is to be at the forefront of this technology.

41:29And in fact, this technology is being used to monitor and harden those systems already. I think we need to encourage that, of course, with the control and monitoring. But that is, to me, a way forward that looks promising, is to be out front on the technology and using the technology to test, monitor, and harden our legacy systems. I mean, some of the threats can be pretty sobering, though, Jay. I mean, you know, you're director of national intelligence. I mean, from a national security standpoint, the ability to develop a bioweapon that conceivably could threaten a lot of people seems to be greatly enhanced.

42:05We should not play down those threats. In anything, you should deal with a clear-eyed. I mean, sure, things like that, but just deprivation of communications. I mean, it is hard to overstate how important communications are to our day-to-day life. If you lose your phone, you feel like it's a disaster. So we need to harden our communication system. What gives you the confidence, and I know you're early in, that you're going to be able to come up with something that's actually going to be constructive, given, again, to your point, how quickly the technology itself continues to move forward? I don't want to be overconfident, but if you look to the past, we have met challenges like this head-on and clear-eyed.

42:46Now, every challenge that is new and, you know, gives you somewhat of a take a breath moment. But I think we can do it. Look at the way the private sector. Let me say this. The way the private sector has already started to organize itself in the United States. The group that Jamie Dimon has brought together to identify critical infrastructure, identify the industry groups that can be focal points for dealing with it and saying, hey, let's work with the government. so that we have what I would say is a incident reporting and response program in place. Right. That we're sharing, if there is a hack, that we're sharing information across industry.

43:25I can't overstate how important it is to have a public-private partnership on this issue. No, but I can't overstate the fact that when the history books are written, Jay, and they may be written by AI, but the decisions that your task force makes are certainly going to be part of that history. I would assume you're aware of that and take this very seriously. It's yes. And I'm lucky to have other members of the task force who are fully engaged and have expertise that I don't have. Right. So we have we have people who do have, you know, infrastructure expertise. What I would say is more military expertise.

44:01And, you know, Andrew Ferguson. FTC chair. Yeah. Great. Right. And and he is focused on the consumer and protecting the American public in a laser like way that just gives me a lot of confidence. Time is of the essence. I mean, I'm sure you're talking to people at the at the AI labs, certainly two of the key ones as well. From where we hear recursive self-improvement, the idea that the models are going to be able to recreate themselves without human intervention and continue to improve is not that far away. Is that what you're hearing as well? And does that make time of the essence here in terms of coming up with some sort of structure?

44:36I think it's, yes, I say it this way. It's an amplifier and an accelerant, because if you talk to the people at the labs, and I take them at their word, they say we usually think about technological development in a linear fashion. This has been exponential so far, and they expect it to be exponential going forward. So, yes, speed is a factor, and time is of the essence. By the way, do you have any idea how you're going to deliver this when you have your recommendations? Are we going to read about it? Oh, no, David, we're going to deliver along the way. We have products coming. This is not like, hey, public, wait 120 days.

45:11We're going to, I can't promise a date, but in terms of Andrew's work on here are the laws and regulations that are in place that we're going to use to protect the public, use to let the labs know, and what I would say is the people who develop applications. These are the things that you're responsible for, so do it responsibly. That's coming soon. OK. By the way, you had one job for 27 years. I've had one for 33 years. And now you've had like all these jobs. I was just talking about it. SEC chair, chair of Apollo, U.S. Southern District attorney, U.S. attorney. I'm going to go there. It reminds me of a Saturday Night Live skit.

45:52Only one job. That's not enough. Well, what's going on? I mean, are you going to stay in this job for a little while or what's next, Jay? Well, this this is this is a this is 120 days to get us on a good path. That's the job. I'm enjoying stimulated. The director of national intelligence job is an important job and one I hope to stay in for time to come. All right. Well, we look forward to continue dialogue around, obviously, what are amongst the most important issues that we're dealing with right now and more conversation at some point about the capital markets and their importance. I'd love that.

46:24That is really interesting. Jay, thanks for the time. Thanks, David. Jay Clayton, director of national intelligence. Carl, back to you. All right, David, thanks so much. Let's watch bonds here with the Dow up 350 or so. That decorrelation between treasuries and energy is still pretty interesting. Brent near the highest since May. Ten-year, not that far from a one-month low at 510. Housing. Yeah, but starts were a big miss. I mean, it's just stopped. Stopped being a force. We're back to where we were, I don't know, 1960. That's really pretty amazing. But you can't care if you're the Fed because you've got to kill inflation.

46:55Yes. You have to. Meantime, NDX trying to hold its lows from last Friday. Still a few points above. Don't go anywhere. It's time for Jim and Stop Trading. As I wait for the hyperscalers to rescue everyone, I want to focus on the fact that there was a downgrade of Apple today. And based on some channel checks, based on some work, based on some very serious whatever. And I think that if you want to sell Apple, go ahead. I was looking on the new touchscreen computer that's coming, how you can't get a duo, the new home products, how electric the new CEO is. But I guess I could look at how some, you know, maybe there's a semiconductor somewhere in Asia that came in lower, which means absolutely nothing to me.

47:36What I care about is this is a golden age of Apple. They don't have to spend a lot of money. There was a very good upgrade last night, by the way, if you have your phone. Golden age of Apple. Turner's doing a really good job. And if you really want to sell Apple, well, all I can say is history is against you. History is against you. Be my guest to sell it. But history matters. Yeah. They are looking for 79 million units in the December quarter. Street's at 85. So they're well below consensus. Well, look, I mean, if you want to make a name for yourself, it's a good thing to do. If you want to be able to make money for people, it's a bad thing to do.

48:10Which you'll try to do tonight with Hasbro? Yeah, now Hasbro is just, you know, look at Mattel versus Hasbro. It's been a tough run there. and BlackBerry, you know, BlackBerry was one of those stocks that got caught up in the greatness of the data center and then seems to have lost their way. But I think it's a very interesting story. They've got a lot of cool stuff. And people have been asking me over and over again to do it. Now, I've got to go back because I'm only allowed to talk about CoreWeave. Oh, this is, oh, sorry. Is this new? No, I just did not grab a notebook this morning. Did somebody give this to you?

48:46Yeah, I know. My wife bought about 10 of them on Amazon. That was all there was. Jim, we'll see you tonight. All right. Thank you, buddy. 6 p.m. Eastern time. 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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