Closing Bell - Closing Bell Overtime: Cancer vaccine from Moderna, Merck shows promise in late-stage trial; both stocks soar 8/19/26

Episode Date: August 19, 2026

Elizabeth Burton, Chief Strategist at Fortress Investment Group, assesses the broader investment landscape and where she sees opportunity as investors balance growth against emerging risks. Health care takes center stage as Courtney Breen of Bernstein breaks down developments involving Moderna and Merck and what they mean for biotech and pharmaceutical investors as both stocks soar following promising results in a late-stage trial. Moderna jumped nearly 200%. Lo Toney of Plexo Capital tackles a key question in the AI race: is OpenAI losing momentum? Our Eunice Yoon reports on a Chinese humanoid robotics company going public and what the deal reveals about China’s ambitions in robotics and AI. Finally, Kate McShane of Goldman Sachs analyzes the latest retail movers, reacts to Target and previews Walmart earnings as investors search for fresh signals on the health of the consumer. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bill is bringing in to the training day at the NYAC, Citro Tech, bringing the bell at the NASDAQ, USAF, Fencing. Welcome to closing bell overtime. We're watching studio be at the NASAC market site. I'm Melissa Lee along with Mike Santoli. Stocks with small gains as the Treasury Department doubles down on its debt repurchase program. The Dow up about 100 points, the SB 500, back above 7,700, the NASAC, just a tenth of a percent higher. Bond yields pulling back on that news, especially the 30-year, which had been near 2007 highs,

and that also having an impact on crypto, Bitcoin, having its first. best day in nearly six months as the dollar declines as well. And a huge success in treating cancer, sending Moderna stock up 180 percent, much more in that story coming up. But obviously the big news is the effective cap that's been put on at least for today on the long run of the treasury curve. And that was good enough to send a broadening of the market. Once again, RSP, new high. New high. I mean, you know, this has been the pattern. So you have semis down against. Semis are caught up in their own drama, right? They were oversold. They rallied. Now they hit resistance. And then the rest of the market goes up.

Apple up 2%, right? Why? Because somebody's your down. I mean, really, that's kind of a game we're playing. On the yield side, I mean, it's worth mentioning, I guess, at the outset. This is something the Treasury does. It buys back. He's kind of less liquid, longer term securities, kind of cleaning things up and taking

advantage of lower treasury prices. They just doubled down as a clear signal to say, we think maybe things have gotten out of hand on the long end of the curve. Maybe you want to anchor it a little bit more. But we'll see if it has a longer term effect. You know, we also got the Fed Minutes that. I don't think there was much of a change in the outlook from that. We knew there were hawkish.

Some of the data since then have been actually a little more dovish. Yeah, I think there's a lot of skepticism on the street. So how long this repurchase program will actually have the impact that the Treasury wants to have on the longer end of the yield curve. But the message is clear that they want to step in when things get a little bit too hot on the yield side. And maybe that is a weaker dollar. Maybe that is a go for crypto. in gold, hard commodities, emerging markets. Yeah, that was the absolute reflex response.

Again, we'll kind of see if it has followed through and also if stocks can handle it because we've had these instances before where yields get to a certain threshold, we think it's going to be scary, we think stocks can't do it, and then they come in again and stocks breathe a bit of relief. Let's get more on the big movers in today's session. Christina Parts of Neville is joining us now for that. Yeah, that treasury buyback, you were just talking about,

really set the tone into the bell, long end yield, knee-jerk, lower equities took the hands, off higher, specifically defensive taking the league health care and materials. But it wasn't the case necessarily for tech and specifically chips. A few names did most of the heavy lifting. Marvell closed up about nine, almost 10% higher after handing Google, a warrant to buy up to $12 billion in stock, also expanding their custom silicon partnership. Competitor Broadcom went in the opposite direction, down almost five.

In memory, S.K. Hinex says board signed off on repurchasing and fully canceling roughly $29 billion in shares in South. Korea. That's the biggest cancellation ever from a Korean-listed company, so it helped shares climb. Oh, it was a lot higher, ever so higher. But Bitcoin switching to that, pushed past 68,000. The president sat down with

crypto executives just in the last hour you saw on our show, lifting strategy, and Coinbase to name a few strategy up over 12%. Steel, though, hard pivot went in the other direction. New core and steel dynamics were among the worst in the S&B 500, specifically on a Bloomberg report that Washington will have

Canadian steel and a luna tariffs to 25% from 50%. Details, of course, are still being worked out, but it points to more competition in the market. That's why the U.S. producers dropped. And then lastly, one mover I want to mention, it's Este Lodder, given it's sore today, 16%.

Best day since, or almost best day since 2011. It was actually 17% when they climbed at that level. But it ended three straight years of falling revenue. The company also confirmed a net reduction, unfortunately, of 10,000 jobs, but of course, you know, that helps shares. Guys? Thank you, Christina.

Let's get a reaction from the bond market now following that move from the Treasury Department that it will at least double the size of the government debt repurchases. Rick Santelli joins us now from Chicago. Rick, your take? Well, let's kind of paint the picture accurately here in terms of what it all really means. It means we're looking at basically seven buyback operations between the date stated September to November. And that now turns from a potential total of $14 billion to a potential total of $20,000. $8 billion. And I say potential because going from $2 to $4 billion on an individual buyback

doesn't mean they're going to do $2 billion or $4 billion. There's been buybacks where they don't do the maximum amount. And I think this is definitely in the purview of the Treasury orderly markets. And let's not forget, that 30-year is not as liquid as the maturities like tens, but it's heavily shorted against the two-year by large spec institutions. And I think the Treasury Secretary now has acknowledged he's aware of that. because the shorts definitely had to jump out of those positions. Now, let's look, and you've talked about it. Mike, here's twos, tens and thirties, 12-hour chart.

We can clearly see where the mover was. Two-year notes actually didn't move at all. They started to actually move higher in yield. The 10-year yield moved down about 1.25 percent, the 30-year almost 2 percent. So obviously that's where the horsepower was. Then we had a 20-year auction not long after that that did not do well. So as you look at a six-hour chart now of only 2,

twos and tens, look where the high yields are. A little bit after 1 o'clock. So the 20 year comes in soft because the yields had already moved down. There was no concession. And the 20 years of weird maturity anyway. So they avoided it for the most part. Yields continued to move down after that auction. And much of that was the tone of the minutes. The minutes had a huge effect, actually. Might not have sounded like it made a huge difference. But as they were being read by investors' yields definitely moved lower. And finally, we remember last week, we had a cooler than expected CPI, as expected, no surprise, PPI.

Well, there's a chart going back to the release of those data points. And what happens to these Fed Fund futures? They rallied on the 11th. They rallied on the 12th. They held on the 13th and moved higher on the 14th, all because of that data. And now they're moving sideways, which means when they go up, the probability is of hiking go down and it's sticking, maybe that's the most important issue. Right now it remains at one in three chance of a hike at the September meeting. Mike, Melissa, back to you.

There's a certain irony in all of this, Rick, and this is pointed out by Mike on our 10 o'clock closing bell overtime call, and that is that, you know, Fed Chair Warsh made it clear that he wanted the market to sort of sort things out on their own. And here we have Treasury Secretary Besson intervening in the Treasury market after intervening in the Japanese currency market as well. So putting that aside, though, do you think this works? Because there's some skepticism that this is very short-lived at this point. Well, whether it's short-lived or not, it's the, we'll never know. It's the counterfactual.

Maybe rates would have been significantly higher if it wasn't for that. And whether this is going against his notion of interference, I would point out that markets aren't where they need to be anyway. After a decade and a half of manipulation by central banks, keeping rates too long. is keeping them negative. The fact is it's hard to let the markets do what they do best and be left alone because I'm not so sure they're at a point where it still reflects true value between the dynamics of risk and reward. All right. Yeah, we'll see how the markets keep digesting all of that, Rick. Thank you. Those easing rates taking a bit of pressure off the stock market, but the move was fairly muted at the index level. Is this an indication that investors don't think this move-in rates

will hold or something else? With us now is Elizabeth. Burton, Chief Strategist at Fortress Investment Group, good to see you. Good to see you, Mike. So I guess dramatic in the moment. We have to figure out what it means in relation to, I think what's been driving markets before this, right? I mean, you have this massive appetite for capital. It's running through the economy. It's running through the capital markets. We're not sure what it means for inflation. And here you have this intervention. So how do you think about it? Well, I think actually, I do have an opinion on all this means for inflation. I have a lot of respect for Rick, and I think something he said was right, like, if not for.

Like, we don't really know what to make of this, right? Because I do think there was a reason why the bond market was moving higher. And obviously, Bessent blinked. Warsh didn't, so Besson stepped in and did it. I think you guys have probably heard this all day. But, you know, if you look at 1961 and you look at 2011 when we saw variations of this, they weren't necessarily coming from the Treasury. So now we've got this, you know, monetary policy, fiscal policy lover that we've done.

also have to consider from as a former pension investor I used to be the cio of awaii well how would i were you taking this what like what would i be thinking about this well you're hedging your long duration liabilities and previously issuance was something rather stable for the most part obviously changed a little bit post-covid but now you've got to think okay now here's another variable i have to account for in this math and it makes it tricky and if the supply on the long end is actually lower you've got you know pricier options here and now you've increased your liability hedging costs. So that's what I'd be thinking about it from that perspective. But the bottom line here, Elizabeth, does you think that it's, you know, the source of this

was inflation? And that still is the root of the problem. And that is still not being addressed? I think inflation is sticky. I'm not saying I think inflation is going to rocket to the sky, for sure. But we haven't solved it. In fact, you know, every Fed bank has their favorite measure of inflation, as does every Fed governor, right? We, Bernanke was talking about Supercore. And then we didn't hear it for two years, and then I've been hearing it more than ever in the last two months, because it's feeding the narrative of whoever wants to follow it. But no matter what way you slice it, every variation of bank has as the Taylor Rule, the rates should be higher. They should be around four. Mathematically speaking, if rates should actually be higher, the 10 years should theoretically be higher.

So if the 10 goes to 5, will that be upsetting? I think so. But it should be more appropriately priced. Even at 6, it's likely more appropriately priced. And I know a lot of people, what level does that really upset? equities. Well, I think five might upset equities, but it's more the speed than the level, right? I was watching the accountant, too, this weekend. And there's a great line that, that Ben says. He says, it's not the fall that killed him. It was the abrupt stop about jumping. I think that's what you say about the equity market in the reverse. Ben Affleck, we should be clear. I think it's where inflation fits into it and what it just means on a portfolio level is, If you look at the market-based inflation projections within the treasury market, it's not particularly flaring up, right?

It's still in the twos for 10 years. And I do think you also, therefore, say, well, that means real rates. The compensation you get for holding duration has gone up. Does that mean that you can try to capture that and say, look, I don't know if equities are going to be that great from the next 10 years on an inflation-adjusted basis? Can I lock in the 2% from, you know, 10-year treasuries? Yeah, I mean, a couple of things. I think one thing that I didn't mention on this move by Besson is that I think you'll see an inflationary move because of this, because part of the way they're going to get around this, I would imagine, is increasing the money supply. And it's already running at an 8.5% annualized rate.

So it's going to go even higher. And I know that I have people who disagree with me on this other strategist, but I do think the money supply affects inflation. What's interesting is, you know, we didn't see a velocity pickup, but we also didn't have the same kind of credit market. that we've had before. So it may be kind of harder to tell. There are ways to profit from this. Like if I was still in my old seat, I'd be thinking about relative value traits. Like if this is where treasuries are going, what are my thinking about corporates or strips? Like, what are the other things I can do here? So volatility creates opportunity for sure. What impact do you think this has on all of the issuance that the hyperscalers are doing right now

and also investor demand? I mean, if we're in a sort of a world where rates are just higher, there's a lot of competition here. There is a lot of competition for capital. I mean, you saw the Blackstone QTS, Realty, they were having to price that investment grade at a high yield level. I think that you should expect to see more of that. You've seen the CDS on some of these hyperscalers, meta, Microsoft AAA, those moving out as well. I think, you know, you'll probably see more of that. One of the sort of side of notations in the Fed Minutes today were some members believe that basically policy is just not restrictive.

In other words, financial conditions are looser. then you would think if you just looked at, let's say, policy rates and things like that. Do you agree with that? And what does it suggest? Completely agree. I think that definitely we have easy financial conditions. You could look at the Goldman Sachs risk appetite indicator. Look at the Bank of America risk appetite indicator. Some of that may be skewed by how they're looking at oil and energy. But I think for sure, I think financial conditions are okay.

I mean, financial risk indicator, too. So I would say that we are accommodative, and maybe that's been okay so far. but what if we are wrong about the labor story? What if? There's so many what-ifs. It feels a little precarious. So you think we're behind the curve? The Fed is behind the curve.

Look, they have a hard job. I mean, a wonderful job, but I think it's hard. So I don't want to say whether they're right or wrong, and I presume they have more data than I do think that the Fed funds rate is lower than what it should be, just mathematically speaking. It's, I guess just to get it back toward equities, which have been completely riding the earnings boom. Yeah.

And this huge swing, I mean, whatever else is going on in the economy, corporate capital is doing really well. And is that something that you're willing to extrapolate and say that equity returns, therefore, can stay good? I would absolutely not fight the equity story right now. You can change fight the Fed to don't fight the equities. I mean, whatever you slice it, earning seasons was good. My favorite thing in equities has been for 18 months, continues to be the security of everything, defense, cyber AI, water. that came up last month, right? So I think there are definitely trends out there.

I wouldn't start fighting it. Do you see there are a lot of comparisons, though, with the, you know, internet bubble, et cetera, I'm not saying that we are in that period, but are you concerned at all about the valuations? I mean, we just learned that Open AI's growth in the second quarter, quarter on quarter was disappointing. There's a lot we don't know about the story, and a lot is riding on the success of an Open AI and Anthropic. Definitely concerned. The problem is I'd have to kind of call at the top. And usually before these bubbles burst, there's so.

six months of really awesome returns that you don't want to mess out on. So maybe approach it in a hedge situation. Liz, it's great to see you. Thank you for coming by. Elizabeth Burton, a fortress. And we want to bring you to Chicago there, CBO on the screen. Lead the Way program ringing the closing bell at the CBO in Chicago, and that will end the regular trading day for options there. Well, Moderna and Merckshare is soaring today with Moderna up nearly 180 percent, adding $44 billion in market cap. The moves come following. positive phase three results for melanoma skin cancer vaccine trial, bringing them one step closer

to filing for the approval of the treatment option. Modern's MRNA-based shot developed in combination with Merck's Ketruda, met its primary target of reducing melanoma cancer recurrence and keeping the cancer from spreading to other parts of the body. Joining us now is Bernstein, senior research analyst Courtney Brin. Courtney, great to see you. Thanks for coming by. The two companies added, what was it, $40 billion each in market.

Yeah, each $40 billion plus, yeah. peak sales drug of $1.2 billion or so. Does that make sense to you? I mean, I think there are a few things that drove reactions today that go beyond the melanoma indication. So first of all, we had great results. We got a positive readout with the first interim analysis. So while we don't yet know the hazard ratios, i.e. how much better than keytruder alone it was in this study, we know that it had to have been very meaningful to be positive at the very first opportunity to read it. So that's kind of very good sign in terms of the efficacy of the drug, translating and carrying forward that phase two data that we'd previously seen.

The second thing we also learned today was that the Moderna MRNA platform isn't just for respiratory vaccines. This was the first phase three trial that completely validates that this potentially is transferable from where they've been playing today to where they may play in the future in the therapeutic space. Additionally, what we also know is Moderna has been relatively short and there's been kind of somewhere in the range of about 15% of the float that's been in those short positions. So there was a bit of a squeeze today. This wasn't just all kind of buying for the sake of buying.

So I think there's a few drivers that are underlying here. And while we got a melanoma data today, this platform, this I&T platform is being tested in lung, in bladder, in kidney cancer. and then in much earlier stages, gastric, pancreatic, the list goes on. And so there's a lot of opportunity to think about what could the data mean beyond just that $1.2 billion peak in melanoma. And on the Merck side as well, I mean, obviously the excitement was spread around. What is now the market implying that it's kind of giving credit for at this point in terms of how wide this might have an impact?

It's a great question. In some ways, every time I see some of these stocks move up with, it's a reflection on the positivity of the catalyst rather than a connection to the valuation of the DCF associated or the NPV associated with that particular milestone. This signal of a $40 or $50 billion market cap kind of increase suggests a much more material kind of revenue contribution

than I think we can underwrite today with the melanoma data. And I think most importantly, not only is this $1.2 billion of annual revenue at peak, But even if you believe you get to perhaps nine or ten, if you underwrite all those different indications I spoke to, the operating margins on this cancer vaccine are unlikely to be great. And that's because it's individualized. You take the blood, you take the tumor from the individual patient, you take six weeks, you send it away to Moderna. Madonna identifies what's in that tumor. What can we then match to what's in that particular patient's tumor?

You can scale this. You can scale it, but it's on a different. type of scaling program than a mass market off the shelf, Ketruder-like product. In terms of Ketruda's patent cliff, how does this get repackaged so that it gets extended? I mean, how does that work? Great question.

As you look at different paths of extending a patent, you look at things like co-formulation, you look at new innovations that you can wrap around. In this particular trials, and most of the Moderna trials, you are adding on to Ketruder rather than, co-formulating with Kutruder. So it doesn't stay off the pattern cliff.

So it is highly likely that we could see biosimilars swapping in and replacing Ketruder and combination with the I&T. The one caveat to that is that these patients in early stage cancers are a bit more likely to be using the subcutaneous product of Kutruder, which is unlikely to have direct biosimilar competition for those first biosimilars that launch, which will be IV. So do you think that the gains in Merck are overstated given these constraints? It's very much a momentum play today rather than something I can point to into my DCF and get real conviction around that valuation. Yeah.

Exciting in terms of the effect, but maybe not so financially connected to what might come. And incredibly positive for patients. Sure. Great to have you. Thank you so much, Courtney. Coming up new numbers from OpenAI raising concerns ahead of its potential IPO. We'll have that story. Plus, the growing backlash around data centers across the country is now becoming a major issue in some key political race.

We'll discuss that next on closing bell overtime, live from the NASDAQ market site. The backlash against data centers is growing. It was a little over a month ago when New York became the first state to issue a moratorium on data center buildouts. Now you can see almost the entire East Coast is at least considering a similar ban. Yesterday, Pennsylvania Governor Josh Shapiro signed an executive order to stop what he calls predatory backers and bad proposals. Shapiro is seen as a top contender for the Democratic nomination for president in 28. one sign the issue is becoming increasingly political. In the Ohio Senate race, Sherrod Brown is running an ad calling his opponent the face of data centers.

I guess that's an insult in the race for Texas governor, state representative Gina Hinojosa, is using the issue against incumbent Greg Abbott. Here's what Hinojosa said on the exchange earlier today. Building these data centers are good jobs for people, but there has to be a way where we can have good jobs and listen to and be responsible and be of local communities that have to deal with this. It shouldn't be an either or. Greg Abbott has set it up as such because there are just no rules in Texas.

It's interesting to see this come to a head at this point. It collides with the affordability issue in America, which makes it much more of a pain point as we approach the midterm elections. Affordability, this idea that people are unsure about what this is all for. I mean, they know it's for AI, but they're not sure if that's a desire, but they're not sure if that's a desire, outcome. It is amazing how it just has become like an 80-20 unfavorable type of a, you know, kind of a testing survey question. Almost, you know, kind of instinctively you want to say maybe it's just not that bad. Maybe people are a little bit overreacting here. I do wonder what it means for when we talk about a trillion plus in CAPEX next year. Right. I mean, that whole pipeline has to

keep moving. Yeah. And right now there's like a thousand, whatever, give or take, underway. Data center is underway. But all the projected revenue of Open AI anthropic are predicated multi-years out on building it. You have to get the capacity to have the revenue. And let's say there is such a political backlash on this whole thing that you say 15% of projects don't get built. Let's say the timeline, because of zoning issues and moratoriums, the timeline gets lengthened.

What does that do to the financing costs? All of this obviously is being financed. So that really changes a return on investment. And to the bottleneck trade, so to speak, and whether it eases them, which maybe is good for people who are doing the investing, but not good for those people exploiting the price on memory and everything else. Right. Right.

Coming up, pain at the pump continuing as the war with Iran drags on. The latest example, $7 a gallon for diesel in California. We're going to have more on that coming up. Plus, target up 4% to its highest close in two years following its results. What can we expect from Walmart tomorrow? That's coming up on closing bell overtime. The backlash against data centers is growing. It was a little over a month ago when New York became.

the first state to issue a moratorium on data center buildouts. Now you can see almost the entire East Coast is at least considering a similar ban. Yesterday, Pennsylvania Governor Josh Shapiro signed an executive order to stop what he calls predatory backers and bad proposals. Shapiro is seen as a top contender for the Democratic nomination for president in 28. One signed the issue is becoming increasingly political. In the Ohio Senate race, Sherrod Brown is running an ad calling his opponent the face of data centers. I guess that's an insult in the race for Texas governor,

State Representative Gina Hinojosa is using the issue against incumbent Greg Abbott. Here's what Hinojosa said on the exchange earlier today. Building these data centers are good jobs for people, but there has to be a way where we can have good jobs and listen to and be respectful of local communities that have to deal with this. It shouldn't be an either-or. Greg Abbott has set it up as such, because there are just no roles in Texas.

It's interesting to see this come to a head at this point. It collides with the affordability issue in America, which makes it much more of a pain point as we approach the midterm elections. Affordability, this idea that, you know, people are unsure about what this is all for. I mean, you know it's for AI, but they're not sure if that's a desirable outcome. It is amazing how it just has become like an 80-20 unfavorable type of a, you know, kind of a, you know, kind of a testing survey question, almost, you know, kind of instinctively you want to say, maybe it's just not that bad. Maybe people are a little bit overreacting here. I do wonder what it

means for when we talk about a trillion plus in CAPEX next year. Right. I mean, that whole pipeline has to keep moving. Yeah. And right now there's like a thousand, whatever, give or take, underway. Data center is underway. But all the projected revenue of Open AI and Anthropic are predicated multi-years out on building it. You have to get the capacity to have the revenue. And let's say there is such a political backlash on this whole thing that you say 15% of projects don't get built. Let's say the timeline, because of zoning issues and moratoriums, the timeline gets lengthened. What does that do to the financing costs? All of this obviously is being financed.

So that really changes the return on investment. And to the bottleneck trade, so to speak, and whether it eases them, which maybe is good for people who are doing the investing, but not good for those people exploiting the price on memory and everything else. Exactly. All right, coming up, pain at the pump continuing as the war with Iran drags on. The latest example, $7 a gallon for diesel in California. We're going to have more on that coming up. Plus, target up 4% to its highest close in two years following its results.

What can we expect from Walmart tomorrow? That's coming up on closing. Bell overtime. Welcome back. Oil prices slightly higher today, right around $85 a barrel, as the U.S. and Iran seem no closer to a lasting peace deal. but the pain of persistently high prices being felt by truckers, California diesel rising to $7 a gallon,

close to its highest levels from April. Let's bring in Brian Sullivan now. For more, Brian, I don't know if there's any kind of, you know, magic trigger level or anything in terms of what the implications of this are, but it certainly catches the eye. Well, I think we might find out soon. I mean, you said seven bucks the highest since April. In some parts of California, you're going to be at record highs on diesel fuel.

And listen, all of our viewers and listeners in California, you always have the highest fuel costs in part because there's a gigantic amount of taxes thrown on as well over 70 cents a gallon into retail gasoline. You know that's not taxes don't go down in California, so we know that's not going away. But what is the impact here of seven bucks per gallon and what exactly is going on? Well, this kind of this confluence of factors. You've got a lot of refinery capacity globally, particularly in Russia, that is offline. Diesel fuel can often be a commodity that is competed for globally. you've got some refineries that are down for maintenance here in the United States.

You've got record low levels in some of the rivers of Europe because of drought. What does that matter? Well, a lot of fuel is shipped on barges in those rivers. If it can't get through, you've got just globally depleted supplies. We're going to find out you, ironically, you mentioned the Walmart results. Well, Walmart trucks a lot of stuff. We'll see if they reference this in their earnings calls. So not only is it painful for the rails, for the trucks and for ships, by the way, cruise lines,

airplanes, things like that. But take a look at the other side of it, Mike. I'm sure you and Melissa have talked about this a lot, the refining stocks. Many of the refining stocks are, if they didn't hit a record high today, they probably hit a record high last week. They're up more than double where they were at the beginning of the year because the spread between their input costs and what they can sell for is also in some cases at a record high. It's called the crack spread, but whatever term you want to use for it, the reality is it keeps

going up, those refining stocks, they continue to go up. There may be some relief way out multiple years on the horizon in the form of something called the Western Gateway is a pipeline project. It is part of Kinder Morgan. It would be part of Philip 66 and the smaller cap H. F. Sinclair, Tickert, Dino, D-I-N-O. They are trying to build a new pipeline from Houston and St. Louis that would go through Arizona to California. It's projected to open up in 2029, guys. But there's the map. But like with anything with California, I would say the projections, 2029. We'll see if it gets built and built by then.

This, by the way, something we talk about more in my Power Insider Weekly newsletter, which hopefully should be out tomorrow. I was a little bit busy earlier this week. So about a day behind in writing it, Mike. But you know what that's like. I know what it's like to have a deadline. Being a day behind, that's a new thing. But maybe that'll come up as I go along.

I do think, Brian, look, we also got to talk a little bit about the, and we can all have theories of this, of the inflation impact as it gets worked through. I saw some references, obviously California, biggest ag state. You know, you got to use diesel for tractors and other machinery. So I don't know. At some point, it sort of pushes against the idea that we have general disinflation happening elsewhere. And I love the fact that you brought that up, despite, I heard what you said there about the daylight. I'll see what I'm talking about. All right, California, the state of my birth, people think, oh, it's the movies and Snapchat and Facebook, and it is those things.

But California is also the largest manufacturing state, largest industrial state, largest agricultural state. To your point, you've got, what, one in six Americans living in the state, you've got over 30 million registered motor vehicles in that state and long distances. California, by the way, also sort of bizarrely supplies Arizona with a lot of refined prices. products because Arizona has exactly zero oil and gas refineries. Right now, there's a lot of oil and gas and even refined gasoline that is coming in via ship into Los Angeles and Long Beach in San Francisco. So if you're trying to be green, I don't know if importing refined fuel from an island or Trinidad or even Iraq, which happened about a month ago, is exactly their vision of green. But to your point, the inflationary aspects are going to be felt. California,

we feel your pain because it is darn expensive and people live 100 miles away from where they work now so they can afford a mid-sized home at in Victorville commuting to Orange County. And you know what that means if you live there. At $5 a gallon. Brian, thank you. Six. Six, even higher. Brian Sullivan. Time now for a CNBC News update with Christina Parts in Nevelace. Christina. A former engineering director at Meta testified today in the landmark social media trial that the company took a quote, Don't ask, don't tell approach to kids under 13 on its platforms and that it consistently put profits over safety in designing its products.

Several states are suing the social media giant alleging it intentionally sought to addict kids to its platforms in pursuit of profit. Meta, of course, has rejected those claims. The Trump administration has reportedly told Congress it's spending more than $200 billion for a proposed Gaza peacekeeping force. According to Reuters, it's the first significant funding for this stall. the U.S. plan to rebuild the Palestine enclave, despite both Hamas and Israel balking at some of the conditions of the plan. Master champion Liv golf critic Rory McElroy said today he's not sure

what value live players could bring to the PGA tour if they return. Live has its final tournament this weekend, and while the tour says it has a lead investor in place, it's just unclear whether stars John Ram and Bryson Deschambeau will stay if purses and contracts are reduced. Make it where the money is. Guys, back to you. For sure. I knew you'd be able to nail Deschambeau there. Well, yeah, there was a French name. Of course, I don't follow golf so clearly. I was a little nervous with all the other names. I follow it only that much more than you probably.

All right, thanks, Christina. Open AI posting much weaker revenue growth than rival Anthropic during the second quarter. Up next, we'll ask the venture capitalist whether that's a major red flag ahead of OpenAI's potential IPO. Closingville overtime. We'll be right back. Open AI is feeling the pressure after reports that its revenue grew, to $6.7 billion in the second quarter. That's up only 18%, we're from the quarter earlier. Meanwhile, Anthropic more than doubled its revenue to $11.6 billion in the same period.

Anthropic also reported a $65 billion annualized revenue run rate beating OpenAIs $40 billion. And in the last hour, CNBC learned that during an all-hands meeting today, OpenAI, CFO, Sarah Fryer told employees the company will be public in 2027, but could make plans for an earlier IPO than that. Joining us now is Low Tony from Plexo Capital, also is CNBC contributor low. It's great to have you on here.

I mean, look, I think the path from zero to 40 billion by Open AI, if that's what the numbers are looking like right now, would be almost record and stunning in its speed, except for comparison with Anthropics. So how should investors be thinking about this race? Great point. Those are impressive numbers. you know, 6.7 billion in revenue in the second quarter, but operating loss widened to about

12.3 billion, as reports indicate. So very correct, you know, great numbers on the top line, but in comparison with Anthropic reporting a second quarter of 10.9 billion, and even eking out a small operating profit of 559 million, you know, those are great numbers. So it's hard to compare, you know, with Anthropic generating 63 percent. more quarterly revenue and operating profitably. So the comparison against Anthropic is tough. It's also tough against publicly traded companies low that operate in the AI space, AI-related companies.

I mean, the quarter-and-quarter revenue growth rate is slower than that of Coriave in the same period, Palantier, Micron. How do you think investors should think about Open AI, given where it stands right now, as well as, you know, just sort of the quality of their revenue base. They are mostly a consumer-facing company as opposed to an enterprise-facing company like Anthropic. Those are great points. The thing that is most interesting is just really looking at the number of publicly traded companies that have that level of growth. You know, Palantir being one of them, and that seems to be the name that comes up most frequently when trying to find some,

comp to compare. You know, when you look at Palantir, you know, 80% year-over-year growth, impressive numbers, trading, you know, around 50 to 52 times sales. So again, I think, you know, when you look at OpenAI, the valuation, $852 billion, most recently, raising $122 billion, that's about 32 times as annualized second quarter revenue, with Anthropics, $1.2 trillion, where it's been trading in the secondaries is about 18.5. What may be most important to look at for OpenAI is the business model itself and the shift towards enterprise. Obviously, Anthropic went straight to Enterprise,

release Claude Code, and that really accelerated its growth. And when you look most recently at some of the numbers, it appears we may be at an inflection for OpenAI, now that they've released their most recent bundle of models as well as Codex. So it looks like Codex is gaining traction. Enterprise looks like it's getting towards 40% of the revenues. So we may be seeing an inflection for OpenAI as well. You mentioned the operating losses again.

This is as we're hearing the reports for OpenAI. And it really does, I think, remind everybody that all of the revenue that you might project in coming years, as I was saying earlier, you have to actually build the capacity for that. So there's a massive cost associated with the revenue pipeline or the order books or whatever for almost all players in this market. And I guess the question is going to remain whether investors collectively are willing to foot the bill. Right. And when we look at, again, comparable companies in the public market, even it's starting to show strain in names like Alphabet. Now, what Alphabet does have is it has multiple

products with over billions of users and a flywheel that at least can throw off a lot of cash to help finance that. And that's the challenge that we see with Open AI and even Anthropics. So it's very important for them to be able to operate as efficiently as possible and really balance that, you know, capacity by both helping to build it out, maybe with the help of some of their rich things like Nvidia. But then also, you know, how much of that is cashed. Apex versus OPEX in the form of leases, long-term leases. All good points. Lo, great to catch up with you.

Thanks, Lo, Tony. Thanks for having me. Unitary robotics going public in China today. Just like one of their robots, China is kicking you know what when it comes to competition with the U.S. and physical AI. That story's next. Welcome back. It was a blockbuster trading debut for Unitary Robotics in China today and highlights the lead

Chinese physical AI has over the U.S. Eunice, Yunis in Beijing with the details. Eunice. Hey, Melissa, well, the stock ended up higher by 460%, but it actually had run up even more by sixfold from its IPO price of $22. The retail portion was 5,500 times subscribed. Unitary produces humanoid robots that even Elon Musk, a chief rival of Unitary, has described as impressive. The company shipped 500, 5,500 last. year versus Tesla's zero when it comes to Optimus. It's profitable. It's key investors are big tech names, as well as government entities. And it's also in a sector that Beijing considers strategic. In addition to that, the stock market regulators have been saying that they are supportive of IPOs in areas that are targets of industrial policy. So these are robots that are used to engage in AI, the AI itself, which is the software that's considered the brains.

of the machines and then the chips, the power these embodied AI as well. For Unitary, the $900 million that has been able to raise is meant to advance its ability in physical AI by investing more in the brains again, so that embodied AI models, which the company has said that it believes that's going to be a key differentiator to get people to move the, or at least buy more humanoid robots for their home. as opposed to just having these humanoid robots in factories. Morgan Stanley says that it expects pilot projects in China to switch to broader deployment in the second half of this year.

And the government here has been hosting regular events, regular conferences in order to show off robots, as well as get people to test out robots, get the companies to test out the robots. In fact, there are two that are, one is ongoing. Another one is next week. And in fact, one of Unitreys robots, which was just launched this week called Superman, which is kind of a sportier robot, was doing some testing.

There was a viral video of it, kind of getting in a little bit of a trouble. This is a Superman robot that can jump two meters high. It could also run apparently as fast as Usain Bolt, and it ended up crashing a bit. But the point of it is that here in China, one of the reasons why you see such advancement in physical AI is that there is just testing and testing and testing and testing with the hope that at one point they're going to be able to dominate the industry, guys? Yeah, and already, besides Unitary, Unis, and I know you know that Adjabot is another Shanghai-based humanoid robotic company. And combined, they have more than 70% of the global market share in

humanoid robots. So this is definitely an area where China has dominated, but they also benefit from the fact that they get state support, correct? I mean, that this is a priority. of the Beijing government. This is also for defense purposes, these robots. And so there's a lot of there are probably tax breaks as well as various other subsidies. Yeah, absolutely, absolutely. I mean, Unistry isn't seen as a company that gets a ton of direct support, but even Unistry does have some government money. They do have like the state grid in there. They have the, you know, a state energy company in there. So there is the support. Also, we see. see the founder meeting with President Xi Jinping on TV, you know, their robots are highlighted

in a lot of the big television gala. So when you see that to the signaling for a lot of investors here as this is a direction that you want to go. Yeah, for sure. Obviously, in the green light to raise capital, as you said, Eunice, thank you very much. Yeah, the robot crashed, but it really slowed down before it got to the wall. You're such an optimism. No, it could have just glass half full. It could have just been like no skid marks right to the wall. I saw it just collapsed. It fell over. There you go. Rumbled there. All right.

Walmart has been a big underperformer in the Dow this year. So could tomorrow's earnings turn that around? And will it be the next retailer to get a boost from tariff refunds when it reports earnings tomorrow? A top analyst weighs in when closing bell overtime, live from the NASDAQ market site, returns. Welcome back. Target chairs popping after beating on both the top and the bottom lines and raising its full year outlook. Thanks to tariff refunds and strong. stronger than expected same source sales for more on the retail earnings picture and what to expect for Walmart when reports before the bell tomorrow. We're joined now by Kate McShane Goldman Sachs

U.S. retail analyst. Kate, great to have you with us. Just to sort of frame the discussion, you like Walmart over Target, even after this report from Target? The Target report was very good, absolutely. We do have a buy rating on Walmart, a neutral on Target. Target's been a neutral as we have tried to make a call on whether this turnaround that they are embarking upon will be sustainable. And I think the second quarter results that we saw today was a further proof point that things are improving on Target. I think if we were to critique anything out of the print with Target though today is that their discretionary categories, apparel and home particularly, where we've seen a lot of change, a lot of merchandising improvement, a lot of labor entered into

the store still is underperforming the overall store. Apparel was flat in the second quarter and home was flat as well. And then in terms of Walmart and what the kind of key variables you're going to be looking for tomorrow, I know there's a lot of scrutiny on tariff-free funds, how much Walmart's using that to improve things on the price front and then, I guess, overall margins? Yes, I think when it comes to tariff-free funds, we're just starting to learn here how the companies are receiving them and what they're planning to do with them as any kind of investment. However, Walmart has said that they expect around $3 billion in tariff-free funds. We don't quite know the amount that they will see by the end of the second quarter, which

they're reporting tomorrow, but we do know that they do plan to use some of that for price investments. We did see an announcement for price investments by Walmart earlier in July, and that seems to be a place where they are focused on returning value to the customer, which has really always been Walmart's objective. Every year they start with a bucket of cash in which they use to invest in price to give value to that customer, and this incremental $3 billion will allow them to invest in price even further. I love you retail analysts who call it price investment to the consumer's discounts and promotions, and things like that.

And so in this kind of highly promotional environment where there is pressure for price investment, so to speak, even by the Trump administration, which one fares, but you still think Walmart fares better? Does Target suffer because of that? Not necessarily. I mean, I think really the price investment is, I guess, a little bit of a funny term. It is rollbacks. It is discounts. It's, you know, all of the things that the customers are seeing that show value.

And so it's not always the cheapest thing, but it's showing value to the customer. And we do think both Walmart and Target have great value propositions. I think where we talk about these price investments more on the grocery side, that is a bigger business for Walmart. It's 60% of their sales. It's only about 40% for Target. For sure. Yeah. And obviously, we're always going to be alert to hear how the company characterizes the overall path of consumer fortunes and especially the quarter so far. I appreciate you getting a set up for that. Kate, thank you very much.

Kate McShane from Goldman Sachs. We show there Walmart kind of flatlining in terms of stock performance for a while. So it does compressed evaluation going in. You just wonder if it's kind of a risk-on type of a market. Walmart sometimes doesn't necessarily capture a lot of the investment dollars. By the way, don't miss the first on CNBC interview

with Walmart's CFO 10 a.m. on Squawk on the street. All right. See that tomorrow. That does it for overtime tonight. Fast money begins right after this quick break.