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Zelenskyy and Netanyahu in DC, A Memory Shift, and a Stealth AI MVP? 7/28/26
00:44:06
Ukrainian President Zelenskyy and Israeli Prime Minister meeting separately with President Trump at the White House as the wars in Iran and Ukraine become more entwined. Susquehanna’s Mehdi Hosseini says memory prices are nearing a ceiling, and that leadership in the space will come down to ‘hand-to-hand combat’ now that the ‘easy money’ has been made. Plus, Gabelli Co-CIO Chris Marangi’s under-the-radar AI trade.
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A
Thank you very much Mike. The Dow is up, but the Nasdaq is down again as the swoon continues. I'm Kelly Evans and welcome to the Exchange. Well the Nasdaq slightly positive now. Shares of Sherwin Williams and Coca Cola soaring today, leading the blue chips as the market continues to rotate dozen 668 this hour. We'll talk to Gabelli's co CIO Chris Moranji about that in just a moment. Plus a busy day in Washington with Ukraine's Zelinsky and Israel's Benjamin Netanyahu both at the White House. Jonathan Panikoff is here with his takeaways for the market and Apple, the stock that sat out of the AI splurge at record highs, overtaking in video in size and crossing 5 trillion in market cap today for the first time. Should other big tech names now use their playbook? That's all coming up ahead. Let's begin in Washington though, where President Trump met with Ukraine's President Zelensky and Israel's Prime Minister Netanyahu today as the Ukraine and Iran wars as we talked about yesterday, are starting to collide. Eamon Javors has a recap and the highlights.
- [01:49]
E
Eamon yeah Kelly, that's right. Vladimir Zelinsky's meeting with President Trump ended just over an hour after it began. Here's what we saw of his arrival using an out of public view side entrance to the West Wing today for both the Zelensky and the Netanyahu arrival. The Ukrainian President said after the meeting that he offered his condolences to President Trump on the death of Senator Lindsey Graham and that the two discussed licenses for Patriot interceptor production, which could fast track missile manufacturing in Ukraine. Prime Minister Netanyahu used that same West Wing side door for his meeting with President Trump a short time later. For Netanyahu, this is the first in person meeting he's had since he and President Trump started the war against Iran back in February. It comes at a time when, when the president has been increasingly vocal with his criticism of the Israeli leader's decision making in the war. And it comes on the day that that war, which the President said would last four to six weeks, now enters its sixth month. President Trump is trying to find a way to end it without leaving Iran permanently in control of the Strait of Hormuz. KELLY so a lot of diplomacy today. We've got some statements after the fact from some of the parties here, but we don't really know if anyone core decisions were made in any of those meetings. And I'm sure reporters are going to spend the rest of the day trying to find out.
- [03:05]
A
Although perhaps again, most striking for what appears to not have been the case, which, I mean, you and I both remember when we this exact same time, Zelensky's visit to the White House was the I don't know what other word to use than disaster than it was, I mean, it was, it was an upbraiding, frankly, this, it's unbelievable how much the vibes, the tone, the policymaking has changed. They appear, do they not to now have a little bit of the upper hand with the president?
- [03:32]
E
Well, they appear to have a hand with the president anyway. I mean, I think we'll see whether it's upper or not in the days to come. But both men were able to come here, have meetings and leave without, you know, a blow up, which, you know, I think in diplomacy counts as a success. Both men have been yelled at by the president in the past. The president's expressed displeasure with both of them. More recently, Netanyahu. The president's been sharply critical of Netanyahu over the Iran war. And yet, by all accounts, we had a productive meeting here today. You know, we'll see, you know, if we get some more reporting on what happened inside the room. But it was notable, of course, that the president did not, as he typically does, allow cameras to come in and record at least the top part of the meeting. In both cases, those meetings were closed doors and the only pictures we have from them are released by some of the participants themselves. So, you know, state media, so to speak, releasing the video and audio that we have so far of these things. And no independent Journalists allowed in the room.
- [04:28]
A
All right, Eamon, thanks very much. Eamon Javors. Appreciate it. Let's get to our next guest who said Trump's meeting with Netanyahu in particular was an important moment to potentially reset the relationship amid rising tensions. Let's bring in Jonathan Panikoff. He's director of the Atlantic Council's Scowcroft Middle East Security Initiative. Jonathan, it's great to see you. And I guess we'll start with this one. It's a little bit more urgent for the markets. Oil prices have come down considerably on this idea that the, you know, the active fighting is at some kind of pause. How important was today's meeting with Netanyahu?
- [04:58]
B
Great to be with you. Look, I think it might be quite important. My sense is Netanyahu is going to probably praise Trump, tell him that everything is great in the way he's doing it, but that Iran can't be trusted and so that they need to be ready to resume the war, frankly, and zoom at a fairly large scale as soon as possible. I think Trump is obviously very hesitant to do that. I think what you're probably looking at is really this question of whether or not you can get for the oil markets for commodities, you know, at the start, a 10 day cease fire. That's what they've been talking about. Going back to the deal that they had for 10 days, 150 ships through the strait each day. If that happens, obviously, I think it'll calm markets, but we're not quite there yet. The Iranians have denied even negotiating, though. We've heard those denials before. Right before deals were announced.
- [05:49]
A
Right. That's important. I mean, it does seem as though the US clearly can cut off their entire. They always talk about the power they have over the strait, but if those, if oil is not flowing, there's no revenue in their coffers.
- [06:04]
B
Yeah, that's absolutely right. Look, and it's especially going to be important in terms of where China comes in here. Right. I think for a lot of, a lot of us there was a little bit of a surprise in terms of, over the last six months, you didn't see oil spike in the way that many of us expected. We saw the slowdown in Chinese demand, but also Chinese reserves. Whether that can happen six months from now, though, at the same rate, I think is a real question. And whether China would be willing to play that same role. So China also has maybe a greater vested interest than they did the first six months of the year. That could also have an impact. But we're going to have to wait and see in terms of real decision making goes the Iranian are probably not united right now internally. And we've already seen that if the wording isn't really clear on both sides, we quickly get back into a conflict.
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A
But is your, is it your expectation that Netanyahu was pushing Trump to resume the conflict or to at least keep pressing hard against Iran? And what do you expect the US Posture on that ultimately to be?
- [07:07]
B
Right now? My sense is, yes, Netanyahu is going to say that the Iranians can't be trusted and that there's a lot more that has to be accomplished in, in this war, not just for Israel's security, but for Gulf security and for US Security. I think we've already seen that the Trump administration is hesitant to go that far and the president is willing to escalate. But despite the threats, hasn't put in ground troops, hasn't taken Kharg island, hasn't actually gone necessarily as far as I think Prime Minister Netanyahu may want. I think you're going to still see a disagreement here. And so my sense is where this is going to end up is you're probably going to see some escalation on some receding of that escalation for probably a couple of months, months now, in other words, yes, I think the Trump administration is going to try to get to a deal. We'll see if the 10 day deal happens, can it be extended then for another 10 days in which the Iranians are also given the right to sell oil, to sell petroleum products. But at the end of it, Iran still wants actual de facto control of the strait. Trump has said that's a red line and so we're not quite close yet, I'd say to a frankly bigger permanent cease fire. And this is going to go frankly up and down for a while.
- [08:16]
A
Okay. Then finally we saw the those Ukrainian they were striking Russian ships that were moving drones to Iran over the weekend and expressing a lot of displeasure about that. The US Seems some openness now to give them a little bit more of these defense systems that they need is the sense that you create. I don't want to say that they to use the phrase upper hand again in this war. But we've gone from the president trying to exert influence on Ukraine to bring this to a conclusion to now it seems like acknowledging their battlefield gains and perhaps wondering how much longer Russia can stay in this. So I'd love to know where the leverage is now being placed if his goal is still to bring this to a swift close. Or maybe it's not. Maybe it's, let's let this continue to play out.
- [09:01]
B
Yeah, I'm skeptical that the president's looking for the same quick resolution that he was, say, a year ago. Look, the one thing we know is President Trump likes a winner. And right now it does appear that the Iranians, if not fully winning the war, they clearly are in a much better position than they were previously. They're doing serious damage in Russia. It's causing significant issues to the Russian energy sector. It's causing significant pressure on the population more broadly, which is starting to express real displeasure at the war and how long it's gone. And so I think for the president, there's a real question here about, okay, do I need to try to be pushing President Zelensky or can I actually look toward something more neutral and letting this go? And since it's not U.S. assets, it's not U.S. troops groups, I think it makes it easier for the President. We'll see whether the president's willing to provide the Patriots to provide that type of defensive technology to Ukraine. Obviously, that's something Senator Graham was hard, very much pushing for and we'll see where it comes out of it. But I don't know that there's the quick resolution being sought now as there was last year.
- [10:08]
A
All right, Jonathan, really appreciate it. Thanks for joining us.
- [10:11]
B
Thank you.
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A
Jonathan Pannikoff with the Atlantic Council. You saw those falling oil prices that plus strong earnings today helping the dow to the 650 point gain we're seeing. But the Nasdaq is still lagging as investors keep rotating out of the tech and momentum space and into sectors like staples and health care and materials, all higher today, in some cases at all time highs. My next guest still warns this market is overly reliant on AI and on fiscal stimulus. Let's bring in Chris Marangi. He's the president and co CEO of Value at Gabelli Funds. Great to see you. Great to be here, being here. So kind of this, this is, there's no doubt this is a rotation right now. How does this, what continues to play out, do you think?
- [10:50]
C
Well, yeah, this is a rotation. We don't know how sustainable it is. You know, we organize our thoughts along the three T's, Trump, Iran, trade, the midterms, tech space and then treasuries, which we'll hear more about inflation and the Fed's take on inflation in the next couple of days. But yes, the market has been very levered to this AI theme. I Don't mean to be Cassandra, even though Greek mythology is on everybody's mind after the Odyssey. But we know how this is going to play out and it's some combination of overinvestment in infrastructure, financing squeeze or the adoption of Chinese models, which are good enough.
- [11:29]
A
The only question on everyone's mind seems to be when, you know, many people prior to this sell off rotation that we've seen would have said, yeah, maybe in a couple of years. Has that timeline been accelerated?
- [11:40]
C
Well, that's what the market is sniffing right now. And I don't think it's today, I don't even think it's tomorrow. The earnings that, that we're seeing, the earnings growth that we're seeing are real. It's by real investment by many of the hyperscalers. But at some point we are going to see that and I think that makes it important for investors to understand just how much of their portfolio is exposed to AI and to, and to seek areas that are outside of AI.
- [12:03]
F
I don't know if you can hang
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A
your hat on earnings. Earnings. We all know the earnings are strong right now. What we don't know is what it's going to look like in four or six quarters. That's where you talk to the analysts who say we're confident it's still going to be strong. These orders are locked in. Okay, maybe, maybe I don't. I'd love to know how you're thinking about that.
- [12:18]
C
Well, you know, actually the market multiple is lower today than it was at the beginning of the year because earnings have gone up more than price. And I think that makes sense. It's reflective of a lower discount rate because we are a little bit more uncertain about the trajectory of earnings over the next several years and how.
- [12:34]
A
So you guys obviously don't have to lay your bets thinking, okay, it's going to be Micron versus, you know, some of these other specific stocks. Are you literally looking for a proof areas of the market or areas that will enjoy the gains from AI productivity? Where, where are the places that you feel most comfortable going?
- [12:51]
C
Well, both actually. I think one of the most interesting parts of this market is trying to find companies that are going to be the beneficiaries of AI, not because of AI investment, because they're making them much more productive. In fact, I was with a CFO of a very large customer facing company this morning and I won't name that company, but they were talking about not cutting people, but actually making the customer experience so much better using AI and that should drive Sales and margins over time. There are very few industries that are AI proof. There are some that I would call resilient and we like a few of those, including my favorite topic which hopefully we talk about live entertainment and sports.
- [13:25]
A
So you think, you think live entertainment and sports actually is a winner from the AI up here. Evil in some ways that the areas like software for instance, you don't need to take an opinion on that so much. You can go to these other areas where you think it's not. That's not so much about the narrative.
- [13:38]
C
Yeah, I think that's right. And in fact I would argue that live entertainment sports is a beneficiary of AI because as technology becomes a bigger part of our lives, there's some alienation that goes with it and you know, causing young people in particular to seek togetherness and to seek events like the World cup to come together and cheer for.
- [13:57]
A
And we always talk about with Charlie Brinskoy about MSG and the sphere and all these companies have actually turned out to do quite well. One of your largest holdings is MSG Sports. You have the Atlanta Braves, you have Formula One. So you think that area continues to be lucrative. But people, people just want the quick, not the quick gains, but the incredible gains that they've seen in things like the memory trade. So can these kind of keep up?
- [14:18]
C
Well over the last 12 years public sports franchise. Sorry sports franchises public and private have actually outcomes pound of the S and P in the mid teens area. I don't see any reason that's going to change. These secular trends are very strong. Should continue.
- [14:31]
A
Well I guess that's. Look there were year to date the Atlanta Braves I used to languish and these are Fun stocks up 30% they are there. There are to fun. They always get people into them with terrible returns. But I guess like you're saying no, actually that narrative has changed.
- [14:43]
C
There's a reason that wealthy people are buying these teams and you look open to the paper any day. You know, whether it's the Padres, the Seahawks, the Lakers, etc. They're going for higher and higher prices. And again I think there's some real fundamentals behind that.
- [14:55]
A
Where else before we leave it, we have areas like industrials, health care at all time. We were just talking about what's going to happen with the continuation of the conflicts in Iran and Ukraine. I don't know what that means for the defense space which has been under some pressure for other reasons. So where. Where are you laying your bets?
- [15:09]
C
Yeah, for better. We still like aerospace and defense. I think the aerospace part of aerospace and defense look very interesting. Obviously Boeing with some strong results today. Health care is also interesting. It's like the S and P for the last four or five years but cut in half as of waiting in the S and P. I think there are some bargains there. Not AI proof but priced accordingly.
- [15:28]
A
Do you have any view on consumer staples?
- [15:29]
C
We still like some of those. Been a tough area but there are some some companies that again are priced very well. Schmuckers is one that we have talked about. Yes, you know they've got some pet food exposure. Some other consumer staples you could probably find in your own cabinet.
- [15:44]
G
There you go.
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A
If you are nervous about what's happening in Korea on any given night, here are some other ideas. Chris, thanks so much.
- [15:50]
F
Really appreciate it.
- [15:51]
C
Great to be here.
- [15:51]
H
Thanks.
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A
Maranchi with Gabelli Funds Speaking of the mania and memory stocks, it does continue to cool off a little bit. Even China's CXMT falling 4% after surging 465% in its debut yesterday. We'll look at what's changed. But first a coin toss. That's where respondents in CNBC's latest Fed survey come out on chances of a hike this year. Is Joe Lavornia in the hike, hold or cut cap? We'll ask as the Fed kicks off its two day meeting today. The exchange is back after this.
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D
This is the exchange on cnbc.
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Trading at Schwab is now powered by Ameritrade Unlocking the power of thinkorswim. The award winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools all while you uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com Trading Today is day one
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A
of the Federal Reserve's two day policy meeting with their first decision. No. Is it their second? I wrote this. But anyway, no. Their first decision. No their second under new chair Kevin wars due out tomorrow. The market is divided on what their next move might be and the Fed reportedly is pretty divided itself amid reports of rising tensions as Warsh acknowledges that he is looking for less groupthink and more of a family fight. Let's bring in Steve Leesman with the latest from the CNBC Fed survey. Steve,
- [18:02]
H
but Kelly, let's let you and I get along okay. Does that work for you?
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A
No. Family fight disagreements only.
- [18:10]
H
Okay. Well, uncertainty over the economic effects of the Iran war and potential changes that are coming from how the Fed makes monetary policy. They have sowed divisions about the outlook among respondents to the CNBC Fed survey and potentially inside the Fed itself. In our survey, 29 respondents, 96% say no change expected in rates this week. 57% though expect a hawkish descent either for a rate hike or a bias to hike. In the statement, 54% see one or more hikes through June 2020. The rest will 23% see no change in rates and 23% see a potential for a rate cut. Lou Green, strategist at DW Trading Group writes in I have participated in the CNBC Fed survey for a very long time. I have never clicked on, don't know, not sure more than I did in this survey. You can see the rate outlook here is 376 by this year and it was up. That's up from 3.6% in June, nearly 4% among those expecting rate hikes this year and 37 next year. That's up from 352 in June. To respond to sectors, see the Fed holding rates this year but hiking next year. That is 2027. Among the uncertainties out there, potential policy changes coming from new Fed Chairman Kevin Warsh regarding communication including his decision to provide less detail about the course of policy. Gila Bar he is chief chief fixed income strategist at that Jamie Montgomery Scott says the uncertainty generated by Warshire's early pronouncements are forcing him exposed to overnight interest rate swings to heads against those swings which will incur costs in the long run. You can see that when you look at futures going into this meeting with a 29% chance of a rate hike built in. Those Kelly have to unwind if the Fed does not hike tomorrow. So that's built in volatility for tomorrow's meeting. Meeting.
- [19:59]
A
All right Steve, thank you. Stay right there. We want to talk more about this and have a little bit of a family fight, but hopefully everyone won't agree. I'll play devil's advocate.
- [20:06]
I
Okay.
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Joe Lavornia is chief economist at SNBC Americas and former counselor to Treasury Secretary Scott Bessant. Let's just be clear on where you stand on this first Joe. Hike, hold or cut?
- [20:16]
G
Hike.
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A
Hike Now? Yeah, tomorrow.
- [20:19]
J
Why?
- [20:19]
G
Because the economy is fine. Inflation risk is to the upside. The Fed cut 75 last year. The last move very contentious when it was in December to guard against unwanted weakness in the labor market. Labor markets healthier, stabilize, it's improving. Take back that easing.
- [20:37]
A
I'd be in the. Well, I think that this hike thing is backward looking. Now I understand what's going on with inflation, but talk a little bit. Where do you see it? Because the last month was when we had a myth in both the labor market and the inflation data. For the first time in a while it feels like the fever is breaking and I'd like to be persuaded that he could do something where what are they? Tighten the balance sheet but also lower the policy rate.
- [21:04]
G
The data the last month was very friendly and would suggest they could wait. The problem is the Fed has missed its inflation target going on six years. If you look at the core PC, it's over a point above where it needs to be. And if you look in the past, when is inflation gotten back to target? It's always been because the Fed's tightened. So the fever might be breaking, but that there's no historical evidence to suggest it will get back to 2. Monetary policy isn't tight with maybe one exception, housing, but that's only 3% of the economy. So you've got easing last year, you've got the likely rise in the real rate R star because of all this capex spending. Oh really? And if you're Kevin Warsh and you're looking at the trends in the data, you want the meetings to be live. This is a perfect opportunity to hike because it's not going to be a total shock, but it'll be a mild surprise relative to market pricing. And you move away from the Bernanke Yellen Powell timeline of always signaling a bias and then reconfirming, let's say a Jackson Hole and then doing it at the September meeting, etc.
- [22:06]
A
Steve, jump in here.
- [22:09]
H
I think there's two questions that Joe raises and I think he knows it. The first one is should the Fed be hiking? And Joe's answer that question in the affirmative. The second question is should the Fed be hiking by surprise. And I think it's that question that I think is worth exploring. If the Fed hikes tomorrow, judged by the pricing of the market, it's a surprise, at least from the Fed funds futures market. Most of the Fed observers do not think the Fed will hike tomorrow. The effect of that, of doing it that way would essentially be to put everybody on guard for either any possible outcome from a Fed meeting or potentially much more hawkish pricing than the market had previously had for future interest rates. So I agree that a hike could be warranted here and could perhaps help break the bone, break the back of the of inflation and prove the Fed's and chair washes seriousness about inflation. I would think, though hiking by surprise would be a much more perilous route to go down. So I would suggest that if Kevin Wash wants to hike rates, he ought to let the market price that in ahead of time.
- [23:19]
A
I bet he'd rather not tell any of that.
- [23:21]
G
I think he'd rather. Yeah.
- [23:22]
A
I mean, I think he love. Here's what I think. You tell me. I think he'd love to come out with a surprise hike, Joe, but I'm not sure he believes that's the right course of action.
- [23:30]
G
I don't know, maybe. I mean, surprise is. This is like a qualitative assessment. I mean, It's a roughly 30% chance. I mean 300 in baseball. Your hall of Fame person gets a hit. It's not a surprise in that regard. I hear Steve's point. It's a good point. But I mean, this isn't like it's a 5% and we're moving, it's 30%. And honestly, old habits die hard. People don't know the Fed reaction function, so they feel like they need to be led by the Fed chair. But Kevin has been clear he wants the markets to kind of figure things out on its own.
- [23:58]
A
Can I ask you and then question.
- [23:59]
G
Take that information from the Fed, not the other way around, the Fed leading
- [24:02]
A
the market to this, something Chris Moranji talked about. You've talked about it a lot. We've all talked about this a lot. But how much of this kind of weird situation that we're in is also because of the fact that the deficit is higher this year than it was last year. There's been no tightening on the fiscal side at all? At all?
- [24:18]
G
No, there's been.
- [24:19]
A
So why are we saying to the Fed go, I understand that inflation is their objective, but where is it? Is it coming from deficits, spending, that's
- [24:27]
G
a much bigger problem is coming from deficit spending is again, it's, if you look at the, the Fed cuts we've had over the past two years, since September 24th, it's been to guard against the labor market. Labor market is stable. If the Fed had today's information with a crystal ball back last December, I don't think they would have hiked. They would have cut. They wouldn't cut at all. And Kevin can get around this issue of the surprise by saying, look, in light of the stabilization improvement, the labor market, we thought it prudent to remove some of that emergency easing from last year that cities done. Now the market may think they could go again or maybe they won't go again. It'll be based on the evolution of the economic data. But I don't understand why you want to go now. Also, it would insulate the Fed. Two of things. One will insulate the Fed from politics because God forbid the data strengthen and look bad right before the midterms. You want to go in October. And that's one thing. Another thing I just want to say is that, that, you know, he wants to, as you said, have these conversations in these debates. So this would be a perfect opportunity to do it right.
- [25:26]
A
Steve, last word.
- [25:28]
H
Joe, again, I'm going to come back to the same thing. The market has no problem with uncertainty. All it does is price it in. And if that's what you want, and I'm not saying you want this, Joe, but Kelly did want a family fight, so I'll give you one. If that's what you want, then the market will simply price in a higher cost. That's exactly why I ran that quote, quote from Gila Bar from Jenny Montgomery Scott.
- [25:51]
D
Sure.
- [25:51]
H
You create greater uncertainty markets like, great, fine, I'm going to price it in. I'm going to have to hedge against this and hedge against that, and I'm cool with it. But if that's what you want, you think that's a better route to get things done. And then you got to go back and say, well, what did he say? That I could have done a better job pricing this in. Well, I'm not sure what that was.
- [26:08]
G
Yeah, I would say, Steve, I don't look at there as being a huge cost there. I mean, what we're talking about are leveraged basis trades among the macro hedge fund community. So they've got to price the risk. They're big boys, big boys and girls. Let them price it. So what? And actually, if they hike. Yes, I think the rate will rally. Rally if they hike. And Kevin could Go to the presence. Mr. President. I got more money to people savings accounts by hiking and I got the mortgage rate.
- [26:31]
A
Lower mortgage rates.
- [26:32]
G
Exactly.
- [26:33]
A
All right, we'll see. Maybe, maybe you're convincing me.
- [26:35]
H
But tomorrow less money if you. Okay. If yields go down, it's less money.
- [26:40]
G
But that's another mortgage for the mortgage buyer.
- [26:43]
H
Steve.
- [26:43]
F
Thank you.
- [26:44]
H
Mortgage rate.
- [26:45]
A
We'll talk next hour. Steve Liesman and don't miss our special
- [26:47]
H
I'm not talking to any of you
- [26:48]
A
guys anymore of tomorrow's Fed decision. Live from Washington, we'll speak with NSC director Kevin Hassett. Look at this panel of experts. One of my favorite show. We like all the shows but the DC should want the shows she said are really fun. We've got some news out of Washington. Speaking of which, let's get to Emily Wilkins on Capitol Hill. Emily?
- [27:08]
I
Hey Kelly. Well, Nvidia CEO Jensen Huang is on NDC today talking with a number of policymaker. This is before we're expecting some policy, additional policy from the White House on that AI framework. But we know that he just met with Senator Mark Warner, a Democrat who's actually the top one on the Intelligence Committee oversees a lot of national security. Big China hawk. Of course, this comes after Huang has been pushing for an open AI model and Warner says that his own thinking on how Congress needs to legislate around open models has been evolving.
- [27:43]
C
Six months ago I was much more sympathetic to the idea of, you know, kind of closed source models because that's when Claude came out and that's where kind of the state of play was. Now that we've seen some of these Chinese models like Kimi come out and more and more American companies go to open source.
- [28:00]
G
I'm not sure this is a genie
- [28:03]
A
we can put back in the in the bottle in terms of open source.
- [28:08]
I
Now we're not expecting any legislation to move on AI up here on Capitol Hill soon. But Senator Mark Warner did come out with a recent package, wide ranging package of AI legislation. This includes pre testing for some certain models. Warner said that he and Jensen Huang had a conversation about that that got spirited. But of course there's lawmakers are really trying to figure out what the path forward is going to be when it comes to setting some guardrails on AI and how much they need to do and how much could potentially be too far. We also that Jensen Huang will be meeting with others in D.C. that will be including Secretary Treasury Secretary Scott Bessant. We've seen reporting that he'll be meeting with Commerce Secretary Howard Lutnick as well as others in the White House as everyone is trying to figure out exactly what the path forward is going to be.
- [28:55]
A
Kelly Bob Greifeld had some great thoughts on this. Encourage everyone to go read his piece again on cnbc. We talked about it on the show yesterday. Maybe that's one route we will go. Emily thanks. Emily Welkin Speaking of AI, is Microsoft the new anthropic Microsoft touting its first AI model for cybersecurity, saying it can outperform anthropic tools. And it comes right after open eyes, hugging face hack. Microsoft shares now up 6% in July after coming off its worst month in more than a quarter century. Details after this.
- [29:28]
K
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A
Welcome back and take a quick look at this video that was just moments ago at Lindsey Graham's funeral service at Washington National Cathedral. You can see Benjamin Netanyahu, the Israeli Prime Minister over there on the left side of your screen and to the right was there he is also shaking hands with the former Vice President Mike Pence is Vladimir Zelinsky. But correct me if I'm wrong, Zelensky and Netanyahu themselves shook hands. Yeah. Okay, so just to confirm the beginning of that video, you also could have seen the Ukrainian President Zelensky shaking hands with Israeli Prime Minister Netanyahu again. Important moment to point out simply because Zelensky himself and the events of the weekend have started to unite these two wars that are happening again. This is moments ago at Lindsey Graham's funeral at Washington National Cathedral. Let's get to Pippa Stevens now for the CNBC news update. Hi, Pippa.
- [31:35]
K
Hey, Kelly. Cases of cyclospariasis in Michigan have risen to more than 9,000. The state, one of the epicenters of the outbreak, saw an increase of more than 400 cases in the past week. The CDC says cases have been identified in 34 states and expect illnesses to keep rising through the end of August. August, the source of the outbreak is still under investigation. Robinhood CEO Vlad Tenev says his account was hacked. In a post on the platform, he said a hacker posted fake content about a meme coin on his account after it was compromised last week 10 saying that a fraudster socially engineered X customer support to gain access to his account. And X Security has set up additional safeguards on his account to prevent it from happening, happening again. And KFC founder Colonel Sanders, pressure cooker, black bow tie and other personal items are up for public auction with online pre bidding concluding tonight. Harland Sanders is home where he established the first headquarters of the fast food chain is up for auction until Friday. The highest online bid for his bowtie is 40$400. Kelly, back to you.
- [32:42]
A
All right, Pippa, thanks. Coming up, the memory meltdown continues. Micron pacing for its worst monthly drop in 11 years. SanDisk has wiped out half its value in the past 30 days, down 14% today. Is this just healthy skittishness ahead of big tech earnings? And the capex questions. Is it a buying opportunity or is it a real breakdown in some of these trades? We're going to talk about that next. The swoon in stocks is gathering steam. A benchmark tech ETF is back to its lowest level since early May, while both health care and financials hit record highs today. The Nasdaq 100 is now down about 10% from its highs as the semis fall another 4%. Micron, Applied Materials and AAM leading the declines on the SMH today. Let's bring in Susquehanna's Mehdi Hosseini. He's a senior equity research analyst covering tech hardware. Mehdi, it's always great to see you and I mean to me this feels a lot like more than just a positioning shift. It feels like we priced in 10 years of returns by May and I'm wondering now if it's going to take 10 years for the stocks to get back to those high water marks.
- [33:48]
L
Well, first, thanks for having me on a program. I remember three months ago during the last earnings season all of these names would, would open up up 5, 10% and they would close up 10 to 20%. So this current earnings season is a very different. I don't think there are investors out there that are looking for bargain stocks bargain hunting. I think they're going to wait till late summer. At the same time there is so much noise. There is a CXMT that has come public creates noise. There is an anxiety over China's ability to make memory chips. But at the end of the day, I think in my humble opinion the biggest variable, the biggest question mark is if commodity memory prices are beginning to plateau, is it going to go sideways or is it going to roll over like the past 30 years? Okay, I think there is enough of a demand to help commodity prices to go sideways and not rolling over. But this is very much debatable and subjective.
- [34:51]
A
So let me ask, I want to show everyone is following this. You're saying your biggest question right now and the one hanging over this trade is our commodity memory prices starting to plateau and can they plateau or, or are they going to follow history of the past 30 years and collapse? What exact data points are you watching to try to figure that answer out?
- [35:10]
L
When you look at the consumer electronics, the memory budget has gone up due to higher prices due to memory inflation. I think we're beginning to reach a ceiling. Just look at the headline over the past six weeks when Tim Cook is out there talking about higher cost of memory is enough. He's got enough volume to do something. And I think that's a leading indicator. And I look at the, the, the companies in the supply chain, they're also talking about the inability to pass on that incremental cost associated with consumer electronics. So this is the. And then I make a conclusion that commodity prices are beginning to. Now looking into next year year AI is diversifying the mix and how these companies are going to be able to have a mix with a reasonable margin would make a difference. But, but to make a longer story short, commodity prices beginning to plateau as to where we go from here is going to be the big variant.
- [36:13]
A
Yes. And I know you literally have to finish this interview in like 50 seconds and go so. So I appreciate you coming out especially because as a memory guy you're acknowledging the anxiety, anxiety that's in the market. You're not glossing over it. You're not just repeating this line about the prices and contracts being fixed for years. So what should investors do about it? Should they get out of this trade? Should they wait for these to become value stocks while the heat seeking momentum missile goes elsewhere?
- [36:36]
L
Look, if you own memory stock, hold on to it. I think when you look at compared to three months ago, these stocks are still outperforming. Of course, over the past month these things have given up a lot of gains. If you haven't, if you don't have an exposure, I think you're going to have better pricing floor over the next month or two. And I think, I think investors will come back to this space, let's say late summer, which is very typical. So if you don't have exposure, wait, I think you're going to get better pricing. And I think looking into next year, I think everything is going to play out the workout, but it's just going to be a hand to hand combat. The easy money is made now. We're just going to have to be very patient and very methodical, very clear.
- [37:20]
A
I hope, I hope our writers@.com are listening. They want them to write these headlines. You see, better entry points are coming if you own, you know, hold on to it. But if you're, if you're looking to buy it, maybe wait, this has been a vicious correction. Many thanks. We'll let you go. Appreciate it. Susquehanna Saini, Coming up, Microsoft shares are on pace for a third straight day of gains ahead of earnings tomorrow. We've got the details on the company's renewed cybersecurity efforts next. Speaking of cybersecurity, shares of Commvault Systems are down 16%, worst day in six months despite strong earnings with Piper Sandler downgrading the name to hold after results writing that while Guidance was conservative, the results did little to validate why one should be adding to positions here versus other opportunities. Those shares are still up about 11% over the past past two months. We'll be right back. Renewing its cybersecurity efforts just days ahead of earnings, they're releasing a new AI model for spotting vulnerabilities. Kate Rooney has the details in today's tech check. Hi, Kate.
- [38:21]
F
Hi, Kelly. So this is Microsoft's first AI model built specifically for cybersecurity and they're doing this at a lower price point. CEO Satya Nadella described it as frontier grade security at half the cost. The model is designed to go out and find software vulnerabilities before bad actors do. It does also help security teams proactively get ahead of some of these risks versus just reacting to those. And then Kelly, having a more capable cyber model is also becoming table stakes. As we're seeing in AI, you have Anthropic and OpenAI really considered the leaders in this space space. Both are partnering with Microsoft. If you remember Microsoft. Microsoft is one of OpenAI's largest shareholders and investors. Google also has its own distinct cybersecurity model. And Anthropic Mythos has gotten the most buzz by far in this space, especially after it was pulled from the market by the US Government. It is considered the most capable on one hand, but it is also the most expensive version out there on the market. Microsoft's move to undercut on cost does come as we see more companies start to scrutinize their own AI spending. And we hear from a lot of CEOs, CFOs that are looking closely at their budgets, asking on one hand who has the best model. But increasingly we hear a lot more about who can actually bring the best performance at the lowest cost. It is an important part of Microsoft's enterprise offering, which is key ahead of Microsoft earnings tomorrow after the bell.
- [39:43]
A
So just again to, to. And so they have. They had other cybersecurity tools, but this is a more advanced one. Or is this really the first of of its kind?
- [39:53]
F
It is. They have had tools and offerings within Enterprise, within Copilot, but this is the first specific AI model. So that is slightly different in that they're not incorporating other models. They're going to have one that can go out and compete, you know, with OpenAI, Anthropic and Google in this case. But they have been deeply steeped in cybersecurity overall. So it sort of adds to that offering. But when I mentioned table stakes, you want to give enterprises and other companies a reason to not leave the Microsoft ecosystem. This is another way to do that. You don't want companies saying, wait a minute, you don't have a cyber model. We're going to go out and use Anthropic, which is also going after Enterprise in some ways now competing more with Microsoft.
- [40:28]
A
I can see why this has been the biggest boon the consulting industry has ever had. I mean, every time we turn around, there's a new tool. People are thinking, I better go get this one. Oh wait, no, there's that. I sympathize with, with the people running these companies. It's a very exciting time. But they must be, their heads must be spinning.
- [40:45]
F
I think the other thing, Kelly, as We talk about that. We may be in this moment where there is almost a peak spend on, you know, I mentioned CEO scrutinizing the budgets more. We're sort of in this test phase where companies are able to use more than one tool, not knowing which one is going to stick, not knowing which one is the best. And it calls into question some of the, the budget and the spending when we look at AI overall.
- [41:07]
A
True.
- [41:08]
F
Is that going to stick in the next year or are we all in a phase, even consumers, but where you're using more than one offering, it begs the question, are we going to be that way a year from now? Do you have to streamline and pick your favorite?
- [41:18]
A
I'm sure they will. I have a, I have a phrase for that. It's called spaghetti mode. Any time you're in one of those where you got to just throw everything against the wall. Yeah, yeah.
- [41:25]
F
So they're in, I personally am in spaghetti mode. But we'll see if enterprises are too and what that means for these IPOs, anthropic and open air. If you can have two subscriptions. This company, that might work right now, but in a couple of months, if companies say, all right, we got to
- [41:36]
A
pick one to spend and then. Excellent point, Kate. Thank you very much. Kate Rooney.
- [41:40]
F
Appreciate it.
- [41:41]
A
Apple reclaiming its crown as the world's most valuable company and crossing the 5 trillion market cap sign for the first time ever. Just below that right now. Our next guest says this all cements their position as a safe haven versus the AI trade. And he sees three catalysts that could bring more upside. We'll talk about that next. Welcome back. Apple didn't just reclaim its title as the world's most valuable company. Today you can see it surpassing Nvidia's market cap for the first time since May of last year. So that's happened before, but new today it topped the 5 trillion mark for the first time ever. The shares are up almost 20% over just the past month. And our next guest says that's a reflection of its safe haven status in this trade here to get us ready. The company also report reports on Thursday. Let's bring in Amit Darianadi, senior managing director at Evercore. I mean, they just look so savvy as this is all taken because again, everyone said a year ago they need an AI strategy. They have one. It's called the iPhone, which I use all the time to use apps like Gemini or, you know, whatever the app of choice is. Are we going to look back at another year though and Say it was obvious they should have pivoted and started investing more heavily. I mean, what, what are we, what could still be lying around the corner? Or is this strategy just going to be the one they stick with and it pays dividends?
- [43:02]
J
You know, I think their strategy, in fairness, is very simple and it's actually the exact same strategy they had with search. Right. Apple did not try to go out and build something that competed with Google and Search, for example. They just partner with them. I think they're going to do the exact same thing with the different strings of spaghetti, as you said earlier. And it doesn't matter if it's Gemini or Anthropic or Open Air. They'll just be the one that is the front end screen with Siri on it. Right, right. And so I think essentially what Apple will do is enable monetization of AI at the edge without having to put in the hundreds of billion dollars of capex that perhaps other companies have had to do.
- [43:39]
A
And so some of the rubs on them were, oh well, they're going to, you know, memory prices are up, they're going to have to figure this out. What's it going to mean for the iPhone cycle? What if consumer demand is a little bit soft, you know, what if Siri just doesn't live up, up to her potential? What if OpenAI comes out with a new gadget that replaces them? Where are you? Or if none of those are your concerns, what would you be thinking about?
- [44:03]
J
Listen, they all are concerned to some degree, right. And the part I would say, you know, on memory input costs, I think Apple has the ability to pass on memory input cost increases to customers. And in fairness, you and I as consumers probably want to face the brunt of it. Your carriers will probably subsidize a part of that cost anyway. Right. So I think they can manage their way through on that pretty well. The iPhone cycle supply chain, I think they do a much better job managing supply chain than anyone else. I would actually argue and say this. The next couple of years could be like the pandemic where Apple will actually pick up market share because they're able to get memory and ship product while others are perhaps not able to do it. Now, the stuff you worry about, right, the part I would say I worry about is, is, is over time AI usage going to be on a device that does not have a screen, is the form factor going to be fundamentally different than an iPhone?
- [44:50]
A
Right, right.
- [44:50]
J
Is it a hockey puck in something else? That's a subcategory I worry about and the question is can Apple innovate and keep pace with that or will they remain reliant on iPhone as the main mode of AI consumption?
- [45:00]
A
Here is what Brandon Nispel, he's another analyst over at Keybank, he's underweight on the stock, reiterated his underweight today to 50 price target. He says the sell off in the semis has driven a flight to safety trade benefiting Apple. So in other words, we're over interpreting its performance as fundamentals more so than market positioning. And he says it's inopportune because there's a pullback in device upgrade rates, changing strategies. IPhone prices will rise, unit demand will fall, slowing user growth and slowing services, leaving them as more pricing reliant for growth. What do you think about that? Especially as they trade it 37 times.
- [45:34]
J
You know, listen, Apple trades at a high multiple, I would argue because they generate 120 billion of free cash flow. And all of that comes back back to you, the shareholder. It doesn't go to Nvidia for GPU purchases. It doesn't go to employees or SBC or for M and A. Right. The return of capital is why you pay Apple a premium. It's a safe trade from that basis. You know, on iPhones. Listen Kelly, Apple is on track to grow revenues mid teens this year. IPhones potentially growing faster than that of the high teens range. So I think iPhone demand is perfectly robust and stable and if anything I would argue that price increases will be an incremental catalyst to the revenue growth versus hurt them. So I would say, you know, look at the revenue growth they're having right now, mid to high teens and iPhones, it's only a sign that you know, there's a demand for these products that's out there.
- [46:19]
A
Yeah, Amit, thanks for making the time. See what they say on Thursday as they've taken a totally different tack here than everybody else. Amit Darienani of Evercore. And take a quick look here as President Trump is arriving for the funeral of Lindsey Graham at Washington National Cathedral that is expected to begin in just just a couple of minutes time. And a few moments ago as well, as we mentioned, we did see the Ukrainian president shaking hands with Israeli Prime Minister Benjamin Netanyahu. And here is President Trump now making his arrival alongside a suite of cabinet members. That's it for us. Thanks for watching the exchange. And up next on Power lunch, JetBlue shares are higher on stronger than expected results. And they their 2026 outlook. They even issued 2028 guidance. CEO Joanna Garrity joined and I will join Brian Sullivan on the other side of this break.
- [47:07]
D
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