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AMD's OpenAI partnership, Gold's Record Year, and Trump's Affordability Fix 10/6/25
00:43:31
AMD surges as OpenAI enters another multi-billion dollar partnership, but one venture capitalist is watching for red flags. A technical check on gold as it hits its 42nd record high this year. Plus, can Fannie and Freddie help lower home prices?
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- [00:00]
Mackenzie Segalos
For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn more@mycare.org.
- [00:17]
Bluehost Advertiser
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- [00:49]
Dominic Chew
All right, thanks very much Scott. Welcome to the Exchange. I'm Dominic Chew in for Kelly Evans. Today you are looking by the way, at the stock of the day. It's AMD flying high, up about 27% on a new multibillion dollar deal with Open Air. And that bring us to the event of the day. OpenAI's developer conference set to kick off any moment now. Stan Altman is about to speak. We're going to bring you all the headlines as they come in and we have team coverage. Mackenzie Sagalos is live at the event with what to expect. Christina Parzonevoulos has a story on AMD and Plexo Capital's Lotoni with the one thing he's hoping he does not hear today is as it would be a potential red flag. But we're going to begin with Mackenzie Segalos live in San Francisco. Mac, what exactly can we expect with this big developers conference?
- [01:40]
Mackenzie Segalos
So Dom, more than 1500 developers have flown in from around the world to demo how they're using OpenAI's tech. The so called Developers Day or Dev Day is all about supporting a growing ecosystem of coders building on top of its models. The thought is that they can then turn their ideas into paid products and ultimately create a new kind of marketplace for AI powered apps. Now to that end it is a full court press here, keynotes, live demos and hands on time with the latest tools. Altman is headlining. It's also the public debut of Fiji Simo, the former Instacart CEO and longtime Facebook exec is now leading Open AI's consumer and application strategy. She is known for turning products into income engines and that is her mandate now. Build real revenue beyond ChatGPT subscriptions. And all of this coming just hours after OpenAI announced a sweeping new chip deal with AMD part of its trillion dollar plus infrastructure plan to scale, compute and lock in supply, which is key to these product ambitions. We're also watching for new product announcements from OpenAI. Altman has teased a new AI browser and we're expecting updates on mobile agents and enterprise tools. And then there's hardware. The day wraps of the fireside with Johnny I've the legendary Apple designer who has been quietly leading OpenAI's hardware ambitions from a lab here in San Francisco.
- [03:00]
Dominic Chew
Dom all right, so Mac, if we talk about the developers conference and what we are going to be set to see, a lot of this is also about the kind of ecosystem effect that's trying to be built by Open Air and all of the other AI type companies in that particular kind of movement that they have going on there. I wonder from the developer side of things, is it a robust community that's developing there? What exactly is the vibe at the conference so far and is it being well attended?
- [03:29]
Mackenzie Segalos
Well, there's no one behind me because everyone is now watching Sam Altman. His remarks kick off any moment now. He's expected to announce new products that the team is putting out. But to your point about building out this larger developer ecosystem, that is critical because at this point Gemini, one of its chief rivals, has really closed the gap in the last six months open. I had them on the back foot a couple of years ago when they launched Chat cbt. I'm hearing from multiple sources that Google has really closed the gap in terms of benchmarking tests that look at how the LM performs the so now the test becomes who is in the ecosystem and who is building on top of the bones those of that foundational model because that is how you gain consumer attention. We just saw that Soar app launch last week from OpenAI. This video generation software, it's top of the App Store and that's what OpenAI needs. It needs sticky apps that resonate with the public to bring more people into the ecosystem and that's what these developers.
- [04:20]
Dominic Chew
Offer and more people making those apps around AI and everything else. Mackenzie Segalos live at the Open Air Developers Conference. Thank you very much for that. Our next guest is looking for substance from today's developers conference. He says if OpenAI leans on demos without any kind of data to back it up, that's a potential red flag. So joining me now is Low Tony, founding managing partner at Plexo Capital. He's also a CNBC contributor as well. So Low Mac laid out a very good case for what exactly we are looking for and what exactly we need to see in terms of the developer ecosystem really becoming more robust. You think that there are going to be potential red flags for investors. So take us through what exactly you would see as a potential red flag. That's right.
- [05:03]
Low Tony
So maybe I'll flip it and say what I'm looking for is green flags, because I am a bull in this scenario. So what we've seen is that the Open Air dev day has turned into what I would call earnings week for the AI ecosystem. So it's not just about OpenAI and technical announcements, but it's also about OpenAI's business announcements. And then the other industry players typically follow this week as well. So I think back to your point. I'm looking to make sure that we can actually see some real robust data to be able to support the expansion of all the infrastructure that's being built. That's what everyone is looking for. Are we truly in a boom or is this a bubble? You know, I would even say the AMD deal today, I mean, that definitely shows that there's real demand. That is believed to be the case by OpenAI and probably others in the system. But, you know, there's some speculative edges as well that do look a little bubbly.
- [06:01]
Dominic Chew
All right, so bubbly is one thing. Speaking of that AMD announcement here, let's now kind of go around and stick around here to dig into more of that big story, that massive new partnership between Open Air and AMD, which is sending that stock, by the way, up 27%. Christina Parts Neville has the details behind that big deal, Christina.
- [06:19]
Christina Parzonevoulos
Yeah, if it stays up at 27%, that's going to be AMD's biggest intraday swing since 1985. Only two times that's happened. But let's talk about Nvidia. Barely down half a percent as rival AMD, like you said, landed this massive chip deal with OpenAI, a deal where AMD is willing to give away a piece of itself to win. And I say that because, first, AMD is going to supply roughly 6 gigawatts of its AI chips, the Mi 450, starting next year, to Open Air specifically for inference. And that would be, Compute that powers chat GPT. OpenAI has already committed to 10 GW assets within video. So this 6 GW is really about diversifying supply, not necessarily replacing the leader, Nvidia. The unusual part, though, is that AMD is issuing warrants for up to $160 million in shares at a penny each, potentially giving open air a 10% stake in AMD. The warrants vest only as OpenAI hits these deployment milestones and AMD stock price rises. AMD is literally betting its own equity that it can deliver. So why would AMD do something like this? Well, first, OpenAI have the cash. They've committed over $1 trillion in build outs, but have only raised 60 billion thus far. Second, AMD, I don't want to use the word desperate. We can say desperate really wants to break into Nvidia's territory and is willing to sacrifice equity to become a strategic partner. Third, the milestone structure really aligns incentives. If AMD's chips succeed and the stock rises, OpenAI benefits too. And then it really turns this vendor relationship into a partnership, something we've seen with Nvidia and a lot of companies. This equity for chips model really could. The template is OpenAI kind of scrambles to fund its infrastructure ambitions. They are very vast. Expect similar deals possibly around power cooling, data centers, networking, for example. And so we point to the shares. They're surging, what, 25, 27% in the news, but Nvidia is barely down. So the market is kind of telling you who still owns AI Dom.
- [08:16]
Dominic Chew
All right, so Christina, we've talked about the AMD and Nvidia dynamic as well. What exactly are the broader ripple effects or implications for the rest of the chip ecosystem beyond just GPUs or AI chips from Nvidia and from AMD? Other companies as well have to benefit or perhaps be seen as a potential at least detractor from the ecosystem as well.
- [08:39]
Christina Parzonevoulos
Yeah, it's hard to go one other day without not seeing an Open Air headline. And that's really helping drive a lot of this tech rally that we've been seeing over the last little while. And I bring that up because some names are not mentioned in these deals. Micron, for example, just last week was not mentioned in the memory deal that OpenAI signed with Samsung and SK Hynix. Marvell is a custom chip maker, yet OpenAI signed a deal with Broadcom. So you could see that maybe you can say some of these players are not included in this OAI ecosystem. But overall for OpenAI, what they're doing is they're diversifying their chip supply. They have AMD on board, they have Nvidia on board, they have custom chip maker Broadcom on board. Why are they doing that? They don't want to be locked into a single vendor, which is incredibly smart on their part. But that's not necessarily what Nvidia wants. Right. Nvidia often Touts the the whole ecosystem stack that they offer and the SOFTW as their moat. And that's the reason why developers don't want to switch over because CUDA is so good, Everybody uses it, etc. So this is a way that you could start to see OpenAI really leverage the entire ecosystem and diversify away its supply, which I think is just a smart move on their part when it comes to signing these non exclusive deals.
- [09:48]
Dominic Chew
All right, Christina parts and evolves with the chip story behind Open Air and that's those partnerships. Thank you very much for that. Now low, we've added a lot of story dynamics into this for you right now, but you see what's developing right now as the next phase for AI. So what does this next phase or chapter then develop into and what's beyond that?
- [10:08]
Low Tony
Well, with this AMD deal, as your colleague points out, it's very important to note that this is procurement discipline by OpenAI. The ability to be able to have multiple players supplying reduces the dependency on the dominant player Nvidia. And so this is just a smart deal for OpenAI. But nonetheless it also shows a couple of additional things. Things number one, it shows that Open Air without question is a kingmaker. I mean you could argue that OpenAI as it moves everyone, the entire global market is watching it because it's driving a lot of the returns that we're seeing from the stock market. And I think second, it shows that Open Air wants to be a player across the entire stack. And that has implications if we see the ability for OpenAI to be obviously within that middle layer, the model layer, a key player. But then also down at the infrastructure layer, they're becoming a key player as well. And also as they think about expanding revenues and especially expanding the margin on those revenue dollars, we see Open Air going up the stack to the application layer as well. So this has broader implications for the entire ecosystem because all of these players are trying to carve out their space and they have to understand how do I gauge Open Air they truly going to be open and be a platform for me to build on top of all the the dollars that they have invested. Or do I have to worry if I'm an application player about Open Air competing with me and if I'm down at the infrastructure layer, you know, Open Air can make or break me.
- [11:43]
Dominic Chew
You mentioned the make or break aspect. I want to go there because when it comes to the trillions of dollars that are being talked about as being deployed or being planned for deployment, every business, not Nvidia Perhaps, but even a business as large as AMD seems like a small business when it comes to the ecosystem. One of the risks a lot of small and medium sized businesses have is when they do find that kingmaker client, the one that actually provides a ton of revenue for them, they become over levered to one or two particular clients. This AMD deal seems to remedy that by putting some equity incentives into that particular ecosystem. Is this going to be, as Christina points out, the template going forward? Because then you diversify not just your risk from open Air perspective on a supply chain, but if you're a person or a vendor in the supply chain, you are, you're not going to be debilitated or destroyed because one client disappears.
- [12:36]
Low Tony
Yeah, that's right. And I think this is really important because we don't want to see any hiccups or sneezes like destroy. I mean, that could take, you know, just as quickly as AMD added billions of dollars, it could easily be taken away if there were to be a sneeze around that deal, so to say. And so I think it is important to recognize how we are looking and viewing these. Right. Like there are trillions of dollars at stake and on the line and the other things that we have to look at. To your point about what are some of the red flags we have to look and see, are we seeing true contracts getting put in place other than by startups that may not necessarily have the revenues to truly be able to pay for those contracts and have them just financed by VC dollars like we saw, you know, a few years ago or decades ago? Right. So we want to make sure that a lot of these deals are real. Is it the enterprises that are coming in, those enterprises seeing efficiency, are we seeing new products being launched by the open eyes of the world? And again, how is OpenAI balancing that role that they play both as a platform but also potentially competing as they move up the stack into some higher margin products? At the application layer, there's a little.
- [13:45]
Dominic Chew
Less relative transparency about the ongoing financials for private companies, perhaps like an Open Air or others, compared to the public companies that have to report quarterly and all their metrics. You mentioned the metrics before. What exactly would we need to see from perhaps the public companies who have to disclose certain financial metrics to see that the ecosystem around Open Air and others remains relatively healthy? Where are the metrics versus the hype aspects going to come into play? Right.
- [14:15]
Low Tony
And so this goes to the contracts that are in place, the API usage, looking at the products that are being produced by companies on top of the open air platforms of the world, and then also looking at the efficiency that's being generated by using AI. You know, I think one of the things that is potentially a canary in the coal mine is we often see some of these layoffs. Sometimes the companies talk about the reasons behind the layoffs, and one of those reasons being AI. Other times companies don't really talk about it. But I think what we're seeing with a lot of the layoffs, layoffs is a potential reflection of AI. And I think what we're seeing, especially from the tech companies, you look at when Microsoft laid off, I think it was about 6,000 folks, a big component. A big chunk of those were technical people. And so sometimes you might look at these layoffs. This could just be cyclical, but I think we're seeing structural changes. And so that's one of the things that we need to watch for as well. Companies can't hide when they're getting rid of employees. And if they're honest about why they're doing that, that could be a good positive signal about the efficiency that we're seeing from AI or what the resource.
- [15:24]
Dominic Chew
Allocation decision is like for not just the people who are making the infrastructure, but the people using it that's going to have to pay for it. Another point here as well is about whether or not we are going to see the actual deployment of some of those types of tools in the workplace and what exactly impacts in terms of the workforce or the transformation of their businesses at the usage level. So the companies would be then be beneficiaries of the artificial intelligence tools. What exactly as an investor do people have to look for for the companies that could benefit from leveraging AI the most efficiently?
- [15:59]
Low Tony
Well, I think if we go back to something that Marc Andreessen of A16Z said, you know, software is eating the world, right? And I think if you can think about this as every company is in essence a technology company dependent on software, if that's the case, every company is becoming an AI company. And so what we want to look for is we want to look for signals from not just the tech companies themselves, but if we're going to realize the potential for AI and the trillions of dollars that can be generated, we have to look outside of tech. So we have to look at AI's transformation to those other industries that are outside of the big tech areas that everyone wants to focus on. I get it, I like focusing on them as well. But we need to look at more mainstream large enterprises and then also those small and medium sized businesses because we need the entire industry that is potentially available to participate if we're really truly going to see the benefit of this technology and more importantly, if the demand is going to be there for this massive build out.
- [17:02]
Dominic Chew
There's a lot of assumptions being made to your point about what the total addressable market could grow into and whether or not that justifies the valuations low. Tony with Plexo. Thank you so much for the conversation. Thanks for sure. It's going to be a lot more expansive. All right, well, coming up on the show, stocks are hovering near record highs. But are the magnificent seven stocks overshadowing the rotation going on in the market? We're going to debate. Plus, can anything get in the way of gold's rally? The precious metals coming off its best month in 16 years and tracking for its best annual performance since 1979. So should investors stay bullish on bullion and the Open Air Developers Conference is now underway. San Altman as you can there delivering the keynote speech. We're going to bring you all the headlines. Coming up again in progress developers conference for OpenAI. Keep it right here. The Exchange is back after this.
- [17:56]
Bluehost Advertiser
This is the Exchange on cnbc. I'm no tech genius, but I knew if I wanted my business to crush it, I needed a website. Now. Thankfully Bluehost made it easy. I customized, optimized and monetized everything exactly how I wanted with a AI. In minutes my site was up. I couldn't believe it. The search engine tools even helped me get more site visitors. Whatever your passion project is, you can set it up with Bluehost with their 30 day money back guarantee. What have you got to lose? Head to bluehost.com to start now. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update Wherever you get your podcasts.
- [19:02]
Mackenzie Segalos
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- [19:30]
Dominic Chew
Welcome back to the Exchange. Tech stocks are continuing to outperform this year. The NASDAQ hitting an all time high today. It's up 30% since the liberation, so called liberation day. Close that rally thanks to the mega cap tech players and their big investments in artificial intelligence. But is it time for investors to start looking past the tech trade and focus on other areas of the market? Let's ask Richard Bernstein, the CEO and CIO of Richard Bernstein Advisors. You know Richard, you just heard the conversation with Low Tony about the need for this AI trade to expand just beyond AI and tech, that other companies have to be involved to make that total addressable market worth work. It's going to be an analogy to the rest of the market. I think right at this point everybody's got to participate. Is that broadening out going to happen, happen?
- [20:17]
Richard Bernstein
So I think one has to think about this more in terms of individual companies fundamentals and not try desperately to link them to AI. My companies are going to adopt AI regardless of the industry they're in. I think we all know that. The same way that say, you know, 40 years ago they adopted the computer, right? Who would think of, of any company as being a computer company? Right? They all use the computer, enhances productivity, etc. Etc. People should think about AI, that companies of course are going to adopt them, but I think as an investor that's not the right way to think about it. The right way to think about it is what's going to be their return on investment from this, from the, from investing in AI and adopting AI. And I think that's a much tougher one for people to grapple with because return on investment is a kind of a more complicated manner than simply saying are you adopting AI?
- [21:10]
Dominic Chew
Richard, you've seen a good number of cycles they've cut, they come and they go. Some of the characteristics are similar. They're not always the same. But can you take us through whether or not in your mind, in your opinion, your experience, that there is a speculative fervor in this market that rivals what happened back in 1999 or not?
- [21:30]
Richard Bernstein
Well, right, well thank you Don for saying that. I've gone through many cycles. It's a nice way of saying I'm old. But I think yes, I think we are in some kind of speculative fervor. And I think for different parts of the market we could argue are they bubble or not. But it's hard to argue that people are, are afraid of taking risk. I think that's Very hard to find in any market right now. Certainly hard to find in equities or private client. Beta is about 1.5. It's hard to find in cryptos when people are, you know, trading any crypto they can get a hold of, people are using leverage through options. Credit spreads are very narrow. It's hard to say that there's not a lot of speculative fervor in the marketplace. And I think when you get that speculative fervor, people tend to forget fundamentals. They become momentum investors, shareholders and its momentum at any price. And that usually is not the right thing to do. Fundamentals ultimately do drive the market. And so in our portfolios at rba, what we're trying to do is focus on those fundamentals and go back to the tried and true things like quality and dividends and things like that. It's so boring, Dom. But I think it is the right thing ultimately to do.
- [22:37]
Dominic Chew
All right, so if we were to subscribe to your philosophy about investing, given the context around markets and valuations, dividends, what exactly then becomes the places in your client portfolios that you're overweight if it's not going to be that momentum tech trade? Right.
- [22:53]
Richard Bernstein
I think, Don, there's two major themes in our portfolios right now. Major theme number one is dividends, what I just said a second ago. And that transcends industry and sector and country. By the way, I think people have forgotten the power of compounding dividends. You know, since Nasdaq's inception in 1971, more than 50 years, the Dow Jones utility index is pretty much kept up with NASDAQ. Not right now because of the MAG7 effect, but over 50 years they were neck and neck. I mean, power of compounding dividends is extraordinary. And then number two is non US Quality. I mean, basically, Dom, if I were to offer you a Maserati for the price of a Chevy, would you buy it? Of course you would. And that's what's going on around the world, Neal. Non U. S Quality has a growth rate, a projected growth rate. Get this. That is faster than that of the MAG7. The dividend yield is 10 times that of the MAG7, yet they sell for 30 to 50% cheaper. Sounds like a pretty good deal. Europe has been cheaper forever in a day. But they didn't have the growth story, and now they're starting to have the growth story. And I think that's a big difference.
- [23:58]
Dominic Chew
All right, so look beyond tech, look outside our borders as well. Richard Bernstein, thank you very much. We'll see you soon, sir.
- [24:03]
Richard Bernstein
Thanks now.
- [24:04]
Dominic Chew
All right, coming up on the show, as the poem goes, nothing gold can stay. But does that include this year's rally in gold prices? We're going to check the charts with B of A's head of technical research coming up next to see if all that glitters can remain gold.
- [24:24]
Bluehost Advertiser
I'm no tech genius, but I knew if I wanted my business to crush it, I needed a website. Now, thankfully, bluehost made it easy. I customized, optimized and monetized everything exactly how I wanted with AI. In minutes my site was up. I couldn't believe it. The search engine tools even helped me get more site visitors. Whatever your passion project is, you can set it up with Bluehost with their 30 day money back guarantee. What have you got to lose? Head to bluehost.com to start now. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [25:26]
Dominic Chew
Welcome back to the Exchange. Bitcoin hitting a new high now above the $125,000 mark. It's up again more than 2% so far today. Meanwhile, gold prices hitting another all time high on pace for its 42nd record close of the year. So joining me now with whether those runs can continue is Paul Siana, the head of technical research over at B of A securities. So we brought in an expert to talk to us about the prices of bitcoin and the prices of gold and whether or not those trends are things that can sustain over time or whether or not we're due for some kind of a reversal. So let's start first of all with the first chart that we're going to put up here and that's going to be a little bit about the gold rally. This is a weekly chart showing all of those bars on a weekly basis long term. So take us through what you're seeing here and what it tells you about gold prices.
- [26:15]
Paul Siana
So steadfast uptrend the trend is your friend. We like to say that in technicals until it's about to end. Right. And that's the warning here is you have this very, very nice uptrend in gold prices, a nice upward slope 200 week moving average and a very nice Upward sloping trend line. But the problem begins here, here and here. That's when the 14 week RSI was stretched well above 80, which is a very overbought market. And that is where we are right here going into psychological resistance of about $4,000 an ounce on gold.
- [26:47]
Dominic Chew
So is the thinking here that the previous historical patterns of price movements now indicate that we could be going back towards this orange line?
- [26:56]
Paul Siana
That's correct.
- [26:57]
Dominic Chew
Okay, so if that's the case, what exactly is that level that you're going to look at target? Is it going to be right around that 35? The way that we're seeing it right now?
- [27:04]
Paul Siana
I think that would be reasonable. It might be a little far for this market immediately. Another thing that we have up here is a systematic signal called the demark signal or TD sequential. Very popular pattern amongst prices that agrees that trend is exhausted. So the first thing we'd like to see is a couple bars here that confirm resistance at about 4,000, then that rollover towards 3,720, maybe even 3500.
- [27:28]
Dominic Chew
All right, so that's the idea here is on the weekly basis we could see more of a pullback in the coming months, so to speak.
- [27:33]
Paul Siana
That's correct.
- [27:34]
Dominic Chew
All right, so let's take the gold prices now and go over the bitcoin side of things because this has been a volatile. Oh, I'm sorry, let's go 10 year first. All right, let's go 10 year here and see whether or not we are seeing some movement. Because what we are seeing is a bit of a kind of almost consolidation or wedging in here. So how significant is this on a 10 year basis?
- [27:52]
Paul Siana
So converging trend lines is a symmetrical triangle. Lower highs and higher lows. So lack of trend in 10 year yields, they're continuing to coil up until they must eventually break out. The smaller pattern here broke to the downside. Right. Just a little bit on that day. So I would say we have a long bias. While that particular candle at about four point, I believe 5% holds as the yield resistance. We'd prefer to play from the long side side.
- [28:20]
Dominic Chew
Okay.
- [28:20]
Paul Siana
But if we go above that, we're still in this longer term consolidation and we may be in that until year end.
- [28:26]
Dominic Chew
So if we look at this, that means we're kind of fill in this area right around here. Right. As we kind of get in there.
- [28:31]
Paul Siana
With a modest bias to potentially go that way.
- [28:34]
Dominic Chew
All right, so there's your 10 year look on a longer term basis. Let's now talk about the US dollar. It's been the talk of the town for a while. Maybe not in a good way if you are long dollars against other currencies. But but there's something shaping up ahead here that could be worth noting. Take us through the dollar trade long.
- [28:49]
Paul Siana
Term secular uptrend in the dollar since the 2008 lows. And you can see this very nice trend line connecting to many of the bottom points in history. And what's interesting here is you have this big up move early on and three down waves, big up move, three more down waves in orange, big up move and three down waves. So the question is do we get a small up move at least in this dollar market what where everyone is still generally consensus bearish.
- [29:17]
Dominic Chew
So this is also here if we take a look at all of these other points, if you look at that dark line over here, it seems to act as a base or a bouncing off point. And you're seeing that again right here.
- [29:27]
Paul Siana
That's correct.
- [29:27]
Dominic Chew
So could we see a move and exactly what would you target in terms of how big this could go up?
- [29:32]
Paul Siana
At this point we're trying to make the argument that we could retrace roughly a third to a half of that move. So that would be the dollar index up to about 102 to 103 just around there. Yeah. And that's Euro at a Lower low than 113.90 from a couple months ago.
- [29:47]
Dominic Chew
All right, Paul, Cianna B of A with a look at the charts. Thank you very much.
- [29:51]
Paul Siana
Thank you Dom.
- [29:52]
Dominic Chew
Nice to be here. Well, coming up on the show, President Trump is targeting the home builders claiming they're sitting on a record number of lots and not building homes. We're going to look at the state of the housing market and whether the federal government can actually do anything at all to increase housing supply. And as we head out to break, Sarah Isen spoke exclusively with Nike CEO Elliot Hill in a very wide ranging interview covering the company's turnaround plans, its manufacturing, its supply chains. Here is what he said about navigating the current tariff environment. Good news is we, we have a very expansive and diverse global supply chain that we've built over 50 years. And so we're working through some of the levers that we have to offset those tariffs. Country of origin into the United States being one, working with our factory partners.
- [30:42]
Mackenzie Segalos
Still has to get made, overseas still.
- [30:43]
Dominic Chew
Has to get made. And our factory partners, our retail partners and then us, the three of us working together to absorb some of those headwinds back moving to the upside to the tune of a half to two thirds of a percent. We're seeing some record high levels overall for key parts of the market that are kind of part of that so called broadening out trade. The US 10 year note yield is currently at 4.16%. So still in kind of like that overall mix with regard to that sweet spot for the 10 year yield. Now let's send it over to Julia Boorstin for a CNBC news update. Good afternoon Julia.
- [31:25]
Christina Parzonevoulos
Well Dom, Illinois sued the Trump administration today to block the deployment of National Guard members members to Chicago. In the suit, the state alleges the deployment quote infringes on the state's sovereignty and right to self governance. The filing comes just hours after a judge temporarily blocked the administration from sending National Guard members to Portland, Oregon. Authorities charged former NFL quarterback Mark Sanchez with felony battery today. According to a court affidavit, Sanchez was stabbed after he allegedly attacked a truck driver in Indianapolis over the weekend. The one time jets star was initially charged with several misdemeanors before facing a charge of felony battery which comes with up to six years in prison. And Rite Aid has officially closed its doors. The 63 year old pharmacy chain announced it shut its remaining stores this week after years of financial troubles. At its peak, Rite Aid had more than 5,000 locations according to industry news outlet Drug Topics. Back over to you Don.
- [32:23]
Dominic Chew
All right, Julia Borson, thank you very much for the news update there. Two stocks moving on Sam Altman's keynote address at Open Air Big Developer Day Coursera was used in a demonstration of deep integration with ChatGPT, sending those shares higher by as much as 5% intraday. Meanwhile, Figma shares popping by about 16% after Altman said it will be accessible within ChatGPT. So keep an eye on those big moves on the heels of OpenAI's big developer day. We'll be right back with more on Dev Day after this. Welcome back to the exchange. OpenAI is using its Developers Day as a way to prove that its technology can actually help engineers build monetizable consumer facing type products. Mackenzie Segalos is back, this time with more on OpenAI's app push in today's Tech check Mac.
- [33:16]
Mackenzie Segalos
Hey Dom, so Dev Day here in San Francisco is very much about OpenAI's big push to become the next App Store. So Sam Altman dedicating his keynote to highlight how OpenAI is opening up ChatGPT, making it possible for developers to build apps directly inside the product and reach millions of users. So we are talking about the next Chatbot or the next Sora 4 million developers have already built with OpenAI and Chat CBT now sees more than 800 million weekly users. Altman laid out a slate of updates aimed at helping developers get distribution. Everything from new model and API upgrades to tools that make it easier and faster to build agents. He called it the best time in history to be a builder, saying that it has never been faster to go from idea to product. Agentic commerce is a big part of this vision. With instant checkout now embedded, embedded directly inside ChatGPT. This is about more than flashy demos. It is about giving consumers simple, intuitive interfaces to experience frontier models in action and turning that into real recurring revenue. Remember, OpenAI gets a cut of sales, just like it does with Etsy and soon with Shopify. So if developers win, OpenAI wins. So this is really a key step toward monetization beyond Chat CBT subscriptions with which is critical as the company promises hundreds of billions of dollars toward its infrastructure buildout. Dom.
- [34:38]
Dominic Chew
All right, so if we do have these particular ecosystems being developed, these kind of developer tools that are going to put out applications at some point, where exactly is the thinking about where we could see the most impact in the initial first innings of this particular move to develop apps for people that actually make money.
- [34:59]
Mackenzie Segalos
So Altman talks about this application process that would be launched later this year. So they're calling their version of the App Store a directory. And so there would be certain submission criteria and then there would be ways to rank the app within the store. But they're really looking at this agent commerce piece and that's what a lot of these main players are trying to solve for. A couple of weeks ago, Google talked about how it's making agents into Chrome, something that probably has been in the lab for a while, but now that they have that DOJ overhang done with, they're able to finally roll out some of these product launches. And that's also something that OpenAI has been looking at doing. It was just last week that they talked about introducing E Commerce, having Shopify and Etsy come on as partners, and that means that they get a cut of revenue. Now, we don't know the exact share, but we do know that earlier this year Altman talked about a 2% affiliate fee. And so the idea here is to iterate that across many, many successful applications, many of which don't exist right now, and there is this emphasis on really democratizing the process so that any developer, any in the world, anywhere in the world, has the ability to apply, to be a part of the directory.
- [36:01]
Dominic Chew
All right, Mac, we'll keep an eye on those commerce driven bot or Butler type things that go on out there. We appreciate it. We'll see you soon. Coming up on the show here, President Trump likening the homebuilders to opec, accusing them of keeping price artificially high, the steps the administration could take and whether they'll move the needle on affordability or supply. That story coming up next. All right, President Trump is calling on Fannie Mae and Freddie Mac to, quote, get big home builders going. Diana Oleg joins us now with the story and the steps the administration might or could take, Diana, to solve this problem.
- [36:41]
Diana Oleg
Yeah, that's right, Don. President Trump posted that the homebuilders, quote, have to start building homes. They're sitting on 2 million empty lots, he said, a record. I'm asking Fannie Mae and Freddie Mac to get big home builders going and by doing so, help restore the American dream. FHFA director Bill Pulte, who oversees Fannie and Freddie, posted that he would do just that. Pulte then told me he would start meeting with home builders today. Now, when I asked specifically what FHFA could do, he said, said we have a lot of tools as the main buyer of mortgages. Now, just to be clear, the 15 public builders do hold roughly 2.2 million lots right now, but it's not a record. According to Zellman Associates. Analyst Ivy Zellman told me their goal is to move those lots as fast as possible because it costs builders a significant amount of money to carry them. Now, this chart shows the amount of homes being built relative to demand and it's currently still over 100. That means builders are actually over building compared to demand. And this chart shows they're aggressively building speculative homes, that is homes without a buyer. And that gets us to okay, what could Fannie and Freddie really do? They can't lower mortgage rates. So the next option is to lower underwriting standards to approve more borrowers like they did back in 2006. But that ended in the worst foreclosure crisis since the Great Depression for several reasons. Now, most builders have said that they really want the government to pressure states into easing regulations because, dom, that would make building houses faster and cheaper.
- [38:12]
Dominic Chew
All right, so there is the solution, possibly hypothetically. Dinah, thank you very much for that. Now our next guest says there is very little the government can actually do to stimulate new construction housing activity. And the new tariffs on things like lumber and cabinets only create an extra hurdle for those home builders. For more, we are now joined By John Levallo US Homebuilders Analyst at UBS John, you're an insider. You know, a lot of the insiders in this business. Diana's report paints a picture that maybe says we can't really see that much being done by the government. Does that click with what you see?
- [38:47]
John Levallo
Thanks so much for having me. Yes, I look, I agree with Diana that the biggest bottleneck is at the local and municipal level. It's getting a raw piece of dirt ready to build upon. And so yes, the builders have a lot of lots that they own or control. But you know what? They're not all ready to upon and they are still running into those roadblocks on a daily basis. Now, could the government step in and have things like Fannie Mae and Freddie Mac subsidized mortgages, perhaps, could they push for the next Fed president to, you know, bring back qe? Things like that are all sort of in the realm of possibility. But from an actual fundamental homebuilding standpoint, there's very little in our view that the government can actually do at the local and municipal level.
- [39:28]
Dominic Chew
All right, so if that is the case, from a regulatory standpoint, you might be able to ease certain types of restrictions or certain types of parameters on building on some of those lots and homes. Diana also pointed out that you could possibly ease standards on, on lending and borrowers and whatnot. Is there a right answer to getting this housing market unlocked that goes beyond what the Fed does with interest rates?
- [39:51]
John Levallo
So I think it'd be very difficult to ease the local and municipal restrictions. Think you think of this, think of NIMBYism. Everybody wants affordable housing. Everyone is gung ho for it. But you know what? They don't want it in their backyard. And there's a lot of reasons and a lot of different kind of hurdles that have to be kind of overcome in order for more building to happen in these municipalities. So, you know, what can they actually do outside of bring mortgage rates down? It's very challenging. You know, if they can reduce restrictions on things like tariffs, I think, I do believe that that would be very powerful. That's something you mentioned at the top of the program is now we have close to $8800 in tariffs that are going on to into a new build at some point here in the future. That is another hurdle that the builders need to deal with. And so look, our view is the builders have actually done the very rational thing that's cut back on production because you know what, there's too much inventory in certain markets out there. And so in order to impair the market or to push on that theoretical string, they've kind of restrained themselves to clear the decks and get ready for the next spring selling season, which we believe is going to be better than 2025.
- [41:00]
Dominic Chew
Okay, if that's the case, within the coverage universe, we're showing some of your ratings right now. Are there certain builders who, from a portfolio, real estate, geography, geography perspective, perhaps are better situated to take advantage of that kind of hypothetically robust spring selling season that's coming up in the next six to nine months?
- [41:21]
John Levallo
We like the group at large. Look, I think that next year is going to be a really good year for homebuilding, much better than what we've seen. I think consumer confidence is stabilizing inventory and stabilizing, maybe just as importantly, interest rates are stabilizing pricing. We're at 6.38 on the 30 year, but I'd like to see that come down more. Of course. But you know what, at these levels, the builders can operate and they know what they're dealing with and the buyer knows what they're going to be paying. So I think that, you know, the set up here is really good. It's just, you know, it's going to take a little bit of time for things to kind of fall into place here. But all kind of arrows are pointing up as we move into next year.
- [41:56]
Dominic Chew
And is housing, John, before we let you go, is housing and owning a home in America, to the President's point on his social media post, is it still the American dream or are the secular dynamics and demographic shifts making it so that the rental market or, or not owning is the more attractive option?
- [42:14]
John Levallo
No, it very much still is the American dream. And there was a thought process maybe six years ago that the millennials and some of the newer generations were going to be an owning kind of generation where they weren't going to buy cars, they were just going to Uber, they were going to rent houses. Turns out as they've reached kind of milestones in life like marriage, children, things of that nature that necess take more space, they're very much like every other generation. And to answer your question from before, which I, which I bypassed on which builders are best positioned, we still like the entire group, but the entry level, first time builders, like a meritage home in a Dr. Horton, in our opinion, are best set up.
- [42:49]
Dominic Chew
All right, there's the top calls there from John Levallo at ubs Housing analyst, thank you very much. We'll see you soon, sir.
- [42:55]
John Levallo
All right, John, take care.
- [42:56]
Dominic Chew
All Right. Coming up on the show, global leadership changes, moving the markets. We're going to get into those and what they mean for US Stocks in an international edition of Rapid Fire. That's coming up next. All right, welcome back. We want to show you a couple of the names that are moving as this open air developers conference is underway. HubSpot jumping as Sam Altman mentions the company during the presentation. Also, Salesforce shares are on the rise as OpenAI demonstrates a Slack integration with OpenAI's Codex agent. So both of those stocks moving on this, keep an eye on those. Let's catch up on a few international stories that are on our radar. It's time for Rapid Fire. And here to help us break all of it down is Seema Modi. And first up, Seema France. It's in a tough state right now. It needs a new prime minister again, the country's fifth in less than two years, resigning just weeks after his appointment that sent French stocks lower and yet yields higher as the government still has to pass a 2026 budget. Can they get their act together?
- [43:59]
Seema Modi
This is the shortest lived premiership in the history of France. The prime minister was there for 27 days and now France has had four different prime ministers in the span of 12 months. The issue at hand, Dom, is finalizing a budget. Party leaders remain divided on how to cut expenses and raise revenue. Every time they try to raise taxes, there's protests on the street. Street and global bond investors are now taking notice. They're becoming more discerning on which country's debt they want to hold. We've seen elevated yields across Europe over the past year, but specifically France, that's where it's playing out. A country that was seen as stable for many years now, literally the problem child of the eurozone. Morningstar now expects this country to have the highest fiscal deficit of any country across the eurozone this year.
- [44:44]
Dominic Chew
A lot of folks looking at that yield differential between German and French debt right now as well. Well, all right, next up, we've got the surging Nikkei after the ruling Liberal Democratic Party chose Saneta Takaichi over it as its head over the weekend. Now, Takechi is an advocate of Abenomics, reducing market expectations of a BOJ rate hike later on this month. Japanese equities did close higher by nearly 5% on the news while the yen and long term bonds tumbled. So an interesting dynamic playing out in a large developed economy.
- [45:15]
Seema Modi
And this stock market in Japan has been on a hot streak, Dom. Right. It's already up 20% this year after gaining 24% last year. Add to that now a new prime minister who is pro growth, anti immigration and has shown her interest in keeping rates lower for the long term. And that's why you're seeing the markets respond positively. The dollar is also rally against the Japanese yen. And interesting to see once again how the bond market is responding with the two year year coming down, but the 30 year going up on this idea that maybe she will keep rates lower in the long term and that could be supportive for the economy. But again, Nikkei, the Nikkei has done quite well this year.
- [45:54]
Dominic Chew
All right, and finally, another day, another deal for Open Air, adding AMD to its list of partners. But is it all to compete against Deep Seek out in China? They released an experimental version of their current model last week with AI better equipped at handling long conversations or documents deployments. And it runs at, guess what, half the cost of previous versions. So is this a game changer?
- [46:13]
Seema Modi
Well, we're trying to understand what is behind OpenAI's flurry of deals with AMD Nvidia. I spoke to Brad Gerstner over at Altimeter Capital and he was saying, listen, these are announcements, they're not deployments. We will see what gets delivered. And he said ultimately the best chips will win. He also adds there's more evidence that the world will remain compute constrained despite best efforts to bring massive supply online. We, we know that when we talk about geopolitics, AI Dom is at the center of this when looking at the rivalry between the United States and China.
- [46:42]
Dominic Chew
All right, huge deal for sure. Seema Modi, thank you very much for international rapid fire. Keep it right here. That does it for us. Power launch with Sully starts right now.
- [46:50]
Mackenzie Segalos
Julia Boorstin sits down with Thrive Global.
- [46:52]
Dominic Chew
Founder and CEO Arianna Huffington.
- [46:55]
Christina Parzonevoulos
What advice would you give to young people now trying to navigate this crazy world?
- [47:00]
Mackenzie Segalos
My advice is to pick a time at the end of the day that you declare as the end of your working day.
- [47:09]
Dominic Chew
Because let's face it, there is no end to our working day. Julia Boorstin hosts CNBC Changemakers and power Players. Listen now, wherever you get your podcasts.