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The Global Bond Rout, The Solo Sell on Nvidia, and Google’s New AI Agent 5/19/26
00:42:44
Yields soaring around the world as bond vigilantes try to force a Fed hike ahead of Kevin Warsh’s installation as Fed Chair. The street’s only analyst with a ‘sell’ rating on Nvidia lays out his bear case ahead of earnings. Plus, Google unveils Gemini Spark at its annual developers’ conference.
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Kelly Evans
You're listening to the Exchange. Here's today's show. Scott, thank you very much and welcome to the Exchange. I'm Kelly Evans. We'll get to bond yields, chip stocks, and this market. Sell off all of that this hour, but let's begin with the stock of the moment. Google or Alphabet. The company's flagship developer conference known as IO, kicks off this hour. The shares are down slightly right now, but they've seen a huge rise in the past year, up 132%. Its market cap has gone from 2.2 trillion to 4.8 trillion as it's gone from a laggard to a leader in the AI space. Look at November last year when Gemini 3 was released. You see that levitation on the chart there. Salesforce CEO Marc Benioff said he'll never go back to Chach. On top of that, Google has partnerships with all the big AI players and it just announced a new AI cloud company with Blackstone. By the way, Google also has a stake in Space X that could be worth more than $100 billion. Still, they have to fend off the growing behemoth that is Anthropic, the maker of Claude Tools for coding and the workplace. So how will Google respond? Let's get straight to Mackenzie Segalos with a preview. She's in Mountain View today with what we're expecting. Mackenzie.
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Narrator/Advertiser
Hey, Kelly. So, CEO Sundar Pichai imminently taking the stage here in Mountain View for Google's biggest AI showcase of the year. Google's broader pitch today is pretty clear. It's got less drama than the other AI labs in a more vertically integrated AI business already sitting inside of products that billions of people use.
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Jay Goldberg
Now.
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Narrator/Advertiser
The key things to watch today, whether we get Gemini 4, which would help Google argue that it's back at the top of the leaderboard against rivals like Claude Code new AI agents for coding would really help them compete with codex, which is OpenAI's product. And it's also a big part of how they compete for enterprise customers. And then there's the question of how Google plans to make money from AI mode in search. Citi thinks it could help Google monetize those longer and more complex queries that historically were harder to turn into ad dollars. But the trade off there is that AI mode searches produce fewer outbound clicks. So we're going to be watch for new ad products within AI mode. Investors also listening for any details they can get on this new project with Blackstone, this independent AI infrastructure business that they're launching with them a huge endorsement of their TPU business. And finally, Kelly DeepMind is central to
- [03:16]
Kelly Evans
all of this right now.
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Narrator/Advertiser
I'm going to be speaking to their CTO in the next hour with you, who along with Demis Hassabis has been really the engineers of this new AI reboot that's, I mean, powered them to the top of, you know, the market cap A week and a half ago. They just beat Nvidia.
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Kelly Evans
Kelly Incredible. And a huge rise. It's been really over the past year since this last I.O. event. MacKenzie, thanks. We'll let you get to it and we'll see you for some highlights and headlines a little bit later this hour. Mackenzie Segalos, our next guest raised his price target on Google earlier this month from 385 to 515. We're at 390 right now. Andrew Boone is managing director and equity research analyst at Citizens. Andrew, it's great to have you here. What are you expecting today?
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Andrew Boone
I think the big announcement that I'm expecting as a new model and then I'm also looking for whatever new agentix services Google is going to roll out for consumers. So how do they increase the automation of what can Google offer basically in terms of shopping, in terms of services, in terms of basically overall search. That takes away more of the consumer friction in terms of just increasing the usage of AI across their platform.
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Kelly Evans
So agentic AI, I mean, not to be super obvious, but let's just break that down for a second. If we go back to I.O. and I.O. stands for input output, as I understand, I'm not a developer, but it's speaking their language. If we go back a year, this time last year they did announce Gemini 2.5, they announced deepthink. We didn't really yet the market didn't fully understand how transformational. Certainly once they got to Gemini 3 these products would be. So how important is the agentic aspect of this announcement today and can it help them play I don't know if we call it catch up, but do they need to have an answer to the Codex and to Claude?
- [05:00]
Andrew Boone
I think there are two pieces there, one of which is kind of the enterprise side. And so I expect Google to come out with something that is more akin to a coding assistant. I think that is less important versus the overall move towards agentic. So if I think about it kind of the medium term agentic is certainly a future in terms of what AI will be from a consumer perspective. So what can AI do on behalf of users to basically simplify their lives? And my real question of what I'm looking for today is kind of where we are on that timeline, right? How far can Google kind of pull forward those use cases? And what comes first is that reservation, booking, is it just various aspects of search, like what exactly is it? And we'll see that today.
- [05:43]
Kelly Evans
Is it super. Look, we've all been waiting for and talking about agentic AI and some even say this is when we hit this artificial general intelligence moment. Yeah, I don't know. I don't know if all that's a bit of a sideshow because to be honest, it's Claude and it's Codex. I mean it's Claude especially where these tools have huge revenue growth, rapid monetization, they are changing the world. And so I'm just not sure us talking about booking your own travel. I know people are doing that, but it feels like a bit of a sideshow to the main act.
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Andrew Boone
Yeah, I hear you. I think that there are two pieces. Microsoft has always been kind of the leader in terms of B2B enterprise
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Kelly Evans
kind
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Andrew Boone
of experiences, if you will. And if I think about what Google's been really good at is they have seven products with 2 billion users and so they're really the consumer side of it. And so if I think about what they can offer, it's really how do you expose more AI to consumers to better basically the Google suite of products. So we've seen that with search, right? That's Gemini, that's AI mode, that's a overviews today. And so where is that going to get taken in the next couple years, especially as model capabilities continue to improve? And so yes, I hear what you're saying, like quad code is amazing. We're trying to integrate that across everything that we do here. And I think that's true of every enterprise. But consumer usage is different.
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Tim Seymour
Right.
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Andrew Boone
Like how do you think about your mom utilizing Google products? And how is your mom going to get impacted by AI?
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Kelly Evans
Right. And I would say this mom over here, I'm still using it like a glorified Google, you know. So in that sense I, I do think it's important to have a great consumer product. And they do. Gemini is fabulous. It's as good as it chatgpt. I think they're basically interchangeable for a lot of the general population. So yeah, I'll be curious. I mean they've integrated it with Gmail. I mean they have this 360. And what's important I think from the business model is if Gemini is as good as ChatGPT. But Google has so many other aspects to its monetization that OpenAI doesn't. You know, I think that's where the market cap is rewarding them.
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Andrew Boone
Yeah, absolutely. And you're seeing that in search, right? Search has gotten better. Search is close to now, 20% growth as of last quarter. That's phenomenal. This is a massive acceleration versus what was, I'm going to say, quote unquote traditional search before. AI is helping to unlock but is a first set of queries and people are now realizing that you can just do more with search. And so I'd argue that the search tam the opportunity of search advertising has now expanded and you're moving into queries that are now incremental. Whereas before people kind of questioned okay, if I'm spending brand dollars, is that really supportive of the search budget or is it something different? Now you're having full on product discovery that's taking place in search.
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Kelly Evans
Yes.
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Andrew Boone
And so you're right, it is improving the overall consumer experience and Google's benefiting from that just given better top line. You're seeing that in the stock chart.
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Narrator/Advertiser
Right?
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Kelly Evans
And all of those used to live off of its ecosystem. You know, it's pain more painful for them, but it's certainly for Google it seems to be no problem. You mentioned the TPUs and some interesting points on this and maybe we're going to hear more about that today. These, what are they? Tensor processing units. It's a, as I understand, a more efficient way to try to do AI and their vertical integration means that Gemini, they don't have to rely on Nvidia chips. So what would we hear today that might say hey, if they're trying to get more Customers, more clients to also use TPU's. Is there a need to keep an eye on Nvidia, which was at a record high. Yes, just a few days ago. But is it a competitive threat?
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Andrew Boone
Yeah, I think TPUs are expanding. And you look at the announcement yesterday from Google and Blackstone, right? $5 billion of equity that's going to go into data centers. What we're unlocking here is Google's IP around chips and what they're doing is they're creating chip sales into their own data centers to be able to support GCP in a different way. Right. Anthropic has kind of verified this in terms of a massive partnership between the two businesses utilizing TPUs. That suggests that hey, look for inference on a cost basis, you're seeing a major provider that is underwriting what is Google's chipset. And so I think for today, what am I looking for? We already know that the next set of chips are going to be inference and training based. That already got announced last quarter. But then how do we think about chip sales? How do we think about partnerships like Blackstone to be able to create the distribution for Google's chipset more broadly? And so that's, I'm looking for additional partnerships, but we kind of got that yesterday.
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Kelly Evans
Right. And you're saying, you know, looking for 3 billion of TPU related revenue this year, up to 25 billion by 2027 maybe Broadcom is an example there finally of the other things that we might hear from the company today. Gemini AI features Android 17 updates smart glasses. I always feel like you want to kind of fade smart glasses, pixel, other hardware teasers. I mean anything on that list that gets you excited or that you think really matters to the main narrative here?
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Andrew Boone
Well, I want to double click on smart glasses because I think it's just so important.
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Tim Seymour
Right.
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Andrew Boone
If you look at like major compute platforms, you had desktop, right? Microsoft really won that. That's a trillion dollar business. You had Apple winning mobile, that's another trillion dollar business. My next question of what we're trying to think through right now is hey, as AI kind of becomes a conversational assistant, if you have glasses on your face, you're now starting to be able to take in everything that's around you. What does a true personal assistant in an agentic sense start and can that be in the form of glasses where that's the major next compute platform for consumers.
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Kelly Evans
Right.
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Andrew Boone
And everything suggests that, hey, look, AI is going to change things. I don't know whether it's glasses, but I certainly know that that's a possibility. If I think out kind of five to 10 years of what that could be. Meta sold 7 million glasses last year in terms of the Ray Ban Metas. Right. I fully expect to get a preview of what our Google smart glasses this IO. I think it could be a big deal if I look out kind of three to five years.
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Kelly Evans
All right, we'll see what they say today. And then the take up and still the journey that they've been on to go from, you know, we say remember, what was it? What was their original AI Bard, was it Bard? Am I thinking of that correctly? Andrew, when we go back a couple of years, they've come a very, very long way to the leader.
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Andrew Boone
Gemini is a better name.
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Kelly Evans
Yes, Gemini is great. The market cap rewards it. Andrew, thanks for the time. Really appreciate it.
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Andrew Boone
Thank you.
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Kelly Evans
Andrew Boone of Citizens joining us today. Turning now to our other BIG story, as you can see there, it's surging global interest rates. The 10 year US treasury yield jumping to its highest level in more than a year. The high today was 4.68%. The long bond at a 19 year high. This follows long term rates rising in Japan, the U.K. germany and France. And Fed futures now show the likelihood of a December rate hike at 55%. Is the bond market trying to force the Fed to hike rates here just as Kevin Warsh takes office? Sam Stovall is chief investment strategist at cfra. He's here alongside Peter Boockvar, chief investment officer at one point BFG Wealth Partners. He's also a CNBC contributor. Sam, I'll just start with you. What do you think the significance and impact is of rising bond yields?
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Sam Stovall
Well, Kelly, good to talk to you again. Hey, Peter, I think essentially that it's sort of a domino effect where we're seeing higher oil prices that are leading to increased inflation readings, higher bond yields and as a result, the likelihood of a new rate hike. And then if you also inject history into this, you find that in each of the last six new Fed chairs going back to 1978, their first move was to raise interest rates. And in eight of the nine going back to World War II, the same was the case that the next move was to hike interest rates. And I think that's what's causing investors to be a bit concerned because we all know how the market performs once the Fed starts raising rates.
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Kelly Evans
Peter, what triggered the latest bout of selling pressure?
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Peter Boockvar
I think it's worries about debts and deficits. And I think the US treasury market has become a source of funds for those foreign holders. If you look at the 10 year increase in yield over the past week and a half, it's been all real yield. So that tells me it's more than just inflation here. And just to quantify foreign ownership as being a potential issue here, foreigners own about 30% of the US treasury market, they own about 30% of the UK gilt market, they own about 50% of the French oat market and they own even more of the German bun market. So countries that are dealing with this very big rise in energy prices in particular that are now looking to subsidize consumer spending and so forth, I do think that they're potentially selling Treasuries now. The bank of Japan, of course most of the JGB market is owned by both the BOJ and domestic savers. So that's not necessarily the case there. That is just a case of deteriorating debts and deficits. We just saw another jump in the JGB yield in response to the likelihood that the Prime Minister is asking now for a supplementary budget on top of an overnight rate that's only a 0.75% when inflation is running well above that. So my point is that this is more than just worries about inflation.
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Kelly Evans
Peter, did you see the story about, you know, I don't know how much truth there is to it, but that UK officials were looking to cap supermarket prices? How do stories like that, when we see them fit into what's happening with the sell off also their political turmoil fit into the sell off in the UK and how important is that from a global perspective?
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Peter Boockvar
Well, just another form of price controls which will work until it doesn't. We've seen historical precedents for it not working and just furthering the higher inflation. It's a good political talking point, particularly now that Keir Starmer is potentially about to lose his job. But there's a big focus on of the candidates that could replace Starmer, who is going to be more prudent with fiscal policy and who is going to be less and when particularly Barnar, who is the market's worried about with him potentially in the lead. There's been another obviously leg higher in gilt yields.
- [15:52]
Kelly Evans
And Sam, yes, it's pushing up mortgage rates. Yes, we're at the highest level at least on the 10 year here in about a year. But I believe the recent high was just over 5% in the late 90s. We love to make comparisons to the late 90s. The 10 year was at 6% although granted back then we were running practically a surplus and right now we have a huge deficit and a lot of debt. So I'm just curious what impact you think this level Sam has on stocks. We have a minor sell off today, but so far nothing that looks like panic.
- [16:21]
Sam Stovall
Well, you're absolutely right. When you go back to 1954, you see actually that the average 10 year yield was in the 5.5% area. So we're still very attractive relative even to that longer term average. But it doesn't mean that investors are gonna be happy with rate increases. Essentially what we found is that in the one month after the Fed has raised rates from an easing cycle, the S and P declined an average of about 3%, falling in all observations going back to 1990 when Greenspan started being transparent with Fed funds changes. And you typically find all sectors underperforming with the defensives holding up better than consumer discretionary and financials.
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Kelly Evans
And so quickly. Do you see anything in that pattern starting to emerge here now?
- [17:12]
Sam Stovall
I think so because we are getting a new Fed chair. We are seeing higher rates and as Peter was mentioning, other aspects beyond inflation that could force the Fed chair's hand to be the next move to be higher.
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Kelly Evans
Right. And now the market even pricing for that by the end of the year. For now gentlemen, thanks. Appreciate it. Certainly an area to keep an eye on. Sam Stovall and Peter Boockvar. Coming up, the one analyst on Wall street holding a rating on in video. Those shares are trying to avoid a third straight day of losses after a record high. And they report earnings tomorrow afternoon. What would it take for him to change his mind? That's next. Plus more on the sell off in bonds globally. Will it open up any opportunities overseas? That's ahead on the exchange.
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Kelly Evans
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Kelly Evans
Nvidia trying to avoid a three day losing streak. It's fractionally higher now, although the stock hit an all time high just last week. And with earnings on deck tomorrow, our next guest is staying cautious. He says the bar is high and Nvidia is facing serious supply constraints. He's sticking with his sell rating, the only sell on the street. Jay Goldberg is senior analyst at Seaport Research Partners. Jay, it's great to see you again. Welcome.
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Jay Goldberg
Thank you.
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Kelly Evans
So sell is sharper than a hold. I mean, it's one thing to say it's fully valued and so forth. I don't think anyone would get out there and try to short this thing.
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Jay Goldberg
No. The way I position this is not so much as a sell or short. I've never told anyone to short it, but I do think it is an underperform. Just the way our rating structure works, we call a sell. But I've always thought of this as an underperform and I think that's played out this year. If you look at it year to date, Nvidia has underperformed most of the semiconductor complex. There are other stocks that are just better positioned to take advantage of it
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Kelly Evans
right now, although supply constraints, I mean, in the very long run, that's a bullish sign. It would be much worse if they get to the point where no one wants the chips, but it's still a serious issue. And so what do you foresee facing up as challenges for this market?
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Jay Goldberg
Well, they've said repeatedly that they're sold out. Right. And I think this is the root of the problem, is once you're sold out, there's no ability to deliver upside to expectations. This is a heavily scrutinized stock. We all have a pretty good estimate of how much capacity they have, how much allocation they get from tsmc, and it's hard for them to surprise to the upside. Lots of expectations built in. There because there's so much demand for AI, it's just hard for Nvidia to. To excite beyond the sort of traditional beyond that.
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Kelly Evans
Don't you think, though, that if they were not going to be able to meet the quarter or meet the numbers, that more people would be on? I mean, and maybe not. Well, who was it the other day? Was it Seagate, one of the companies that was talking about how, again, the supply constraints are a major issue.
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Jay Goldberg
That's right. And I think the body constraints are going to get worse next year. It's just everything is backed up across the ecosystem and that's actually leading to this weird phenomenon where Nvidia is leaving money on the table, they can't supply any more chips, and that's opened the door to their competitors. We've seen a lot of big announcements this year from pretty much anyone else who has a competing part. We see intel and AMD both taking advantage of that opportunity to pick up some share.
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Kelly Evans
Exactly. Two quick final questions. One about the quarter, specifically, what are your expectations?
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Jay Goldberg
I think they'll come in sort of a little bit ahead of expectations and I think they'll guide up a little bit, but not enough to change the trajectory of the story.
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Kelly Evans
Okay. And then on the question we have this meanwhile Google I O event happening where they're expected, or they've already made some announcements about TPUs and opening that up and pushing for more partners. Does that make them at some point more of a viable competitor to Nvidia?
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Jay Goldberg
Google is absolutely a viable competitor for Nvidia today. I would argue that, you know, to date they're the biggest competitor Nvidia has on the market right now. Anytime anyone is, Nvidia doesn't get a deal. It's gone to Google's TPUs. And next year it gets worse. We have AMD coming on stream and so I think Google has become a pretty formidable threat in this market.
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Kelly Evans
And I know I said I only had two more, but I'm going to sneak in a quick third, which is the significance of the OpenAI trial and the way that that's sort of working out. It appears that they are going to prevail over musk. This comes after months of intense pressure from the media and others on the company about its business model, about its future earnings. So at least they don't have a major bill potentially to pay. But OpenAI is an important part of the whole Nvidia ecosystem, is it not? Does removing that cloud kind of help generate more upside potentially for Nvidia's business?
- [23:17]
Jay Goldberg
I think one thing that's clear is that there is strong demand for AI and it is steadily growing. People are finding new ways to use these models. The models are becoming more useful. I think. I, you know, I, I, I didn't follow the case day to day. I probably should have. It's some pretty good gossip going on there, but certainly OpenAI and their spending patterns are a big driver of what's taking place in the market today. And this should, should free up their ability to raise more capital and buy more chips. But not just from Nvidia, but from everybody.
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Narrator/Advertiser
Right.
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Kelly Evans
And Cerebras, I mean they're small and I know Nvidia has its answer to them, but do you can. I guess that's part of what you're saying, that there are a growing number of competitors.
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Jay Goldberg
That's right. That's right. Sarah Bross is on that list. I think if you look at all the press releases that OpenAI and others have done, it's pretty much every vendor out there and I think that the key is to look for the ones that are. The contract is finalized and the deal is financed. And Sarah Bross, I don't think this is clear, but they're certainly a very interesting technically. As a tech enthusiast I can geek out about their solution. It's pretty interesting commercially. I think it's. Remains to be, remains to be seen how well they'll do.
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Kelly Evans
All right. The shares at 325 today for cerebras. Jay, thanks very much and we'll see what happens tomorrow. Thanks for joining us.
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Jay Goldberg
Thank you.
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Kelly Evans
Jay Goldberg with Seaport Research Partners. Speaking of tech, don't miss an exclusive interview with Jeff Bezos tomorrow morning. He'll be live with Andrew Ross Sorkin at the Blue Origin Rocket factory down in Florida. You can catch that around 8am Eastern on squawk Box. Coming up, CNBC unveils trailing its annual Disruptor 50 list with nearly half the group making their debut. We'll tell you why there are so many new names and which could be next to IPO after this.
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Foreign
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Kelly Evans
Taking the top spot on CNBC's annual Disruptor 50 list, this comes as two time champion SpaceX prepares for a record breaking IPO. So we're taking a look at the other potential IPOs on this year's list with none other than Julia Boorstin, who leads our Disruptor 50 franchise. She's here in studio with a closer look. I I got a little taste of this Julia, you let me judge a little bit this year. Holy cow. The number of companies and there's a lot to pick from. So anyway, on the IPO question, over to you.
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Narrator/Advertiser
Well, thank you for being involved in Disruptor 50. It really is a company wide initiative and it's such a great opportunity to look at what's going on in the tech ecosystem. And when it comes to the tech ecosystem, the IPO market is poised to pick up with what Goldman Sachs calls a multi year high IPO backlog. After the IPO market continued its gradual Recovery last year, three of the top five disruptors, Anthropic, OpenAI and Databricks, along with multiple time disruptors SpaceX and Stripe, are expected to go public this year. This follows 47 IPOs this year, raising at least $50 million compared to 22 at this point last year, according to Renaissance Capital. The two companies that went public from last year's list, Figma and Navon, are both trading well below their debuts, reflecting concern about valuations amid competition from the hyperscalers. Other past disruptors that went public last year? Chime Klarna and Wealthfront are also down double digits since their ip. Now, many companies have been forced to accept down round pricing. And investors are now focused more on profitability and sustainability and are concerned about a software apocalypse. Now. The Disruptor 50 index of companies that have gone public is up 25% in the past year, which is outperforming the S&P 500, but lower than the Nasdaq 100, which is up nearly 34%. It's been bolstered by the likes of SanDisk, which is up more than 3,000%, and Lumentum holdings, which is up 1,000%. Now this speaks to the challenge of keeping up with the mega caps and a new focus on AI infrastructure.
- [28:39]
Kelly Evans
Kelly and notice there were a lot of companies, you know, sort of saying we want to use AI to help with health care and AI to help with this. There were a lot of defense names on the list. There were, there were just, there were many areas that five years ago it would have been much more, I think, about pure software at that point.
- [28:52]
Narrator/Advertiser
Yes. So it's definitely true that AI continues to dominate, which is what we've seen the past couple of years. But there are some new trends within AI and one of those trends is this idea of Vibe coding, this idea of using AI to code. And we have three companies that are vibe coding companies on this year's Disruptor 50 list. Newcomers, Replit, Lovable and Cursor. And so it's really important to look at how we're seeing this next generation of AI. There are 22 enterprise companies on this year's list, many of them about enterprise AI. And then yes, we have some key defense tech disruptors. And what's so interesting to me about the defense sector is you have companies like Sironic, which is a pure defense company, which is making, you know, actual physical devices which are used shield AI, which is used for drone warfare. But you also have companies in the cybersecurity space. And increasingly cyber is seen as a key frontier when it comes to defense.
- [29:43]
Kelly Evans
Great point. And like you said, some of these have been underperformers in the last year. So because it feels like we're in this moment of transition, those were kind of the last of the fintech software, whatever you want to call it, group. Now here come the AI.
- [29:54]
Narrator/Advertiser
So yeah, so the Disruptor 50, these are the private venture backed companies. When they go public, they graduate from the list and they join our index. And there we've seen some companies underperform in part because they were so highly valued before their IPOs. And then we've seen a sort of reversion towards maybe more reasonable valuations, especially when it comes to these software or fintech companies. And there's been such great growth when it comes to the AI infrastructure space. So it'll be interesting to see how these companies like SpaceX perform. You know, many people have told me SpaceX is in a class of its own. And then of course, we're waiting to see what happens with databricks, another massive company that can't call that a startup.
- [30:34]
Kelly Evans
Oh, gosh, no. These are established anthropic OpenAI. All private giants.
- [30:38]
Reporter/Correspondent
Yes.
- [30:38]
Kelly Evans
And they're going to test exactly what you said if they, after they wait this long, not that anthropic and them are so old, but to have the business model that they do. Julia, thanks. It's a great list. Appreciate you being here. For the full list, you can go over to cnbc.com disruptors and don't miss Julia's interview with the CEO of WABI next hour. Autonomous vehicle startup on the long haul trucking space. Their number 27 debuted at 35 last year, so they're climbing the charts. Julia Banks. Let's get to Deirdre Bosa now for a CNBC news update. Hi, Deirdre.
- [31:09]
Narrator/Advertiser
Hey, Kelly. Russian President Vladimir Putin arrived in Beijing for a summit with Chinese leader Xi Jinping just days after President Trump's visit to the country. It comes as the two leaders aim to reinforce ties between the nations and make progress on a long stalled energy policy project. China's Foreign Ministry says this is Putin's 25th visit to the country. The New York Times filed a second lawsuit against the Pentagon over its rules restricting press access to the building and military officials. The Times argues that a requirement that journalists be escorted while on Pentagon grounds violates the First Amendment. A Defense Department spokesperson said the lawsuit is an attempt for the outlet to get its hands on classified information. And the Professional Women's Hockey League announced San Jose as its latest expansion City for the 2026 season. The league previously announced new teams in Detroit, Las Vegas, Hamilton, Ontario. San Jose will be the league's 12th team and its first in California. This is a very welcomed development for
- [32:10]
Kelly Evans
me and my family.
- [32:10]
Narrator/Advertiser
Kelly, back over to you.
- [32:12]
Kelly Evans
You know, California hockey, I get it. They can put ice anywhere these days. Are you guys hockey people?
- [32:17]
Narrator/Advertiser
Deirdre?
- [32:19]
Kelly Evans
I guess, yeah. You're, you're, you're from Canada. You're required to be anyway. Deirdre, thanks. Dear Jebosa, Coming up, a deep dive into the global bond Breakdown that we're seeing around the world. Yields spiking from the US To Germany and Japan. What's driving the direction of the world's debt and what it means for currencies as well. Stay with us. Bond vigilantes are back. The 30 year treasury yields hitting their highest level in nearly two decades here while the 10 year sits at a January 25th high. And these moves aren't just here in the U.S. rates are rising globally with the Germany, France, the UK and Japan all hitting multi year highs. Our next guest says this reminds him of the fall of 2021 when the Fed was way behind and about to pivot hard. Tim Seymour is CIO of Seymour Asset Management and a CNBC contributor. Tim, take us back to that time.
- [33:10]
Tim Seymour
Well, let me put it in the context of Japan where I think last week was really all about the PPI number that was not just high, it was, it was in fuego. It was up 2.3% month over month. It was 4.9%. What we've known to be the dynamics in Japan of building inflation. Japan, where I think we're getting the greatest upward pressure on global bond yields is where this started. So it feels like 21 in Japan, not here. I don't think the Fed is that far behind the curve. But I do think rates need to come higher in Japan.
- [33:41]
Kelly Evans
And what does, why does the US investor in Micron need to care there?
- [33:46]
Tim Seymour
Yeah, actually Merrill lynch, bank of America, their fund manager survey which I participated in that came out today, I think really frames it nicely. Only 4% of global investors feel that we have a risk of a hard landing Yet 40% think inflation is the real number one tail risk out there. And 60% think that the 30 year treasury could go back above 6% in the next 12 months, really for the first time since the financial crisis and arguably the late 90s. And you can't equate all of these things together. And so Therefore after a 30% move in the NASDAQ triggered by Micron, someone is not listening to someone and bond yields are often right. And I think there's a lot of complacency out there.
- [34:28]
Kelly Evans
You know, we heard 440 was a stumbling block. Then it was 450, 460. We blew past that this morning. The stocks are barely responding. Is 470 next? I mean we were at 5% not long ago on the 10 year here.
- [34:41]
Tim Seymour
I think it is, I think as we all know every day that war wages on or a ceasefire that's still keeping those ships out of the Straits is leading to input price inflation across the board. We've seen it, we've had a number of readings, we don't need to really articulate that anymore. So that's the dynamic here. Despite extraordinary earnings season, etc. And if you look at global equities, you can really see the impact of what higher rates mean and I think they should have have as much meaning. US investors see the sensitivity on a minute to minute basis with what's going on in the 10 year and what's going on with stock yields and a lot of it's driven by the oil price. But if you look at international equities emerging which have outperformed everything this year in a week over week. So since May 13th when we had this big move and this latest spike in yields, Emerging's underperformed the S and P by 340 basis points. That's in a week. ACWI x US has underperformed the S&P by 155 basis points. So global equities feel it more because the doll dollar here is at 6 week highs has a lot of firm footing underneath it. And you'd make an argument that the ECB has less maneuverability here than the Fed. I mean higher rates in Europe ultimately will lead to lower rates. That's what people who ultimately are going to be buying sovereign bonds are thinking
- [35:57]
Kelly Evans
and quickly Tim, but when I hear what you're saying I think well, I know you're constructive generally on a lot of these opportunities, Europe, em and so forth. Do you remain that way? Does any of this change the, that, that bigger narrative?
- [36:08]
Tim Seymour
I think if investors have a, you know, 9 to 9 to 24amonth outlook, I think a lot of this will be remedied. I, I, I believe that it's in everybody's best interest to see oil prices come down. But we all know where the term structure is of the futures curve. I, I think most investors are underweight. International isn't the reason to go out and buy it. I do think higher rates is, is resilient as EM has been as much as there's been a, a fiscal adjustment as someone's been investing in this part of the world, you can't tell me a 6% treasury is good for em and I think that's something investors have to be cautious of.
- [36:41]
Kelly Evans
All right. So they can maybe get a little bit more bullish once we start to see those rates pivot and hopefully come down. Tim, thanks for now, appreciate it very much. Tim Seymour Coming up, Alphabet's Google IO conference is underway. We're going to bring you the big announcement so far right after the break. With shares still down about 1.7% on the session today, we'll be right back.
- [37:04]
Narrator
As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the nation and continue to shape its future.
- [37:16]
AT&T Representative
150 years ago, when Alexander Graham Bell came up with the first idea of a phone call, he thought about calling the office right next door to him. He never really thought about what this could be in terms of connecting the globe. And yet today it's the foundation under which commerce and the economy was built that is really the origin story of AT&T. Maybe a small idea started contained, but it grew incredibly big over time. When you think about every innovation that's occurred in communications in our society, whether it was analog communications with voice, the advent of using radio frequency technology, when you think about what has happened with fiber optic capabilities, all those innovations came somewhere out of AT&T time after time. AT&T has been there when people in the United States have needed it, whether it was allowing a president to talk to people on the moon.
- [38:13]
Sam Stovall
And this certainly has to be the
- [38:15]
Kelly Evans
most historic telephone call ever made.
- [38:17]
AT&T Representative
To the last, AT&T put the first communications satellite in space.
- [38:22]
Narrator
Nothing was left to chance.
- [38:24]
AT&T Representative
What we've been able to do to scale wireless technology to this very day, I think everybody at ATT comes in with a spirit of innovation in their own way. They come in thinking about what's the next big idea that they can come up with to advance communication and take it a step further.
- [38:43]
Sam Stovall
You're working.
- [38:43]
AT&T Representative
Here we are today on the dawn of the AI revolution, getting ready to invest even more money and create new capabilities that will take this economy in this country to an entirely new place.
- [39:16]
Kelly Evans
Some breaking news from the Google I O event. Mackenzie, over to you.
- [39:21]
Narrator/Advertiser
Hey, Kelly. So we just got the full readout of new products and what we're looking at here is a through line of agents with Google trying to show that it has the speed, cost, structure and distribution to make them work at massive scale. Now the foundation is Gemini 3.5 flash. That is the new default model for the Gemini app and AI mode in search search globally. Google says it delivers frontier level performance at less than half the price of comparable frontier models. The question for Wall street is whether that's enough. Some analysts came into IO looking for Gemini 4 as proof that Google is back on top of the model leaderboard. Now the headline agent product is Gemini Spark. It is a personal AI agent inside of the Gemini app, essentially bringing an open claw style agent directly into Gemini and workspace. Google also adding information agents directly inside of Sear and sharing its biggest upgrade to its iconic search box in 25 years. They're making it bigger, more conversational and more multimodal, with easier handoffs from traditional search into AI mode. CEO Sundar Pichai saying in his keynote a short time ago that the full stack approach to AI is really lighting up every part of the company. That AI mode in particular has been a revelation. AI Overviews now has over 200 or 2.5 billion monthly users, and in just a year it's already surpassed 1 billion monthly users. And finally, Kelly DeepMind chief Demis Hassabis teasing on stage just now that Gemini's multimodal capabilities are being used for world models, which is important to everything from building these AI assistants to training robots.
- [40:58]
Kelly Evans
I'm not even sure which of those most to follow up. I did take your point, mackenzie, because we're watching the stock and it's not a lot of movement. I mean, you could argue maybe a slight downtick. And to your point, maybe that's just because people want more. But let's remember at this conference a year ago, they were only announcing Gemini 2.5, and by the fall, Gemini 3 was what was totally a game changer.
- [41:19]
Narrator/Advertiser
Exactly. And what stood out to me is that CEO Sundarpachai said that 3.5 is a real step change in terms of coding capabilities. And that's really where you've seen Alphabet fall short. They don't come up in the same conversation where you're talking About Codex with OpenAI or with Claude code. And so if that's a case that they're able to make to enterprise customers, which is something that Thomas Currie and their cloud chief is certainly trying to do, trying to sign up more of their enterprise customers to use their AI tools. That can be a real change. But also what stands out to me is Gemini Spark. So this personal AI agent, it is just another indication that Google is really going after the consumer, which is OpenAI's home turf.
- [41:54]
Kelly Evans
I know, I'm over there and I'm trying to see, do I see the Spark thing yet? I don't know. It's sometimes it takes a second to work to use it in real time. Mackenzie, thank you for now. We really appreciate it. We'll see you next hour. Mackenzie Sagalos Coming up, the Homebuilder etf. Well, that's certainly under pressure today as rising bond yields push mortgage. Mortgage rates to a 10 month high. They're re approaching the 7% mark. Can the housing market hold up? If that continues, we'll get a housing gut check next. Welcome back to the Exchange. Can't keep this market down. I know. That's how frustrated some of the more cautious traders feel lately. The Dow had a bigger decline at the open, down about 101. That's 2/10 of a percent right now. Similar decline for the S and P. Nasdaq down half a percent. Russell's underperforming, but take a look at some of the stocks hitting all time highs today. That list includes Costco, Coca Cola, Walmart and cbo. And the S and P leaders tell you a lot about the market action as well. Once again, who's breaking out the upside? It's the familiar names across the memory and across the chip space. The names like Micron and so on and so forth. Home Depot, different story. That one was initially under pressure this morning after their report. Remember, that stock's been under pressure now for some time, down 20% over a year. However, on the call, the executives did talk about the consumer being resilient, said they've only put off big ticket purchases. But that's been true for a couple of years now. Those shares have reversed higher and are up about about 2/3 of 1%. Meanwhile, you've seen them run races, dance and even fight. But now China's humanoid robots are preparing to enter the workforce. And just like humans, they've got to be trained first. Our Eunice Yun went to China's state media what they describe as humanoid robot schools to find out more.
- [44:01]
Reporter/Correspondent
Kenneth Wren is training the workers of the future. Only thing is, they're not human. We're essentially teaching robots to think on their own, he says. Ren helps run what state media describe as a humanoid robot school. As China looks to advance its robots beyond entertainment to employment, this center in Beijing trains robots to get ready to work in a variety of scenarios. Foodie Luo is one of some hundred instructors. A former art teacher, law schools her cyborg students on how to sort items on a factory line. Using cameras, controllers and motion capture, she and her fellow instructors guide their AI enabled pupils through tasks, repeating actions multiple times. At first, the robot has no awareness and I have to control it manually, she says. But once my movement generates data, the robot learns and then can perform the task on its own. The robots are taught skills like housekeeping, massage, organizing store shelves and metal repair. Who gets tired first? Me, she replies. The robot doesn't know what tired is, but I do. On the same campus, hands are trained with motion tracking and sensors on average 10,000 times to learn a new skill, the creators say to a woman of soul, our current robotic hand can pick up an egg or even smaller objects and lift a string.
- [45:29]
Narrator/Advertiser
He says the training isn't only in school, but on the job.
- [45:33]
Reporter/Correspondent
AI powered robots are being test run as restaurant chefs, bartenders, waiters, even bodega owners. Right now, the robots rely on human assistance, though their proponents say it's only a matter of time before the droids do the jobs on their own.
- [45:51]
Kelly Evans
Can't tell if I'm rooting for them or against them. With all of that said on the innovation front, take a look at China's Kweb etf. This represents a lot of the Chinese Internet and high tech high growth names. It's still down about 17% over the past year. Its 52 week high was back in the fall. And all of this notwithstanding, it still remains somewhat under pressure. That does it for us here on the Exchange. Thanks for tuning in. Coming up next on Power Lunch, we'll be speaking with Google's chief AI architect following the Google I O presentation. I'll join Brian Sullivan for that right after this quick break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day. Day, same time, same place.
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