Inspiring the AI Trade, Peloton Product Launch, and Muni Bonds to the Rescue? 9/22/26

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0:42Member NYSE SIPC. You're listening to The Exchange. Here's today's show.

0:51Scott, thank you very much. The S &P trying for four in a row today as the AI trade extends its rally. I'm Kelly Evans and welcome to The Exchange. The Nasdaq holding on to gains this hour after hitting a record to start the session today. The Dow S &P struggling a little bit more. Dow's down 186, S &P fractionally higher. WTI is holding around$96 a barrel. President Trump telling the U.N. General Assembly he has a, quote, big decision to make on Iran. But as you can see, only a little bit of green there. And the 10-year holding below 5%. We have a two-year auction on deck right now. We're looking forward to seeing how that demand is.

1:27Meanwhile, the tech trade going strong and the broader chip trade leading the gains. Sandisk up 6 % on some bullish analyst commentary. AMD slightly lower now after becoming the 14th U.S. company to hit the trillion dollar market cap. And Apple an all-time high for the first time since July. But it's meta that has Wall Street's attention. Look at that. It's trying to stay in the green today. On top of yesterday's 11 % pop on that Muse momentum. As Brent Thill of Jefferies put it today, Muse has all the signs of a killer app. So let's start there while I get a glass of water. Dan Ives is a partner and senior managing director at Yorkville Ives.

2:03First of all, it's good to see you. Great to see you. How much, how impactful do you think that Muse is? I mean, I think it's a game changer. Because the reality is that I think investors, they discounted Zuckerberg and Meta in terms of the tens of billions that they were spending. You know, in terms of capbacks, they didn't see the results. Now look at it. I mean, this is something when you have when you have three and a half billion users to tap into, it's not just going to be open AI and anthropic. And I think this just shows this is an AI arms race. And when you count some of these companies out, whether it's Apple, whether it's Meta, look what happens because they have the resources and they have the install base.

2:43And I think investors, they discounted what, you know, what Zuckerberg and Meta could do here. I wonder, this is my little Kelly hypothesis, what do you think about this? The consumer having finally kind of an acute, maybe exciting way to use AI. I mean, people already use it, don't get me wrong, but a new way to save money on tickets or just experiment with different ways of kind of putting their agents out there in the world. Could this inflect demand for AI and for the supply chain, for kind of the agenda supply chain, and even kind of diminish some of those concerns around data centers and the larger angst about it?

3:15Yeah, this is for the average consumer. And I think it's many where they weren't ready to go down the anthropic, quad path. This is one, they're already used to the platform. I mean, think about how many Instagram, how many Facebook, how many users that you ultimately have. And now they tap into that. And I think when you combine subscription, cheaper costs with a product, anyone that's seen Muse is the reason it's top of the charts in terms of App Store because of what it could produce. And it just keeps coming down to the value more and more. It's going to be less in the model. It's going to be more in the data.

3:51And when it goes back to what Anthropic and Dario did going back to a few weeks ago in terms of the essay, the view is, okay, we get to the top floor. Now it's time to actually have regulatory and whether the regulatory capture or whatever, pull the ladder up. Now, Metta and Zuckerberg, like, not so fast. I would also add Alexander Wang. It has a little bit of must energy around him in terms of you follow him on X and he's irreverent and he's funny. And I wonder, I'm amazed and impressed that Metta lets him get away with just being who he is. But the way he's resharing posts and talking about its logo and everything else, that is powerful marketing.

4:31And again, here's somebody who's not Mark Zuckerberg, that people who wonder, who's the guy behind this app? They can go, oh, it's this guy. He's funny. I get him. He doesn't seem like a threat. He doesn't seem like an AI overlord who's out here with some scary doomsday story. Yeah, I think it's almost the anti relative to some of those others. He's a special one. And I think it goes back to the acquisition. It goes back to also a lot of the culture. Because when you go back to whether it's what we've seen at Google, whether it's what we're seeing at Meta, you need entrepreneurship culture under these big companies.

5:04And even going back to what Ternus and Apple are trying to do, you cannot just count them out when you have that user base and those resources. And I think it just shows, look, we are still in the third inning of this AI revolution. And this is an arms race. It's going to be more of a Game of Thrones, whether it's what we see with Amazon and Muse and some of the battles going on. And this is just the beginning because of the trillions of dollars going to be spent. You and I remember well when OpenClaw first debuted and what a huge inflection that was for the AI supply chain, especially those in kind of that.

5:36You know, I'm a simple person. The CPU supply chain is how I think about it. Right. As I understand it, technically speaking, Muse is kind of like a cute little rapper on OpenClaw. So if OpenClaw did that for enterprise users and Muse does this for consumers, what does that mean for all of the stocks, you know, from Intel to AMD to you tell me? I mean, who else is implicated here? Get the popcorn out. And I think it speaks to what you're seeing with AMD, what you're seeing with the chip stocks. I think it just goes back to our view, like this is going to be a multi-year tech bull market. And we don't have equilibrium probably until 2020, 2029 from a chip perspective.

6:14You start to get the masses in. Remember, we're only at the enterprise in terms on the AI trade. Consumers come in. It goes to our point. I mean, you're 15 % through what's going to be the true spend over the coming years. And that's why I think the bears that are in hibernation mode, they don't see that in the spreadsheets. And that's why I think these stocks will continue to move higher. And the AI trade spreads to the second, third, fourth derivatives. I think that's really what's happened in the market. Can you articulate what that second, third, fourth derivative is? Is it a derivative we've seen before or is it a new one?

6:47And does the success of Muse come at the expense of others like in OpenAI, which, again, I don't want to pile on them. I'm just talking about where is the consumer now if they're going to migrate? Or is there enough bandwidth for this thing to kind of go without taking share from anybody else? Well, it's a huge benefit for ultimately Apple because Apple really is going to be the total collector on the consumer AI highway. But the thing is it all spreads on the enterprise. Look at software. SaaS apocalypse was a fictional narrative. Yeah, there was some headwinds for definitely software companies, but look at cybersecurity.

7:18Look what's happening when you look at ultimately what I think is ServiceNow and Salesforce, but especially what we see on the infrastructure side. And look, all these companies, Adobe Intune included, they're trying to figure out how they're ultimately going to make sure that this is not a business model threat. That's going to be more acquisitions. So you would bet on them, on those laggards? I think the laggards definitely have a lot more wood to chop, but they're going to do acquisitions. They're not just going to say, game over, we're done. And I think that's why when you count Med out, you count Apple out, now look what these stocks are doing.

7:53Because when you have the install bases and the resources and the engineers, you could be late, but with an install base like that, you're going to be a winner. And I think that's what's playing out right now. And you're right. You, Sam, others have said, you know, don't set the narrative too soon here. It's going to change so many different times. I guess just a quick last comment on this then as it relates to the IPOs and all the rest of it. What is the ripple effect? I mean, Friday was supposed to be a barrage of bad news. It was supposed to be Anthropics not here yet. There's more. Now it's Gemini with AI safety.

8:22Where does that conversation go? Look, I think this is going to be, you're going to see a barrage. You're going to see many IPOs because I think ultimately it shows to what's happening in terms of the demand. As the demand spreads, whether it's Meta, whether it's Apple, it shows that the AI spend is just starting. Even with the IPOs we've pulled this week, which were more on kind of the energy side, I guess you could call it, but still. I think that's also more second, third, fourth derivative, is it may be some sensitivity to what's happened with data centers and midterms and what's ultimately going to happen.

8:53But our view is I think Bark will ultimately be worse than the bite as it plays out. And even if 10 to 15 percent of data centers get shut down or don't ultimately get live, you're still going to have a massive multiplier. For every dollar spent on CapEx, there's a five, six dollar multiply across the rest of tech. It is hard to bet against that. But again, a lot of the bears, they've called 10 of the last two downturns. So they'll continue to kind of trying to poke holes here. All right, Dan, good to see you. Thank you. Thanks very much, Dan Ives. If you think AI is exciting, how about treasuries?

9:25Because we had the two-year notes up for auction. This follows a couple of weaker auctions last week. Rick Santelli tracking the action. How'd it go, Rick? Well, first of all, you're right. These are exciting, these auctions. This was$69 billion, two-year notes, the first leg of a three-leg refunding, which a total of$183 billion. This leg, a C-minus, a Charlie-minus, what I gave it, the yield of these$69 billion, two-year notes, 4.787, which was about a quarter of a basis point above the when issued market, which means it tailed in a small way. That's not good, but it was a small tail. And the metrics, whether it was bid to cover, indirects or directs, were very close to the 10 auction average.

10:10However, a small tail and dealer takedown was a little bit larger than a 10 auction average, which means investors weren't super aggressive. Dealers ended up taking a little bit of the leftover at the buffet. So it was a C minus, not a bad grade. You can see that yields are moving a bit higher. As a matter of fact, they're the highest of the day session. We did have last night. The yields trade a bit higher towards that 478.5. But we are looking at a fresh high yield close on twos. Anything above four and three quarters would be a new high going back to June of 2024. And we want to pay very close attention here because the two-year and short maturities have been leading the way with higher yields flattening the curve.

10:50But right now, twos and tens are virtually on top of each other. Each one's up about two and a half basis points. And the yield curve is low 20s, which basically is about the flattest it's been in one and a half years. Kelly, back to you. All right. Not a great. There's no great inflation from you, Rick. Not at all. C minus Rick Santelli. Here's a stat that has some worried about the broader markets. Yesterday, the S &P climbed one and a half percent to close less than a percent away from its all time high. But get this, 30 stocks hit 52-week lows, while only 7 hit 52-week highs. The last time that happened, that the S &P jumped at least 1 % to within 1 % of a new high, despite new lows outnumbering new highs, was in 1999.

11:36So are these toppy times? Andres Garcia Amaya is the CEO of Zoe Financial. It's good to see you again. Thanks for having me. 1999 all over again? I think that the big difference is earnings are delivering, is not just clicking and getting eyeballs, which was a lot of the story in 99 and 2000, right? So if earnings hold up, which they have, I think the story could continue. Want to play for you something that Jamie Dimon was talking about. So we have kind of market frothiness, if you wanted to call it that on one hand. Here's what he said about the impact that AI could be having on the economy and the markets.

12:11Take a listen. And AI is not direct stimulus, but it went from$300 billion last year, the whole hyperscaler ecosystem, to like$700 billion this year, maybe a trillion more next year. That's like 1 % increase to GDP each year. And obviously, it may add a little bit to inflation because you're hiring people, you're building factories, you're buying equipment and copper wires and building power plants and all that. But it will be, it's an unbelievable technology. So I would say that to you know, there's which story is it? Is it the story that this is an unbelievable technology? Is it the story Dan Ives was telling?

12:45We're only in the third inning of this and this all keeps going and you can buy the semis and you can buy the memory names and you can buy all of these stocks that have done incredibly and still have plenty of time to generate wealth? Yeah, I mean, if you think about what is the constraint right now, is it demand or supply is still actually supply. That's where they're building out all these aspects of what's necessary for the demand that's there. So the story in Muse is an example. If two years ago someone told me that you could literally just shop one shot asking a question and then it's just going to go and get it done, I would think you're crazy.

13:20So imagine two years from now where the application layer of AI could be and how much jobs and demand could create. Although, I could have talked to Dan about this too, but we're starting to see this kind of hesitation amongst some partners. So you have on the one hand, Meta's muse saying, okay, Shopify is a partner. And I think today it was PayPal is a partner. And they always announce it with a cute little guy with the new logo. On the other hand, there might be some big companies a la Amazon who are less sure about whether they want to give up their customer relationship and give it to Meta effectively.

13:53So does that slow down adoption and the impact this could have? I think we're just getting started, right? I've been trying this app called Instinct, which is like a muse. You got Instinct? Okay. Tell the audience about Instinct for a second. I'll give you one crazy example. So basically it lives in your text. I'm giving this guy commercial, but it is great. It's a great product. It lives in your text. And for instance, my wife asked me, hey, can you buy a printer for a daughter? She started school. And I just basically said, I have a 14-year-old, find me a printer, nothing crazy price, go. Yeah.

14:22And I went on my flight. I landed. It bought the printer and it delivered to my house. Okay. So you've given this thing both your home address. Yes. And your credit card information. I'm too paranoid to do that. Well, you know what? In the early internet, I remember how scared you were putting the credit card to buy on Amazon as well. So I think it's still scary. And I think there's a lot of cybersecurity that needs to be improved. But it was that moment of aha. Aha moments. So when the Internet first came to town and I was excited because we weren't living near a shopping mall and I could go to, you know, thegap.com or whatever.

14:56But I didn't worry they were going to take my information and go buy other stuff. I mean, that's this case where it's like on the one hand you hear about bots going rogue. And on the other hand, we're all saying, sure, here's all of my stuff and go execute this task. I tend to be an early adopter and I'm sure I'm going to get caught on something where it buys me a$3 ,000 printer or something like that. But it does show you where this thing's going, right? And the ability to remove friction for consumers in an economy that's 68 % consumer-driven could create a lot of new activity. And I think we're just getting started.

15:27I desperately need new running shoes. There you go. I should tell you, I have to get size 12 with its running shoes if anyone's ever needed an AI assistant for that task. But Instinct, just to back up for a second, is still new. It's very small. Is it still invite only? It's invite only. Frankly, I try anything new, so I'll probably still try Muse. But I think it's just the idea of like, oh, I see where this is. It's like seeing around the corner a little bit of like, oh, interesting. This is where it's going. Imagine if Siri was able to do what Muse does, you know, to earlier comments from Dan.

15:59Like, that's huge. But if Siri does, is that a threat to Meta? I think, let's put it this way, as a consumer, let them fight it out, right? That's capitalism. As a company, I think that's why they're raising as fast as they can so that they don't fall behind. As an investor, though, what do you do? I think as an investor, the adopters of this, called the application layer, hasn't even gotten started. If you think about where the returns have come from from markets, first it was the GPUs, right, like NVIDIA and such. Then memory, like the things to get the GPU to scale and all the demand that's coming.

16:31But we haven't even gotten to the application layer. Like all the companies we don't even know of that are going to be created using all this new technology, right? And even if you look at it back up and look at a sector like financials, their operating margins are going to improve as adopters of AI. And we're just into early innings. I mean, we just saw Jamie Dimon. But let's say I was a user of instinct. I'm an early adopter. I'm excited about all this, but I want to make the big money. I want the 10 ,000 percent return. OK, can I sit in the S &P 500 and trust that my financials are going to do fine over time?

17:04A lot of the companies coming to IPO like instinct. Let's say we're all excited about it. It could be here. What are they going to wait until they're$100 billion in market cap? You know, that's why, as the journal highlighted this week, Home Depot was the best compounder in the S &P 500. Better so than Apple, because even Apple was so big by the time that it IPO'd, you would have done better holding Home Depot in the long run, because it was still a pretty cheap and a small company when it came. Yeah, no, I think to a certain extent, if you look at where the returns have come from, has been from the innovation, right?

17:31Like an NVIDIA used to make chips for video games, right? And over time, it really became what it is now. And there will be more IPOs. I think there will be more companies coming out to market, not just in OpenAI or Entropic. So give us a final point then about we started off with the stat about stocks and, you know, all these new lows we're making, even as we're near the all the all time highs. Is that all just noise to you? I think for now, it looks to me more of a mid cycle rather than late cycle. Even if the Fed is raising interest rates, they're looking to raise interest rates, call it 25 to 75 bps, not like post-COVID, 500 basis points raising.

18:09So I think the market could take that as long as earnings are not affected. And so far, earnings have been very resilient. I know. We didn't talk about bonds, which I know you're not a huge fan. I mean, yes, for the income, maybe not for the diversification commodities, as you say, is the new thing. And that has worked. But next time. Next time. Because today it's all about muse instinct and, you know, buying your sneakers. Yeah. Andres, thanks. Thanks. Thank you. Andres Garcia, Amaya. Coming up, health care is on pace for its first five month win streak in nearly two and a half years. We'll talk to one CEO using AI to keep their health care costs down.

18:39But first, it was seven years ago this week that Peloton went public. Speaking of IPOs, it's been a wild ride for investors since then. Now the company is unveiling another new line of treadmills. We'll talk to CEO Peter Stern about that, how much it costs and where they are in their turnaround plan. That's next on The Exchange.

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19:42and 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. I've given my blood, my sweat, my tears to this island. What happened here? We came here seeking a great treasure. We've been out here for 14 years. After centuries of mystery. You have to hold the proof in your hands. The lifelong quest. Time to go get it. Whoa, what the heck? Has finally paid off. You found that in the money pit. This is what we've spent our entire lives searching for.

20:22The Curse of Oak Island. New season tonight at nine. Only on History. Welcome back. It's been a rough ride for Peloton. Once a pandemic darling and a$170 stock, the company was hit hard with a post-lockdown demand crash. Throw in safety recalls and leadership shakeups. And it's been a long road of recovery and reinvention. Today, they're announcing a new lineup of products they hope will turn things around. Joining us now is CEO Peter Stern with our very own Brandon Gomez. Welcome to both of you. Do we have any products here? Is this like a morning show segment? We'll just hear about it. Brandon, go ahead.

20:59Yeah, no products here, but I did come out and check out the new equipment. And congratulations on the relaunch of the revamp of the products. Well, thank you, Brandon. We are so excited about the products that we launched. And although they're a little bit difficult to move around on set, We are so excited about the fact that we now have the Treadflex, which is our most affordable and the first folding treadmill in our history. So we are creating a product that addresses the two biggest barriers to home treadmill adoption, price and space. At the same time, we're introducing a whole slew of AI coaching features that will help everyone become a better runner, walker or hiker.

21:38And help me explain this for investors, too, right? Because there's sort of these conflicting stories happening, right? The stock's down about 40 % in the last year and a half. But at the same time, in the last year, the company's been profitable. So two of these things are, something's happening. So explain how the hardware revamp actually fits into your turnaround strategy for the investors who are just looking at the stock price today. What I would say is Peloton is the healthiest it has ever been. If you look at where we are, last year we delivered record adjusted EBITDA. We delivered the first full year of positive net income in the company's history.

22:15We have now delivered a couple of quarters in a row of revenue growth. So Peloton is doing great. And with these new launches, with the introduction of these treadmills, now a three-tier treadmill lineup that covers the broadest array of prices that we've ever offered, we're opening up more of the market for Peloton to capture the demand around running. So this is my question is, what is the growth engine? Because I feel like for so long, as long as I've been covering Peloton, in the pandemic era, it was hardware, hardware, hardware, hardware sales. Then we shift over to the fact that, nope, actually, this is a subscription model.

22:49We have the app for folks to use. We're trying to push beyond the hardware. It seems like we're now back in the land of hardware a little bit with the innovations that are taking place. So what actually is driving the growth of Peloton? So Peloton has what I call a magic formula. And the magic formula is the integration of hardware, AI-powered, intuitive software, the world's best human instructors, and an incredibly supportive community. When you bring that together, you have an experience that actually makes people have fun while they're working out and keeps them coming back. And that's what creates such incredible stickiness in our business.

23:25It's why we have enviable churn rates. And that supports, yes, the subscription part of our business, which has roughly 70 percent margins and has had very stable, stable revenue over the last few years. And it's what enabled us to transform the profitability of the company over the last couple of years. But you're a specialist in these kind of subscription products. So like Brendan's saying, it is a lot of capex to do the equipment and kind of just deal with that and the maintenance and all of it. Could you go to something more synthetic? Did you think about going in that direction? Because people would always tell me, too, if I was on my own treadmill or bike, they'd say, you know, you should try the Peloton app.

24:03You know, you can just use it on your own piece of equipment. These treadmills also$2 ,400, like you said, the entry level price,$6 ,300, more of that high end price point. Why treadmills in general for you guys are still kind of primarily known as a bike company? Well, let's first of all go back to the CapEx point. I'm actually very proud of the way that we have engineered this company in that we are really asset light. We have roughly 1 % of our revenues going into CapEx. We have found a way to work with great manufacturers to produce those products so that we're not carrying that capital expense on our books.

24:37So that's been absolutely terrific. Now, there's a tremendous amount of interest. We're seeing sort of a mass cultural shift toward running. And so we're incredibly excited about it. There's record turnout for marathons. We're seeing local run clubs come up everywhere. People like Brandon, who's an amazing runner himself, are sort of proof of what's happening out there. So we are going after running because we know we can make a really big difference for current and future members. At the same time, we're still completely committed to bike. We added a couple hundred thousand new bike members over the course of the last year.

25:15And we're actually introducing one of the big announcements that we're making today is that we're going to be going on sale on October 1st for the first commercial series bike in the history of Peloton. So that's a product designed for gym operators in a heavy duty use cycle. So really everything, we're clicking on all cylinders, bike tread today. Yeah. And I want to follow up on the commercial element of it, too, because that is another avenue that you're going into. And for me, when I'm having conversations with investors and with analysts, they're trying to understand where is Peloton's focus.

25:47So you have this very individualized, personalized treadmill for folks to use at home. But then you also are launching this commercial line that's meant to be high use and you're looking to partner with gyms and get into gym floors. I mean, again, where should the market be focusing when it comes to what that growth driver is for Peloton? and its turnaround. Commercial's actually a growth driver for us. And we posted double-digit growth in our commercial business over the last year. And the reason that that's happening is because gym operators are telling us that the only brand that potential gym goers ask for by name is Peloton.

26:21That makes sense. Right. And so we want to be there for people, for members, wherever they are. Some people exercise only at home. Great. Peloton has a solution for that. Some people exercise only at the gym. We need to make sure that we can serve them there. And there are a lot of people who actually have a hybrid workout routine, either because they travel or because they like to do some of the gym and some at home. Sometimes it's good to get out of the house. We want to be there for members wherever they are. And no commercial partners announced yet. We'll announce that soon enough. Okay. What are you training for these days?

26:51New York City Marathon. Well, again, it's... Brandon is for real. How much of the training do you do on a treadmill? Inside, outside? This is my thing, is that I really do think that the the target demo of the treadmill market is parents. Because when they have their kids around, they have to go and train on the treadmills. All my friends who I coach, they're the ones who are using it on the treadmill. You're coaching. I'm clocking the doors out. So you're training for the New York Marathon. You're coaching people. Okay. And following Peloton. I could use some help over here, but that's okay. We got you.

27:19Peter, thanks. Really appreciate it. Of course, Kelly. Thanks for having me. Peter Stern of Peloton. Brandon, great story. Brandon Gomez. Coming up, MetaShares hitting their highest level since October ahead of their annual developers conference this week. Mark Zuckerberg set to deliver his keynote address tomorrow night, but can he convince the street they can hold their lead in the consumer AI ecosystem? We'll talk about that ahead.

27:45Some of the most important design choices are the ones that go unnoticed. The details that together make an experience feel intuitive, comfortable, and above all, exhilarating. At Acura, that means looking closely at how every detail can make your experience behind the wheel more rewarding. Every lesson learned and every idea refined becomes part of what comes next, and it lives inside every MDX, ADX, and Integra. That's precision-crafted performance. That's Acura. Hey, Fidelity. What's it cost to invest with the Fidelity app? Start with as little as$1 with no account fees or trade commissions on U.S.

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28:52You have to hold the proof in your hands. The lifelong quest. Time to go get it. Whoa, what the heck? Has finally paid off. You found that? In the money pit. This is what we've spent our entire lives searching for. The Curse of Oak Island. New season tonight at 9. Only on History.

29:15Welcome back. We watched to see if stocks can hold on to their gains. Today should be a little easier for the Nasdaq and Russell right now than for the S &P, which is just up one point. The Dow's down 219. And Apple is outperforming its mag-7 peers, hitting its first all-time high since July. and is the best-performing mega cap so far this year. The shares are up 8 % since that launch event we covered here about two weeks ago. And Bitcoin is hovering around 86K, its highest level since January. It's up 14 % in a week. All of this despite the Clarity Act failing to advance in the Senate. But the SEC did clear the path for tokenized stocks.

29:50And Bernstein says that benefits broker exchanges like Coinbase, Robinhood, and Bullish. You can see those stocks there today, a bit of a mixed bag. The firm also high on the tokenization ecosystem, Figure, and stablecoin leader, Circle, saying they'll both benefit from a tokenized securities market. Let's get over to Mackenzie Cigalos now for the CNBC News Update. Mackenzie? Kelly, President Trump has reportedly signed a commission that permanently makes Marco Rubio the national security advisor. That's according to our sister network, MSNOW. Rubio has been serving in an acting capacity, but the move formalizes the double duty as secretary of state and national security advisor.

30:27The online influencer, known as Cavicular, charged with allegedly drugging and raping a teenager on Cape Cod. Cavicular, whose real name is Brayden Peters, has gained internet attention for his looks-maxing practices, which involves going to radical lengths to achieve more defined features. Peters has been a magnet for controversy after being banned from several social media platforms and arrested several times. He is scheduled to be arraigned October 14th. And this is a view of Hurricane Polo from space, which strengthened to a Category 5 storm this morning with maximum sustained winds near 160 miles per hour.

31:04The storm is about 200 miles off the Pacific coast of Mexico and is expected to bring life-threatening flooding and mudslides as it continues to strengthen into tomorrow. Kelly, back to you. All right, it's that time of year. Mackenzie, thanks. Coming up, Starbucks, Pepsi, Cigna and others are cutting back on covering weight loss drugs for their employees. But if costs and premiums do continue to climb, could that upend employer health insurance altogether? We'll talk about that story next.

31:52Welcome back. Open enrollment season is just around the corner. Employer health care costs could jump nearly 10 % this year to more than$19 ,000 per worker, according to the consulting firm Aon. For some companies, that means higher premiums, like at Starbucks, with some baristas reporting that their premium costs per check are nearly doubling. Others are cutting coverage like Pepsi, Cigna and PWC, all announcing they will no longer cover GLP-1 drugs for weight loss. And others are turning to coverage reimbursement arrangements where employers reimburse health care costs tax free. Our next guest is trying to help curb rising costs, working directly with employers to offer primary care benefits and using AI.

32:32Yes, AI superintelligence to keep costs down. Joining me now is Dr. Danish Nagda. He is the CEO of Resilient Health. It's great to have you here. Thanks for having me. And what does your company do? We provide primary care for employers so that they can actually reduce total cost of care. What's happened in the last few years is everybody's just been shifting the cost of the employee. So guess what happens? The employee doesn't take care of themselves. They get sicker. They need to be on GLP-1s. They need to be on these other drugs. So employers are saying enough is enough. Let's cut out the middleman.

33:01Let's go direct care, directly partner with primary care. So if my company offered your plan, it would mean I'd have to go find a resilient... Is that what you look for? I look for your brand name and I go visit one of your clinics. How many clinics do you have? So today we have 15 clinics in five states. We're actively growing about 400 percent year over year. So we should have many soon. I will say that the core premise there is, you know, you think about sort of like elite folks in Manhattan being able to access concierge care. We want to bring that to the janitor in St. Louis. And that's sort of the only way to do that is through a deflationary force like AI.

33:34OK, so that's the core question. How do you do this in a cost effective way? because as I understand it, having a doctor's office is a terrible business these days. All the doctors I know, I mean, they really, you know, New Jersey, there's a lot of them. They're all scaling. They're selling out to mega health systems. Exactly. Their costs are in a bad place. They have to find other ways to kind of generate revenue. So how does this work for you, especially when you're trying to extend it down to those who are lower income? Well, the most important thing, the most deflationary force in the world is AI.

34:03and healthcare has never been able to get around it because most of healthcare has come through the government. So it's highly regulated. Employers and commercial lives are a really interesting little middle ground. So you can go direct. We do a subscription-based model. The more that we can offload onto AI, the more our unit economics are actually positive. And so from our perspective, that is the final frontier of care delivery is actually going direct, cutting out the middleman, cutting out the insurance companies, who by the way, add a ton of bloat to the system and going direct and partnering with the real insurer in America, which is employers.

34:36So how does AI get involved here? So think about very basic things. I mean, you have kiddos. Sometimes you need a refill. Right. Why should your doctor be involved in some of the most basic things that we know that AI can help with? There are all these little tasks along a doctor's journey. We always think about the patient journey. There's also a doctor journey. They're spending a lot of their time doing a bunch of administrative tasks that they don't need to. That's a great use case for AI. and then allows our doctor to be able to take care of more patients, do a better job with each patient, give them that concierge experience.

35:07And so what if you took the service stack and you took 100 % of care that's delivered and took some of it and gave that to AI? That is much, much cheaper than a doctor's salary. So in this case, health care has become so fragmented. There's primary care physicians. There are pediatricians. Those are separate. There are all sorts of specialists from dermatologists. Dentists, I guess, is a whole different thing. So even if you can tackle this one piece of it, what about all the other pieces that go into it? Yeah, great question. So we actually don't think they're different pieces. We actually think that we need to give superpowers to primary care doctors.

35:40So what we do is we provide same-day access to primary care and same-day access to 70 specialties. So if one of your kiddos gets sick, you can bring them in. And let's say they have a mole in their forearm. Instead of waiting six months to see a dermatologist, we'll actually do a dermoscopy right there. and literally in four hours, a board-certified pediatric dermatologist, who, by the way, again, six to nine months wait, will take a look at it and let you know what's going on. I think this week alone I've had a staph infection, a rash. We had lice a few weeks. I shouldn't even talk about that.

36:09So is this really possible because it sounds too good to be true? I mean, how do you really provide all of these services, and it's day of, and it's cheaper? Can you give our viewers who are smart just an example of the economics of what you do versus the system and how you're really able to do this and scale it? Well, first of all, it's taking what needs to be done and allowing that to occur in a system that is built around billing. All of healthcare is built around this fee-for-service billing model. We are not built around that. We're on subscription. And so ultimately, once you move to a subscription-based model, which is what these employers actually want us to do, you can actually change the unit economics completely and be able to take care of the patient as a whole patient and not worry about, hey, if I don't do this thing this way, then I won't get paid my$150 for that visit.

36:53That is at the core of the whole thing. I think AI is a deflationary force, but I also think that cutting out the middleman is the most important thing. We know this is true in drugs, and now we know it's true in services. And finally, when you hear people talking about kind of healthcare more broadly, we mentioned all these companies that are dropping coverage. There's new upstarts like Lucy from Oscar Health trying to build out the individual marketplace. I mean, it does feel like we're at an inflection point. Maybe GLP-1s in a positive way can be some kind of catalyst for change, but that's going to leave a lot of employees in the lurch.

37:22I'm going to say something contrary in a little bit. I'm not a big believer in ICRA and choice. What's ICRA? ICRA is what you were talking about, which is like the insurance companies kind of employers just handing that off. Because all it is is just saying, hey, patient, you now pay more. The employer pays less. But that causes more trouble because people then end up spending way more money long term because they're not taking care of their short term needs. This is a big, big thing right now that is being pushed. And I will say that that is not the answer. The answer is actually to make the most important care, your primary care, to make the most important care, the colonoscopies, you know, all of those things actually completely free for the patients.

38:00They actually do the right thing for themselves. Sounds great. Now I want them to come to my house so I don't have to travel there either. That's next. Dr. Danish Nagda, thank you so much. Thank you. Please keep us posted. Really appreciate it. Coming up, Muse is not just hitting number one in the Apple App Store. The AI agent is also pushing up MetaShares more than 30 percent this month. Mark Zuckerberg taking the stage at their annual Connect event tomorrow night. Can he keep the momentum going? We'll talk about that next.

38:28Can Meta piggyback off the success of Muse as it prepares to launch more hardware? Mark Zuckerberg is expected to tackle that and some of the privacy issues it could raise in his keynote speech at Meta's Connect event tomorrow night. Julia Boorstin has more in today's Tech Check. Julia? Kelly, Meta surged 11 % yesterday. That made it one of its best non-earnings moves ever. The stock is higher again today. This on bullishness over Meta's Muse AI agent, which had faster downloads than ChatGPT in its first 12 days. This comes ahead of MetaConnect, where tomorrow at 7 p.m. Eastern, Mark Zuckerberg is expected to discuss his AI roadmap, addressing the key investor question of whether Meta can create the definitive consumer AI software and hardware.

39:12Plus, we're looking for more on Meta's plans to monetize its AI investments. That's because Meta is guiding to as much as$145 billion in capital expenditures this year. With the stock down about 2 % over the past 12 months, Meta has been working to improve its foundational models, which have been seen as lagging the likes of OpenAI and Anthropics. The stock, though, has gained 22 % in the two weeks since its launch of its Muse AI agent, the freemium app that can execute tasks and shop. JP Morgan writing, quote, While it is still early, we believe that Muse has the potential to become the most widely used consumer AI application since ChatGPT.

39:53Bank of America, though it has a buy rating on Meta, warning the monetization path for Muse, including ads, subscriptions and commissions, seems unlikely to be material before 2028. Now, in the meantime, Meta is appealing to developers to build for its Muse ecosystem. Tomorrow, Meta is expected to announce a camera-free version of its Meta Ray-Ban glasses, addressing privacy concerns while the lower price tag without the cameras could drive adoption of AI-enabled hardware. Kelly? You know, it's a tough question. I think they're going to have to kind of walk a line there to convince people they can both have these new tools but that it won't engender a big pushback.

40:31And Julie, is that the new studio? The new bureau? It's beautiful. This is one of the shots at the new bureau. Yes, here in beautiful Universal City, California. That would look behind just very, very good. All right. We'll let you go for now. We'll see what happens tomorrow night. Julia Borson, appreciate it. Coming up, it's been the quietest start to hurricane season in the Atlantic ever. But that doesn't mean extreme weather isn't on the way. And with proposed FEMA reforms putting disaster recovery funds into question, could muni bonds come to the rescue? That's next.

41:05Welcome back. California declaring a state of emergency ahead of what is likely to become a historic El Nino event. The state urging residents to prepare for potential flooding, landslides and strong storms. And the cost of dealing with these disasters keeps growing. According to Nuveen, there were 27 disasters where losses topped a billion dollars in 2024. Even after adjusting for inflation, that's still three times the average of the 1980s. Could the muni market have a solution to this? Let's bring in Dan Close. He's head of municipals at Nuveen. It's good to see you. Good to see you. Are we talking cap bonds here or is this a different way of coming at this?

41:40Yeah, slightly different way of coming at it. You're seeing that convergence of two trends, a lot more natural disasters greater than a billion dollars. And the federal government now taking a step back and saying, do we really want to reimburse at 90 percent as we've done in the past? And there's the president's council to assess FEMA. And some of their recommendations are taking a step back and saying 50 percent is where we'll start. we're going to cap it potentially at 75%. Wow. And municipalities are, yeah, certainly, municipalities are taking notice of this and saying, how can I harden my infrastructure so that if I do have a disaster that hits, I'm not on the hook for much, much lower reimbursements.

42:21And so when, in other words, if they're saying, okay, we have a disaster that hits, the government used to pay us 90 cents of reimbursement. That could be 50 cents. That could be 75. So we have to pay to make sure these systems work. That costs a lot of money. That's right. But they can turn to the muni market right now. I mean, but are rates up? I mean, is this going to be expensive for them? Certainly. But I mean, we estimate that there's about 63 billion of these projects that are right now in the queue. But I think you absolutely have to do it. This ounce of prevention is really needed with a lot more uncertainty on your federal funding.

42:52So Miami, for instance, put in 400 million in 2024 of pumping stations in a seawall. You know, here in New York, Battery Park issued 650 million to put in a seawall. So municipalities, I think, are taking a look and saying there really wasn't an incentive to have an ounce of prevention when you got 90 cents in the dollar. With payments considerably slowing to FEMA, with more decisions going against municipalities, one really doesn't have a choice. And the municipalities we're talking to have really changed their mindset. And you were saying people who aren't looking at this now should, I mean, got to make sure that you know what's coming.

43:28For investors, it's also interesting because, so let's take the Battery Park example in New York. So they're coming to market to try to shore up their defenses. But investors in New York, I mean, if these yields on a tax equivalent basis, what could they be getting for investing in these projects? Be still my heart. Yes. You know, on the municipal side right now, we've crossed that threshold. We're long dated 5 percent double A coupon bonds, which is right down the middle of the fairway for us, are yielding more than 5 percent at a discount. And so when you have and you're in a high tax state and you're all in taxes are at that 50 percent level, you know, you're talking 10 percent taxable equivalent yields at the long end of the curve.

44:08And 10 year, you know, it's right around 4 percent. So an 8 percent all in taxable equivalent yield. But so, again, if you are on the side of funding some of these kind of hardening projects, you could be getting an 8 to 10 percent tax equivalent yield. That's exactly it. And we're finding a lot of investors like both the social aspect of this, of being able to react to all of these weather-related events, coupled with certainly saving a good deal on your taxes. That's a good reminder, as we've seen bond markets in general kind of backing up here with the flip side of that coin is. Dan, thanks.

44:42Thank you so much, Kelly. Dan Close of Nuveen. President Trump's financial disclosure form from July is out. Eamon Javers has the story. Eamon? Kelly, that's right. We've got new information on the president's sales and also his purchases of stocks for the month of July. A lot of trades here. The president continues to trade actively, although he says it's managed through third party firms that do the trading for him. Total purchases, we see about forty three point six million dollars in purchases. Total sales, thirty five point six million dollars in sales on July 20th alone. something to flag.

45:14We see sales by the president of Microsoft and Amazon of somewhere between five and twenty five million dollars. They just give you a broad range here. So we don't know the exact number. And you were just talking with your last guest about the Mooney market, a million or more purchases of municipal bonds by President Trump in individual counties in relatively long dated bonds in Florida, Missouri and Texas. So the president, an active participant in the muni bond market as well. Back over to you. Eamon, did we ever determine, I can't remember if there was clarity on this, but because it's so active, this portfolio, I mean, much more so.

45:53Is there an aspect of this that's daily tax loss harvesting? Yes. That's what the Trump family have said, is that the president is not directing this. It's done by outside third parties, and they say those third parties are engaging in daily tax loss harvesting. So you see the president going in and out of some of the same stocks throughout the course of the month on different days. So that's their explanation for the sheer volume of the trades that we see. And they say the president doesn't direct any of this trading. It's all done for him. But we can all see it now in these disclosure forms.

46:22So it's worth looking at. Right. And obviously, we'll pour over it to see if anything stands out from what just might be that typical churn. But this is something I and many others have been pitched on by financial advisors, because they say you can generate several percentage points of alpha over the course of a year just by doing daily tax loss harvesting. So it is picking up. I think there's maybe a Vanguard ETF or something that does this now automatically. Yeah, and it looks like the president's a buyer too. Right, yes. Eamon, thank you very much. Appreciate it. Eamon Javers with the July update from President Trump on his trades.

46:54That's it for us. Thank you for watching The Exchange. I'll join Brian Sullivan for Power Lunge right after this.

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