Closing Bell - Big Day for Apple, Ternus 9/9/26

Episode Date: September 9, 2026

Apple takes center stage after its latest product event. Moor Insights & Strategy’s Patrick Moorhead breaks down the announcements and what they mean for Apple’s competitive position. Alex Kantrowitz weighs Meta’s latest moves around Muse and the company’s broader AI strategy. CrowdStrike CEO George Kurtz discusses the evolving cyber threat landscape live from Communacopia. Neuberger Berman’s Charles Kantor weighs momentum versus quality and where he sees opportunity in the market. Meantime, Mike Ozanian breaks down soaring NFL franchise valuations and the economics driving professional sports higher. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell's bringing an end to the trading day at the NYSD Lab Corp, bringing the closing bell in HMH holding, doing the honors here at the NASDAQ. Welcome to closing bell overtime. We are live from studio be at the NASDAQ market site. I'm Melissa Lee along with Mike Santoli. Sox lower once again as oil and bonds move higher bond yields, I should say. The Dow losing 400 points. SB 500 down about a half a percent. NASDA composite off by two thirds of a percent.

Third straight day of losses for all those averages. WTI rising by 3 percent. Brent crude topping $100 a barrel. and bond yields moving along with oil, the 10-year yield topping 4.8% getting to its highest level since November of 2023. But today, Mag 7 and semis not quite strong enough to offset that impact from oil and bond. Meta, though, getting an AI boost up 6% on positive reviews for its new model. Apple right near the flatline following its big iPhone event. More and all of that coming up. But we begin with those big moves in the energy markets and the bond market. The 10-year yield

getting to its highest level, as we said, in nearly three years. This is the Treasury Department announced the size of its planned Treasury buyback program meant in part to help restrain yields. Rick Santelli, joining us from Chicago with all the context. Hi, Rick. Indeed. You know, Mike, it's fascinating because as you look at a two-day chart of twos and tens and look at the percentages of yield increase, they're about the same, a little over 1%. And the reason I do the two-day chart is because if you just look at today, indeed, the $6 billion buy-back, Definitely steep in the curve, which means 10-year yields moved a little more aggressively than two-year. But over a several-day period, that seems to disappear a bit.

The point is that all yields have been moving up for a variety reasons, from our economy doing much better than Europe and Asia without as much stimulus, although we have a lot of debt, to what's going on in the Middle East and energy prices. Now, there's a lot of foreign exchange issues going on as well. Let's look at the dollar index. Right now, it's on pace to have the... lowest deal closed since May. We'll call it four months.

And it doesn't end there. We've all been talking about the dollar yen and the intervention that occurred at the end of July. This chart starts in February. And you can see this is the lowest the dollar has been versus the yen since then. We'll call it seven months. And you can see on the middle right of that chart

where we are basically around 164. You could also see where the intervention hit. The point is conventional wisdom is a dangerous thing. even when it talks about the logic of how interventions don't really work. It certainly seems, though, by looking at that chart, at least for the moment, it did work. Melissa, Mike, back to you. It is interesting, Rick, to think about Treasury Secretary Bessent and how he's really taking on two of the deepest, biggest markets in the world by calling himself the House. I mean, not only seeing increased buybacks on the Treasury front, but also on the yen front saying he has asymmetric information when it comes to what the BODs.

precisely will be doing. And it seems like he's almost setting a market expectation for something majorly hawkish to come out of not just the decision, but more importantly, the speech afterwards. Yeah, no, I think when it comes to the dollar yen, maybe he is like the house. When it comes to the treasury complex, I don't believe he is. And I'm not so sure that he really believes he is with regard to treasuries because the amount of buybacks we're doing on even at $6 billion, three times the $2 billion, really historically versus the Fed amounts in the past, is really small. And indeed, I can't believe this Treasury Secretary, with his trading background, believes he's going to alter the market.

I just think he's trying to be part of the market and have a presence there and acknowledge the notion that interest rates may be going up globally, but he's keeping a very close eye, especially on the thinner parts of the yield curve. Yeah, he did mention price equilibrium in the context of treasuries. Rick, thank you. Rick Santelli. Brand crew topping $101 a barrel for the first time since July as the fighting between the U.S. and Iran escalates in the Persian Gulf. Pippa Stevens is here with more on these moves today. A lot of moves across energy complex today, but the one that everyone is focused on is Brent topping 101,

getting closer to that post where a high of 126. And we are seeing a widening divergence between Brent and WTI. That is because Brent is the global seaborne benchmark, while WTI is technically landlocked. in Cushing and so Brent is usually the one that responds more quickly. Moving over to heating oil futures up another about 5% today, now just shy of the post-Iran more high. That means that it's really a question of when rather than if we see $6 on the national average for diesel. Right now we're at $594 in California.

They're approaching $8, currently at $7.87. Moving to Europe, we saw European and that gas prices top 80 euros per megawatt hour today for the first time going back to 2022. They are very behind on their injection season right now, lost cargoes from the Middle East, and then the available cargo is getting bit up and sent to Asia. Instead, those prices, as a reminder, are more than nine times above what we're paying here in the U.S. And then finally, energy stocks hitting records on the back of all these moves and the underlying commodities, the XLEA at a record.

But we do really need to look at the subsector performance because the refiners are really distorting the outlook here. They have now all, the big three have more than doubled this year. Not a lot of love for the drillers or the pipeline companies. That's really not getting the same level of traction. Yeah, and if anything, the overall energy equity group looks a little fatigued. I mean, obviously, they've had tailwinds, and it's worked pretty well to actually stick with them for a while. But I guess for months, people have been saying we're really working down whatever buffers existed in terms of reserves, in terms of what we can expect on demand.

And now, I guess we also have to track, you know, Red Sea shipping is also along with the straight. So it feels as if some things are coming to a head that a lot of people have been warning about for a while. and I just wonder if there's any offset to that in the near term. I mean, remember back at the beginning of the conflict, everyone said there's no way this will stretch beyond June. And now here we are in month seven. And people keep pointing to the drawdown in SPRs worldwide, including in the U.S. Now, we are about 133 million barrels out of that 172 that was authorized,

so we could see another sale there. But then the next step is kind of a drawdown in commercial inventories, which have stayed at better thresholds worldwide. But I do think one interesting divergence is that we are seeing, of course, money flowing to the likes of Chevron and Exxon as kind of the way to play the sector and not really have to make a call on commodity prices. But Chevron notably hit a record today. Exxon hasn't hit a record back since March. And Exxon actually has the larger downstream footprint, so you would think that they would be the ones benefiting.

But it seems more of a case that they also have more exposure in the Middle East. So perhaps investors are saying that's a long-term issue versus the refining upside is more temporary. Gotcha. Tippett, thank you. So, I mean, just more broadly, you know, Mel, it seems as if, you know, the market, the stock market has been trying to basically put on this brave face and say, you know, we are feeling the impact of what yields are doing and what oil is doing at the subsector level and at the equal weighted level, right? Everybody was celebrating the broadening trade. It's really narrowed back out. In fact, the equal weighted S&P sort of rolling over a little bit down two thirds of percent today. It's four percent off its high. So, yeah, I guess the question is, is this going to remain kind of a stealth internal pullback for the overall market? Are we going to have enough excuses pile up that we actually have to see something a little more broad and headline level in terms of a pullback?

I'll just mention one thing. It feels like the bond market is kind of stretched pretty far ahead of these inflation numbers. And if it's cool, if it's on target, nobody should be surprised if we see a ripping bond market rally. And then we'll see what the stock market does in response. Yeah, exactly. And I know there are plenty of people out there who hate seasonality and don't want to use it as a factor.

But it's a factor out there. I mean, psychologically, for a lot of traders. Yeah. And so you pile up all these excuses, ones that we've been able to move past on a day-to-day basis for all these months into a seasonally week period, and you wonder how the markets are actually going to

digest these things. I mean, combination of self-fulfilling prophecy, genuine seasonal flows that exist, and then I think there's always a little bit of hesitation about deciding what next year is going to look like, and it's conference season, everyone's trying to formulate their view. So we'll see if it matters this year. All right, let's get to one of today's top story stocks.

That's Apple. The company holding its product event announcing its highly anticipated foldable phone. It was the first event for new CEO, John Turnus. McKenzie Seagalus joins us with the highlights. Mack. So, Mike, I just came out of the Steve Jobs Theater after getting my hands on Apple's first ever foldable iPhone, the iPhone duo. Now, folded, it's roughly the size of a passport. And when you open it up, it feels much more like a small iPad than two phones stitched together.

With Apple building a new interface specifically around that larger screen. Now, it starts at 1999, roughly the same territory as Samsung's competing foldable, while the iPhone 18 Pro now starts at 1199. So John Turnus's first launch as CEO is very clearly pushing the iPhone further into this premium end of the market. And arguably, the biggest addition to Apple's AI arsenal today wasn't on the iPhone at all. It was actually on the watch. Apple effectively turning it into an always-listening AI device. Siri Recap, that's the name of a new feature, uses ambient listening throughout your day

to generate notes from your conversations. While live rewind can recover the last 15 seconds as something that you missed, that puts Apple directly into a category already being built by AI wearables and recording startups, but now baked into a device that millions of people already wear.

Guys? That was a really fascinating feature to me, McKenzie, and I also wonder about the privacy concerns when you're wearing a watch. Let's say I'm having a device. a discussion or conversation with Mike on set off camera, if that watch is also going to pick up those conversations. I assume the answer would be yes.

Well, I mean, I have the exact same thought. And the question is, we've seen something similar from Apple in the past where you've got cameras on the Vision Pro that they say are not recording video but are part of this spatial awareness. That's also been a conversation in the context of an unreleased device cameras baked into the AirPods. And so it's a similar situation here. If it's always recording but not actually holding on to the

the audio and instead using that as context to build these daily summaries that might be a way to kind of get around the privacy infringement. But one has to wonder if you're living in a two-party consent state, there will be a legal case. I imagine down the line where this is argued and considered because privacy is Apple's entire schick, right? When they were talking about a lot of the AI features today, it was all about this on-device AI, not even Apple has access to the queries that you're putting through Siri AI, but this certainly calls that into question. for sure mac you've said a few times it's the size of a passport the duo and i just realized you mean an actual passport booklet i was like what kind of devices a passport you know so eventually

i get things even if you you have to repeat them enough times mac thank you very much uh joining us now is more insights and strategy CEO and chief analyst patrick moorhead so patrick uh what's your your quick assessment of what we got today from apple relative to what you were expecting Yeah, so let me put it in the context of new CEO, John Turnus. So he didn't reinvent the iPhone. He really priced it to keep share while memory takes the margin and he put a meter on Siri. And that's the most interesting thing that I think investors should be interested in is we've been talking for three years. How does Apple monetize AI? And while they didn't give a lot of details about it, essentially they're going to charge you when you've hit your server-based capacity through the new Siri AI,

and they'll charge you either per token or probably a bank of tokens, but probably start off with a monthly overage fee. Is that going to make up, I mean, it sounds almost like you're describing a loss leader of a product. I mean, they've increased the price, presumably the memory and the components going into it sort of offset that price increase, and yet you're saying that, it's the toll that they're going to charge that will make them the money. Yeah, I think it will. I mean, Apple already reset the gross margin expectations. They were 51 percent, and then they guided down to 47 to 48 percent.

And then they just added another eight to nine percent price increase. And then you have to factor in. And again, I think this is why the stock didn't move much today. There were very little details in what they would charge, how they would charge aside aside from the basics. The final comment on that is the lease. Apple's really good at factoring in how will people pay over time if they don't want to pay or can't afford to pay that up front. And 8 to 9% might sound like nothing, but if you remember just a few years ago, peak entry price was 1899. And before that, it was 1799. So there's only so much Apple can charge, but they are doing a pretty good

job taking the sting off of it through these different monthly and even all you can eat programs. Yeah, and Patrick, you note that the stock didn't move much, which is true point to point, although it did trade in like a $3, 3% range, you know, people trying to decide if this was something to get excited about or actually express some disappointment with. So I wonder what you think in terms of the new products that were delivered. do they recharge any enthusiasm for upgrades or people deciding that they're going to move now, or is it just kind of noise and around the edges? Because, you know, I think we all have to remember so many times the initial impression

of whether this is a big deal or not for Apple gets revised over the ensuing months and years. So, you know, I hate this might not sound great, but if Apple plays to not lose, they can win as long as they keep their own. services going. Their retention rate is astronomical. I mean, it's upper 90s. So anybody they can pull into the system, regardless of what has ever happened, will re-sign up. I don't see any evidence of an acceleration. I think nobody uses the word super cycle anymore because it hasn't happened for a long time, but Apple can't create a super cycle by increasing the price by eight to nine or percent and then tacking on new service offerings to make up for, let's say, something that

ShatGPT does even better. Yeah. I don't know. Are you going to get any of these products, Patrick? I mean, do these attract you? I get every new version of every new phone. Yes. On the Apple Watch, though, I mean, Ultra 4, I wouldn't consider myself an athlete, but I'm very,

try to stay very fit. I'm very happy with my ultra. I ultra-one. It does everything it needs to do. All right. Patrick, great to speak you. Thanks. Thanks. Patrick Moorhead. By the way, we're showing you the closing bell at the CBO in Chicago. Philip Capital ringing the bell there, marking the end of regular trading for options. All right. Well, meantime, big gains from META closing out its best day since July in the back of positive reception of its new Mews AI agent. Y Combinator CEO Gary Tan posting on X harness wars are full on now, and Mews is very impressive.

Shopify CEO, Tobias Lutki, is calling it pretty amazing. And META's chief AI officer saying last night that early usage of MUSE has blown past their expectations and users today are using Mews 10 times more than their testing cohorts. The app claiming the fourth place on Apple's top app downloads, chat GPT remains number one. Joining us now is Alex Kancherwitz, founder of big technology. Alex, great to have you with us. What's your take on the importance of Mews to the meta story? Well, it shows that META has a pulse and artificial. intelligence, which up until recently really wasn't the case.

You know, up until today, the company was negative on the year, and people really didn't believe that it had a strategy or a competitive model. And obviously, a lot of AI is moving towards these use cases where you get an AI agent to go out and do things for you, like book movie tickets or search your email and help you stay up to date. So meta does have this, like, now it has an app in the game where it shows it knows what it's doing. But I just don't think that this is going to succeed because it's meta.

And the company even said in its marketing, the more it knows about you, the more helpful it is. Well, who is in their right mind is going to give meta all this information? It takes a lot of trust to connect your Gmail to it, your credit card to it, your shopping history to it. I think people are sick of giving this company all this information. And so while it shows that they're in the game, it's the competitors, the chat GPTs of the world, and even some of these upstarts that are actually going to run away with this use case. Why are people more comfortable than giving the information to another company? I mean, obviously, META has a bad press and the history of maybe not being careful with privacy concerns and things like that.

But it seems like you'd be worried about no matter what. You would be worried about it no matter what. But the question is, you know, it's a tradeoff. How much utility are you getting out of an app depending on how much information you put in? So people don't love AI. We know that. They don't love Open AI. However, Open AI hasn't yet had the privacy scandals that a company like Meta has.

Where is the one indication or the one case where someone's chat GPT logs have leaked and all the privacy is out there on the internet? You just can't, it hasn't happened. You can't say the same with meta. I mean, obviously, we don't have messages leaking, but people have been concerned about their personal data being hoovered up by meta. There's no meme that Chat Chepti is listening to everything you say. Maybe because you tell it everything you say. there is this meme that meta advertising is. I just think meta has so much baggage.

And again, this is such a new category that you don't want to rule out any company. But meta has so much baggage and so much concern among people in terms of giving it information about themselves. There's just a meme about it this weekend going around that it's going to be a very uphill fight for the company to get anything to take off. And I think ultimately the long term for meta, which is spending $130-something billion on AI this year, and it's probably going to spend more next year as to become a neocloud. So I'm just wondering, I mean, Meta has all the baggage, as we said, but a lot of the companies are not trusted. Those CEOs of all these hyperscalers are not trusted.

I mean, survey after survey, the public backlash. I mean, we recently had a CNBC survey of young people, and they did not like anybody. I mean, they like Satya and Adela the most, and that was still less than 50%. And so from your standpoint, who is poised, at least on the PR front, to be in the position to try and earn your trust?

Okay, so that's a great question. So nobody's trusted. I would say meta is trusted less than the others, but how can meta win this battle? And the way to do it is you provide an experience that's so good that it overcomes people's fears about what you'll do with the information. Like, for instance, I'll give you an example. With chat GPT, I have my calendar connected, I have my Gmail connected so I can read through all my Gmail. I have my health information connected, and I have my banking information connected. You might say I'm crazy, and maybe I am. But frankly, because chat GPT's technology is that much better than everybody else's, it's worth it to me despite the risk. Meta has the unfortunate case of being not trusted and being behind on the AI models. So I was in the product today, and it doesn't have the same fidelity, the same conversational awareness that a chat GPT has. And even if it takes me a little bit more effort to get the same utility at a chat GPT, I would rather use it because I'm going to get much more productive uses of that. AI versus having to fight my way through dumber intelligence with meta and that's how you lose. If you're not trusted and your product

is worse, you just have no chance of making any headway here. The good news is you have all these GPUs and data centers you can sell those when you lose. Not a good combination. Alex, great to see you. Thank you. Alex. You too. Thank you. Coming up, an alarming

new warning from minthropic scientists about the possibility of AI taking over humanity. We've got the details there. Plus, we'll ask Crowdstrike CEO, George Kurtz, if current cybersecurity technology is enough to prevent AI from going rogue. Welcome back to overtime. One of the starkest warnings yet about the risks of AI out overnight, a former anthropic researcher resigning from the company today, warning that frontier labs are racing to build systems

that may not be able to be controlled. Jacob Coxman, writing on X, the people building AI earnestly believe that it could kill us all by the end of the decade, adding that while executives may temper their language publicly, he hears the same fears expressed privately. A current anthropic scientist echoing that warning saying he believes there is a greater than 10% chance that AI could kill all humans within the next decade that Anthropics still does not have a plan to solve the alignment problem for superintelligence. The post reigniting the debate over AI safety as Frontier Labs race to build ever more powerful models. Some industry leaders also pointing to recent high-profile AI hacks as a warning of what could come if future models can work together toward malicious goals.

and conceal their actions from humans. And just in the last hour, Anthropic disclosing a fourth cybersecurity incident involving its mythos model going rogue. So could cybersecurity be the answer? Well, there need to be an evolution in the way we think about cybersecurity. With us now, David Davor, alongside Crowdstrike CEO George Kurtz, live at the Goldman Sachs Communicopia event. David.

Melissa, thank you. And a good day to have you, George. Thank you for joining us. Great to be here. You weren't listening because you don't have an earpiece. but Melissa was talking about this latest news that we got today from an anthropic former engineer slash researchers basically saying there's more than a 10% chance that this thing is going to kill us all, this thing being AI. Right. By the end of the decade, in fact, very specific on timing. You're as close to this technology as anybody, certainly in terms of understanding its capability when it comes to doing bad things.

How do you view those comments? Well, you know, the percentage, the time frame, all of those things, I'll leave that to those folks. But I think in general, when you look at AI, it's been transformational in everyone's lives. Certainly the most transformational technology that I've been involved in. And obviously, like most technologies, it can be used for good or for bad. And I think part of what CrowdStrike is focused on in our mission is to make sure that you can leverage AI in a safe way, in a secure way, to make sure that these agents don't go rogue and do things that they shouldn't be doing. So, you know, we see it as an opportunity, and given the power of the technology, it should be harnessed, and that's part of what we want to do.

Harness it in a safe way, obviously working with the broader ecosystem. Yeah, when you talk about the power of the technology, you were one of the early people to see mythos, I believe, right? You were part of Project Glasswing where they made it available to companies like your own. Yes. Because they said internally, whoa, we can't release this thing into the public. Do you remember your thinking at the time? Do you remember when you first sort of understood what the power of that was, how you thought about it and whether it was a step up somehow that you hadn't seen or expected? Yeah, I mean, there's a lot of watershed moments.

I think that was one of them where you had a model, again, that was very capable from a cyber perspective. And as it became better and better at understanding code, it became better at understanding vulnerabilities. And one of the biggest advances in mythos is it could actually string together multiple vulnerabilities, way more than a human could do. You can't keep track of all these things, where it can actually do a great job and be very persistent in getting into systems based upon all these low level vulnerability. So we were part of that. Obviously, we've been part of it since then. And I think it really showed the power of what these models can do and why they need to have the right level of safety built in. All right.

Are they going to have the right level of safety built in? Well, this is the hard part. I mean, this is the classic genie problem. You know, you get what you ask for, not what you want. And it's the alignment of these agents. And so if you think about some of the latest issues that were, you know, that we talked about, hugging face, I mean, I heard you talk a lot about it. I did.

You know, I spent time trying to understand it as best I can from a layman's perspective. It sounded pretty scary to me, what, 1,200 agents acting completely as a collective, but on their own, defying their human masters, so to speak, right away, and then spending most of their time trying to cover up what they were doing. Yeah. Well, you know, it makes for great sci-fi, but it really... Yeah, but it was real. It was real, but it really demonstrates that the outcome.

that the human want, it wasn't necessarily what the agent delivered, right? The agent was focused on passing a test, not actually exercising all of its cyber capabilities. And I think a lot of people when they look at this particular incident, again, I would call that a watershed moment where autonomously it broke all into all. And you were brought in early by opening eyes. We were. We were. We brought in early to understand what happened to just help them. Obviously, they've got incredible people there, but we were just one of the teams that was helping them. But I think when you look at this incident, you know, people have a certain view of, wow, it was autonomous attack end to end. But I think one of the real big takeaways

that maybe some miss is that the defenders weren't equipped to deal with this. The defenders didn't have the level of AI they needed and the models they needed to be able to deal with it. They didn't have frontier sort of defenses because the models were refusing. And I think this is a big part of the takeaway. How do you enable the defenders to protect themselves with as capable or more capable AI as what the adversaries are using? of your company is focused on doing that. Correct. And you've had a great deal of success, and anybody can take a look at a stock chart to see that as well.

But are we going to be able to effectively defend ourselves, so to speak, as these models continue to get more and more powerful? Well, you have to. And I always talk about sort of the adversaries, and you've done work on this. I've seen your documentaries on nation states, right? Nation state obviously was the apex predator of the adversaries. But now the new apex predator is the agent state. Right? And they're not at your perimeter. They're on your payroll. So we're actually, think about this. Corporate America, everyone is letting them into their own environment and what happens afterwards, they're having a hard time controlling it.

So I think from the standpoint of how you get in front of this is you have to have the right level of AI and focused on security activities, understanding the attacks, but also understanding the defense. And we've created this sort of red blue, meaning offense defensive loop, where we keep getting better and better from an AI perspective. be right every time, as we always say, and it only has to be right once. I mean, and they're so powerful, not to mention rogue agents out there doing things that nobody ever intended them for them to do. This is true, but I think if you can identify these things very quickly, part of the issue that you saw in Hucking Face is, well, is it activity, is it real, is it not real, is it is it, is it, is it took some time. And we always talk about this concept of the breakout time. How fast is it when someone actually breaks in or AI agent to break in and do something else?

and it used to be, you know, hours and days and those sort of things, and now down the seconds and somewhat collapsed, and it's really at the speed of inference. So even if you detect something, you can still prevent a breach. You just have to be on top of it with the right level of AI. And finally, George, I mean, just broadly speaking, you've been in technology since, I think, 1993, since the early days when you're working with mainframe computers.

Are you positive on the prospects of AI, given everything you're seeing up close? Well, when I look at AI, I'm not a doomer. I'm a, the glasses have full, and I think it has changed fundamentally how we do work. It will change fundamentally society going forward, and we just have to harness it in the right way. And I think cybersecurity, not just crowds right, but the industry of cybersecurity becomes even more relevant because it isn't just about keeping people out. It's about creating safety and allowing work to happen. For the first time, security has been the accelerator on the gas, not the brake pedal. And that's a massive change that we've seen in security, all the way from the board to the CEO, to the people, the actual builders in these companies.

So we feel we're going to play a big part of it. I think it's great for the cybersecurity industry. And I'm happy to come back and talk about what new stories we find from now and then. Without a doubt, we know you well, of course. You'll always join my colleague, Jim Kramer as well. Appreciate you all you joining me today. Thank you so much. George Kurtz, CEO of CrowdStrike.

By the way, don't miss next interview from Communicopia. I have an exclusive sit down with Airbnb CEO Brian Chesky, where we also, Melissa, talk about these broader issues for society. Again, as somebody who founded a company 18-plus years ago at this point. Back to you. Wow. That's hard to believe 18-plus years. David, thank you.

A fascinating conversation with George Kurtz, CEO of CrowdStrike. It's the only game in town at this point in terms of if you want to have an AI defense. If you want to have that cybersecurity defense, you go to a player like CrowdTrack, as David, mentioned the chart. is a great chart. I wasn't convinced necessarily. I was still sort of terrified about the conversation and the ability of what we have existing in terms of cybersecurity defenses to combat models that are constantly improving themselves. Yeah, constantly improving and essentially kind of pointed in the direction of finding ways to escape what the intentions were. This whole phenomenon

really does test my normal mode of saying, we've all seen this before. cycles come. This is just like some other technology in the past. It's just like what people said about the internet or computers. And to some degree, that's true. I do think it's kind of similar to, you know, nuclear weapons, where, honestly, in the 40s and 50s, the people who knew most about nuclear weapons were pretty convinced they'd be used pretty commonly. Like, in other words, multiple states having the capacity to do it. Like, when have we ever created a weapon that wasn't used? Now, the difference here is you don't need intention for these things to kind of, you know, escape the grasp. Yeah. And the nuclear weapon, you needed a human to press the button, so to speak.

Right. And here it's these agents that are enabled and empowered to work on their own constantly with the desire to exceed human intelligence. Yeah. So the machine incentives are built in a way that could be difficult. I guess maybe we're just hoping that it's still kind of being overhyped or it won't quite come to fruition in that particular way or we can create these little firebreaks. I hope. We'll see. All right, up next, the new tax strategy the wealthy are using, they're calling it tax awareness, but it's starting to draw the awareness of the government. We'll explain it all. Next, on overtime. The wealthy are increasingly employing a new tax strategy to offset capital gains, and it's starting to attract the attention of the IRS.

Robert Frank is here to explain the long and the short of it. Robert. Guys, great to see you both. This has become one of the hottest trades for wealthy investors right now. It's so-called tax-aware, long-short strategies. They've grown to $170 billion in assets up from just $2 billion four years ago. Never seen a product like that catch on so quickly. The strategy, it's a form of direct indexing, so investors buy the individual stocks of an index,

but they use added leverage and short positions to create larger losses, which can then be used to offset capital gains taxes. Now, those benefits, they come with risk. Officials from the Treasury Department recently warning of, quote, sophisticated abusive tax structuring that could become a runaway train. They cited similar so-called tax alpha products. Some custody firms also tightening their rules. Charles Schwab recently raised its minimum investment for the accounts from $1 million to $10 million. They also instituted new borrowing limits, Fidelity pausing the opening of new tax-aware long short, separately managed accounts.

The strategy is also a bit hard to exit. Tax attorneys telling me that while some clients think they're eliminating taxes, they can face a hefty tax bill when they actually try to get out and shift the money back into an index or fund. Now, for more on the wrists of Wall Street's hottest trade and whether the strategy makes sense for you. You can sign up for the Inside Wealth newsletter out tomorrow morning at cnbc.com slash inside wealth. Just so I understand the mechanism and also why it would be hard to exit without a tax liability. So a long, short strategy, you're aggressively shorting and using leverage to generate these losses. You realize the losses.

Correct. So that you can use them to offset gains you're realizing elsewhere. But you, I guess, allow the gains to accumulate from the portfolio. Exactly. At some point you have to pay. And it's the leverage that makes that so much larger. And it's the leverage that costs a lot. The reason that RAAs and the wealth managers love this is the fees.

This could be between 100 and 300 basis points for this product. And so it's complicated. It's expensive. There's a lot of leverage. So many wealthy investors I talk to are in it, but don't understand it exactly what's under the hood. So my goal here was to look under the hood and explain it. And so that's all laid out tomorrow. I would imagine it would be hard for Treasury to say that that is not right.

And to tell, you know, I mean, to say that that vehicle, started, that's just a tax, you know. Right. There's no economic value. There's no economic benefit. Yeah. And that's, they're trying to understand it. Yeah. Because, I mean, AQR came up with this. Quantino's another firm that came up with it. It's now, AQR alone, has $70 billion in assets just from this product. We've never seen a product take off so quickly in the wealth space. So everyone, including Treasury, is just trying to understand it and how it works. Fascinating. Robert, thanks. Thank you, Frank. Time now for CNBC News Update with Sima Modi. Hey, Sima. Melissa, here's what we're watching at this hour.

The first ever 2026 Republican Midterm Convention is underway in Dallas. The event will feature more than 100 speakers over two nights covering topics including immigration, tax cuts, and a proposed congressional stock trading ban. President Trump will deliver a keynote address tonight and will close out the event with another speech tomorrow. Meanwhile, President Trump did not rule out a potential pardon today for his former fixer Michael Cohen. Cohen was sentenced to three years in prison. 2018 for making a hush money payment to adult film actress Stormy Daniels before the 2016 election. His testimony contributed to a conviction in 2024 against Trump in his criminal hushed money trial, but Cohen has since said he felt pressured and coerced.

And New York Knicks star Jalen Brunson will host the season premiere of Saturday Night Live. Later this month, the NBA Finals MVP will be joined by musical guest, Katzai. Brunson will lead the Knicks to their first NBA title in 53 years in June. He will join the ranks of other basketball greats who have hosted the show, including LeBron James and Charles Barkley. Looking forward to that. Melissa and Mike. Absolutely. Yeah, I guess that's going to maybe finish his victory lap. And then it's like, let's go. You have another season to play. Exactly. Get back to it. Let's do it again. Yeah. See me. Thanks.

Yeah. Coming up so far this year, the name of the game in the market has been beta and momentum with quality stocks being left behind. Is it creating attractive opportunities in the space as tech stock valuations continue to rise? Welcome back to overtime. Momentum is winning the factor race. The I shares U.S. Momentum ETF is up about 22% year-to-date, even after a big pullback from mid-year, versus a 12.5% gain for quality stocks. So is that creating more opportunities in non-tech areas of the market, some of these higher quality parts of the tape with us now to discuss his view is Charles Cantor, Senior Portfolio Manager at Newberger. Charles, good to see you. Thanks for having him. Mike. Good to see you. It's a fascinating dynamic because all of the big companies we used to rely on for heavy, free cash flow and no leverage or borrowing and spending their free cash flow like the Mag 7. So you would think scarcity of those quality attributes would say, ah, we have to pay more for it, not happening.

I mean, I find the skepticism around the negative free cash flow for the large companies kind of silly, to be honest, because the fundamental question is how you, you know, what's the rate of return on investing, not do I have negative free cash flow? And so everyone loved it when they're bought back their stock. And now they don't seem to like it when they're investing in their business. I think it's really hard for investors to wrap their heads around just the magnitude of the investments. And the companies themselves aren't revealing a lot. And that makes sense to us because we're in such a competitive, dynamic race and they're playing for the future.

You know, our work around these types of returns, we think, you know, if you can get over the fact that you may not see the returns for a while, they're going to be very attractive. And so there's a lot of skepticism around these levels of investments. I think it's not exactly well placed. But of course, as you highlight, you know, the market loves risk right now. It loves momentum. It doesn't love quality. And I think at some point folks are going to come back to the quality factors, to the businesses that are moated and say, these are really attractive entry points. And I think you see that, whether it's in the equal-weighted index or in the market at a whole.

I just don't think valuations are demanding relative to the earning season you just went through. I think the last time you're on, you call this sort of, you know, the spend, spend, spend, trusts us. It'll pay off later storytelling, which is sort of derogatory in some ways. I mean, when you're spinning a tail, you're spinning a tail, it's not necessarily the truth. Do you still view it that way? Or because of earnings season, have you gotten enough data points to think that it's not quite storytelling? It is a leap of faith, though. I think it matters who the storytellers are and how much credibility they're having the bank.

And I think when you look at the folks doing the largest capital spending, today in the public markets. I think they've earned the right to tell their stories, and it's our job to figure out, you know, do you get mid-teen types returns from these types of investments? The skepticism is no different, for example, Amazon's a company we focus closely on. You know, you go back to 2014 or so.

People were super skeptical about the billions of dollars they're going to invest in the cloud. You look back, those types of returns pencil out at 17%. Our guess is these types of returns pencil out at the same level on gigantic amounts of more capital, right? That was probably a $300 billion investment. This is going to be north of a trillion dollars when we all set and done.

And so if you can get those types of returns on that amount of capital, I don't think the skepticism is going to be warranted. But we're in that season of everything's glass-half-full at the moment. That was $300 billion like over a decade too, I think. And this is, no, but this is kind of the delta year is a trillion over a decade too.

So it's three times more. But I think you're going to get similar, levels of absolute levels of profits. Quick word. Our bond yields, our interest rates, any restraint on the returns you're going to get, and how would you think of it as an investor looking at bonds? I think we're at a moment in time where both bonds and equities are attractive on a risk-adjusted basis. I think the bond market has the skepticism about the secular nature of inflation,

whether it's because of oil prices or whether it's because of tariffs. To us, those are supply-side shocks. the bond market reads that as secular, I would take the other side of that. And then on the stock market side of things, the earnings you see most recently, folks think of that as cyclical, not secular. And so there's just a lot of margin of safety in my mind in both markets. And we don't always see that. Charles, good to see you. Thank you.

Thank you. I loved it to be here. Coming up, are we in a K-shaped economy? What retail results are telling us about the consumer? Over time, be right back. Mix read on the consumer today, shares of Signate Jewelers and Academy the outdoors jumping after both companies reported earnings ahead of expectations and raising their annual outlooks. The Cignaz CEO saying it is entering the end of the year well positioned to deliver

value throughout the holiday season for customers across different income levels. Meanwhile, Casey's general stores closing lower after reporting same store sales grew less than expected the stock posting its worst day since March 2020. And an interesting note about what consumers are buying saying sales of its own branded chips rose 16 percent, while sales of national brands Well, 8%, as many of those companies have raised prices. All right. Coming up, the NFL season kicking off in just a few hours ahead of that. CNBC is out with our updated list of team valuations, and the numbers are eye-popping.

That's coming up on closing bell overtime, live from the NASDAQ market. CNBC, we're releasing our list of NFL team values today, and they continue to skyrocket. The Dallas Cowboys, the top team, with an estimated value of $16 billion. Mike Ozanian, joining us now with more on. on this year's roster, Mike. Mike, great to be here. The average team is now worth almost $10.4 billion, 35% more than last year.

The Seattle Seahawks just sold for 59% more than the Washington commanders did three years ago. I just sat down with Jacksonville Jaguars owner, Shod Khan, and asked them if the run-up in team values was over. Take a listen. I think what's going on is sports valuations are going up, But I think the real point, the big story is, NFL is still greatly undervalued compared to the other sports.

So I think the run-up for the NFL is almost endless of this point. Since Khan bought the Jacksonville Jaguars 15 years ago, the value of the team has appreciated 18% annually to CNBC's value of now 9.35 billion. When I asked Khan if you can keep appreciating at that rate and be worth over $100 billion, in 15 years, he did not say it wasn't impossible. No, well, he says unlimited. So I guess that's his conception of the upside. You know, 18% annualized for 15 years.

It's great. It's not super different from what the stock market has done over that time. But 35% one-year bumps from these quick succession of deals. Seems like it's been an acceleration to the upside. Yeah, I mean, over the same period since he plopped down 770. 70 million for the Jaguars, the S&P has increased 14% annually, price appreciation. So it has, you know, when you talk about compounding, it's a pretty marked difference and higher than the S&P. But we'll see where it ends up. I expect higher revenue and also expansion in revenue

multiples and transaction in the upcoming years. Mike, thanks so much. You know, enjoy the opener, wherever you might be. Appreciate that. Yeah, there's only 32 of these teams. You tell billionaires, there's only 32 things in the world. You've got bid for one of them. Yeah, exactly. All right. That does it for overtime.

Fast money starts right after this quick break.