Nvidia Selloff, Fed Hike Odds and AI IPOs Rattle Markets

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1:00Thank you very much, Scott. Stocks are dropping as talk of a half point rate hike picks up today. And it doesn't help that Nvidia shares have been sliding all day long. I'm Kelly Evans and welcome to the exchange. Let's start with the Nasdaq down 1.4 percent today. The S &P down a little less than a percent. The Dow's only down 315 points, so that's the outperformer right now. And Nvidia is weighing on the Nasdaq today. The biggest decliner down 6 percent this hour, down 17 percent over the past five sessions now. That's its worst stretch since ChatGPT first launched four years ago. It means the company's market cap is falling too, close to dipping below$4 trillion, dipped below Microsoft's market cap today for the first time since June of 25.

1:41Attention is turning to NVIDIA's board now with an interesting Elizabeth Holmes angle. We'll have more on that ahead. And take a look at Treasury yields because the 10-year is back above 5 % today after that hot CPI data this morning. And we have a 10-year auction happening right now. We'll bring you those results momentarily. Federal Reserve Governor Christopher Waller setting the tone this morning in a speech overseas before the CPI data. He warned a hot report could mean a quarter point rate hike isn't enough. I believe a 50 basis point hike in the policy rate should be considered at the December meeting.

2:15Hiking only 25 basis points in that situation would put our credibility at risk. And it's a risk I'm not eager to take. That was if CPI was up three tenths. It was up a little more than that today. BMO's Ian Lingen warned the market will have to price in higher odds of a half-point hike now, and that's where we begin. With those odds on the rise, let's bring in CNBC senior economics reporter Steve Leisman. Steve, what do the data say? Okay, hang on. I'll get you that 50 odds in just a second. First, I want to tell you Waller's comments along with the hot CPI numbers boosting the outlook for Fed rate hikes.

2:48But Waller was not alone. Dallas Fed President Lori Logan speaking this morning, raising the possibility not of a 50, but of consecutive quarter point hikes in December and January, she said the Fed needs to hike at least twice until rates are, quote, modestly restrictive. Now, futures market siding with Logan rather than with Waller, raising the probability of a December hike to 100 percent, up from 80 percent, with only, there's your number, Kelly, a 12 percent chance of a 50 in December. But they boosted the chance of a consecutive hike in January to 58 percent from just 19 percent before Waller spoke in that hot inflation data came out.

3:24The inflation data was hot by just a tenth. The headline was up 0-4 versus 0-3, CORE 0-3 versus the estimate of 0-2. Raising the headline to an estimated, by the way, we have to estimate this because there was, because of the government shutdown, it's a long story, but it was 3-9 is the estimate, and then CORE came in estimated 2-8, up a tenth. Trouble here is this, that's going the wrong way or not going enough of the right way to give Fed Chairman Kevin Walsh the confidence he says he needs, that inflation is headed back to the 2 % target. Kelly, you'll remember, Mr. Warsh said, if he has no confidence, we, quote, have work to do.

4:00And he was prophetic because, as to Lingen's point, when you said there's 12 % odds of a 50. So basically, we just went from 0 % to 12 % or effectively that with his comments in the data. Let's bring in Nancy Lazar. She is the chief global economist at Piper Sandler. Nancy, you've been saying that we're only now seeing the impacts of the feds easing from two years ago. So that's, you know, we're now talking about pedal to the metal rate hikes. It's going to take a long time for those to show up and have an effect in the economy. Well, this is Milton Friedman, obviously made this very, very famous.

4:36There are long and durable lags between changes in Fed policy and economic activity. And absolutely. Why are we seeing stronger employment right now? That's because of the lag effects of the 175 basis point cut the Fed made 24 into 25. It takes, on average, roughly two years. The declining trend in unemployment claims, which has been very dramatic, have been clearly pointing to stronger employment. And so it's likely to last yet as we go into 2027. Feds just raised rates 25 basis points. They've barely taken away any of the stimulus that they put in place in 2425. You see it in money supply growth.

5:14The other cliche is inflation is always a monetary and fiscal policy phenomena. Money supply growth has re-accelerated from minus five to plus six. Government spending has re-accelerated. Now, federal outlays are growing around six percent. Think health care and defense. Bank loans are growing over seven, almost eight percent on a year over year basis. All of those are accelerations corresponding with this, what we would argue, is a shift up in inflation, particularly if you look at the core PCE deflator. The CPI is a little screwy. The shelter weight is way too big in it. The core PCE deflator, which the Fed targets year over year, is still about 3 percent.

5:52Definitely the wrong direction. Would you support a half point hike? That would probably be too much of a shock to the system. My colleague, Kurt Lewis, would suggest still suggests, yes, you get the 25 and probably you pull forward another rate hike. He would agree with Logan's comments that you get another 25 in January. Quite frankly, the Fed does have to worry about their credibility. They've been wrong for six years. This reacceleration of money supply to relatively healthy growth rates is a problem. It suggests inflation will stay sticky as we move into 2020, into 2027. A lot of us, and this is maybe a worse thing, Steve, but have been going back and thinking about Greenspan and the way that he would look at different indicators and try to just put together a story of the economy and inflation to understand what might be going on.

6:41All of which brings me to my Greenspan chart today, which is the price of a bag of potato chips. Okay. Here it is. It's not a great chart. Are you like my wife? Do you have a problem with potato chips? I have a problem with them costing$7 a bag, which is what that price hit. if you look about a year ago, a little bit more. I mean, look how long. And that's for the same 16 ounces. They didn't make it into 14. Well, you add shrinkflation and it's even worse. Right. So look how long it took from that stimulus in 2022 for the price to peak. And if that's how long it's going to take for inflation to come down.

7:14So that's the story that the Fed is worried about here, that Waller was asked, hey, oil prices are going to come down. Why? And David Zervo said that on our air this morning. And the problem is the inflation in the pipeline. The problem is that you have this diesel issue, and that's going to affect prices going forward. You look at the PPI, which we'll get on Friday, but in the prior report, a lot of inflation up the pipeline and less processed goods coming down. You look at the NFIB report this morning that came out, intentions to raise prices, a six-point increase on the part of small business owners.

7:49I like Nancy's story. I think it's an excellent narrative. I guess there's a question of emphasis of does it does does the issue or the problem fall on the Fed or is it also on fiscal policy? Remember, the Trump administration ran a hot policy. They made it sure that we would have these tax refunds this year. We have that accelerated depreciation, making sure we had this huge investment in this year. That happened. Plus, you had the tariffs and the war. So the problem I think the Fed is having, not that I'm denying this issue that inflation is always a monetary phenomenon. Well, she said monetary and fiscal and fiscal.

8:26I think that's what I'm saying is a question of emphasis. My problem is that I don't think the Fed is reacting quickly enough to the changes in fiscal side. And I guess, Nancy, my concern is they're acting too quickly because we're talking about how in 20 the easing from a year or two ago is coming through now. now. So how do we know if we're over tightening? And by the same token, you go a year from now, are you telling me that oil prices are going to be up another 50 percent and food prices going to be up another 50 percent? If they just stay where they are, the inflation reports are going to have flattish readings.

8:58If they decline, some of those inflationary pressures are coming away. The housing market, those prices are not reaccelerating. Like those forward looking indicators seem like it's going to be harder for them to be green than red when you look at, you know, a year from now. So the breadth of this inflation report was really important. 59 % of the core CPI components, of which there are 110, actually rose more than a 3 % annualized rate. Wow, I didn't know that figure. 59%. That is historically very high. And can I just interrupt and say that's when Warsh flagged that number, it was 54%. So it's going up and going the wrong way.

9:36Sorry, Nancy. No, it's very it's the point is it there's breath. I would keep oil out of the story. This is not due to oil. It is due to monetary. And I'm not even sure it's due to the tax cuts. I'm not even sure it's due to tariffs. It's the acceleration in government spending that we've seen, which is health care. Take a look at the health care inflation in this report today and then also also also defense. So the combination of the two are keeping inflation sticky. The leading indicators of inflation, it's not house prices. The leading indicator of inflation is money supply and government spending.

10:10And they are definitely, I sound like a, I'm repeating myself, I apologize, but I really want to emphasize. No, but what are they telling us? In other words, are we then betting? So we know monetary policy or sort of the broadest look of the monetary aggregates that you want to use. You know, there's adjusted, M2 is not that great. There's other adjusted ways to look at it. So you see an acceleration there and you see an acceleration of it. It's hard not to see a fiscal acceleration, especially given the midterm results. And I don't think the Democratic Party is going to be spending less as a percentage than what we're seeing in this already.

10:44Again, this already on the rise under the Trump administration. So are we to assume those two variables keep going and that's why the Fed has to tighten? I would assume monetary and fiscal policy are still accommodative. One way, and I would agree with your comments on the election results, keeping government spending on the stronger side. The one way to gauge is to look at Fed funds relative to nominal GDP growth. I'm not a fan of real interest rates. We know nominal it's created by monetary fiscal policy. Nominal growth is six. Fed funds are below four. Three three ninety on Fed funds is still accommodative.

11:16When do we know we're tight? When Fed funds, if you look historically, which I've done, it's when Fed funds are roughly the same level as as nominal GDP growth and go through it. And I know we have from there, Nancy. But why then isn't the 10 year yield at 6 percent instead of five? I mean, one percentage point of steepness in the yield curve between Fed funds and the 10 year, which is basically where we are now, is completely normal by historical standards. I'm just wondering why it's not steeper than if we're that behind the curve. Well, nominal growth is right now six. And based on six percent nominal growth, bond yield should be five.

11:46We were calling for that for a while. If nominal growth accelerates up towards seven, then, yes, bond yields will move up towards seven. And right now, we think nominal growth will stay at six. But there is certainly upside to that as we go through 20, 20, 27. We have to go, Nancy. But I want to make sure people know that despite this discussion, you are and remain bullish on the U.S. economy. Right. That's been a consistent theme in your research that I read almost every day. And that's important. So you think what's happening right now, the U.S. economy can withstand when it comes to Fed rate hikes and these high yields.

12:20That's a yes or no question because we have to go to break. Yes. Actually, we have to talk Anthropik. I want to make sure people understood that. It's all part of the soup. Nancy, really appreciate it. Thank you. Thanks very much. Nancy Lazar, Steve, as always. Who else would have known the diffusion number off the top? It was 54. Now it's 59. But it's a little scary what's in my head, isn't it? The AI trade is weaker today with NVIDIA, by far the biggest loser after the company's alleged spy scandal. We're just keeping an eye on this one. It's been the tell for the markets all session long. It's down 6%, which is actually slightly off session lows.

12:53And it comes as Anthropic is kicking off its IPO roadshow today. And NVIDIA is one of the investors in the IPO. Anthropic is planning to market its stock between$70 and$78 a share. Total terms set today put the valuation at$1.4 trillion. The trading debut is expected next Thursday. But our next guest says it's still not the time for them to go public. Let's bring in bullpen capitals' Duncan Davidson. Duncan, good to see you. What's your concern? Well, look at the market. I mean, they can raise in January, February. They don't have to go out now. So I've got to believe Goldman's filled the book already and they wouldn't be doing this.

13:31And they probably are worried that it might be worse in January, February. But if I'd been running this thing, I would have waited till the new year. In order to raise more money or to do so at a higher valuation or both? The valuation would probably be OK. And this is going to fill no matter what. This is a must have IPO. If there's a winner-take-all market here between OpenAI, Google, and Anthropic, you've got to own all three. No, I just think they could make more money at a cheaper rate. Think about how SpaceX thinks. They can raise more capital at cheaper capital costs. It's good. So yes, if they'd waited, they probably would have gotten a higher price.

14:05So you wanted them to get a higher price at the IPO. So between 70 and 78, you wanted them to get at a higher price, because why? Just because - Of course, this is a game of cost of capital. The amount of capital they're gonna have to put out in the next three years is humongous. So the cheaper they can get it, the better off everybody's gonna be in their business. The higher the stock price, but still, does it only depend on the amount of capital they're raising at the IPO or does the post IPO performance matter as well? It doesn't matter as much. I would expect this to pop just like SpaceX did, then fade back down again.

14:39And it only matters when they raise the next tranche of money. The stock price is the stock price. It's not really beyond ego what this company should worry about. It should worry about raising money at a cheap rate. What do you make of their other financials, the revenue rate, the fact that Goldman says they could be free cash flow positive by 2030? Does that make the capital raise that essential to get the absolute cheapest possible when those financial projections look pretty good? Well, they didn't have to raise now. They have more than enough cash. The issue they run into is the commitments they have for data center capacity in the future.

15:14And these are a lot of them are taking pay, take or pay, which means if they don't have the cash at the time the data center says we're ready, they've got to do some real scrambling and not to pay a penalty. So, yes, they have to raise the cash over the next two years, no matter what. They could have waited a little bit. Sure. Yeah. I was just going to ask about the events taking place with NVIDIA, most important company for the AI build out in this country. Does it have an impact on Anthropics IPO timing in one way or another? Or does it have an impact on the broader both startup ecosystem and the AI business cycle?

15:48Or do you think it's just a tempest in a teapot? Well, I think what's going on is a regulatory land grab post-midterm. And that includes suddenly exposing the Chinese honeypot right after the midterms. They've apparently known about it for a long time. So why now? Why now is to grab more control over exports and then maybe to grab more control over data centers and a different... So that's what's going on right now. And if they do go too far with regulation, this is going to hurt the AI trade. However, if you think about what Dario, Anthropic CEO, and Sam, OpenAI CEO have been saying for the last few years, first of all, there's going to be a jobs apocalypse.

16:32Secondly, there's going to be an extinction risk. They've been stoking fear against their own business, which I think is highly irresponsible. Now, Now, a little bit of regulation, sort of thoughtful regulation, is probably good at sort of lowering the temperature of the fear of AI and also putting these guys in a decent position to keep going. Too much is bad, too little is probably not going to happen. So it's going to be something in between. I figured they were scare mongering to avoid just simple liability. That comes from, we made a product that, you know - I'm sure that's all part of it.

17:04There were more risk factors in this S1 than I've ever seen. Do you quickly last question? There are some like Bradley Tusk, who's a VC, does a lot of lobbying as well, but he thought they shouldn't go public at all because the one of the risk factors is basically this extinction event that you're talking about. You just thought it wasn't appropriate. I mean, do you share that point of view as well or no? No, there's the extinction event is ridiculous. It's overstated. I mean, every time you ask somebody how it's going to happen, there's a bad human in the middle. It's not AI out of control. It's some bad human in the middle.

17:35And that's going to happen no matter what. No, I think Bradley's just wrong. They do have to go public. These companies should be public. And they do have to raise a lot of capital to pay off all their commitments. So they have no choice. Regulatory land grab post midterms. That is a great way of looking at this. Seriously, Duncan, thank you. Appreciate it. Take care. Duncan Davidson of Bullpen Capital. Let's get to the results now of that 10-year Treasury auction top of the hour. Dom Chiu, how did it go? The auction went off at 5.02 percent. Current rate, you can see right now, just about 5.01%.

18:09Some interesting moves with softness, maybe a little bit in terms of demand, although not by much. The bid to cover ratio, that is a gauge of demand. It means it came in at 2.46. So$2.46 of bids for every dollar of auction available there. The last 10 sale average for indirect bids, it was also at 61.2%. The 10 auction average is at 73.4%. Now, foreign central banks are a part of that kind of indirect bid process. The direct bidders came in at 29 % of the overall sale. The recent average over the last 10 auctions was about 18%. And then dealers took down just below 10 % of the auction. The recent average was just below 9%.

18:54So again, interesting moves here, but slightly softer demand than we've seen over the last 10 auctions. Kelly, I'll send things back over to you. A little soft was Peter Bookvar's take as well. Not a huge reaction in rates, though. Don, thank you very much. Dom Chiu. Coming up, what do Jensen Wong, Elizabeth Holmes and Sam Bankman-Fried all have in common? We'll reveal that and bring you the latest on NVIDIA's spy probe ahead. The shares are down 6 percent. But first, billionaire investor Ross Perot Jr. joins us with what he's hearing from business leaders about the new political climate, plus his take on the future of data centers in his home state of Texas.

19:29That's next on The Exchange. This is The Exchange on CNBC.

19:41Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually get stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Traders don't need a prettier app. They need a better angle. Schwab's thinkorswim trading platforms were built for real traders like you.

20:16They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. You know, Kevin, sometimes I feel like computers are the only thing around here that are getting smarter. Yeah, my model hasn't had an update in a while. But that changes now. We think

21:05Welcome back.

21:12Welcome back. It's been one week since the midterm elections essentially altered the national outlook for the AI build out. Arguably the biggest shakeup is happening in Texas, one of the biggest areas for data center development. Also where governor-elect Hinojosa is calling for a moratorium on data center approvals until the state legislature can pass laws to, quote, protect Texans. For more on that, we're joined by one of Texas's most influential investors, the head of one of the world's largest real estate developers, Ross Perot Jr., with our very own Morgan Brennan. Morgan? Hey, Kelly. That's right.

21:47So I'm here at the B20 USA Summit and about 5 ,000 registered attendees. We've got 90 countries in tow here. And I am joined by Ross Perot Jr. It's great to speak with you. Morgan, great to see you. Thanks for all your help during our whole summit. I know. We've been busy today. So many conversations. Okay, so Kelly, just seed it up. Let's start right there. What you're seeing in Texas, especially, you know, in the wake of midterm elections, what it means for an effort is there. So, I mean, basically, we had Texas, it was a shock, and we had a complete political turnover, and none of us saw it coming.

22:18But to me, it's the genius of our democracy, and the voters have spoken. And so now we are all going to work with our new leadership and continue to build the state of Texas. And Texas is on a roll, huge amount of activity coming in. and on data centers, there's a lot of data centers lined up, and we'll work with the new administration and come up with the appropriate way to get the data centers built. As long as the community wants them and you do it in a responsible way, you'll get it done. And I've already had one call from one mayor today saying, would you please hurry up and get these data centers done?

22:49So you're seeing a lot of cities want the data centers. They need the tax base. They need the jobs. It's a very positive story, done right. And so we're optimistic we'll continue to build our state and continue to bring in a lot of good data centers. What are your expectations? When you say done right, what are your expectations in terms of how some of this regulatory framework might evolve from here? I think at the end of the day, you're getting a tendency for local control. And you're going to see probably most of the decisions pushed down to the local authorities, the local mayor. Let them work with their citizens.

23:21Let them work with the developer and get a responsible data center done. And I think at the state level, it'll be very maybe strategic, but it will not be tactical. Okay. Last time you and I sat down together, which was almost six months ago, we were talking about the building boom and the manufacturing renaissance that was upon us here in the U.S. What are you seeing now? It's still as strong as ever. And you're having a huge demand for industrial buildings, huge demand for manufacturing buildings, that every type of manufacturing activity you can imagine is now underway in the United States and certainly underway in Texas.

23:56And so we've got big studios going up with Taylor Sheridan. So we've got movies. We're building magnum factories. We're building office campuses. Every kind of use is trying to come into the state right now. And so it's a very good time. And you see it in the job growth numbers, very good job growth, which is causing some of the inflation. But you've got a boom going on that I believe the whole nation will start to feel pretty soon. OK, I think we have a question from Kelly back in the studio. Yeah. Okay, Kelly. Thank you so much, Morgan. I just was going to build on that, Mr. Pro, and say, you know, why do you think people are so disaffected with AI?

24:34And if you're in Texas, you must be surrounded by this kind of community pushback against the data centers. What would you say about that? What should AI leaders say about that? And not for nothing, now we have Jensen Wong under intense scrutiny. I don't think that's going to help the image. So yeah, Where do we stand? How do you push forward? Hey, Kelly, I'm in a fairly unique spot because I grew up in data centers. I've been in data centers since the 60s. And I've been building and developing data centers now for decades. And only the past six to nine months have you had a data center pushback.

25:08Most of our big data centers are up. They're running. They're paying huge taxes into the cities. The neighbors haven't said a word. You've got to be responsible how you do a data center. And you've got to really listen to the local community. If you listen to the local community and satisfy their needs, you'll get these data centers built. And just to pick up from there, you sit at the intersection of policy and investment. You're also chairman of the Chamber of Commerce, which is hosting this event. So what's on the agenda? How do you expect policy to shift, change, evolve, whether it's in the lame duck right now, we just had permitting move forward in the Senate, or with a new Congress coming in January?

25:47The United States Chamber is the largest business group in the world. Ninety-five percent of the members are small business. We are very bipartisan. We will work with both parties to come up with good legislation to keep the United States growing. So anything that keeps us growing at 3%, the U.S. Chamber is going to push. Permitted reform has been a big push. We're getting close. The next will be bipartisan immigration reform. We need to get this immigration issue off the table and get the economy really growing again with a good immigration policy. And I think there's a window here to get immigration done.

26:20And then the final one that will be tough is we're going to have to face entitlements. We're going to have to face Social Security. And we at the chamber want that done sooner rather than later. Let's not wait for a disaster. Let's get it fixed, form a bipartisan committee and get that done. So those are the three big focuses we have at our chamber. And we're making good progress. So we look forward to working with a new Congress to get this done. Interesting. Interesting to hear you talk about that. I think the bond market would like to see that, too. Ross Perot Jr., great to speak with you today.

26:49Morgan, great to see you. Thank you. Kelly, I'll send it back to you in studio. Great stuff. Thank you both. Really appreciate it, Morgan. Thanks, and our thanks to Ross Perot Jr. Coming up, NVIDIA shares down another 6 % today. We're heading back towards session lows. We're down 10 % in two days and likely headed for our first six-week losing streak in 14 years. You got that right. Up next, we'll dig into the Chipmakers Board of Directors and an under-the-radar connection to two other high-profile corporate scandals, including Theranos and FTX. We're back after this.

27:25Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Traders don't need a prettier app. They need a better angle. Schwab's think-or-swim trading platforms were built for real traders like you.

28:00They have an insane amount of chart studies. I'm talking over 300 studies for virtually any strategy. They also have integrated risk management technology and nearly unlimited customization so you can shape the platform to fit the way you trade. And when you do that, you can analyze trades from angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading. Computers are getting smarter, Silicon Valley's getting weirder, and AI is taking over. At least that's what everyone keeps telling us. Welcome to Machine Guides, a new NPR podcast that will be your field guide to the AI-powered future.

28:34We're veteran tech journalists with front row seats to the industry. And twice a week, we'll make sure you get smarter about AI. So you know what's real, what's hype, and what might come next. Listen to Machine Gods from NPR on the NPR app or wherever you get your podcasts.

28:54NVIDIA about to lose the$4 trillion crown for the first time in a while. You can see the shares there down 6%. It's been since July of last year. It's above that. $165.97 is the price to watch if you're curious. Comes as the board of directors investigates Jensen Wong's ties to an alleged Chinese spy. We're getting new details on an under-the-radar connection to a couple of other high-profile corporate scandals. Eamon Javers is in Washington with a closer look. Eamon? Yeah, Kelly, that's right. The man at the center of the storm today may very well be a man named Stephen Neal. He heads the NVIDIA Board of Directors, Nominating, and Corporate Governance Committee.

29:32And as such, he's going to be in a key position to oversee the internal NVIDIA investigation into the Jensen-Wang sex and spying scandal. But Neil is not just any other board member. Over a long career, he's been an attorney at the side of some of the most notorious figures in American business history. And that includes Theranos' Elizabeth Holmes. She's also the infamous savings and loan executive Charles Keating. Neil is the chairman emeritus and senior counsel of the law firm Cooley LLP, where he was also chief executive officer from 2001 until 2008. Early in his legal career, he defended Keating through federal and state fraud and racketeering prosecutions related to the savings and loan collapse.

30:18He also represented Elizabeth Holmes of Theranos. She's the central figure in this hit documentary. You can see everything that's out right now. That one didn't end so well. Neil and colleagues filed a motion in court to say that Holmes had not paid them legal fees that she owed. And when the crypto firm FTX was collapsing, founder Sam Bankman-Fried proposed that Neil should be the one to take over as chairman of the board. That one, that didn't happen either as the company fell into bankruptcy and the court appointed another executive to that role. So the question will be if all of that high-level experience dealing with corporate scandals will make Neal the right man for the job, or if his experience in largely defending these executives won't translate into investigating an executive who's very close to himself.

31:09We reached out to Cooley, by the way. We've not heard back from them just yet, so we'll let you know if we do. Kelly, back over to you. Strange coincidence, by the way, on the street. City and Wells Fargo cut their price targets today. Bank of America removed it from the firm's high conviction U.S. one list. Amen. All of this, to me, smacks of especially the stock move the last couple sessions, increasing odds that Wong might be ousted. Yeah, it's hard to see how he survives this, Kelly. I mean, we've seen other CEOs survive certainly infidelity scandals or corporate scandals, but to survive both of them at the same time at the nexus of geopolitics seems very, very difficult, especially when there are questions swirling around exactly what NVIDIA knew about all this and whether they did the appropriate thing.

31:57The thing that Jensen Wang has in his back pocket here, of course, is support from the president, who has issued some statements from the podium and from Marine One, suggesting that he supports Jensen Wang staying on as the CEO of NVIDIA. But that support has been, you know, just by my read, a little bit sort of moderated from the usual full-throated endorsements that we see from the president. So the president said he spoke to Jensen Wang yesterday, and he said he had no idea that the woman who he was having an affair with was a Chinese spy. And the president said he believes that for now. So that, I think, argues in Wang's favor staying on.

32:36But clearly the board has a lot of very tough questions to ask right now. All right, Eamon, thank you. Eamon Javers reporting with the latest. Let's get to Pippa Stevens for the CNBC News update. Hi, Pippa. Hey, Kelly. House Democrats are reportedly demanding that the Interior Department retain all documents related to President Trump's construction projects around Washington. CNN reports whistleblowers warned lawmakers that key paperwork has already been destroyed as the White House signals that it's accelerating plans on projects such as the Triumphal Arch to lay as much groundwork as possible before Democrats take control of Congress in January.

33:11The federal appeals court ruled today that former Voice of America head Carrie Lake illegally fired the director of the largest and oldest international broadcaster funded by the U.S. government. It's the latest failure by the Trump administration to dismantle Voice of America by cutting its broadcasting capacity and putting hundreds of employees on paid administrative leave for the last year and a half. And property owners in Miami-Dade County can now pay their property taxes with Bitcoin, either online or in person. The county's tax collector says the funds will immediately be converted to U.S.

33:44dollars and that the county will not hold, invest or manage any crypto directly in order to protect public funds from the volatile crypto market. Kelly. All right. Thank you very much, Pippa. Coming up, our next guest says November will prove to be a historic month for the markets. between the midterms, Anthropics IPO, and now NVIDIA's crisis. How should you frame that against a fundamentally pretty strong stock market? We'll ask a five-star fund manager next. We are selling off this afternoon after that hot CPI report and comments from Waller, among others, raising expectations for possibly a half-point rate hike.

34:23It's overshadowing a steep drop in oil prices that we've seen play out all week long. They're down about 10 % as tensions with Iran have eased somewhat. Our next guest is ready for it all, though. He is positioning for structurally higher inflation, recommending a 60-30-10 portfolio model with that 10 % in commodities. Here to discuss is Christoph Gleisch. He's the chief investment officer at Harbor Capital Advisors. It's great to have you here. Thank you so much for having me. In a weird way, commodities are not as hot a topic as they were. I don't know. It's been a good run of years. Their performance has been good.

34:55But this issue with oil has kind of muddied the waters. The soft commodities are a little bit weaker, if I'm not mistaken. So anyway, how are you guys positioning? And you're up 35 percent this year, right? Absolutely. So the ETF that we have that tracks an underlying commodities index, the ticker HEDGER HGER is up 35 percent. Very happy with the returns that we've generated for our clients so far. But maybe let me sort of take a step back. We believe that commodities are chronically under-owned, chronically under-invested. If you look at the average investor portfolio today, they have maybe up to 1 % in commodities.

35:30We think that should be near a 10. We think they're a great diversifier, and we think if they're structured correctly, they're a great return enhancer as well. And we've been able to demonstrate that so far this year. My hesitations as a kind of long-term, you know, index fund investor would be commodities don't do that great over a long period of time. I'm not saying three to five years. I'm talking 20 or 30, right? They don't tend to do that well over a very, very long period of time. And then when you invest in them, I always am concerned about what is the actual underlying product? Is it a futures contract?

36:02What's the rollover? How much of my capital might be eaten away by that sort of stuff? So I'm just curious what you'd say. Generally, look, we'd agree with you as of five years ago. And why we sort of broke into this market is we had this very strong point of view that commodities investors and allocators had been let down by the investable options that they had. If you look at generic commodity indices such as BCom or GSCI, they were never designed for the end investor experience in mind. They were set up for commodities producers and banks to help hedge and transfer risk more efficiently. So what we did is we took a first principles perspective and said, what if we created a new index from scratch built for investors?

36:45So what our index approach tends to do is it tends to lean in and out of different commodities. It's always going to be a diversified basket of commodities. I think it's really important to be diversified. It's actively managed. It's actively managed in that the index rules will orient the commodities to different commodities depending on the type of environment we're in. But depending on whether we're in a scarcity or a new basement inflationary environment, the types of commodities that you're going to want to own are going to look very, very different. Clearly this year, it's all been about the supply shock.

37:17It's been about owning those consumable commodities, albeit they have pulled back quite significantly in the last week or two. Are there other funds that you, from the company as well, I mean, because when I look at a name like OnSemi, is On in your, On wouldn't be in any of these commodity ETFs. No, so no. Also sort of maybe transitioning. So we run a number of different funds playing into different themes and areas of the market. OnSemi is a name that we hold in some of our more AI thematic. So we're big investors, we're big believers in AI as a structural growth story. I know there's been a pretty vicious sell-off, you know, beginning really going all the way back to July, October momentum.

37:57What was it like for you last week on that, you know, they call it the pod apocalypse, where reportedly major institutions were seeing one after another after another of their trading pods get shut down because of the violent price swings that we had. Did you experience any of this yourself? Luckily, nothing in the terms of, you know, I saw the reporting as you did in some of those pod shops. And it would seem to be sort of by the minute or by the hour, different pods shutting down, different hedge funds blowing up. We're generally a long only investor. What really gets you into trouble in those periods of severe drawdowns is the L word, leverage.

38:31And so we weren't sort of affected and thankfully we were able to weather it. We also generally deploy skilled stock pickers that are able to take those active decisions to try and protect when volatility is a bit higher. Last question then, have you been buying into some of this weakness going back to the summer or more recently? Or do you think there is a different kind of rotation happening in the market that you want to stick with? I think we're going to wait and see at the moment. But our bias would definitely be to adding risk rather than reducing risk. I think what people forget is that fundamentals this year are still so strong.

39:05If you look at earnings growth in the S &P 500, we're going to have earnings growth this year of 30 percent. If you look at valuations broadly, we came into the year with valuations 22, 23 times. Those are now nearer 18 times. We think this AI economy that is being built before us is just getting going. Even with Fed rate hikes. Is NVIDIA a buy here? Is that you lean into this? I mean, if you believe in NVIDIA's long term story and in the long term AI story, this is one of the most historic opportunities that you would have to buy it because of a sell off related to its significant leadership.

39:42Yes. But I'm just curious how that would fit into your thinking. So a couple of things. First, you mentioned the rate cycle. Yes, the rate cycle is important, but I think investors need to differentiate. Are we in a mid-cycle correction in terms of the interest rates or are we at the beginning of a new rate hiking cycle? We firmly believe that this is a mid-cycle correction. Maybe it's going to take one more hike than we originally thought. Maybe they do have to go 50 in December. I don't think so, but there's certainly February and meetings after that are going to be in play. I don't think that if AI gets derailed by one extra 25 basis points, then it's certainly not worthy of all the hype in which we've been led to believe.

40:22I think it's much, much more resilient than that. No comment on NVIDIA. Oh, so you can or not, depending on how your firm is thinking. It's very topical. What I'll say about NVIDIA is that Jensen Huang, he's been an amazing CEO, an amazing business builder, historical figure. Clearly, he's made a disastrous mistake. And NVIDIA shareholders are feeling that pain right now. When you look at the stock, though, it is an amazing, world-class company. And it's now trading 11 to 12 times, I think, on next year's. And that's despite the stock running up 7 ,000 % or whatever it is over the last five years.

41:03So I think we are beginning to see investors nibbling around at the edges, as are we. All right, Christoph, thank you so much. Really appreciate it. Thank you so much. Come back anytime. Thank you. I will. Christoph Gleisch with Harbor Capital Advisors. Coming up, CoreWeave down 40 % over the past month, and it reports after the bell today. We'll tell you what investors are expecting and how that company's relationship with NVIDIA, which is its second biggest shareholder, might be even more complicated now. That's next.

41:32Morning's report due after the bell today. CoreWeave out with results. The shares are down more than 50 % from their highs, and one of its biggest shareholders is NVIDIA. What are investors hoping to hear to be reassured about all of this? Seema Modi has more in today's Tech Check. Seema? Well, Kelly, NVIDIA is no doubt an important part of CoreWeave's story. Its investment in the company dates back to 2023, a Series B investment. At the time of CoreWeave's IPO, NVIDIA had about a 6 % stake, and then that grew to 9 % when NVIDIA decided to put an additional$2 billion this year. NVIDIA has invested separately$2 billion in Nebius.

42:10That was back in March, sort of reinforcing, right, the company's role as a strategic allocator of capital and a key player in driving the AI build out with money and also support. We're told these investments, as well as the ones in Marvell, Lumentum, Hugging Face, were all guided by NVIDIA CEO himself, Jensen Wong. He's known for being incredibly hands-on. With Corey tonight, CEO Mike Intritcher will need to provide an update on how it plans to fund future purchases of GPUs, its data center model. We did report last Friday that one of its big customers, Microsoft, was looking to consolidate its NeoCloud partners.

42:44The street will want a status check on CoreWeave's relationship with the hyperscaler and any new customers that it's been able to bring on. That's going to be key, Kelly, as we try to understand how competitive CoreWeave can be going into 2027. All right, Seema, thank you for that, Seema Modi. And we'll have much more on CoreWeave's results with co-founder and CEO Mike Intratore tomorrow on Squawk on the Street around 9.30 a.m. Eastern. Coming up, we'll talk to an executive who works closely with Anthropic about the future of enterprise AI and how his company might help lower those costs next.

43:20Welcome back. Assigning AI agents the right tasks can reduce your company's compute costs. That's what Workato does. They count Intuit and Red Hat among their clients and are partnering with major providers like Anthropic, whose head of commercial applied AI joined our next guest on stage less than two months ago. Joining me now here on set is Adam Seligman. He's the chief technology officer at Workato, and it's great to have you here. Welcome. Hey, glad to be here. So I guess I could ask, are you, you guys are trying to help reduce companies' spend, but places like Anthropic want more and more and more spent.

43:53So can both things be true at the same time? I think the most important thing is companies want to get business results for their AI investments. So that's what we do. We help them with the control of the costs and the execution, make sure there's safe execution. And it works like all their existing apps and business processes. That way they can take advantage of the latest models, but get real business results because it works and does actual work. So explain how you kind of would route people to different providers. This works best for this kind of task and this one, that kind of thing? Yeah, people ask a lot of different things, or they give different jobs to AI agents.

44:26Some of them are easy, some of them are hard. So our control plane routes their requests to the right model for the job to be done, and then also provides that execution to make sure the work is carried out safely and complies with their company's policies, govern it, all that stuff. Is that like what Ramp does? Who else are your competitors? There are a lot of people that are doing that control part to make sure the AI can do safe work. We do the control and the execution. It's not just like letting the thing in the door. It's making sure, like, once it's in the store, it can only do safe things and every step is governed.

44:54How do you do that at a time when these agents like to go a little rogue? I know. They're so powerful. They, like, invent new things. They can figure it out. They're pretty smart. Yeah, yeah. Well, our thing is, like, we're the place where the work happens, that execution happens inside your core systems. We've been doing this for over 12 years, connecting to thousands of different applications. Customers like Cisco and Red Hat, they use us for, like, their core business processes. And so for us, bringing AI agents to work with those business processes is a really natural evolution. Yeah, talk about the Anthropic IPO, OpenAI, maybe sometime next year.

45:25The usage of tools like Claude and whatever the latest model names are, what are you experiencing in terms of kind of, you know, the CIOs and these budgets? I mean, I'd just love to hear more about that. How quickly is the spend and the adoption accelerating? Yeah, I think every CIO woke up in sort of a cold sweat recently when they saw the bill, and the CFO was going to call them up and say, look at this bill that we've got. So it's kind of this weird catch they're in, right? They want to get the business benefits of AI. They want to put it to work. People are exploring. They're running pilots.

45:56But you can't scale the business on chaos. Ultimately, if you want to run a business, you have to control it. You have to control costs, govern the execution, make it make sense, and make sure it has real business value. A lot of people were impressed in Anthropics filing that their revenue accelerated even as they had cut costs. And maybe that speaks to what's going on here, that there's just such demand for this. I mean, I've heard stats like the adoption of these tools by actual companies is 1 % or so. Yeah, I think we're still in the early days. You know, like we started using Claude and other tools, you'd ask really simple questions.

46:26And now we're learning how to give it more and more complex work to do. And the models are responding really well to that. You've got to make sure it's safe. There's still some ground rules you have to follow really carefully. But we're in the early days of what these models will be able to do for employees and businesses and the kind of impact they can have. What do people use Claude for mostly? And what do they use Fable or other OpenAI models for? I'm just curious, what are each of their standout kind of use cases now? We see AI being used in business processes in pretty much every function.

46:54The big step is when you go from just using it for sort of productivity tasks like drafting an email or summarizing business notes. So like really getting into a business process, which might have like multiple steps, a human approval before you give somebody a refund. But like that's what's in front of us right now is much more complex, multi-step business processes that really drive like core KPIs in a business. Right. And you're helping them to watch those bills, get it to the right place, make it all work. I know a lot of companies are nervous about taking that step. So, Adam, thanks. Really appreciate it today.

47:24Yeah, thanks. Adam Seligman from WorkAuto. That's it for us. Thank you for watching The Exchange. I'll join Dom Chu. He's in for Brian. Power Lunch is after this.

47:59angles you won't find anywhere else. Go see what that looks like at schwab.com slash trading.