Power Lunch - Stocks Slide Further on Concerns Iran War Will Drag On 3/26/26

Episode Date: March 26, 2026

Strategy's Michael Saylor joins the show to discuss bitcoin and digital credit. Frank Holland interviews billionaire investor Robert Smith. And former President Biden advisor Amos Hochstein joins the show to discuss geopolitics. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Stocks under a bit of pressure as the Iran War drags on. Welcome to Power Lunch, everybody. I am Brian Kelly is out today. Here is where the markets and your money stand at this 2 o'clock Eastern time hour. The Dow, S&B NASDAQ, they are down a bit today, about 1% on the Dow. Currently, though, right at session lows, two hours to go. Let's see how it plays out. What is rallying today?

Well, it's energy. The sector with another record high crude oil up again today. It's now up nearly 50% in a month. And we have got a huge hour ahead for you. Listen to this lineup. Energy security expert Amos Hoxstein, market guru Ed Yardini, Michael Saylor, who's the founder and executive chair of strategy, and Robert Smith, founder, chair, and CEO, Vista Equity Partners.

They're all on this one-hour program every day. We bring you a great power lunch today, maybe a little bit special. All right. Let's kick it off and begin with the markets, which are still under pressure as oil jumps, and President Trump warns Iran negotiators to, quote, get serious. The market uncertainty also weighing on the Fed's future policy moves. Look at this.

The December Fed contract now showing a 37% chance of a rate hike. Yes, a rate increase. There's a 59% chance of no change to rates and just a slight, three and a half or so percent chance of a rate cut. So if some stocks have been rallying on optimism of a rate cut and we don't get one, then what happens? We don't know. But let's ask somebody who does. That is Ed Yardinney.

He is the president of Yardinney Research. He is on set. We're glad to have you, Ed. Thank you very much. So what? Let's see we don't get a hike or a cut. We get the same level of Fed funds rates all year. What happens that way?

None and done is what we're at. None and done. None and done. I like that. Yeah, I think that's what we're going to see this year. Look, the economy has been remarkably resilient since the beginning of the decade. I think it's getting stress tested again once more. This time, of course, with this war in the Middle East, with oil prices going up. I think the economy is going to weather the storm.

I don't think we're going to go into recession, though I think the risks of that are increasing. But I think the economy will make it through. I think the Fed is between Iran and a hard place. You know, I don't think they can do anything. They don't know, you know, and by the way, Powell, when he gave his press conference, I guess it was a week ago, he mentioned the words, some combination of we don't know about 20 times. We don't know. We don't know.

And if you say you know, if anybody out there says they know exactly what's going to happen. They go to Polly Markets. Yeah, they should go to Polly Market, and maybe you should ask them where they're time machine is because they've come back from the future because I don't know anybody else that knows exactly what's going to happen. And given that environment, Ed, how do we invest? Well, I think you just stay put. I mean, I think it's, I don't know if it's too late to panic because people may panic over the weekend depending on how things unfold with Iran. But I would stay put. I don't think you can game this very well. Is there a point at which we don't stay put

because it drags on. And historically, the stock market has not reacted well to energy shocks. It has not acted well. As a matter of fact, we all remember the 1970s, the stagnationary period. There were two oil shocks back then. It was a dead period, a dead decade for the stock market. So that's not out of the realm of possibilities now that we've got an oil shock. And we had an oil shock at the beginning of the decade back.

in 2022 when Russia invaded Ukraine. So we are going to get something that looks like a twin peak inflation situation. But I think the difference is going to be the resilience of the consumer, the economy, capital spending. I have been, I have to say, and I've been doing this long enough to kind of give my sideways opinion. I am a little shocked at how resilient most of the stock market has been. I mean, I know we're down a couple percent from the highs, but we're really, but we're, rallied huge into it. Are you surprised at how resilient we've been? I'm not, well, I'm not surprised with the resilience of the economy so far. It's still to be tested. And therefore, I'm not

that surprised by the market because the other thing that's happening here is apparently industry analysts haven't gotten the memo that there's a war going on and it might cause a recession because earnings expectations have actually gone up. The analyst's expectations for the Are those wrong? Is that wrong to do that? Energy while critical is the lowest percentage of the GDP input cost than it's been ever in American history. It's not going to make a big difference. What is making a big difference is that we continue to see that earnings expectations are rising in technology.

There's a lot of controversy about technology these days, but the analysts collectively keep raising their estimates for that sector. But yet there has been a drawdown in the MAG 7, a pretty good drawdown. And it would have been more if it hadn't been for the analysts raising their earnings. In other words, the valuation multiple of the market, overall market, with the magnificent seven has gone down from about 22 to 20. It would have been more than that if earnings estimates hadn't been right. Do you think that drawdown in the MAG 7 is related to the war? I don't see what the connection is other than maybe net gas as an input cost to AI.

It's a whole different war on that. We talked about it before when I was here. That's kind of the game of thrones. For a long time, there were seven independent kingdoms. surrounded by moats, happy with what they were doing, really weren't competing with each other. AI suddenly created an AI arms race, if you will, and now they're all competing with each other. They're spending a lot of money. So the game has changed.

It's still the Game of Thrones, but it's more competitive, let's put out there. And people, I don't know if people at home realize this. Microsoft is 33% from its 52-week high. So Microsoft, which was one of, the biggest, it was for a time the biggest company of the world, has lost one third of its investment value in five months. Yeah, it's amazing. And this may all just be a demonstration of the fact that AI could turn out to be one of the most disruptive technologies of all

times, because the technology industry was pretty well set. And then all of a sudden, AI comes along. And almost every other day, we get some announcement from Anthropic from Open AI that they've come up with some new element to their models that threaten... But you're still bullish. You're in target 7,700. Yeah, because I think earnings are going to be... Continue to be surprisingly strong. I think the economy is going to remain resilient in the face of what we're experiencing now. Can we hit 7,700 on the S&P, your target, if Google is 20% from its 52-EKai, which it is right now?

I don't want to pick on just Microsoft. Yeah, yeah, no. In early December, I made the call that I thought that the market was finally going to widen out, that the breadth was going to increase, and that you should overweight the 493, which is, you know, so you've got the Magnificent Seven, and I call them the impressive 493, which really means an equal weight S&P 500 strategy as opposed to a market weight. All right, so, folks, we want to hear from you. You can scan the QR code, which you're about to see, boom, on your screen right now.

Vote in today's power poll. Here's the power poll. It's a very simple question. Will the Federal Reserve raise rates, hike rates, this year? We'll reveal the full results at the end of the show. You can scan the QR code to vote. Will the Fed, Ed Yardini, raise rates this year? I don't think they'll go Volker on us.

You know, Paul Volker. Yes, yes. 1980, 81, raising boom, boom, boom. We had the stagflation of the 1970s, and the Fed does have this dual mandate, but back then, Paul Volker said, you know what, I'm going to just slam on the brakes here, let interest rates go to whatever level it takes to break the back of inflation. I don't think we're going to do that the stuff. Very quickly, I'm about to do the bond report where I'm going to show our viewers that,

and, by the way, if you want to throw the bond report up now, because I'll ask it about it, we're 4-4 on a 10-year yield. We were supposed to be under 4, I guess, supposed to be. There we go. They ran the animation, the Bonnerport. This is it with Ed Yardini. Great guest.

Is there a level on the 10-year yield? 4-5, 475, 5% that kills the stock market, and Ed Yardini has to bring down his target? Well, yeah, 5% would get spooky again, but we had that a couple of years ago, and we stayed there for about a nanosecond. I mean, suddenly buyers came out of the woodwork. I mean, the bond yield, U.S. Treasury are still viewed as a safe haven, believe it or not. Remember, over the past year, everybody's been writing off the idea of the United States having any exceptionalism and being a safe haven. Well, suddenly we're back to the dollar firming up, and I think money is coming into the fixed income markets.

We know that. We have data on that. And there's also the digital aspect to that, but we're not going to get that with you, Ed Yardine. We'll get that with our guests coming up, Michael Saylor, in a minute. Ed Yardinni, really appreciate your views. Thank you for coming out to New Jersey. Appreciate that, Ed. All right. So again, folks, in a few minutes, another big interview. Strategies, Michael Saylor. Coming up in a few minutes, we're going to talk about digital currency, digital credit. A new 11.5% preferred stock, STRC, called Stretch, that he's got. He's going to talk about that and much more.

But up next, former Biden senior advisor and now TWG managing partner, Amos Hochstein, will join us with his. his latest take on the developments in Iran. What exactly is the exit ramp here? Is there an exit ramp? We'll talk about it. Next. All right, welcome back. President Trump has given a stern warning to Iran,

get serious about a peace deal, or face significant consequences. Here's what the president said earlier today at the White House. They are begging to make a deal. We'll see if we can make the right deal. And they make the right deal, then the straight will open up, Hormuz Strait will open up. But that differs from what whomever is speaking for Iran is saying.

And right now, we're not even really sure if Iran has a functioning government, or at least one government. Senior Washington correspondent Amon Javr is joining us live for the White House. Amin, you heard the president say, they are begging to make a deal. But at this point, do we know who they is? Who's in charge of Iran? Yeah, we don't know that, Brian, but we do know that the American side has been testing the people that they're talking to. You heard the president earlier today say that they sort of arranged for a test of legitimacy with the Iranians that they're talking to by seeing if they could let some ships through the Strait of Hormuz. He said the Iranians did give the U.S. a present of allowing eight oil tankers through the strait, and that convinced the American side that they were dealing with people in Iran who,

did control the strait and could suspend military operations there on behalf of the government of Iran. So at least the U.S. side feels that the people that are talking to in Iran have some authority. And those people apparently have been talking to Reuters, Brian, because what we're seeing earlier today is coverage from Reuters suggesting they've spoken to a senior Iranian official who's pouring some cold water on these talks so far. That official's saying there's no arrangement for negotiation so far, no plan for talks that's realistic right now. The official also saying that the U.S. proposal that was conveyed to them lacks the minimum requirement for success. But sort of one optimistic note in this, the Iranian official saying diplomacy has not stopped.

A path forward could still be found. All of this, we were told by Steve Whitkoff in the White House today during the cabinet meeting, is being run through Pakistani intermediaries. So the two sides don't appear to be necessarily talking directly to each other just now, but talking through intermediaries in Pakistan. So it's sort of a whisper down the lane version of direct diplomatic talks. Still, though, the president said he was optimistic. He said he thought the impact on the stock market of this war and the impact on oil prices could have been worse.

Here's what he said. I thought, frankly, I thought the oil prices would go up more. And I thought the stock market would go down more. Hasn't been nearly as severe as I thought. So, Brian, the question is, by saying that, is that an individual? indication that the president feels he's got a little bit more economic political capital, so to speak, that is that because the impact on the U.S. economy hasn't been as severe as he expected, does that mean that he has more running room to continue military operations in Iran before that impact

is too severe for the American voting public? All right, all good questions. Amon Javis at the White House, let's try to get a few answers. Amin, thank you very much. Let's tackle another big question that is kind of hanging over the market right now. How long were this war drag on? And what is a real? real possible off ramp. Well, your next guest has been right at the center of high-stakes diplomacy in the region and will offer some much-needed clarity. Joining us now is Amos Haxtene. He is managing partner at TWG Global, former senior Biden advisor who negotiated directly with Middle Eastern leaders on some of these most sensitive issues. So almost, I'm going to ask you

the same question I just went to Aeman on. Do we know who's in charge of Iran right now? Brian, I think we do know who the people calling the shots are. I'm not saying that I do, but I think the administration does. And we have significant evidence that the Iranian regime is weakened and is hobbling, but it is in charge. They're able to execute military operations. They're able to give orders. They're able to meet, discuss strategy. And so it may be that it's run by more of a committee than a person, because you know, Iran is a system that has multiple cultures of war. So it doesn't have to be that there's a Supreme Leader. It could be that they are meeting and discussing and reaching agreements, and it may not always take a long,

you know, it won't be a quick decision. But I do think that there's people in charge that can cut a deal. I'm not sure they want to at the moment. Is it possible? And I know we're speculating here, okay, but is it possible that, because what happens is the President Trump will say he spoke to Iran and then Iran will deny it. Now, I'm not going to believe anything Iran says to be perfectly direct. I don't know who they are, what their goals are. But is it possible also that people are speaking with different people, each who kind of purport to be in charge of the country?

Is that possible? It's possible. But I do think the Iranians are, they seem, the first couple of weeks, I think that was more believable than now. I think right now there is the fact that the IRGC is clearly in charge militarily. They've gained a lot of power with the fact that the son of the former Supreme Leader, the now dead one, is in, he's at least in on written on a piece of paper. He is the leader.

Kalibov, who was reported that the administration was talking to, the speaker of the parliament, comes from the IRGC ranks. So there's a lot of closeness there. So I don't think that's the big issue. I think the president, what he says, about how he thought the markets would react is the bigger issue. Look, on Monday morning, when the markets were going to react poorly, the president said he gave himself five days, which of course is to the end of the market on Friday.

But I think that there's a distinction that we're not making, and it goes to your question about the length, the duration of this conflict. The market is pricing in, I believe, risk, because that's what the market knows how to do, because we actually haven't had real disruption in decades. So it's, you know, Russia invades Ukraine, and there's a risk of losing three to five million barrels. We had a short disruption from, or a small one from Libya back in 2011. But really, other than that, we've had risk. So they're pricing risk.

We have real disruption right now. It's a greatest surprise shock in modern energy history. Yes or no? Right. Yeah, absolutely. Because it's oil, it's gas, it's jet fuel. It's diesel, it's helium gases, it's butane, it's polyethylene. The things that make, you know, yesterday I heard that hospital gloves that are made mostly

in Malaysia and a couple of other suppliers are now having to stop full operation. There's no more manufacturing because they have the need of product. Jet fuel is at a terrible crunch right now. There are airports around the world that are saying they're running out, not within weeks, but within days running out of jet fuel. So let's talk. I want to go to that. I want to go to that because you're going to see shortages beginning in the countries that can't afford to buy the product.

They're going to get outbid by others. Then that's going to trickle up the supply chain. Countries that are rich can keep affording to buy stuff as long as it's available to be bought. Correct? I'm looking at a country like a New Zealand. They closed their last oil refinery in 2022. They import everything. Are there real chances in major economies?

not New Zealand, but South Korea, where there are shortages soon? I'm probably sure percent. I think we're days away from that because we're already seeing those shortages, physical shortage. This is a physical market shortage, not a risk of shortage. And so Malaysia, Indonesia, Australia, New Zealand, Vietnam, Bangladesh, these are Sri Lanka, countries that are disrupting their economies on purpose already. Sri Lanka has gone to a four-day-a-week work week. because they're trying to conserve energy. There are airlines around the world that are going to stop flying on certain days in order to reduce their exposure to costs. And because you can't

pass these on to the passengers, because you're going to have demand destruction. Now, as you said, this will go to first the poorest countries, then it'll go to middle income, and eventually to everybody else. But the market is not understanding also that even when we open up again after the war, it will take time for all of this to sort of sort itself out. And the longer you're offline, the longer it takes to come back. And I don't see any signs right now that we are going to end this conflict in the coming days. We are now, if you think about it, this Saturday will be at four weeks, finished four weeks. And the president originally said four to six weeks. I think we're probably going towards that six weeks. But that's a lot of time. Yeah. I've been trying. I've been trying

almost to identify the last ship that loaded with Qatar Energy's natural gas. I've narrowed it down to two ships that got out. I'm trying to figure out the last ship, and I'm bringing that up, because that ship, whichever one of the two it is, is about to arrive in Asia, and after that, there's nothing. Once that ship offloads, there is no ship behind it. Brian, it's more than that. It's no ship until the war is over plus two to three months after, because it's it's It will take two months to restart the Katari LNG, and it can only restart it to 80% at max because of the damage. So it will take two months.

So now you're talking about a much longer period. The ships that loaded LNG that are waiting to pass, remember, this is liquefied natural gas. When you take gas and make it a liquid, it starts evaporating. So the longer you're in that ship, the more evaporation is also happening. So this is a far greater crisis. then we understand because the market hasn't priced it in. Now, what's the danger with that? When markets don't price in accordingly and accurately based on the physical market,

they can do it for a while because they don't want to be caught on a short position when the president ends the war suddenly. But when they're wrong and it matches up, then you don't have a slow rise in price or slow decline in the market. That's when you get crashes. People always see the signs in hindsight. Yeah. I'm giving you the signs now. The signs now are the market, the economy, including the U.S. economy, is in more peril because of this event that we're in right now, especially since this

could actually last significantly longer than people imagine. Almost Hoxton. Could have you on every day because I want your experience and your knowledge about this tenuous situation. Got to go now, but we'll get you back on soon. Almost thank you very much. It's good to see you. All right. So, folks, speaking of, if you want to stay ahead of the fast-moving world of energy, we've got a new newsletter. It's going to be launching here in a couple of weeks.

You can scan the QR code on your screen. It's called Power Insider. I'm going to be writing it every week. It's going to launch in a couple of weeks. We're going to meet some new insiders in energy, get some investment ideas. Talk about what's the big stories, energy as well. Scan the QR code. Sign up today.

All right, coming up. Is gold a goner? Or does gold still have run? room to shine. It's your market navigator, and Dom Chu's got it. Next. All right, welcome back to Power Lunch. I'm here, Dominic Chu, with your market navigator, because markets are continuing to see-saw due to the Iran war and other factors. But some traders are looking for those safe haven assets that could be getting a fit maybe. So could gold be one of those triggers following that record run we saw earlier this year. Our next guest says,

no, he's actually reducing exposure to the metals and says that the trade has already played out. for the case is Todd Gordon, founder of Inside Edge Capital. He's also a CNBC contributor. So right now, gold, yes, has been a hot trade so far. But ever since the war began, it's acted more like a risk asset, not a safe haven. What does that tell you? And what are you doing about it? Hey, Dom. Yeah, exactly right. You know, I think a lot of people don't even realize before the conflict, gold was kind of correlated to the risk trade. So the risk trade came off. Gold is coming off. And it has to do with a lot with rates, with the elevated, expectations of inflation with embedded energy. The Fed rate cut is off. I looked at it, Dom. We're not expecting a rate cut until two Halloween's from now. So what's happening is rates are moving up. And the concept here is real rates. Nominal rates moving up faster than expected inflation, takes the shine off gold, also takes the shine off stocks. So I've been reducing it. And a lot of people at home would think, why wouldn't gold be a safe haven now? It has to do with interest rates.

All right. So if that gold trade, that's the primary kind of movement there, but there are derivative trades on top of that. For you about futures and options, what about the gold miners? They're very levered to gold prices. Absolutely. I think the gold miners the last year, the GDX is up 180%. So one is really overbought. I cut from the holdings AU, which is Engel Gold, AEM.

I caught Kinross. I'm still holding some. But again, I mean, if rates still keep going up with the embedded inflation and energy, which some is risk premium, but some is kind of a rethink of the structural demand for fossil fuels will probably be here longer than we think. And plus, there's a lot of good fundamentals in the energy stocks. So we're increasing our holdings and energy stocks while reducing our holdings in the miners. Gold, silver, even some copper, though. We still do hold some copper miners as well. All right. So the precious metals, Todd, not as much of a safe haven as they've

been in the past. Thank you very much. We'll see you again soon on the Navigator here. Brian, I'm going to send these back. Tom. All right, Dom. Thank you very much. All right, on deck. key is one of the most important people to crypto in the world, and he is here on set. Michael Saylor of Strategy. Next. Is the biggest Bitcoin Treasury company in the world, and it's been on a Bitcoin buying spree, amassing a whopping 45,000 coins over just the past 30 days, the fastest pace of accumulation since April of last year.

That, according to data analytics company, CryptoQuant. In order to double down on its wager on crypto, the company laying out a plan to issue 42 billion in common and preferred shares with four trading days left in March. Strategy is on track. Snap an eight-month losing streak, but the stock still down about 70 percent from its 52-week high. It's volatile like Bitcoin. Bitcoin, by the way, in the same period, down about 40 percent. Joining us now for an exclusive interview on set, Michael Saylor, co-founder and executive chair of strategy. Really appreciate you coming out to New Jersey. Michael, thank you. Happy to be here. Okay. This is, so the, the first of, so the

volatility, crypto has fallen over 50%, I think minimum of 10 times. If you are invested in crypto, you have to have a bit of a thick stomach, correct? Like deal with volatility. The same thing has been true of your stock and your new stock, STRC, you call it stretch. Are you trying to strip some of that volatility out with that equity? Yeah, the idea is to create an on-ramp for people that believe that Bitcoin's going to be around for the long term, but they can't handle the volatility in the near term. So the idea of Bitcoin is you get on a roller coaster and you're expecting 30% or more, but you've got to hold it for a decade. The idea of stretch is we're going to take strip the first 10 to 11% of that return. We're going to pass that to the credit investor.

Our equity investors accept the excess volatility, they over collateral. that they get the excess performance. So STRC is a preferred stock that pays a monthly dividend. It's about 11.5% annualized right now. It's way over collateralized. The bet of the company's strategy is Bitcoin will go up more than 11% a year, and our equity holders are going to make a fortune. And the bet that the credit investor is making is Bitcoin is a real legitimate thing,

but I want to get paid 11% and ideally defer the taxes. 11% is a big. huge number as a dividend effectively. You know there are people watching listening right now that are saying, they're using my initials BS in vain, bull, pucky, right? How is 11% possible? That is a big number. Okay, Bitcoin's up about 37% a year for the past five years. That's the slowest it's ever grown. Our company's strategy is up about 55%. We've levered that Bitcoin. The bet is Bitcoin is going to outperform 11% over the next decade. Now, if Bitcoin outperforms the 11%, then our company equity is making a lot of money. If Bitcoin performs just, if it's up 2% a year, all it needs to be is

2% a year, we can pay those dividends forever, Brian. And if Bitcoin... If just up 2%, we just, because we're sitting on a mountain of equity. We're sitting on more than $50 billion of Bitcoin is collateral. So Bitcoin only needs to go up 2% a year. for us to pay the dividends forever. The equity, MSTR, wouldn't make as much money, but the credit's fine. If Bitcoin goes up zero percent a year, then in 50 years we've got to figure something out. So private credit has been two bad words lately. You know that, right? You look at Ares, KKR, Blue Owl, Apollo, some of these funds, private credit, all the cracks, blah, blah, blah. Does your then private digital credit, I think, is a fair way to say it, does that run alongside

side private credit, or is it meant to supplant private credit? If you're the investor that you want a credit instrument that pays your double-digit yields, normally you had to go after something like private credit, but the price you paid was illiquidity. It's not liquid. They have your money. You can't do it. Give it to me back. And it's heterogeneous. It's like a thousand different investments. It's illiquid, and they're going to lever it a bit to try to give you 8% or 9% or 10% return. What we've done is taken the world's most liquid asset, Bitcoin, which is global capital, very volatile.

And then we built a credit instrument where the idea is, let's make it extremely liquid, let's make it double-digit return, let's make it homogenous. The credit, the underlying collateral of STRC is Bitcoin itself. So you can assess the credit risk of STRC every 15 seconds by looking at the price of Bitcoin move. And how does it trade relative to Bitcoin? You said you wanted to strip out the volatility. Yeah.

How do you do that? If you go back to October 6, Bitcoin hit an all-time high-127-5,000, and it's down about 40, 45 percent since then. STRC is flat at $100 plus or minus a nickel. And so we have stripped all of the principal volatility out of the instrument. In fact, Bitcoin's been about a 55-V-V-Vall asset for the past 30 days. STRC is a two, two-vall asset, right? And so we have, we have actually, by creating a volatility of two or less, we've created a product with a sharp ratio of three to five. Okay. Okay. Is it fair,

then am I offending you if I called it a money market fund in some way? Is that offensive? No, it's meant to be like a money market, a digital money market like instrument that pays you double-digit yields in a form of a return of capital dividend. Why not offer the yield at 7, 6%. Those are still big numbers. Why 11? We actually adjust the dividend rate every single month based upon market feedback. So in a month, like in a bare market where Bitcoin is trading down and the credit is looking weaker, we will adjust up the yield.

And in months where it's too strong, we can adjust down the yield. So the idea is a monthly variable rate dividend so as to stabilize the yield. instrument around $100. So that yield could go down? It could go down over time. Yeah. But it would only go down over time if we thought that there was too much demand for the instrument, and we didn't want the market to overheat because we want the instrument to

trade around $100. Is the concept of digital credit, again, I'm going to go back to this point about private credit, is it meant to sort of eliminate the current system, work within the current system, or be an add-on to the current system? We've really created a digital credit instrument that's integrated with the existing securities market. It's created as STRK floating on NASDAQ, trading $200 to $250 million a day,

issued by a public company. So we're using public securities. We're using public markets like NASDAQ. You can hold it in your 401K. You can trade it via Shrower. Schwab or your favorite retail account. Yeah. In fact, 80% of stretch is held by retail investors.

And so it's meant to be a retail product that's really easily accessible by anybody. But it's built on top of a crypto asset, Bitcoin. And so for people that they believe that Bitcoin is a thing and they want to get heightened performance, but they want it to be quick and easy and they don't want to worry about the custody risk or they don't want to set up with the crypto. Is that why it, because I'm trying to figure out why does this have to be a stock? Why does this have to be a public equity? Because you want people to be able to buy it from their Schwab account.

Yeah. Well, if you want to create hundreds of millions of dollars of liquidity and be able to buy it from your Schwab or Fidelity or Morgan Stanley account, it needs to be a publicly traded stock. And in fact, when we did it, a friend of mine said, you better make it a four-letter ticker. It needs to be STRC. It can't be five letters. You don't want an over-the-counter credit instrument. with a Q-SIP where you need a Bloomberg to find it,

you need to make it very, very simple and easy for everybody. And what is the number one question? I know you presented about an hour ago in New York City. What is the number one question you're getting about STRC? Well, what did I forget to ask? You know, it's how do you actually create this thing? It sounds too good to be true. 11% is a big number.

Yeah, and the number one, why haven't I heard about this before? And the answer is because until Bitcoin was acknowledged as digital capital, and until we built a large enough equity capital base to be able to collateralize it, you couldn't have created this instrument. It was, we did four other preferred stocks before we hit on this one, and we did dozens of other credit. The crypto infrastructure simply wasn't there. It wasn't sufficient to hold up the building, so to speak.

You needed a really big publicly traded company with $50 billion of digital capital on its balance sheet and a lot of equity in order to create this sort of instrument. Michael Seller, really glad that you're on set with us today. Important conversation. Really interesting equity as well. And what you guys are doing, really appreciate your time. Thank you. Michael Sailor, thank you very much.

Sit down to Angelica People's Free. CNBC News Update. Hey, Brian, United Airlines and its flight attendance union reached a tentative new labor deal today, giving flight attendants their first raise since the pandemic. The union didn't give specifics on the deal, only saying it includes increased base pay added compensation for flight disruptions and new restrictions on overnight flight assignments. Wall Street is paying out record bonuses this year just shy of an average of $250,000. That's according to estimates from New York State's comptroller.

It was a 6% increase from a year ago below the city's projection for its 2026 budget estimate that assumed a 15% increase. Artificial intelligence and bots have officially eclipsed the number of human users on the internet. In a new state of the traffic report from cybersecurity firm human security, automated traffic across the Internet grew almost eight times faster than human activity last year as people increasingly turned to AI chatbats for daily questions. Brian, back over to you.

AI is Googling AI to search for AI about AI. It's all so meta. Guilty. Yeah, thank you. Coming up, Frank Collin, bringing you a very timely and important interview. billionaire investor Robert Smith will give you his view into software and anything else. Frank decides to ask it. Robert Smith and Frank, up next on Power Lunch. Stick right. All right. Let's talk about software because, you know, the sector has struggled all amid

growing concerns about AI disrupting the entire industry. But your next guest is betting big on applications and what they call agentic software. Let's head down to Atlanta, Georgia. Frank Collin is with noted tech investor, Vista Partners CEO, Robert Smith, and they join us now. Frank, take it away. Brian, thank you very much. Robert, thank you for join us. We're talking about software very shortly, but very quickly, we're here in Atlanta for the HBCU Aware Fest. This is a fundraiser for your Student Freedom Initiative. Everybody saw the headlines when you paid off the debt of those Moorehouse students. This time, you're doing it a little bit different. What's the money you raise here?

What's it going to be used for? It goes to what we call the Student Freedom Initiative and the dollars, in essence, recycle. So rather than paying back student debt, you borrow from the funds, As a student then and as an adult, you start paying it back into the fund, the fund then relent it to the next generation of students. So it has a nice, I'll call it, a virtuous cycle of supporting your own community and supporting a community of Americans who are for HBCU, 75% of our doctors, over half of our teachers, and over half of our engineers actually come from HBCU. So we're excited to be here and all the great sponsorship and friends who've come out to make this happen. All right. Amazing cause. We can go online and get more information. We do have to talk to you about soft.

And donate. And donate. I was just looking at the IGV software ETF. A lot of us uses as a proxy for the software trade. It was down. It's down about 20% year to date. Sure. You've been adamant.

The fears are overblown about AI disruption. You see software spending continuing this year about 16% higher year over year. Gartner has about the same number. What's the disconnect? What is going on in the public market? It's a difference between call it sentiment and reality is the fact of matter. You know, software's actually gone through. Anytime there's a new introduction of technology, it goes through some dynamic.

of disruption. In fact, we've had nine dislocations similar to this, 25, 26 percent reduction in the ICV index over the period of time. The last one, if you recall, the lost major one was when the introduction of this thing called AWS. Everyone said, oh, SaaS, this is going to eliminate, this AWS is going to eliminate what enterprise software companies do and actually ushered in the greatest expansion because these technologies are enablers for certain software companies. That doesn't mean some may go away, might not go away. But in essence, if you have, I call it sovereignty and dominion over workflows and data sets, these probabilistic systems can be very effective in driving certain amounts of processing the data. But enterprise software delivers

deterministic outcomes. So you need the scaffolding of these enterprise software workflows and data sets in order for it to actually prove to be very valuable in an agentic world. A lot of notes have come out talking about the private market software companies that are AI agent native and their basic competition against the legacy players. You say it's not really about that. You also say only about 1% of enterprise data is actually loaded into LOMs. Now, what does that exactly mean going forward? Yeah. So importantly, as an enterprise, you have a lot of workflows that you've actually developed over decades in many cases.

You know, insurance companies don't have their data published on the web or in public information. So the actual LLMs aren't trading on them or the foundational models aren't training on them. And so one of the things that actually Satya Nadella said in Davos last year was what people are going to need to focus on in 2026 is are they leaching? Are they leaching enterprise value by taking their data to these models? What's actually occurring now, or enterprises are realizing you have to take these models to the data, operate in air-gapped environments, on-prem environments, utilizing the capabilities of these probabilistic big systems,

these AI systems, but actually running those agents through your workflows, your enterprise software workflows and your dynamic data that you uniquely have to give you deterministic outcomes that your customers want. I like to say, you know, getting a wire transfer mostly right isn't acceptable in an enterprise environment. Well, it's not when it's my money. Robert, thank you so much. Really appreciate your time. Good luck with everything with the Student Freedom Initiative.

And right here at HBC AwareFest. Thank you again. Thank you, Frank. Brian, back over to you. All right, Frank and Robert, thank you very much. All right, after the break, the headline that is moving both Apple and Alphabet. News Alert on Apple. Mackenzie Sagallo, South West.

What's going on? So, Brian, Apple is planning to open up Siri to rival AI assistance beyond just chat, GVT. And its upcoming iOS 27 update, that is according to Bloomberg. The company apparently building tools that would let chatbot apps integrate directly with Siri. So if you have Gemini, Cloud, or other AI apps installed, you'd then be able to route your Siri queries to those services instead of ChatGBT. It is worth noting this is separate from the deal with Google to use Gemini models under the hood to power Siri itself. Instead, this is about giving users the choice of which chatbot handles their questions on top of Siri. I'm out to Apple now.

No word back on this report just yet, though, Brian. All right. So again, what does this mean then for Apple? What can I, what would I be able to do on my phone if this occurs that I can't do now? Well, people have been let down by the chat GBT experience where essentially you asked something of Siri. It routed the more difficult questions to chat GBT. People have been underwhelmed by Apple intelligence and Siri capabilities ever since they announced this two years ago. So essentially it would let you slot in your chatbot of preference. And again, this is separate to the huge. huge Siri reboot that we are expecting it sometime this calendar year. Like with search, you can go to Google, but you can also go to duck, duck, go, Bing, Lycos, excite, ask Jeeves.

Mackenzie, thank you. More power lunch for this short break. Put up by the reveal of our power poll. Will the Federal Reserve hike rates this year? Will they raise rates? 76% of you said no. No, they won't 24% though. Said yes.

One out of every four of you said the federal. Federal Reserve is going to raise interest rates, not cut, raise rates this year. That's something. Anyway, all right, we're going to wrap it up with Power Lunch. Markets are down across the board. Let's see what happens at the final hour of trading. Closing bell starts right now.