Closing Bell - Closing Bell Overtime: 8/28/26

Episode Date: August 28, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing an end to the trading day at the NYSC. Glasshouse brands ringing the bell. And closing out the week here at the NASDAQ is the center on rural innovation. Welcome to closing bell overtime live from Studio B at the NASDAQ market site. I'm Mike Santoli. Melissa Lee is off today. Stocks down slightly following Fed Chairman Kevin Warsh's speech at Jackson Hole. The Dow finished basically flat. The S&P 500 slightly lower by about a quarter of a percent. The NASDAQ, NASDAQ, NASDAQ, 100, both down bigger as tech gives back some of yesterday's games.

For the week, however, all the major averages holding on to modest gains of about a half a percent, aside from the NASDAQ, which was up a bit more than that. Bond yields higher today, as Warsh says the Fed may have work to do to fight inflation, much more on the war speech and the market's reaction to it coming up. Let's begin with today's market movers, though. Christina Parts of Nevelist here with those. Christina. Oh, Mike, today AI conviction cut both ways across the tape. And Amazon popped after Evercore ICE, I put on a new price target saying for the first time it actually sees a As a positive for the retail business.

The firm actually put out a survey. They found 57% of Alexa AI users bought a product they weren't previously aware of. Marvell going in the other direction, the chipmaker raised its revenue outlook for fiscal 2027 and 2028 on stronger AI data center demand. But the stock, you can see, still fell 10%. Street is definitely waiting on its October analyst day, October 6, for more on that Google partnership, specifically it's going to be making Google TPUs, already baked into guidance. through fiscal 2028th Street wasn't expecting that. That's what the stock fell. Iran fell about 16%.

Now 12%, because I did this or wrote it earlier, unmixed results with better revenue, but thinner profits as Bitcoin mining softened. Still, it sold out of its 2026 AI cloud capacity and landed a blue owl-led $2 billion debt deal to buy NVIDIA's Blackwell Ultra Chips for new data center in Canada. In payments, PayPal was the worst performer in the S&P

down about, let's say, 12% almost 13, after Bloomberg reported stripe and Advent walked away from a buyout. A firm ran in the opposite direction, up about 1% after gross margin. Merchandise volume jumped 36% for the quarter. And the day's top gainer was workday. Up roughly 6%, almost 6%, let's call almost 6% after it raised the low end of its full year software subscription revenue outlook. Happy Friday.

I made it. You as well, Christina, thank you very much. Well, Treasury yields rising today, as Fed Chairman Worse indicated, the Fed is concerned about inflation. On the price stability side of our mandate, the numbers are more concerning. The Fed's preferred measure of inflation, the one I talked about earlier, the 12-month change in the PC price index stands at 3.7%. With the six-month change, a little above four.

The comparable measures from the CPI index are also elevated, as our core measures both of PCE and CPI inflation. None of these measures are perfect. But they all tell a similar story. Inflation is running above our 2% target. Let's bring in Rick Santelli now for more on how the markets are interpreting those comments. Obviously, Rick, market found plenty to respond to here. Yeah, and it's pretty hard to argue with that.

Everything he gave are facts. These are facts. These are quantitative details, and he's been consistent. I think the reason the market really responded in a much more aggressive fashion today is the venue. This is a big central bank symposium. This has real girth to it, and I think that's significant. Look at Fed Fund Futures for December. This is a two-week chart, so it's been steadily drifting down until today.

Remember, when it goes down, percentages of a hike go up. It had a dramatic drop. That shifted the tone from 36. probability for the set meeting to a whisker under 60%. And that is significant. And I think if it remains solidly above 50% on the Monday before the Wednesday meeting in mid-September, that he will do with the market dictates, that's the relationship I think he's looking for. Now, if you look at what's going on with regard to the two tens, this chart is really interesting.

and it helps explain why the percentages move so much. Look at the difference between the response on the two-year versus the response on the tenure on a percentage basis. Almost three times more aggressive on the two-year, narrowly missing 3% while the tenure moved 1.2% in terms of a higher yield. Didn't end there. The dollar index definitely followed interest rates. Look at the pop in the dollar index.

Maybe something even more significant, the dollar yen. We know that $164 yen is where the significant high was that brought in ultimate intervention. Now, today, first time over 160 on the dollar versus the yen on the popping interest rates. So it's going to be very interesting to see if the Bank of Japan has any verbiage regarding this in the near future. Mike, back to you. Absolutely. All right, Rick, thanks so much. So with traders positioning themselves for a hike now, given Warsh's hawkish tilt, what will it mean

the economy, if the hike does come, should we actually believe that it is coming? Joining me now is Morgan Stanley, Chief U.S. economist Michael Gapen. Michael, good to see you. Good afternoon. I guess there was a reason to think that maybe the chairman wouldn't give much of an indication of where he's thinking things should go. But he did cite, first of all, 2% is the inflation target, short-term policy rates of the tool to get it back down there. We may have an inflation problem. And, you know, he's kind of moving toward the hawkish consensus.

of the committee. So where do you think that leaves us? Yeah, I think, first of all, he did provide information, as you said, a little bit about the framework. Yes, it's an interest rate story, not a balance sheet story. And I may look at inflation from a wide set of indicators, but 2%, 2%, percent. So we did get at least some information there. Where we're headed, I mean, I'll take a slightly contrarian view. Obviously, the Fed speaking hawkishly, obviously there's a very real risk. inflation does not behave and they have to raise rates. But we think inflation will moderate enough to keep the Fed on the sideline. I'm not convinced that they have to raise rates in September. Obviously, it's set up for them to do that if the data doesn't work in their favor.

So a hawkish tilt, no doubt from the chairman today, we think ultimately inflation decelerates enough, but certainly that's a close call. And that, by the way, I should say, was explicit in his speech as well, where he said, you know, you have to have a view as to the underlying trend of inflation, and if it doesn't continue in the way we want, we might have work to do, right? So he was making it contingent. There is some optionality there. I mean, obviously, maybe under a different Fed in the past or different shares, you might read this speech differently. But I think the totality of his remarks since coming into the seat in June, yes, that they think inflation will moderate, but if not, they've got some work to do. So he left himself and out,

If the data performs as we think it will, maybe the odds for September drop below 50 and they don't have to hike. Longer-term yields that had been in focus for weeks, the 30s, they're off their highs, 10-year yields, 472. Okay, it's not too far off the recent highs. But the big question is why there is that term premium in there above market-based inflation expectations. Is it just sort of a what-if factor? Is it just fiscal? Is it just demand for corporate and government debt, supply, things like that? And is there anything that the Fed chairman today said that might change those things?

I do think one component, so in addition to the list that you mentioned, one component is call it credibility issues. I mean, lack of understanding about what the framework is, are we going to, if we have to combat inflation, do we do it through interest rates or the balance sheet? So the shape of the curve is going to look different in that world. So I do think uncertainty about how the chairman thinks about the world. What's the framework? What's the reaction function? Was part of that story as to why longer yields moved higher. If the market saw some clarity today that it likes, maybe the long end can move a little lower.

Yeah. I think there's also in there. I mean, it's obviously subject to so many interpretations. But the direction of surprise for inflation is probably up versus down, I think, in the market's estimation, longer term. You know, like structurally as opposed to today, perhaps. it's a way to think about it. So, I mean, market implications for all of this in terms of can the economy sort of handle where rates are right now on the long end and are we okay for a while? Yeah, I think if the Fed's raising rates, I think the path they're considering would be something like 50 to 75.

Yeah. And actually, Warsh gave a little analogy today about going on a hike at Jackson Hole. And do you want to go with Don Cohen on this really aggressive hike or do you want to take the leisurely Ben Bernanke-Path? He didn't answer that question, but it sounds. like he prefers the latter. So I think the economy is in good enough position where 50 to 75 basis points of hikes at the front end won't derail the expansion. So you can put us down into the, in the resilient camp. Yeah, it would be taking back the three or two of the three cuts from last year. Our view is inflation is decelerating. The question is how far and how fast. So if you think inflation's moderating in general, it doesn't suggest a major course correction in

rates. So something in the 50 to 75 basis point range, I think is not something the economy would worry about or equity markets should worry about. Yeah, we'll get a little bit of input on that, a little bit of data before the September meeting. We'll see if that changes things. Good to see you. Thank you, Mike. Thank you. Appreciate you coming in. All right, two of the week's biggest market catalyst, now in the rearview mirror, NVIDIA's results in the Fed Sherman's big speech. So what will dictate the direction of the market from here? Joining me now to discuss is Barbara Durant, CEO and Chief Investment Officer at BD8 Capital Partners, and Bob Elliott, chief investment officer and CEO of unlimited funds.

Thanks to you both guys. Good to see you. Good to see you. Bob, start with the macro side in terms of what you heard from Warsh and what you think the markets and the economy need. Well, I think Warsh basically kept up his rhetoric that he at least will talk as if he's a hawk. The question is, when will he deliver the goods? And so far, you know, he had an opportunity to bring the market to a tighter environment the last time. And I think he learned his lesson with not delivering the hike that some people had expected in July.

In July and talking about how, you know, it's fine to get the long end to do the work. You know, if anything, this speech was an attempt to basically unwind the mistake that he made losing two points off the long bond the last time. And all of this is in the scope of rhetoric. In context, if you just look at the Taylor Rule, which I know Warsh rejected directly in this, but for those of us who like rules-based decision-making, it would imply interest rate should be 100 to 200 or more basis points higher based upon current conditions. And so right now, we're nibbling on the margins here of, you know, should we hike or not a little bit in the next meeting when what that's telling you is monetary policy. and the level rates, particularly on the short end, is wildly inconsistent with inflation and the strength of the economy.

So you think that policy right now is very loose relative to conditions, and therefore, what does that mean for markets? I mean, it's not just what I think. I mean, look, stocks are at all-time highs, right? Nominal GDP is growing at 6, 7, 8 percent. Inflation is well above the Fed's mandate, no matter how you look at it. It's not a story of, you know, what kind of policy you like. It's a story of what's their mandate versus what are conditions, and it clearly points

to considerably higher rates. And instead we got kind of this wishy-washy, I'll think about it kind of speech. Barb, as the equity markets digest these things, they maybe see pretty strong nominal GDP growth. Earnings have been obviously fabulous. So that maybe is another measure of loose conditions. And, you know, this sort of underlying technology investment thrust is just not quitting. So how do you think about markets in those terms? Well, it is interesting because Warsh himself said that there's,

is potential for significantly higher growth. You know, and he also said, as you just pointed out, that he does not feel monetary policy as restrictive. So the question is, you know, the market is looking to hikes at some point, even though he's being cagey about it. And I don't think he does it in September. I think, you know, unless the CPI and PPI number that come in in about two weeks are surprisingly bad,

which is probably not likely, I think that they'll continue to hold there because I think he wants that flexibility. He has his task force on productivity. he wants to see how this all plays out, but he's got to buy some time. So for now, I mean, despite, you know, you saw what happened with the long, excuse me, long duration bonds last week, they went higher. The market held in there.

So I think it really comes down to earnings, you know, and we know it's happened every quarter this year, and for forward guidance. Earnings and margins are much dramatically higher, and it's really the guidance that's key. So I think the market's fine. There's no doubt the earnings, you know, if you're willing to kind of extrapolate, they're there. I do note, though, that, like, the majority of stocks were kind of down this week. We're giving a little bit up.

Small caps are down 1.2 percent. So you wonder if the market has to keep clenching on the prospect that we have at least a 50-50 Fed meeting coming up. You wonder if we can keep our composure. Right. Well, I think it's more to do with, you know, we're ending this second quarter earnings. We always have this little bit of vacuum. You know, what's the next catalyst going to be? And right now, it's also happens to be Wall Street is on vacation.

Oh, yeah. And so when we start to come back, I think, after Labor Day, you're going to see people start to reassess what's going on here. And I think they're really going to focus on the earnings, the margins, what is happening. And that, as your last guest said, we can absorb 25, 50, even 75 basis points of hiking, which probably is not going to happen in the next three months. So the economy, and again, I think Warsh went out as a way to point how strong the economy, consumer spending, business investment is that we can absorb hikes. Yeah, I mean, look, Warsh also, I anticipate he would go here, and he did, but didn't say

it has bearing on near-term policy, which is maybe there's a productivity. revolution in the making with all this AI KAPX spend. He even went into the point of talking about token pricing and what this is going to mean in terms of economic analysis in the future, Bob. I mean, where does that take us? Well, he certainly has been a techno-optimist in his rhetoric for a long time. And a supply-sider. And that would make his life a lot easier, right? If we could have a disinflationary productivity boom in the economy. Unfortunately, the facts don't pan out to anything that he's talking about, at least in the near term, when you look at productivity numbers actually quite stagnant over the last couple of quarters, certainly if AI is the greatest

productivity miracle in the history of man, you'd think it'd be showing up somewhere. It's not showing up in real economy margins. It's not showing up in the productivity numbers. I think he's got a long time to wait before he's going to get the sort of supply side that he dreams of making his life easy. We're in the pain before the gain moment, I guess. Barbara, do you want to jump in? No, I just think, you know, I'm not sure that that's the case.

I mean, if you heard Invidia, you know, I heard Jensen Wong who talk about the clients over half now are not the hyperscaleors. They're clients who are finding immediate return on investment, like within a year. That's telling you productivity increases our company. Well, that's, yeah, the neoclows of the world that Nvidia has to help finance. So it's a little tricky to figure out, you know, the end user growth. But look, it's working for now for everyone. Barb, Bob, good to see it. Thank you very much.

Thank you. All right. summer's winding down, which means it's about to be football season, which could give a boost to the sports betting companies. That's not the only news driving those stocks higher. We'll explain what is taking the stocks up and how big of a boost football could be. And we want to show you the closing bell at Cebo in Chicago, ending the regular trading day for options. You're watching Closing Bell overtime live from the NASDAQ market set. Shares of Take 2 interactive closing higher today, but off its best levels. The company released a 26-minute trailer of Grand Theft Auto.

on Netflix yesterday with so much traffic, some users received error messages. Analysts are positive on the release, which some estimates say could generate as much as $5 billion in sales in the first week alone. Also viewing the release of this extended trailer as a sign that the game is on track for its November 19th launch with no more delays. The NFL season kicking off just under two weeks from now with the Seattle Seahawks versus the Patriots, a Super Bowl rematch. The league announcing yesterday it has renewed its partnerships with Draft Kings and Fanduil

and adding fanatics as official betting operators. Meanwhile, draft kings and Flutter ending the day higher after a U.S. appeals court in Nevada ruled that Kalshi can't block Nevada gaming officials from cracking down on sports prediction markets. So how do these latest developments help set up the potential winners and losers of the NFL season? Who are to me now is Jeff Stancho from Stiefel. Jeff, good to have you on here. Let's start with, I guess, today's news. on this court decision, which I guess conflicts with another appeals court decision.

What does it mean for the sports betting company's competitive position? Yeah, thanks for having on, Mike. Yeah, so this one's important. There's been quite a few, you know, legal outcomes up until now. What's different about this one is really that it's a circuit court. And importantly, it's the first circuit court that sided with the states against Kalshi. So the first one to rule was the third circuit. They ruled in favor of Kalshi.

Now you're the Ninth Circuit ruling that's in favor of the states. That creates a circuit split, which means Supreme Court can now be. whether they want to take this up or not. And if they do, that puts the timeline potentially to have full resolution on whether or not Cal She and Polymarket could continue to offer these sports and then contracts that could come potentially as soon as we'll call it middle next year. Right. So this basically bears on a state's ability to regulate or actually limit those sports contracts from the prediction markets, which would preserve the franchise for the sports betting companies that are approved to operate there. Yeah, that's exactly right. With the Ninth Circuit rule

is that the CFDC does not have the right to supersede the state's rights to regulate, or at least that's their ruling. So if they don't, then, yes, they should not be or that would not be allowed to offer sports event contracts, but ultimately it's going to go to the Supreme Court and they'll decide. Bigger picture outlook for the business as we get into the NFL season and college football season as well. I guess the question is, is the pie of overall betting growing fast enough that all these players can kind of get their share and do well within it? Yeah, it's a great question. It's one where our view has been evolving rapidly. But if you go back to NFL of last season, right, what we saw was the regulated market

really fell off a cliff. This was it, you call it a 10 to 20 percent structural growth market that decelerated starting in December down to Flatish. It stayed that way up until World Cup. And then you saw a big uplift around World Cup volumes were up 30 percent in June and July. Seems like a lot of that stuck through to MLB. And I think there's optimism that's going to continue to hold into NFL. But it's certainly a big debate. but, you know, flatish, you know, flatish tam in the regulated market, but at the same time, prediction markets have come along and you're adding, you know, 50 billion or so of monthly notional volume on top of those regulated volume. So certainly as a whole, the pie is growing.

The question is just how it's shifting in between. And also, I guess, the cost of growth, because you do have those prediction markets that are willing to, you know, through their marketing, spending and giving really good deals to betters, maybe it just sort of competes away some of the profit. I think that's right. Yeah, draftings at Fandle themselves are each plan to spend, you know, a couple hundred million in marketing spend in the back half. Cal She and Polymarket haven't confirmed how much they're planned to spend, but they've raised billions of dollars at this point. And you think they'll want to put their foot on the gas at this point, just given, you know, these exchange business models do tend to be winner take all. And it's good

to get exit velocity early. So there's certainly going to be a lot of spending this season. What's good for the regulated sports book is two things. One, you mentioned it earlier, but, you know, the NFL signed deals with drafting Fandil Fanfare. Importantly, they did not sign deals with any of the prediction markets operators, so that ad space is going to stay limited to regulated sportsbook so far. And then, too, now that draftings at Fandu are moving into predictions, they have a much more competitive product, that enables them to get a lot more leverage on their national marketing scale,

just given those same dollars you're acquiring, you're spending dollars and you acquire users in regulated states, and now you're also acquiring users in California and Texas in some of those states and earning a return on that as well. So a little bit of a push-in-a-pull offsetting. Sure. And just quickly, so draft king, Flutter, you have buys on those stocks, right?

That's correct. Yeah, we're positive on the sector. All right. Jeff Stancho, really appreciate the time today. Thank you. Thanks for having it. And we should note that CNBC and Cali have a commercial relationship. Many Americans still worried about eating fresh produce following this summer cyclospora outbreak. Up next, we'll look at how one company became so central to the nation's food supply. Stay with us. As the Fed and consumers grapple with inflation, some food prices are right.

izing wheat up 10 percent to its highest level in more than three years. Concerns of how the latest fighting between Russia and Ukraine could affect supply. Corn also back to July 23 levels as adverse weather could hurt U.S. production. And soybeans at two and a half year high as Chinese demand for American beans remains strong. While it's stick with food, Taylor Farms remains in focus as the FDA investigates the largest cyclospora outbreak on record. Years of mergers and acquisitions has made Taylor Farms one of the world's large. just fresh-cut vegetable and salad producers. Our Food and Wellness Reporter, Brandon Gomez, dug into how America's food supply system became so reliant on this company. Yeah, Mike,

that's right. Taylor Farms produce is everywhere, from Walmart and Target to McDonald's, but its competitive advantage took decades to build. Take a look at a clip from our digital report. It partners with hundreds of family farms for most of the produce. Taylor does the rest. That means everything from refrigerating, washing, chopping, packaging, labeling, shipping, and distributing. That's why the company has become so vital to its customers. 40% of all salad kits at grocery stores are from Taylor. Taylor Farms was founded in 1995, and by 2010,

even before its acquisition spree, it claimed to be the nation's largest salad producer. Over the course of the next 15 years, it either bought up or invested in at least a dozen companies domestically and internationally. Some of them were salad competitors like Earthbound Farm in 2019. Others were processing facilities like Club Chef or tech assets like Agricultural Robotics Company Farm-Wise in 2025. We reached out to the DOJ and FTC and found no public evidence of any reviews for those investments or acquisitions from either agency. There is still no reported positive product sample for Cyclospora linked to Taylor Farms. Taylor Farms told us they commit millions of to food safety and continue to cooperate with the investigation as well.

You can watch the full video on CNBC.com that really dives into how Taylor Farms became so essential to the food market in the U.S. It is so illuminating, Brandon. Now, even though Taylor Farms is so dominant in terms of the processing and the distribution of retailing of all these products, they pull from producers all over the place. And so they can decide whether to take from a certain region or not, right? They've tried to figure out exactly where the affected produce. And all the focus has been down in Mexico, right?

And there's been even FDA going down there to sort of do an inspection of where the produce is coming from on those farms. But the thing that Taylor Farm specializes in is this ready to eat, ready to pre-chopped, pre-diced. So it's all going into this big pot. One source we spoke to said once that happens, you start to lose the ability to actually trace back to the farms that you're finding it from. Even if you can, it takes so much time that by the time it gets to the consumer, it works through the system, it's already, you know. Right. It's hard to actually get a handle on it. Yeah.

No, fascinating. Brent, thank you. Thanks. All right. It is time for a CBC News update with Julia Borsden. Julia. Hey, Michael, a federal judge today once again blocked President Trump's effort to get rid of his hush money conviction in New York,

rejecting his attempt to move the case to federal court and have it dismissed on presidential immunity grounds. It's the third time the judge has blocked an attempt by the president to move the case. Defense Secretary Pete Hegseth is reportedly considering summoning hundreds of top military commanders to Marine Base Quantico for a second year in a row. That's according to the Wall Street Journal. That first meeting drew criticism for bringing all of the military's top brass together in one room. One official tells the journal that Hegseth will announce a new set of directive for U.S. forces.

And Tennessee intends to rename Nashville International Airport after Dolly Parton. After a social media campaigned by fans to honor her in death, Governor Bill Lee released a statement today saying he would push for the move, which will be addressed at a meeting in September, writing that Dolly Parton's extraordinary life is forever woven into the fabric of our state. You know, here in Los Angeles, there are a lot of flags flying at half-mast in honor of Darley Parton. Back over the year. Probably unanimous support for that. All right, Julia, thank you so much. Up next, venture capitalist Bradley Tusk on what he thinks is really driving the outrage behind AI data centers, as well as how AI finance.

is impacting the bond market. Closing bill over time. We'll be right back. Data Center buildouts have been drawing attention not just on Wall Street, but also Main Street. Community pushback against data center construction has accelerated this year as lawmakers in at least 15 states have proposed moratoriums, putting pressure on tech companies, demand, and costs. According to Morgan Stanley, an estimate of $156 billion of projects were canceled or delayed in 2025 and $130 billion already during the first quarter of this year. Concerns range from environmental issues, including water usage and utility to cost to noise and traffic.

Joining us now is Tusk Ventures, founder and CEO Bradley, great to have you on here. It feels like an unusual level of agreement from all sides in opposition to a lot of this local building. You know, we mentioned the environmental stuff. It gets talked about a lot. What do you see as underlying it? Yeah, I mean, I think there's two things. There are some genuine regulatory concerns that I think do need to be addressed. So, for example, energy.

There is no reason that residential homeowners should have to subsidize data centers or Sam Altman or be like that. Water consumption. You know, if you have a closed loop system, then you don't need to draw from the local water supply, but that's also, if you don't have that, a genuine concern. However, these are things that the data center world now fully expects to have to do and pay. Governor hopeful issued an executive order maybe about six, eight weeks ago now, that made that clear. And I think that was seen as like, yeah, of course we have to do that. So then the question is, beyond that, what is creating all this

anxiety? And I would argue it's not really about data centers. And it's not even really about AI specifically. I think that there's just this big disparity between human evolution and technological evolution. Human beings is in our current form. We only wrap about 60,000 years, and species take millions of years to evolve. And yet the pace of technology is evolving so incredibly rapidly. Things are changing so fast. And it's economic change, it's technological change, it's physical change. And I think for a lot of people, that just creates tremendous anxiety. They just don't know what's going to happen next, what's going to happen to their job, what's going to happen to their lives. And I think that that's really scary for them. And that anxiety has to go somewhere.

So all of a sudden it becomes, I don't like AI or I don't like data centers or propels MAGA on the right or the DSA on the left. And it's just the broader anxiety. It's really not about the specific thing they're actually complaining about. Yeah, I mean, it certainly seems as if there's a lot of folks feel like, look, We didn't ask for this. We weren't hearing about it three years ago. Now it's all we hear about. And they want to build these enormous facilities nearby. So that inflames the normal kind of not in my backyard stuff.

So, you know, we can see that. But now on the other hand, what do you think the practical effect is going to be? I mean, how should those concerns be either catered to or addressed or eased? Well, look, I think there are a couple of things that data center builders and people involved in that just have to be willing to accept and do. Number one, you've got to pay your own way when it comes to energy. That could be by providing an own behind-the-meter sources of power, like small modular nuclear. It could be by using far more efficient forms of compute, whether reverse computing or dendentric or biological. There's a lot of ways to deal with that.

Second would be water. And if you use a closed-loop water system, then you're bringing in maybe two swimming pools worth of water. And from there on out, you're just recycling it. So that takes care of that problem. And the third is, like any major project going in anywhere, you're part of a community and you have to act like you're part of a community. And that means working with the community, you know, being supportive of different causes, maybe helping with the local energy grid or with parks or libraries or whatever it might be. But if you want people to be a good neighbor to you, you have to be a good neighbor to that. I think that if those three things can become accepted fact and practice, then ultimately most of these will end up getting permitted.

And then once that happens at scale, it'll stop to be a big issue. Well, so there's this sort of speedbomb possibility there with either moratoriums or you have to kind of work your way into getting built. On the other hand, I mean, it seems like AI as a theme, as a project collectively, it's sort of outgrowing the traditional ways you would finance this type of growth. We keep talking about it. Invidia is, you know, taking equity stakes and, you know, lending its balance sheet to all of these players who say they have demand and they need. need the capacity but can't yet afford it. So is that okay? Should we be worried about what the weakness is in those chains? I worry about it. Look, and there are totally legitimate things like Navidia buying Hugged and Face or the partnership that was announced, I think, on CNBC today

between Salesforce and Anthropic. Those are really good things that businesses should do. But when you are taking on trillions of dollars of new KAPEX spending and the way that you're financing it is either, A, all this circular funding where everyone just sort of pay, passes money from A to B to C, so it doesn't really look that bad on the balance sheet, or just endless amounts of debt, right? As robust as the bond market is, no, even if everyone is perceived to be blue chip, you can't just handle trillions of dollars in new debt on something that might end up paying for itself, but we don't really know.

I mean, there are good analogies to make around AI infrastructure, like the train tracks that were originally laid to build the whole rail system, that ended up being very good for the American economy writ large, but didn't necessarily make money for the people who were financing those particular buildouts. And so, yeah, I mean, when you look at opening eye, talking about going public with a trillion and a half in CapEx's commitments, even Anthropic,

which is a lot less, more like $400 billion, but still, if you're a retail investor thinking about do I want to buy this stock, it's not just looking at, you know, the ratio of revenue to share a price or even, even our margins or anything else, you're not going to be, you're going to be junior to anyone that's holding the debt. And so if you're thinking about, do I want to buy opening eye, anthropic, or, you know, any company like that, you've got to factor in that the true cost

is exponentially greater than what they're going to show you. Yeah, and they have years of liabilities to finance some way or another, as you mentioned. Right. Bradley, I really appreciate your perspective. Yeah, Mike, thank you. Drop me on as always. All right, Bradley tells us. You too. Fed Chairman Kevin Warsh, hinting the central bank may need to raise interest rates to cool inflation. Up next, a member of his balance sheet task force weighs in on when that could happen and what it could mean for Wall Street and the economy. Closing bell overtime. We'll be right back. Bitcoin has been on a roll lately, but pulling back nearly 3% today to fall below $80,000.

You can see a big drop in prices right around noon. That is sending crypto-related stocks, including Robin Hood, Coinbase, and strategy sharply lower. That was right around the time. soaring, gold coming down as well on this idea the Fed might have to tighten sooner than expected. Fed Chairman Kevin Warsh, of course, speaking at the Jackson Hole Symposium today, expressing concern about the outlook for inflation and warning interest rates may need to be raised if higher prices persist. We're joined now by our own Steve Leasman from Jackson Hole, as well as a member of Kevin Warsh's Balance Sheet Task Force, Steve.

Thanks, Mike. I'm here with Ragaram Rajan, who is one of the esteemed economists who's presented here over the years, former governor of the Bank of India, now at the Hoover Institution, former IMF chief economist, a lot of roles, but I just have a very simple question for you. What did you think of the speech?

I thought it was very good, given the expectations that had built up. He basically did two things, I think. One is retrated the fact that he was serious about inflation. He said that before, but he emphasized that once again. But more important,

he told people that he knew what it took, that it would take a risk, rise in interest rates to bring inflation under control. He wasn't waiting for AI to come to the rescue. He wasn't waiting for long-term interest rates to tighten financial conditions. He was going to raise interest rates if the time was appropriate. And he didn't give us forward guidance, but he pretty much said, you know, watch the space. And watching this space, what would you expect them? What do you think they should do? Well, I am in the camp which says they should already have moved. but I'm generally hawkish.

I think September will be a serious decision, but it may still be pause. But I think if things go as they've been going, a reasonable labor market, and inflation still way above where the Fed wants to be, no matter how you pass it. What about this idea that the energy price hike's going to pass through and everything's going to pass through?

It's one damn thing after another, right? That's the explanation for inflation. But it's five years of one damn thing up or another. And so, yes, if the Fed is really sure that inflation is coming down, it can still wait at the cost of yet another shock potentially, which reduces its credibility more. My sense is they will certainly pay attention to the pace of disinflation, but they might just have to act because it's been too long.

So if you were analyzing this as the IMF chief economist, you would look at the United States and you guys would do this. You'd say, we're going to look at this country, that country. And you would say the inflation has a structural component to it, not a cyclical necessarily component to it. Well, the longer it persists, the most structural it becomes, right? And that's the real problem, that, yes, you can blame COVID, you can blame Putin, you can blame the oil shock right now.

But it all sort of adds up. And yes, we're seeing the end of the trade tariffs in prices, but then we've now have the oil stuff that's going to come in, especially if oil prices start moving higher because of tightness of supply. Mike has a question. I do. Mike Santoli here. Thank you. You mentioned that Kevin Warsh in his speech said that it would take higher rates, were higher rates as the primary tool for perhaps helping to get inflation under control. What does that say about the function of the balance sheet in the past? You know, Kevin Warsh has said perhaps there was something to do on the balance sheet that could

bring things more into line that could help restrain inflation, not to mention what the market might do in response to that. I think if you parse Kevin's speeches on this, he certainly has said that the Fed has too large a footprint outside of the policy rates. And certainly one part of that footprint is the balance sheet. So I think, I mean, without, sort of specifying what specifically we're looking at, I think the issue of the balance sheet

comes into play from that perspective, which is how do we ensure that the Fed has the appropriate balance sheet? What can you tell us regularly about how the process is going with the task force? Are you close to being done? What have you come up with? Well, let's put it this way. We are talking and we talk frequently. So we're fully engaged. I think Chair Warsh has said that there will be some kind of either the actual report or some disclosure of what the task forces have suggested by the end of the year. And that certainly is a time frame that we're looking at. Let me just ask. You've spoken publicly about the balance sheet a lot.

You've done a lot of research and it's really changed the conversation in a way. And your point, I think, if I have it correctly, is that reducing the balance sheet matters a lot, but you want to be very careful about doing it because it could be very disruptive to markets. Absolutely. So if you won the one-liner on the work, there's a ratchet effect. That if you have a certain size of the balance sheet, the private sector gets used to it. It's like heroin. That's the way I read your paper.

It's like we needed $1 trillion, then we needed $3 trillion, then we needed $5 trillion. Exactly. So what the paper was about is trying to show the sources of that ratcheting. Why does the private sector become used to higher levels of liquidity, which then means that if you want to reduce the Fred's footprint, that part of that has to be considering the size of the boundary. Well, give me the elevator version. Is there a way out? I think slowly you can normalize, certainly. And, you know, I mean, there are so many tools that other central banks are using. So I think the right way to think about it is look at what everybody else is doing and figure out where you want to be in the long run. We look forward to your report and you're coming back to visit us and explain your thoughts on that. Absolutely.

Thanks for Raghra Rajan. Here from Jackson Hole. Mike, back to you. All right, Steve, thanks so much. A CEO changing of the guard is about to happen at Apple and Tim Cook is taking care of some unfinished business before handing over the reins to John Turner's. Details straight ahead. Let's get you set up with next week's trade.

Earning season starts to slow down, but there are some big names on tap, including Dell, Palo Alto Networks, and MongoDB on Tuesdays on Tuesdays. Broadcom, Snowflake, and C3AI are Wednesday's highlights, and Lulu Lemon headlines Thursday's results. And on the economic front, the G20 finance ministers and central bank governors are meeting in North Carolina on Monday. On Tuesday, we'll get the Jolt Survey, ISM Manufacturing and Auto Sales. Wednesday brings the ADP employment report and the latest Fed beige book. Thursday's highlights include weekly jobless claims and ISM services, and that all leads up to the August jobs report on Friday. Also next week, a big C-suite change coming at one of the biggest companies in the world.

Tim Cook will be stepping down as CEO of Apple on Tuesday. McKenzie Seagalos looks at all the moves he's been making during his last few months as CEO. Matt. So, Mike, Tim Cook has spent his final stretch as CEO, Taking on the unpopular decisions and less consequential product moves, that John Ternus would probably rather not inherit on day one. Take a look at just the last seven days. Apple announced layoffs at scale back parts of the Siri AI team

and cut deeply into software engineering here in Silicon Valley. And then this week it put out more incremental hardware updates. And just this morning, Apple raised prices across parts of its services business, including Apple TV. Now, that services headline is worth watching because, built it into one of Apple's biggest profit engines and growth there is starting to soften just as regulators and courts around the world put pressure on App Store economics, but Cook isn't really going anywhere.

As executive chairman, he can keep doing the messier work that he's become especially good at, Washington, Beijing, trade and supply chain diplomacy, while John Ternis has the air cover to focus on products and become the face of what could be Apple's biggest hardware cycle in over a decade, Mike. Well, that does, Matt, get to what I was wondering about. So Tim Cook kind of, you know, ties up a lot of the loose ends and does some of this sort of dirty work that needs to be done or at least just to clear it out of the way. Turnus, what do you think his set of priorities are? What do investors want to see from him out of the gate?

Well, September 9th is his first public-facing event where he's going to be addressing both consumers, but also Wall Street. We got a little preview of what we might expect from him on the last earnings call. but he only said a couple of sentences. So this is his chance to really surprise and delight to the upside in terms of hardware. This is Apple's hardware chief. He's been at the company for 25 years and a recent leak of this Tahoe 26.7 update is a software update to the Mac OS system. It actually is a directly from Apple that points us to some of the new product form factor changes that are coming. So we're looking at potentially an foldable iPhone in less than two weeks from now.

And then further out on the product timeline, there are things like AirPods and, have cameras equipped in them. So kind of getting into this visual intelligence space that Met has been competing in with glasses. So what we're expecting from him are a lot of revolutionary form factor changes that we haven't gotten from Apple in over 10 years, really. Yeah. So he gets to do some of the fun stuff, I guess, at least initially. Mack, thank you very much. That is going to do it for overtime for the day and for this week. Fast money begins right after this quick break.