Power Lunch - Bessent Press Conference Reaction, Tracking Hormuz Tankers, Data Center Impact on REITs 8/24/26

Episode Date: August 24, 2026

The markets are moving mostly lower on Monday as a drop in key technology stocks overshadows a dip in Treasury yields. Brian Sullivan and Contessa Brewer are joined by Oliver Wyman’s Dan Tannebaum to discuss how the U.S. could effectively sanction Iran without causing a massive surge in global oil prices.  Kpler’s director of commodity strategy, Matt Smith, also joins the show to go through the latest shipping traffic numbers from the Strait of Hormuz and how much oil is actually leaving the Middle East. Later, Ji Zhang, Cohen & Steers Global Real Estate Portfolio Manager, explains the impact that AI data center backlash is having on the real estate sector and adds where she is still seeing opportunity for investors. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Treasury's warning shot to Iran. It's called economic outcast. Welcome to Power Lunch, everybody. I am Brian Sullivan. Alongside Contessa Brewer today, Kelly, is off all this week. Treasury Secretary Scott Besson, unveiling a new round of economic sanctions on and against Iran. And he threatened economic asphyxiation was his exact term. And then the markets just shrugged.

Let's take a look at the Dow Jones right now. It's up 90 points modestly higher. And you can see that the NASDAQ and the S&P are just slag. slightly lower. Let's take a look at oil as well. Right now, $84.79 a barrel off by about two and a half percent on the day. The Russell 2000 is in the red as well, and that yields on the 10-year Treasury down to 4.69 percent, Brian. Yeah, and semiconductors selling off a bit today. Don't worry, we've got your whole markets covered, but we are going to begin this hour with the Treasury's big warning shot. Secretary Scott Besson laying out the Trump administration's plan

to try to squeeze Iran and any country that continues to do business. And as he put it, enables Iranian terror. Amon Javers was in the press conference. Joining us now with more, had a little more time now to sort of dissect it. Think about it, Amon. What are the big takeaways from today? Yeah, Brian, you said it. The name of this operation is Operation Economic Outcast.

But the Treasury, importantly, stopping short of taking any significant action against American trading partners who are also trading with the country of Iran. The Treasury Secretary is saying that this is in effect putting those countries on notice. Here's what he said. We believe that a warning shut and a level set of expectations is appropriate. And if people do not want to meet our expectations, then we expect, and they should expect, that they should, will leave the dollar system. So what the Treasury said in the press release that they put out,

before the press conference is that the U.S. departments of Treasury, State, and war are engaging counterparts around the world to make it clear that the United States expects immediate action. But what the United States will do if that's not followed up on, not really clear here. They say every country will be given a defined timeline to shut down the Iran-related activity. We have identified if they fail to act. Treasury will act. But the Treasury Secretary was asked, for example, about actions he's prepared to take on China. China, without getting into what timeline he expects China to make adjustments in, he said he does expect the Chinese side to follow up on his warning here.

All countries, he said, are subject to this. But without a lot of detail about what kind of action the United States might take, the Treasury Secretary has also asked her, why is it that you're not taking immediate action now on these secondary sanctions against Iran's trading partners? He had an interesting answer. He said, we are giving everyone the opportunity to remedy bad behavior. Why would I want to blow up the global financial system? We believe that it's important to level set and give people a cure period, but they should know that we'll move very quickly and we are serious. So what the Treasury Secretary is saying here is that these kinds of secondary sanctions

would blow up the global financial system. He doesn't want to have to do it, but ultimately he will do it if he's forced to. And so the question here is, what is this message coming out of Washington today? how is that being received in capitals around the world, particularly capitals like Beijing in particular, where leaders sent a message last night saying that they're concerned about this U.S. action, and they're worried about too much economic pressure on them. So some really open questions here, guys, I think, in terms of how this will be received and when it will happen if it happens at all. It's true. All right. Amen, thank you for that.

All right. One big question still remains. Can Washington turn up the pressure on Tehran without also turning up oil prices? Let's bring in sanctions expert Daniel Tannenbaum. He's a partner at Oliver Wyman. Dan, appreciate joining us. Listen, you're a sanctions expert. You know so much about this. We had sanctions on Iran.

Many of those were either done away with or sort of suspended when we got that memorandum of understanding a couple of weeks ago. Sort of that peace deal, if you will, that ended. I assume these sanctions are back on as well as some new sanctions. What do we know? What are we still waiting to learn right now? Brian, it feels a little like when your kid misbehaves and you're going to count the three. I mean, that feels a little like where we're at at the moment.

The sanctions were never lifted. They were going to be not enforced during that. Kind of suspended, right? Don't do it again. Exactly. We're going to give you the benefit of the doubt under that memorandum of understanding. Exactly. But let's be clear.

I mean, there is nothing new in what was announced today. That pressure that we're talking about, that Secretary Besson's talking about, has been on the table through secondary sanctions for years. Now the question is it's time to act. And China is the real linchpin here. They buy 80% of Iran's oil. If President Trump has the relationship he claims to have with President Xi, he should really be making a deal with China to try and offset their purchases of Iranian crude

because that is what's helping to continue to finance Iran right now. To your point, the sanctions existed before this current presidential administration. Also, to your point, it didn't really do much to dissuade buyers, mostly China, maybe some India thrown in there in other countries, from buying Iranian oil. Iran just kind of had to do it in a more surreptitious sales type way. Is there any level of sanction, Dan, that you think that would accurately or, I guess, forcefully prevent Iran from selling oil that would also not spike the price of oil? If the U.S. sanctioned a non-state-owned Chinese bank, assuming one was involved in oil or other trade with Iran, that would be a wake-up call. And I think Secretary Besson alluded in his remarks,

he said by the end of this week, but he said something on a paraphrase, by the end of this week, I wouldn't be surprised to get some kind of major sanction on a major financial firm. I mean, he kind of alluded to it without saying. He did. He did. But let's see it. The U.S. government has been extremely reluctant to go hard on economic sanctions,

not export control, but economic sanctions on China. I say this, having worked on these issues for 22 years, I mean, there's been a number of investigations in Democrat and Republican administrations of Chinese state-owned banks and non-state-owned banks that have violated American sanctions that have never been brought to bear. It's time to actually execute against these if we're serious about trying to curb Iran's financial connections. All right. You're talking about how and why sanctions can work. But Amon brought up that the Treasury Secretary said, in research, response to, okay, well, this is, if you're comparing this to D-Day, D-Day was a surprise. Why aren't you surprising all of these organizations and countries with sanctions today? And he said, why would

I want to blow up the global economic system? His understanding is that if they put into place all of the sanctions they are prepared to do, that there will be economic mayhem. Do you agree with that? I totally agree with that. And that reluctance is good on one hand. But, there's ways to calibrate what would be a meaningful sanctions package, a designation that would show that the U.S. is serious while not totally screwing the global economy. There are ways to do that. And so, giving this time, I mean, look, the president pushed this issue of derisking from Iran back in February when this began. I mean, companies have had, countries have had ample time to really re-evaluing here. It's time to actually put something in place that shows how serious we are.

The 60 designations that came out today were really not that impactful, and they banned remittances and cultural and academic programs. They went at the humans in Iran, not the government. So, like, that isn't going to fix this conflict. Yeah. So one more. You're focused on China. Are there any other players that are supporting Iran right now that become meaningful to the U.S. economy or to the global economy? You've got the Emirates, which the UAE did announce that they were suspending business with Iran, but that's not something that'll happen overnight. Iraq is obviously a unique situation now, have Iranian businesses operating there. There's a nice relationship now between the new PM and President Trump, Turkey, India. There are other countries here that are in

the mix and continue to trade with Iran and trade with the U.S. and haven't heated those warnings. But China, is really the big one out of all of them. All right. So, Dan, we'll continue and wait, I guess, when we hear the government name names. Dan Tannenbaum, who's the expert on sanctions. Appreciate your sharing your wisdom and your expertise with us. All right, the other big Treasury story that we're following today, two senior officials tell CNBC the department could tap its $1 trillion general account to help fund purchases of government bonds, those buybacks. Treasury Secretary Scott Bessent had built that cash pile to about $950 billion.

The news comes after the Treasury surprised markets last week, doubling the size of its bond buybacks. And in fact, the Treasury Secretary was asked about it in the news conference right now, and he said, well, we haven't started yet. Joining us now, Tobin Marcus, head of policy and political strategy at Wolf Research.

Okay, what's the implication if Treasury goes to the general account and starts using that to fund bond buybacks? Thanks for having me. So this doesn't really changed my expectations for that program. When we were writing about how it could look last week based on the initial rollout and based on Treasury Secretary Besson's comments on this

network on Thursday morning, we were clear, there is a lot of firepower here if they're willing to use it. Even if it were funded by new bill issuance, there's a huge ability to increase how much bills they're issuing to ramp up the buyback program. There's nothing stopping them from issuing hundreds of billions of dollars of new bills over the course of the next several months to to fund a big buyback program. So, you know, tapping the TGA is, it shows perhaps some more concrete planning around this, but I don't think it changes my expectations for the potential scale of the program. And it would need to get quite big, I think, to have a meaningful impact. We're seeing the yields retreat just a little bit on the news about this potential for the buyback.

At what point, if Treasury continues down the path, does this start to look like easing and conflict with what the Fed is doing? Yeah, I think it already, in terms of intention, is clearly pushing in that direction. It's very hard to read this entire thing as anything other than an effort to bring down yields and east financial conditions just based on the way it was rolled out ad hoc several weeks after they had formalized their normal buyback program in the QRA in early August. So that's clearly what it's intended for. I do think that runs somewhat at cross-purposes to Fed policy where they're debating whether

or not they need to tighten. you know, our expectation is they'll probably remain on hold, but they may need to tighten at some point, and this sort of is fighting against it. So right now, I think the direct impact of the buyback program just is not very big based on the announced scale. But if they do, like, really intend to ramp it up to hit the evident goal of that program, I think it is rowing somewhat opposite to what the first said. Okay, sort of answer your own question, Tobin, do you think they'll do that? They've got the next operation is on September 9th. So let's say they do something. yields don't move down.

They do something else. Yields don't move down. I mean, they seem to have a pretty big bazooka to coin the phrase that we used in the previous hour. I am not really a believer. So first of all, in terms of how big they would need to go to have a big impact, you know, the Treasury twist moniker,

the Besson has given this, calls back to the Fed's Operation Twist in 2011, which had a similar idea, you know, sort of changing the term structure of outstanding Treasury issuance. That ended up getting to $667 billion, over about 15 months. So for Besson to take, you know, from what's already been announced to get there, you'd need to increase this by a factor of eight and run it through the end of 2027. So it's quite a big

expansion. And the academic literature estimates that the impact of that was about 15 basis points on the tenure. Right. So if you're really trying to bring down the long end, I think you need to do a lot. And even though they do have the capability to go bigger, I'm not sure they're willing to go that big. You know, Besson also just hasn't really been projecting the kind of whatever it takes resolve that you'd want to see if you were trying to move yields. When he was asked about, about the buybacks today, as you alluded to, he said, we'll see on September 9th. So both last Thursday and today, he came out, he communicated about this, and he conspicuously declined to say, we're going to do whatever it takes to get yields down.

So I'm not really a buyer that it's going to have the impact it's intended to have. Okay. The market isn't yet, but we'll see if the market does ultimately move because it gets that point of belief. Tobin Marcus and Wolf Research, Tobin, always appreciate you coming on. Thank you very much. All right. on deck here on Power Lunch. We're going to try to answer the big question in the energy markets

right now. How much oil is actually getting out of the Arabian Gulf? Some ideas you may not be thinking about. Plus, the big trade ahead of Nvidia's earnings in just two days time and your big market setups right now with Ryan Dietrich. We've got a lot more to do. We're back right after this. The S&P has already delivered double-digit gains this year up about 12 percent, but does the rally have more room to run? Carson Group thinks, yes, projecting the index will finish the year as high as 18% up. Ryan Dietrich, chief market strategist at the Carson Group joins us now. Nice to see you, Ryan. All right.

Give me a sense right here. The Dow's holding up today. NASDAX slightly lower, S&P off just a bit. Did you expect a bigger reaction to what Scott Besson had to say? First of all, thanks have me back, and I hope everyone celebrates National Waffle Day out there today. You think about it, no. I don't think we're overly shocked by that. I mean, today it looks like watching paint dry.

I know chips are down a little bit more. I mean, as everyone said, Nvidia earnings coming up, obviously Jackson Hole's coming up. Bottom line, getting a little technical for a second here. As long as we stay above the June 2nd peak, around 7610 on the S&P 500, I think this is constructive, and we're just kind of catching our breath here. All right, let's talk a little bit about the big picture here. Your overweight tech, financials, industrial, health care, where are you seeing opportunity?

Well, those areas, I guess, specifically, and you think about it, like the economy is probably other guests that pointed out. I mean, it looks like it's turning the corner to us. Those regional surveys we saw last week are strong. We know we just had really good earnings season. I know the consumer you can pick fits and starts there, but we've said a lot this year. This is an inflationary growth environment, meaning inflation is going to be a little hot. Yield might be a little bit higher, but the Fed's going to run it hot. And again, we think being equities, overweight equities, underway bonds still make sense.

if you drop it, hit your foot and it hurts, you know, those are the things you want to have in that bucket to diversify your bond portfolio. But one of the other concepts we've talked about is kind of a barbelled approach, right? You don't have to be a hero. You don't have to have just all one thing. We're saying, hey, own some growth, own some value. We manage billions of dollars here at Carson Group. We're probably about 53% growth, 47% value. I feel pretty good with that because there's a lot of areas that very well could take the baton like health care just did, obviously, last week with the incredible moves we saw. All right. I'm looking at a chart that you sent over here that say, And it appears in your chart, you're not seeing anything overly concerning, even if there was a June peak for the S&P 500.

Well, that's correct. And again, you know, we did have a June peak on June 2nd, but we went above that. No year in history has ever peaked in June. So history doesn't repeat itself often rhymes Mark Twain. You know, we'll get a little more technical for a second. You know, just two days ago, 74% of all the components in the S&P 500 were above their 200-day moving average. You go back in history when that's trending higher, that's usually a good sign. Now, eventually, yeah, you might have a peak. We could have some August, September volatility. Everyone knows midterm years.

You historically can see that. But I think, you know, we kind of had that volatility ahead of time this midterm year, and we're still pretty optimistic. We get through this week with Jackson Hole. One more thing on Jackson Hole, don't forget. Last year, Jackson Hole, market liked what I heard because the Fed back then said going to run it hot. And what really took off after Jackson Hole, that's when Gold really, really got going.

So we're looking at maybe another situation like that where the Fed says, hey, we don't think they're going to cut. I mean, we might be a contrary in there. I'm sorry, hike. We don't think they're going to hike. We think they're still going to run it hot. You want to be on equities and maybe some gold and commodities in that situation. Gold has gotten hot again. Bitcoin was up 22 percent last week. Bitcoin, it's like the Bengals. It's like they came out of nowhere all of a sudden they did.

I had to throw that in there, Ryan. I apologize. Thank you. Listen, sort of our top story last few days has been about this bond buying program, not to go back at the top. is do you view, I know you're optimistic, okay, but if the 10 year, and it's a big if, I get it, if the 10 year were to get close or hit 5%, would you change your views? Yeah, we could. I mean, I think so, solely. You know, again, why are yields going higher? When they were doing this, oh, year, year and a half ago, you can make the argument it was because growth was coming. Now the bond market price sniffs out potentially higher inflation, but you look at that

tenure, it hasn't broken out yet, you know, 470 to 480. That's been the peak going back for a couple years now. I know the long end is broken out. But again, if everybody's thinking of like, somebody's in thinking, General Patton, my goodness, everybody understands what yields are doing. We see what the Treasury Secretary wants to do. I wouldn't be so quick to say he doesn't have control on this and to say he couldn't push to longer and lower. And one more thing on that, I know a week ago he said, oh, maybe more like an Operation Twist is what we're dealing with. But after what they said today they're going to do, it is, it looks like a QE. And QE, it is what it is. Go back into history books, it tends to suggest that money flushes in.

money comes into the economy, and it's probably going to continue to push things higher here. As the grandson of somebody in Patton's Third Army, I love the reference. So thank you for that. Very quickly. Let's not forget, in 2023, I think that was three years ago, Contessa, we saw the yield go from 4 to 5% on the 10-year. It was scary. Treasury stepped in, but guess what? The stock market has gone up and up and up since then. So is there a case to be made that even if we get the 5%, I think, to your point, Ryan, it's why we have it. not the absolute number that matters. Exactly. 2020, you got to come out of here a lot so early on here that evening show.

And we talked a lot back then about why things still look good. I mean, listen, historically, higher turning yields, it tends to suggest the economy's doing well. You know, the reality, look at the shape of the yield curve. It's steepening. I mean, that one there, again, is more of a positive, probably why financials and banks are doing well. When you have financials and banks leading,

messages the market says you probably still want to be a net buyer here to continue to a bold market. Hey, Ryan, thanks for joining us on this Monday. Appreciate your time. Well, Jackson Hole, of course. Yeah. A waffle day. Who's taking advantage of that? You know, I can't decide how I feel about National Waffle Day.

Sometimes I love it. Sometimes I don't. Do you see what I just did? Jackson Hole has a... Yeah, I got it. It was like a wordal. Such a dad joke. Jackson Hole has a focus turning to what Fed Chairman Kevin Warsh may say or may not say. Morgan Stanley doesn't expect many new clues on what the Fed will do next.

Instead, the bigger conversation may be about how the Fed should keep up with rapid financial innovation. And Stiefel says even a doveish tone may not be enough to push long-term yields lower. We have full coverage, of course, from Jackson Hole beginning Wednesday. You won't want to miss that. All right, coming up, a key question. How much oil is really getting through the strait of Hormuz? We're going to try to sort through all the conflicting signals and numbers

and then talk about it with Matt Smith of Kipler. That's all next. Stick around. It is perhaps the question the entire global oil and energy market is trying to answer right now. Exactly how many ships and how much oil are getting through the strait of Hormuz. The numbers you hear are probably all over the place, and there was a lot of conflicting information and data coming out on all sides. For example, U.S. Energy Secretary Chris Wright says that last Tuesday, over 15 million barrels of oil and products went through Hormuz. That's not far from a normal pre-war volume.

of about 20 million barrels. But the Iranian bosses say those numbers are wrong, and very little oil is moving through the region. And they or their proxies sometimes cite marine traffic and Kipler satellite data to make their own case. Of course, Iran has billions of dollars of reasons to say anything negative about oil or the American economy. So take it all with some skepticism because there may be things that are happening, which help

explain both sides. All right. It's pretty simplistic, but we made this map for you to try to show you a couple of things, things that we haven't talked a lot about. For example, there are these two islands off the coast of the UAE, the DOS Island Marine Terminal and Zerku Island. They are not only loading ports for the UAE, but they can also be moved to move oil from other countries around. Some of this oil may then come through via U.S. naval escort with their radar and transponders off, meaning they're almost invisible for short periods of time.

That's not all. The UAE also has this huge port of Fugera. That is on the east coast of its peninsula and facing the Gulf of Oman. Not only is that a big loading port via pipeline, but off the coast, tankers here, just in this region, they can do ship-to-ship oil transfers. The idea is that oil comes in via pipeline, then leaves and gets put onto other ships,

which sent steam to their respective ports, but never go through the strait of Hormuz. This is just one part of the case that some would make that more oil may be flowing through than some think and that that camp they're in. We understand, folks, this is all complicated. It is often confusing information, but let's be clear. It's also a complicated and confusing time

and region of the world. The bottom line is that the global oil market are clearly in deficit. 20 million barrels of products, they are not getting through Hormuz, maybe far from it. But the oil market is going to move a lot in either direction. If it believes 15 million barrels per day are getting out, however they're getting out, islands, ship to ship, pipeline, whatever, or just 5 million barrels a day getting out. That difference can move markets by billions or tens of billions of markets or dollars per day. Matt Smith of Kipler tracks us for a living and knows as much as anyone and joins us now, Matt.

All right, you heard what I had to say. What are you seeing? What are you hearing? What do you think is the real situation around Hormuz right now? Well, Brian, it's a patchwork quilt to get these numbers together. And what I mean by that is that you outlined a number of these different methods. You have some crude and products that will be going through the southern corridor, the Omani route there. You have some that are going through dark and just leaving.

There are some that are shuttling through the corridor there. They are then getting to tankers. They're outside in the Gulf of Oman. They are doing ship-to-ship transfers and then leaving from there. So that's a really developing trend in that we could see much higher volumes leaving from there in the coming months because you're having tankers that are taking the risk to be taking it through the strength. trade of Hormuz. But then these, in terms of the other patchwork pieces, right, we have the, still the Iranian route. You are seeing some volumes going through there. It's a good number of

tankers. It's a low volume. It's smaller tankers, that type of thing. So you kind of add all that together. And then you have the added dimension in that the satellite imagery is being delayed here. And so once we've managed to track all these pieces, we are then having to look at the imagery and try and reconcile more vessels there. And then there's the other piece in, and, and, Finally, just in terms of Fujaira there, as you mentioned, you have the pipeline that runs about two million barrels a day. That's able to avoid the straight of Hormuz. And then just the last, last piece is what goes across on the East-West pipeline, across to the Red Sea there to load Yambu.

Challenge with that is even today, we have seen at Yambu a tanker being struck there by the Houthis. And so this remains a very volatile situation. You can see that in the day-to-day numbers that are coming through. But the key point to bear in mind here, Brian, is that we are not at pre-conflict levels here. And prices are telling us. Prices are the things to watch here. You know, we've had a lot of thrown at us over the last few days. And yet, W2A is hanging around 85.

Brent is well above 90s. So watch that price action as much as anything rather than the minutiaeer of the day-to-day-to-day-to-day. And I want to say that you guys have an impossible job right now. And you and your team at Kipler, Marine Traffic, are doing a great job. We've been calling attention to the charge. How about this? Is it is the one thing we can be certain of, Matt, is that prices are up, right? Because if you're doing ship-to-ship transfers or if I'm putting oil from a ship to a pipeline back to a ship, I know one thing. It's going to be expensive. That's part of it, Brian, but it's just we're not kind of back to that pre-conflict levels on a consistent basis.

And so we are still here, nay, coming up to the six months of being in this conflict and we don't see barrels flowing freely. That is the problem here. You know we've got the problem on the product side of things because refinery runs have been down for so long. We can see that coming through in diesel prices, right? They're double what they are for a barrel of oil. It's really just on the WTI, the Brent side of things, where we have been playing catch-up as the situation refuses to fully get resolved. And by all means, the US administration is really giving it its best shot here to try and get those volumes out. but the prices are just telling us we're continuing to struggle to get back to normalcy here.

Yeah, so given the price, what's the market betting on, that they're going to find supply somewhere else, that enforcement's going to be weak? What do you think is the reason behind oil being lower, even after these secondary announcements about the asphyxiation of sanctions? Well, sure. I think the concern contests about Iran is not really there on the shipping side of things, in that we've got the blockade in place. Iran barrels are already being strangled off of the market, right? They're not getting out. And so they're really struggling to even load in the Middle East Gulf there. So there's that side of things here. But just in terms of the increase in your price, we're into the sixth month here.

There has been this expectation. We've been told there's going to be resolution. There's going to be a compromise. There's going to be a ceasefire. There's going to be a new memorandum of understanding, etc. And it just hasn't happened. And so the markets from an oil perspective, it just, continuing to price in these lack of barrels being available while the product market is particularly these are. Matt, sorry to jump in. Are you able to track, and I saw Kipler put out data, 74 crosses, are you able to track, you know, sort of, you know, transponder off crossings or shadowfleet crossings or ships that are escorted by the U.S. Navy? Are those things you can ultimately track, maybe not at the time to the Hormuz, but rather later on when they get to whatever port

they're going to? Well, there's two ways. So, so one is retrospectively, with the satellite imagery, yes. The other piece is that they are going through with the transponders switched off, but then they are loading in the Gulf of Oman, and we are able to capture that loading, and off they go on their way. And so we are being able to see those barrels

and may just not get in there real time from the satellite imagery. Matt, it's great to talk to you. Thank you very much. Appreciate your expertise. NVIDIA shares are lower following a new report on AI-related price hikes, but the company's also making a multi-billion dollar bet.

We're going to break it down next. Vida shares lower today on pace for their seventh straight decline, which would be the longest losing streak since September 2022. Investors, of course, are looking ahead to Wednesday's second quarter report where earnings are expected to grow 100% year over year. Today, the company announced full production of its GROC 3. Chip, Christina Parts of Nevelas, joins us now. What are you watching on the NVIDIA front? Okay, let's start with the GROC part because most people don't even know, like, the language is just confusing. And VINVIDIA is actually putting its GROC 3 LPX into full production.

What that means is just a piece that slots into its racks with the GPUs, with the CPUs, to make AI respond so much faster, especially with open weight models, the kind that anyone can download and customize freely. And that speed lane has been the territory of Cerebris. Another chip that company that just went public this year, they built their chip around fast inference. The stock has been under pressure for weeks. You can see it's down about 4% today as well. down only two, but Cerebra's getting hit harder. NVIDIA in general is also making the same bet on the software side. So days ago, it agreed to pay $6 billion to license pool sides technology,

hire more than 100 engineers to build a powerful open weight model of its own. And this according to the Wall Street Journal, Nvidia hasn't confirmed yet. But the goal, why open weight if they're focusing on hardware and their CUDA software? An American open model would rival China's open models, which are dominating right now. cheaper, faster open AI means more usage, more usage means, of course, more demand for Nvidia chips. So that's literally them attacking the entire stack.

Invidia doesn't necessarily need to make money on that top layer, more profit from that, but it profits on everything that runs underneath them. Okay, what about these reports that Nvidia is going to go to its best and biggest customers and raise prices? What's that due to the bottom line? Well, it helps gross margins. And so the reason they're doing that is this giant concern that the gross margins would dip below 75%, which is still absolutely incredible for a company.

If you look at just like facts set for the Q3, so right now we're reporting for Q2, for Q3, expecting it to be around 74.8%. That's coming down. So here's an opportunity, and Vida is getting ahead of the curve. They're reportedly going to raise prices for their Blackwell Rubin systems

anywhere between 15 and 17%. And I mentioned the gross sale, that's really important for this earnings report. You mentioned the 100% growth. And it's like nobody shrugs their shoulders. I'm like, oh, who cares? Everybody's expecting this already. So that's why they're focusing on.

on other smaller details like the circular financing, gross margins. And the price part of it, they're not, it's not like the big customers have anywhere else to go, right? It's not, I mean, you got them over a barrel. Okay, I should be recovering. Why am I not? Is that a question or a statement? You should be covering chips? I do cover, I cover chips.

You do. No, come on. That joke is so old. But for the audience is listening, again, for earnings, we want to focus on gross margins. We want to focus on any type of circular financing stuff and then the ramp of the Rubin platform, which was in the second half of this year. So this is the latest and greatest.

Isn't deep thinking Kimmy 3 going to kill all this stuff anyway? Well, that's the reason why Invidia is getting in the open weight world with their Enochron and they're working on the raising prices, but margins may get compressed? Well, it won't get compressed at this point, right? Going from 75 to 74.8%. They've promised roughly mid-70s for a while. The concern is if it does go to 73, you'll definitely see a sell-off in the stock or even 74%.

But that's why they're doing all this. What's the key thing Wednesday night for, you know, I'll be hosting fast money on Wednesday night. Well, then you and I will be sitting across from each other. I know. I'm trying to get ahead of it because I've got to wrangle the other crew, too. I'll make sure to bring some tips here. Guy Dami's going to be there. Tim? Could have a body arm.

Big sigh. And what? And we digress. Chain mail. Here we go. Christina, I'm just kidding. I can, you do cover Nvidia very, very well. I'm just glad I'm not the only one in trouble at this point.

All right, Christina. You didn't have it of Kate Rooney with a CNBC news update. Hey, Brian. Well, we'll start with Congo's Ebola outbreak now. It's recorded one of its deadliest weeks yet with 317 deaths in just seven days. Government data does show over 5,500 cases right now, over 2,600 deaths overall as that virus spreads at unprecedented speed. health workers face rebel threats. They've got bad roads and unpaid staff.

More than 16,000 vaccine doses have arrived through their, though, excuse me, their effectiveness against this rare strain remains uncertain. Meanwhile, thousands remain without power in Gary, Indiana. It's nearly two weeks after a powerful storm tore through that region. More than 10,000 outages were reported as of Monday morning, Mayor Eddie Melton, called the delay unacceptable, saying 12 days is too long for families. businesses to wait. Utility Nipsco says it's now working to restore service by the end of Tuesday. And finally, Prince Harry is leaving the board of conservation nonprofit African parks. After a

decade of service, the group calls the move part of a governance refresh effective September 30th. His departure does come four months after an indigenous rights group urged him to resign over alleged abuses by Park Rangers. Contessa. All right, Kate, thanks for the news. Appreciate that. Up next, the data center backlash goes national. What does it mean for REITs next? As more and more states launch AI data center moratoriums, tech investors are grappling with growing backlash across the country. What impact does that have on the real estate sector joining us now on set? To give us her take is Gizong, global real estate portfolio manager at Cohen and Steers. It's great to have you, G. Okay, let's take Texas, for instance.

You've got leaders, even at the local level, that are looking at permitting and the, and the, what, the the regulations that are necessary to build anything, and they're just dragging their feet. So is this the new headwind that investors have to build into any investment in data centers? That's exactly right, Contest it. The reality is when we look at the data center demand, and we just spend some time talking about Navidia and revenues growing 100%. We know the demand is there. But when you look at the data center development and the AI buildout,

especially when you look at the market that already have moratorium today and are talking about moratorium, that is a real risk to data center development, whether it's the timeline or just the ability to whether or not they can even get power. So when we look at our portfolios and our investments, we are very much focused on portfolios and companies that are operating in those specific markets, primary market that have demand drivers, very sustainable demand drivers, and, by the way, contractual power. And that's really important. Having that visibility to power becomes even more valuable today. The CSRE, your real estate active ETF, is up 13% or so year to date. It has digital realty trust, Equinix, GDS holdings in China. What haircut should you attribute now to these holdings because of the backlash that's happening across the country?

That's a great question. And the way we think about the haircut and the way we think about risk is how certain is that power allocation. So the good thing is when we look at our investments in the listed re universe, the digital realty, the equinex of the world, they actually have the majority of their pipeline that has contractual power. But if you look at some of the private players out there that have massive development pipelines in Texas and in some of these markets that are really front and center when you think about the moratoriums, that haircut and that timeline and the ability to even get it done is real. And I think that is going to be a real But you're tying it still to power availability, not political permission?

I think in a way they are hand in hand. I do think that when there is contractual power with the utility companies, the probability of that getting done is significantly higher. But with that said, we are monitoring the permitting the local jurisdiction and whether or not they have the ability to get that done. And there are certain times and scenarios where things could get tied up in court. There could be scenarios where timelines get much more prolonged. So I do think that is a risk, but the bigger the development pipeline, the bigger the risk is. We haven't seen any huge data centers get canceled yet. I assume if that were to happen, you might change your tune. There are some pretty big shorts. Jim Chanos, negative on Equinex and Digital Realty. Doesn't like the balance sheet. Forget

about the political stuff. You're obviously not worried about their balance sheet. How come? Well, what I would say is there's a big bifurcation between the balance sheets for the companies and the listed market versus some of the private developers out there. So if you look at Equinix, for example, their net debt to EBITDA is just over three times, digital realties just over five times. So that is very healthy relative to what we're seeing out there. With that said, right now the financing availability is still there. Developers are still able to take pretty high loan to cost at pretty attractive interest rates. But if you think about everything that's going on in the market today with concerns about sort of just credit overall within the AI ecosystem, those private highly lever players is where the risk is.

Gee, thank you so much for coming into the studio. Appreciate that. Chi Zhang is with Cohen and Steers Global Real Estate portfolio. All right, coming up, travel stocks are taking off. We're going to show you some of the big winners. That's next. Well, we got the grass. Welcome back, everybody.

Three travel stocks have stored over the last six months. Airbnb shut up roughly 50%. Expedia, more than 60%. TimeShare company Marriott Vacations has doubled in six months. All three companies are using technology to get more. out of eager travelers. Now, Airbnb is applying AI across the business. From search and listing to customer service,

its AI assistant now resolves nearly 45% of issues without a human helping cut support costs per booking 16%. Their revenue grew 17% last quarter. Expedia, meanwhile, revenue at 14%. It's pushing AI across its business too. Trip planning, booking, service. It just bought AI trip planner Leila while it's fast growing B-to-B business saw revenue jump 23% in the second quarter.

And then you've got Marriott vacations, focusing on personalization with a new data-driven system that matches timeshare customers most likely to buy with the salesperson most likely to close them. You know, those presentations where they're like, you should buy this timeshare. Well, the company says it's doing roughly the same number of sales presentations, but significantly higher rates of success. Plus, they've got these new loyalty tiers that are encouraging existing owners to upgrade. And they saw that owner sales actually surged 41% in the most recent quarter.

Look at the results here. Not necessarily more travelers for these companies, but smarter ways to turn travel intent into more revenue. Now, here's the interesting... What does that mean? You're using AI to match up sales people. So, like, let's see, you've got somebody who's a potential buyer who's from Michigan. It's not even AI. And so you put them with a salesperson from the UP and they're like, oh, yeah, you want to buy up there.

It could just be an old-fashioned algorithm that matches buyers and the salespeople. But listen, Airbnb says, we know that if we can capture more of your information about what you like and where you book and who you're booking with, we can offer you experiences and destinations that are our better match. and by the way, and then upsell you. The question is, at what point does it get so good that it's a little creepy? Well, it's creepy already because it's like, I don't want somebody to match me the destination they think I'd want to go to because I know where I want to go. I want somebody to match me the destination I never thought of because we got to go. We've got to go. We're back after this.