Joe Kernan (2:03)

Another wallet was created. This one just 12 minutes before the post on Truth Social earned an estimated $48,000.

Podcast Host / Narrator (2:12)

It's Thursday, April 9th, 2026. Squawk Pod begins right now.

Michael Froman (2:20)

Stand Becky by in three, two, one.

Becky Quick (2:22)

Cue it please.

Andrew Ross Sorkin (2:25)

Good morning everybody. Welcome to Squawkbox right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin. Yesterday the Dow was up by more than 1300 points and it was the biggest gain that we've seen for the Dow in a year. Last time we saw gains like this was after the 90 day suspension of the tariffs that President Trump put in place last year. It was the S&P 500 and the NASDAQ both performed well yesterday too, where they are now on six day winning streaks. In fact, the Dow was or the Nasdaq was up by 2.8%. The S&P was up by 2.5%. If you check out treasury yields this morning, you will see right now they're lower across the board. The 10 year sitting at 428. The two year is at 378. And then you've got energy prices which yesterday Brent was down by 13%. It's been biggest drop in six years, biggest drop again since the COVID era that we first saw with WTI market volatility that we saw back in early 2020. But volatility is the name of the game.

Becky Quick (3:28)

Meantime, Iran now accusing the US of violating the cease fire agreement between those two countries. President Trump saying the US military will stick around in the region. And CBC's Dan Murphy joins us now with the very latest on the ground from Abu Dhabi. Good morning.

Dan Murphy (3:41)

Andrew, good morning to you. Well, the two week cease fire is still in place on paper, but it has been undermined in the last 12 hours and there does seem to be misunderstandings and a lack of trust on both sides. Israel hit over 100 targets in less than 10 minutes in Lebanon yesterday, marking its heaviest wave of airstrikes since the war began. There were scenes of chaos literally on the streets of Beirut as smoke from those strikes filled the air. Lebanon's civil defense says at least 250 people were killed and Israel said it killed Ali Yousaf Hashi, who is a senior Hezbollah official. But of course, this raises key concern. Iran is calling those strikes a violation of the cease fire framework. But of course, the US And Israel say the deal never covered Lebanon, only the direct hostilities between Washington and Tehran. Here's the vice president speaking earlier on

Becky Quick (4:37)

that I think this comes from a legitimate misunderstanding. I think the Iranians thought that the cease fire included Lebanon and it just didn't. We never made that promise. We never indicated that was going to be the case. What we said is that the cease fire would be focused on Iran and the cease fire would be focused on America's allies, both Israel and the Gulf Arab states.

Dan Murphy (4:57)

So that dispute is now really the central fault line of this entire agreement. The Wall Street Journal also reporting this morning that while the US has had some big successes in its war, Trump allies and U.S. officials fear an Iran victory lap is premature. And of course, in retaliation for those strikes in Lebanon, Iran reportedly closed the Strait of Hormuz once again and is continuing to push for its toll. BO basically demanding cash or crypto now for transit. President Trump has also demanded that the strait be reopened and said on Truth Social in the last few hours that all US Ships, aircraft and military personnel will remain in place around Iran until the real agreement on a cease fire is fully compiled with. And he also warned of more conflict if that doesn't happen. And of course, here in the Gulf, we have seen most nations welcoming this cease fire, but their message to Washington is pretty clear here. They say any deal that leaves Iran with influence over the Strait of Hormuz is not a deal that they can accept. Guys.

Becky Quick (6:03)

And so it feels like, I don't know, are we back to square one, Dan?

Joe Kernan (6:08)

Halfway, maybe.

Dan Murphy (6:09)

Quite possibly. It's really hard to say at this hour. We'll have to watch and wait to see exactly what happens inside Lebanon and watch and wait to see exactly what happens inside the Gulf as well. You really do get the sense that from the US Side, from the Iranian side, they are pushing for a deal. They do want to see this conflict coming to an end, but only on terms that they can accept. And again, the gap between the two sides is wide at this point. And underscoring what I said earlier, the lack of trust on both sides is real as well. Of course, also hanging in the balance is Israel and its operations inside Lebanon. This is a key wild card that I also mentioned yesterday. It appears as if Israel is also fighting its own war. And because Netanyahu wasn't necessarily included in the original framework for those peace talks, also it appears that he is now, now part of me going it alone. So watch that space as well.

Joe Kernan (7:06)

We have no idea what the actual negotiating position of Iran is right now. They said that the 10 point that was public, that that was thrown away. Carolyn Levitt said that was thrown away immediately by President Trump. So it's a totally different set of demands that Iran wants. But there's no way that what we need is going to be in those demands, in what they're negotiating for at this point. The key things that you, how do

Andrew Ross Sorkin (7:31)

you get both sides to save face or allow Iran to save any face?

Joe Kernan (7:35)

We need to. They can't have control of the strait. They can't have the, they can't keep enriching Iran. The other thing, Dan, it's really sort of depressing is if you hear from Iranians that live here and still have family back there or even what they're saying in Iran, people initially were, you know, were gratified and grateful that this was happening. Now they're worried that they're going to be left in a worse position because the same regime is still there. Even all of our allies in the Middle east are voicing the same thing, that the job is not finished yet and there's no way Iran is going to finish it without further action by I mean, here's the Journal today, Trump declares a premature victory. Iran is still a threat. The strait may retain enriched rate. On the other Trump can't negotiate away free movement in the strait or the highly enriched uranium. Everyone is saying the same thing over and over.

Becky Quick (8:32)

The Ray Dalio point, though. I know everybody know.

Joe Kernan (8:34)

I'm just saying everybody knows the strait. Who doesn't know that it's about the Strait. Why do you have to cite someone to say it's about the Strait when oil went to $120.

Becky Quick (8:43)

We know all because there were other people yesterday who were smiling as if this was a big day. And it was, well, it was a,

Joe Kernan (8:50)

it was baby steps.

Becky Quick (8:51)

But I think everybody knew, I think anyone who understood what was happening knew this was maybe one step forward, potentially two steps back. Maybe one step forward, one step back.

Joe Kernan (9:00)

Someone said, here's what I've come up with, Dan. The Strait of Hormuz is an important part of this whole calculus.

Michael Froman (9:08)

Yeah.

Joe Kernan (9:09)

I mean that's what I mean. Yes, we understand that in that's the economic basis of all our problems is based on the Strait. And it's almost impossible for us at this point to tell Iran what to do in the Strait.

Becky Quick (9:24)

And that's. But that's the whole thing. And then you heard you had the president yesterday reading these truth social posts.

Joe Kernan (9:30)

Well, who knows? They're talking about sharing the 2 million,

Becky Quick (9:32)

that he's sharing the money, that he's doing regime change and he's doing all these things.

Joe Kernan (9:37)

There's already been regime change proposal.

Andrew Ross Sorkin (9:39)

Do you see this on the, on the Wall Street Journal about the.

Joe Kernan (9:42)

It's not their water for charging a toll and. Right.

Andrew Ross Sorkin (9:46)

It's a very, it's a modest proposal in a Jonathan Swift sort of written way.

Joe Kernan (9:51)

Right. But they don't have the right to do any of that in a perfect world. It's not theirs. It's international. Is it?

Dave Kasten (9:58)

Yep.

Dan Murphy (9:59)

Exactly. And I can only share the view from what I'm hearing here in the Gulf. And in fact, the ADNOC CEO, Dr. Sultan Al Jabba just posted on social media literally just a few moments ago, saying that Iran has made clear through both its statements and its actions that passage is subject to permission conditions and political leverage, he says. And that's not freedom of navigation, that is coercion. And the reality is, at least according to what I'm hearing here, is that an Iran that controls even partially the waterway through which their oil, this Gulf oil flows, is an Iran that can still hold them hostage indefinitely. So the Gulf states have tried to address this question. At the United nations on Tuesday, there was this Bahrain sponsored resolution backed by Qatar and the uae, Saudi Arabia and Kuwait and Jordan, but it was vetoed by China and Russia. So they've tried to get the framework that they would need legally to help to reopen it. But at the same time, they're also saying that unless this issue can be resolved, their economic stakes are seriously at risk here. So, you know, maybe when it comes to these negotiations, why not just start on the Strait of Hormuz specifically instead of trying to go down this list of 15 different proposals? I think that's the key question that the Gulf is grappling with right now. The overlap is pretty incredible here. No real clarity on both sides when it comes to what is going to be able to be achieved. And now these Gulf producers and golf leaders are watching closely to see exactly what happens next.

Becky Quick (11:36)

Dan, want to thank you. I'm sure we'll talk a lot more. One of the things actually I want to talk to Dan about that I hope we'll get an opportunity to talk to later is I talked to some insurers yesterday and the idea that these boats will even be able to go through right now, nobody will insure this at all. But even if, even if you thought that there was a deal in place, it could take potentially months for them to even just decide to accept that they would be willing to insure these things.

Andrew Ross Sorkin (12:03)

Remember, at one point the Trump administration said that they would backstop insurance or something. They were trying to push the insurers. But, you know, you forget exactly what the details of that were.

Becky Quick (12:13)

If you are the equivalent of an actuarial or whatever your job would be in this regard, how you actually try to estimate the chances that your boat is going to have a problem. Unless you're going to charge people an extraordinary amount of money, it's very challenging.

Joe Kernan (12:26)

And they would never, you know, overcharge. You know, that's what they said. Yes. If a drone chips the paint on the side of a tank and they're oh, okay, but from the here's what you're paying.

Andrew Ross Sorkin (12:37)

How much would you charge? How much would you be willing tax charge. Yeah. But this modest proposal for the Hormuz toll, ipo. They lay out a fake prospectus summary where they say minimal costs. Our primary operating costs are currently the laundering fee charged by our money trans agents and payments to the Islamic Revolutionary Guard for provision of security and resilient leadership. Our executive succession plan has recently been tested and proven successful as changes at the top have been managed.

Joe Kernan (13:06)

I mean long term there's talk about other ways of getting the oil out of that part of the. Sure, if you build Saudi pipeline you

Andrew Ross Sorkin (13:13)

could go through the Red Sea, which is what they're doing right now to a certain extent. Although they've had their own problems trying to get through the Red Sea at this point too with Houthis.

Joe Kernan (13:22)

And we're back to. I don't know if we're back to ending civilization, but they certainly are not. I don't know. I thought yesterday they were getting some religion. I think maybe they got the same religion, same theocracy, same brutal regime and having pictures of Donald Trump with a white flag and claiming victory and. And more in control of the strait than before. Maybe. So we may be maybe going back. We better leave those our assets over there. Assets said a group of polymarket accounts profited making hundreds of thousands of dollars on some well timed bets on whether the US and Iran would stop fighting. President Trump announces ceasefires. You know, Tuesday evening True Social Post. The Associated Press says that morning one wallet made a $72,000 bet on yes, there would be a ceasefire cast out later with a $200,000 profit. Another wallet was created, this one just 12 minutes before the post on Truth Social earned an estimated $48,000 in profit. In all, blockchain data showed at least 50 accounts bet big on a ceasefire on Tuesday with the bets being the account's first activity. Obviously it says here it's possible users may have been betting simply that President Trump would back down from his threats. And a lot of people, that was the opinion that you would civilization of an entire country would not be ended after all. I think that was the bet by a lot of people. It was even a Tuesday, wasn't it when it happened? So everybody, we know what Tuesday is.

Andrew Ross Sorkin (15:09)

Taco Tuesdays.

Joe Kernan (15:10)

Right.

Andrew Ross Sorkin (15:11)

I actually made tacos on Tuesday.

Joe Kernan (15:12)

You did. You know, any day is a good day for tacos.

Becky Quick (15:18)

A federal appeals court denying Anthropic's request to temporarily block the Pentagon from blacklisting it as a lawsuit challenging that would ban it plays out. The case is one of two, and it's a little complicated, one of two related to Defense Secretary Pete Hegset's move to designate Anthropic as a priority supply chain risk after the company sought limits on how the technology was used. Late last month, you might remember in another case, a federal judge ruled for Anthropic, saying it appeared the Pentagon retaliated against the company with the split decision, split decisions now by the two different courts. Anthropic will be excluded from Defense Department contracts for now, but is able to continue working with other government agencies while the litigation continues. Katie Hahn, who I remember we had a cold conversation with about this, effectively took to Twitter last night and or X and said that the three judges that were picked to choose this case, they said the administration could have not. Couldn't have gotten a better group of people for their side if they had selected them themselves. There's three out of the 11. And so the question that she was sort of raising was if you could try to go back to the court, which they could do, and do what they call en banc and try to get all 11 judges to try to overrule it that they based on their backgrounds and things that they would. So it's going to be very interesting to see what happens ultimately.

Andrew Ross Sorkin (16:44)

I didn't realize that part of it, but the government's case or the judge's case in siding with the government was that this is the fortunes of a private company, a single private company, versus the ability of the Defense Department to decide what it thinks is important during times of war, which was kind of an interesting argument. I hadn't thought about it from that perspective, but they basically said they didn't care about the fate of a single private company.

Becky Quick (17:10)

Right. What was interesting, though, to me, and this is the thing that I think where like a Katie Hahn would come out, if you were looking at this just in terms of what's actually at stake, which I didn't understand the way the judge described it, you don't have to determine that it's a supply chain risk to not use the service. So the government could say we are not using Anthropic. That is their choice. It's the designation of them as a supply chain risk, which then has all of these downstream effects to the company. And so when you look at why the other judges on the west coast said that it was retaliatory. It was retaliatory because it effectively, by describing as a supply chain risk, then hurts it in these other ways.

Andrew Ross Sorkin (17:56)

It's not a final ruling.

Becky Quick (17:57)

Right.

Andrew Ross Sorkin (17:57)

This is just to say that the injunction that they're not going to give Relief while they're deciding the rest of it.

Becky Quick (18:02)

Right. And so now, now we'll go to court, by the way. We'll go to court in California, go to court in D.C. as well, and then we'll see. And I don't know if these justices are the same justices that will actually determine that outcome.

Joe Kernan (18:16)

I can ask you off camera.

Becky Quick (18:17)

Okay.

Joe Kernan (18:18)

Did you. Was it ground beef? Tacos? Chicken tacos? Ground beef. Was it ground beef?

Andrew Ross Sorkin (18:22)

It was. Sometimes I make turkeys.

Joe Kernan (18:23)

Hard shell, Soft. Soft shell. You put salsa. What kind of. No, no salsa.

Andrew Ross Sorkin (18:29)

Sour cream.

Joe Kernan (18:30)

Visualizing. I need info on tacos in particular.

Becky Quick (18:37)

Cheese will be next.

Podcast Host / Narrator (18:40)

Next on Squawk pod. These fog of the Iran war with the Council on Foreign Relations President Michael Froman, who is beholden to the cease fire and who are the stakeholders in a solution.

Michael Froman (18:50)

We would be in a stronger position if we had allies with us. Most of the oil doesn't come to the United States, goes to Asia, to a certain degree, to Europe. But we are not unaffected.

Podcast Host / Narrator (19:00)

We'll be right back.

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Podcast Host / Narrator (21:08)

Welcome back to Squawk Pot from CNBC with Joe Kernan, Becky Quick and Andrew Ross Sorkin. Here's Andrew.

Becky Quick (21:17)

President Trump announced a cease fire in the Iran war about 36 hours ago. But things have only gotten more complicated since then. For more, we want to bring in Counsel on Foreign Relations President Michael Froman. He served as U.S. trade Representative in the Obama administration. Good morning to you.

Michael Froman (21:31)

Morning.

Becky Quick (21:31)

You know, I think we, it's not like I want to say we said this already, but, you know, everybody seemed to, you know, think that things were so great yesterday. I was not so sure why that was the case. And the real question now is, is it one step forward, two steps back, three steps back, no steps back? What are we?

Michael Froman (21:50)

Well, first of all, I don't think it's unusual when these cease fire agreements are announced that there is some bumpiness in the road and how they're implemented as orders are given down the line, whether commanders in the field are being effectively sort of kept under, under the control of a central authority, et cetera. So, you know, it's not, it's not unusual for there to be at least some period of implementation noise in the system. I think the problem here, Andrew, is that there doesn't seem to be total agreement as to what's included in the cease fire or not. Is Israel's actions in Lebanon, are those included? Did the U.S. accept, did the president accept as a basis for negotiation a 10 point plan from Iran that includes their insistence on the right to continue to enrich uranium and to control the Straits of Hormuz, which we had said were red lines for us before. And so those are the kind of issues that need to get sorted out as the vice President heads to, to Pakistan to try and further these talks. But at the moment there's just a lot of uncertainty about what has been agreed to and what's included and what's not included.

Becky Quick (22:54)

So given that you've participated in, in talks like this, how do you handicap what the outcome of this even looks like?

Michael Froman (23:01)

Yeah, the positive element of it is it was basically just a cease fire announcement, an agreement to stop bombing of some sort, stop the killing and to create space for negotiation of the real underlying issues. The real underlying issues remain, you know, very difficult to resolve because the Venn diagram between what the US Is insisting on and what the Iranians are insisting on. There is Almost no overlap. And so that's the really hard part. And the question is whether they can use this two week period or whatever period it's extended to over time to, to get to those more difficult issues. It could end up just being a stalemate where there isn't any overall agreement, where the US agrees to stop the military action, Iran agrees to open the straits, hopefully without limiting by the Iranian military how many ships can go through and charging a toll and making it a, creating more friction in the global trading system and the global energy system. And then just the underlying issues remain unresolved. And it's kind of a frozen conflict that the parties return to over time. And sometimes it'll break out into violence and sometimes there'll be relative periods of peace.

Joe Kernan (24:14)

Michael, you don't sound that negative on the whole process. And while I was, you know, listening to you and I'd seen these other editorials all over the place about if we don't achieve these objectives, we definitely haven't gotten what we wanted. And right now Iran seems to have gotten some of the things it wanted. But then I finally came across Holman Jenkins. His point is the war is not over. Washington has advanced its aims more than Tehran, and a cease fire isn't permanent and the night is still young and our assets are still there. But that just begs the question, what comes next? Whether it's boots on the ground in Cargill island or whether it's boots on the ground somewhere, whether it's renewed attacks on power and infrastructure. But you seem to think we've made some progress and something could be positive that come out of this if it, if it's handled right from here on out or no.

Michael Froman (25:08)

Well, Joe, you know, Bridge Colby, senior Pentagon official, came to the Council on Foreign Relations at the beginning of the war, laid out the military objectives. Many of those military objectives have been achieved or largely achieved in terms of sinking the official navy, damaging their missile and capability and greatly weakening the Iranian regime. But I think what the US may have underestimated is how much pain the Iranians are willing to go through. They went through an eight year war with Iraq. And even though it's a weakened regime, two things I think are really important that come out of this, this period of time. One is we've seen the impact of asymmetric warfare. With a relatively small number of missiles and drones, Iran can wreak havoc on shipping in the Strait of Hormuz and hold the rest of the global economy hostage. And secondly, with regard to the Strait of Hormuz, Iran could always have closed that, but it had rarely been done or had never really been done in this way. And they have learned the lessons of choke points, which is that the US Used the dollar and dollar based institutions over the year to cut off access to the banking system. The Chinese have learned how to use supply chains to cut off access to critical minerals and rare earths. And now the Iranians have learned that they have this incredible source of leverage over the rest of the global economy, including the United States, by cutting off the shipping of the Strait of Hormu. So we leave this conflict or we get to this next phase of this conflict with the Iranians much weakened in some ways, but now having a new tool that they've taken out of the toolbox and demonstrated great leverage with.

Joe Kernan (26:43)

So what do you, what would you advise the United States to do to address that?

Michael Froman (26:50)

I think we ought to get back to the fundamental issues, which is what's the status of the Iranian nuclear program? We haven't talked about the nearly thousand pounds of near weapons grade enriched uranium that is still there. Are we going to let them be able to enrich uranium in the future or not? And what will be done in the future in terms of if they try and rebuild the nuclear program, try to aid their proxies around the rest of the world, will the US And Israel continue to take military action against them? Those are the issues that need to be discussed and see if there can be some agreement as to what the guardrails are on an Iranian regime going forward.

Joe Kernan (27:30)

Diplomacy with Iran in believing what they're saying. Is there anything else that, do we

Andrew Ross Sorkin (27:35)

need allies to come to the table with this? I mean, if this is the world's problem, do we need a united front to handle the Iranians, even if it's with diplomacy?

Michael Froman (27:47)

Becky, look, on so many of these issues, that's absolutely right. I mean, if we would be in a stronger position if we had allies with us, as the President said correctly, most of the oil doesn't come to the United States, goes to Asia, to a certain degree to Europe, but we are not unaffected. And I think the Europeans and our allies and partners, you know, have a very strong interest in how this is resolved. And we need to find ways and of engaging them in this process as well, in our position as well.

Becky Quick (28:13)

Do you think that's possible given how this started and what's happened with our relationship?

Michael Froman (28:19)

We haven't made it any easier by starting right. Without consulting them and, you know, and creating, you know, we've had a year of difficult relations with a lot of our allies over tariffs and other issues, Greenland, etc. So that we haven't made it easy for ourselves at the end of the day. However, I still believe in national interests and even though our allies and partners may not love the way they've been treated, they have national interests that they need to follow and hopefully they'll work with us to address them.

Becky Quick (28:45)

Great Ambassador, thank you. Appreciate it.

Podcast Host / Narrator (28:49)

Coming up on Squawkpod, we are digging into Anthropic's new artificial intelligence model, Mythos, that's alarming software developers and policymakers with its capabilities, particularly in cybersecurity. We'll talk about to the head of policy at Palisade Research, Dave Kaston. What comes next?

Dave Kasten (29:06)

The race isn't over. Everyone's still racing as hard as they can and they're going to cut as many corners as they can to catch up. And frankly, I think you should ask yourself the question of would OpenAI have announced today that they were going to do the sort of staggered disclosure thing if it wasn't for the case that Anthropic had led first?

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Becky Quick (30:24)

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Dan Murphy (30:29)

What made you confident that you could

Andrew Ross Sorkin (30:31)

do something that hadn't been done before? I have no fear of failure.

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Trailblazing women, Changing the game One of

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Leadership can look and many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta

Andrew Ross Sorkin (30:49)

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Podcast Host / Narrator (31:02)

This is Squawk Pod, straight up on

Andrew Ross Sorkin (31:05)

Becky 3:2, 1Q and you're watching Squawk Box right here on CNBC. I'm Becky Quick, along with Joe Kernan

Becky Quick (31:15)

and Andrew Ross Sorkin, Anthropic is starting a controlled release now of its newest frontier model. It's called Mythos. And the model is, has capabilities that sparked a lot of concern among the public and within Anthropic itself. Joining us right now to talk about is Dave Kasten, he's the head of policy at Palisade, an AI research firm. The idea that they've built this model, they're not going to release it to the public because they think it's too dangerous, but they're effectively going to give it to other companies, at least ahead of giving it to the public. How is this going to work and what do you think about this?

Dave Kasten (31:47)

Hi Andrew, great to be here. So the proposal that Anthropic has put forwards is what they call Project glasswing. And their idea is that they're going to partner at least initially, with 11 other companies that are significant in sort of the technology ecosystem. Companies like Amazon, Apple, Broadcom and Video, that kind of thing, as well as Google, one of their competitors, in order to be able to try to pluck as many of the low hanging fruit of cybersecurity risks as possible. Anthropic believes that the AI models that they've, the new AI model that they've developed is going to be able to identify a lot of bugs that previous models weren't able to do so effectively and humans weren't able to do so cost effectively. And so they're really hoping to try to clear out the weeds of as many of those risks before other models get to the same place.

Becky Quick (32:35)

But what does it mean to every other company out there? So let's say they do this, they get to those companies first, then they release this to the public and then it's just a field day and a race between the hackers and the companies that weren't in the original 11.

Dave Kasten (32:51)

Yeah, so I think the, my suspicion is that the companies that are in the original 11 won't just be working on their own behalf. When you sort of look at the software ecosystems that these companies have, they rely upon a lot of common libraries, whether those made by common third party vendors or open source libraries. And so as a result, I suspect much of what like Amazon by example would be doing, we're looking at open source libraries that many companies rely on, but they might particularly rely on identifying areas of concern and then trying to get them patched before these sort of bug finding capabilities become more available generally to sort of malicious actors that might want to use them.

Becky Quick (33:29)

Is your sense that once that the Model itself is obviously not just being used to find bugs and exploit hacking opportunities. I assume it is that much more powerful for the rest of us, no?

Dave Kasten (33:41)

Yeah, that's right. And in fact, Anthropic has said explicitly that this model wasn't developed for the purpose of being a cybersecurity model. Anthropic, as well as all the other major AI companies have as their core business goal building automated AI researchers. That's AI models that help them make better AI models that help them make better A.I. models and so on. And so software engineering tasks, particularly the ability to do software engineering tasks on your own, are something that's useful for all kinds of economically valuable things. It just happens that it's also security relevant in that you can use it for cybersecurity offensive and defensive tasks really easily as well.

Becky Quick (34:19)

And you know, we were talking about this as this most advanced model. You know, where do you think chatgpt lives in this? Meaning, you know, they're working on another model, is their model, have the same issues all over again. I assume Gemini is trying to do the same thing. And how, how ahead of the game is Anthropic then?

Dave Kasten (34:40)

Yeah, I think your expectation should be that Anthropic is a little ahead, but not overwhelmingly ahead, and they don't necessarily have much of a permanent moat here. So there was a report from Axios just a couple of minutes ago that Chat GPT is also going to have a new model which is currently codenamed Spud, that is going to go through a similar process in terms of their sort of slow rollout of capabilities because of similar cybersecurity concerns. I would expect that Gemini is not far behind. Google has certainly been investing in automated AI based vulnerability finding for quite some time, but the fact that Google is partnering with them probably implies to me that at least for the next couple of months, Anthropic has a little bit of an advantage here with this particular model.

Becky Quick (35:25)

Let me ask you just about that advantage because it really does feel over the last couple of even couple of months now, I'd say last two months that there was a real move towards Anthropic and its Claude model for a lot of folks in the Valley and much even beyond. And the question is, how sustainable do you think that is? Or do you think we're going to be sort of switching back and forth between models because the next Chat GPT or the next Gemini is going to leapfrog wherever they are?

Dave Kasten (35:56)

Yeah, so I think it's going to be a bit of both. And When I talk to sort of professional software engineers that I know, you tend to see sort of two types of folks. One kind of likes finding a model that's pretty darn good and sticking with sort of that family of models as it advances. The other is kind of constantly switching out at sort of the technical level for the latest and greatest model, whatever that happens to be on a given week. I think you would expect that over time we're going to see more sort of speciation when it comes to the different AI companies offerings. And so you might see more vendor lock in over time that would occur. I certainly think it's true that when you talk to many coders they have an expressed preference for either the Chat Codex models or more commonly for Claude code. And I suspect that that sort of taste based preference might last for some time.

Becky Quick (36:45)

So do you have any sense in terms of either declaring a winner or declaring do you believe it's a multi winner game? I mean the other thing that just happened in the last 24 hours is you had Metta releasing its latest new model.

Dave Kasten (36:58)

Yep. So you know, I think the news is still coming in on the metal model in terms of how good it is. Obviously they released sort of their benchmarking results, but it takes a while for people to actually use the models to sort of say, hey, are those benchmarks really reflecting reality or do they sort of overfit on the benchmarks? Too soon for us to say for sure, it's certainly a good model. Whether or not it's certainly also not, as far as anyone can tell, a model that beats open air anthropic, but certainly a credible showing by Metta. I think you would expect to see that the race isn't over. Everyone's still racing as hard as they can and they're going to cut as many corners as they can to catch up. And frankly, I think you should ask yourself the question of would OpenAI have announced today that they were going to do the sort of staggered disclosure thing if it wasn't for the case that Anthropic had led first? I think some people might be skeptical of that, including myself.

Becky Quick (37:49)

We Dave, we got to run. But my final question for you is you just said cutting corners. Usually when you hear that phrase, at least my ears perk up. What does cutting corners mean in this context?

Dave Kasten (38:01)

Yeah, so I think something that non experts don't know is that every AI model sometimes does bad behavior. It doesn't do what users want, it sometimes lies to users, it sometimes engages in all kinds of behavior. You can read anthropic disclosures on this as well as opening eyes and everyone else's. The more that you're trying to hit a timeline for release of a new model or you're trying to hit a given benchmark number, the more that you might be willing to accept some occasional bad behavior in order to crank more performance out of your model. And so I think one thing that we Palisade are worried about is that people will have a lot of incentives to cut corners on safety in order to either get back in the race in case of places like Metta, or to stay in the race in the case of places like OpenAI, Google and

Becky Quick (38:40)

thank you Dave for scaring us a little bit this morning. Appreciate it.

Dave Kasten (38:44)

Thanks so much.

Podcast Host / Narrator (38:47)

That is Squawk Pod for today, this Thursday. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. You can tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Follow Squawkpod wherever you get your podcasts. We'll meet you right back here tomorrow.

Becky Quick (39:12)

We are clear.

Michael Froman (39:14)

Thanks guys.

Becky Quick (39:24)

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