Title: AI Safety Concerns Pushe Tech Stocks and the Market Lower: Your Next Move 9/14/26 Show: CNBC Halftime Report (podcast of the live noon ET show) Host: Mike Santoli (in for Scott Wapner) + Investment Committee -- Joe Terranova, Liz Thomas, Stephen Weiss, Jim Lebenthal Guest: Kate Rooney (CNBC, on the Amodei essay / AI slowdown); Contessa Brewer (CNBC News Update); Diana Olick (mortgage rates); Dominic Chu with Justin Schack (Rosenblatt Securities) on ETF Edge; Oliver Renick (Options Action) Date: 2026-09-14 (Monday) URL: https://open.spotify.com/episode/1HZLEwbQzFrWqMQOXObijW Length: 44:18 Note: Spotify auto-generated transcript (accuracy may vary); this is an AUDIO podcast -- the Spotify panel carries NO (mm:ss) cues, so there are no timestamps anywhere in this file and the analysis page's "At" cells are plain "listen" links to the episode. CAPTURE METHOD: same as 2026-sep-11. The transcript tab panel holds the COMPLETE episode in the DOM at once (664 child nodes) but Spotify virtualizes it with CSS `content-visibility: auto`; forcing `content-visibility: visible; contain: none` on every child made the panel's innerText measure 46,977 characters, and the WHOLE episode was captured in ONE get_page_text call -- from the cold open ("I'm Scott Wapner, and you're listening to CNBC's Halftime Report") through Santoli's sign-off ("It does it for halftime. The exchange starts right now.") and the closing disclaimer. One pull, so no slice joins; the page URL and title were confirmed against the assignment before saving. Coverage is CONTINUOUS; there are NO GAPS; NOTHING WAS INVENTED. Spotify's chapter headings appear inline in the panel and are kept below as "## Chapter:" lines. Speaker diarization was numeric only ("Speaker N") and is left as-is below; from context the mapping is: 1 = Dominic Chu (ETF Edge; also the podcast announcer), 2 = Joe Terranova, 3 = Mike Santoli, 4 = Kate Rooney, 5 = Liz Thomas, 6 = Stephen Weiss, 7 = Jim Lebenthal. (Anchors: Santoli introduces "Joe Terranova, Liz Thomas, Stephen Weiss and Jim Labenstall"; "Jim, you own Amazon, Alphabet, Microsoft" -> Speaker 7; "Weiss I'm going with Lidos" -> Speaker 6; "Liz, the iShares Gold Trust was your final trade" -> Speaker 5; "Joe?" -> Speaker 2 gives Expeditors. Diarization noise, not new speakers: the Contessa Brewer News Update and Diana Olick's mortgage-rate hit are both tagged Speaker 5; Oliver Renick's Options Action is tagged Speaker 2; Justin Schack's answers are folded into Speaker 1; the opening Wapner promo line is unlabeled.) Auto-caption garbles left verbatim here and corrected only in the analysis: "Labenstall" = Lebenthal, "Tropics/anthropic" = Anthropic, "Amadei/Daria Amade/the dark" = Dario Amodei, "open AI" = OpenAI, "Meg 7" = Mag 7, "app ... at 3:40" = Apple near $340, "Vernova, Verta" = GE Vernova, Vertiv, "AIPO" = the AI power & infrastructure ETF, "Walsh/Wash" = Warsh, "City" = Citi, "APP Lovin" = AppLovin, "Jyoti ETF" = JOET, "Lidos" = Leidos, "Vicks" = VIX, "SIBO" = Cboe, "Oliver Rennick/Albert" = Oliver Renick, "TLTETF" = the TLT ETF, "4:10"/"346" = Broadcom $410/$346 price levels, "1:25" = $125, "6:50" = $650. Light remove-only filler cleanup (pure stutters/false starts like "I I", "the the"); wording otherwise verbatim. This transcript was generated automatically. Its accuracy may vary. ## Chapter: Unpacking AI Stock Sell-off and Urgent Safety Concerns I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We. Speaker 2 Record this live weekdays at 12 Eastern Listen in. Speaker 3 Thank you, Carl. Welcome to the halftime report. I'm Mike Santoli and for Scott Wapner today front and center. This hour, AI stocks sell off. The 10 year yield cracks 5% and a Fed decision looms large. This week we will trade all of it with the investment committee. Joining me for the hour, Joe Terranova, Liz Thomas, Stephen Weiss and Jim Labenstall. Let's get a quick check of the market. The index is still lower but well off their lows from earlier. S&P 500 got down below 7600. It's up about half a percent from where kind of retested last week's lows. NASDAQ has been the underperformer, but Mag 7 helping that come back. 10 year yield you see has come off the boil. It did crack 5% and a few little fractions of a basis point now back to 495. We're going to have more on that move and yields in just a moment. But first, let's get to Kate Rooney with more on what's driving the slide in AI stocks. Kate. Speaker 4 Hey Mike. Well, it goes back to what we saw over the weekend and Tropics CEO Dario Amadei really shocked the tech world with an essay out on Saturday. The CEO proposed a three-step plan aimed at tempering how fast some of the most powerful AI and AI models out there are going to be improving. He talks about third party evaluators as part of this safety standards and then international coordination as well. Amadei has argued for safety in the past, but he does talk about this with some new urgency given some of the recent panic around the risk of this technology did snowball last week after anthropic researchers tweeted about the existential risk of AI labs and said that they are, quote, gambling with our lives. Two new concerns from Amadei that he flags. He talks about AI developing a lot faster than expected. And then an example of open AI agents hacking into the startup Hugging Face. If you remember that he called those agents a fanatically devoted collective. Major AI leaders agreed with Amadei. You don't see that every day. Elon Musk saying the dark is right. He said that on X Sam Altman, the CEO of Anthropics biggest rival open AI tweeting his support as well. At the same time though Altman told fortune over the weekend and IPO right now would be ill advised. He did say 2027 for their own listing. Although we have reported that the AI giant open AI was already likely to list next year anyway, so grain of salt there. I did speak to some people over the weekend who argue that the safety push could actually help Anthropics IPO, positioning the company now as a responsible player, reducing some regulatory and liability risk. And then multiple investors told me the growth rate still off the charts, they do expect the IPO to go forward. I also confirmed with a couple of sources at Anthropic has seen back-to-back quarters of at least adjusted profitability. And then a new wrinkle in all of this, President Trump weighing in this morning, slamming on the day, saying that the only guardrails AI needs is a strong and smart president. He goes on to say there is a sick conspiracy going on against AI and data centers that the only one that's happy about this Mike is China. Speaker 3 So Kate, you know, among the many questions that pop up here is what it would mean in a practical sense for there to be a slow down in the pace of development at the frontier in the terms that the market cares about, right. You know, what does it mean given what we already were assuming about maybe some kind of snags in the data center trajectory of build out and just exactly how much we've already are kind of put in the ground and is already in the pipeline. So I just wonder where this all comes in, if it's more just messaging that, hey, we have to be careful here. Speaker 4 It's a great question. The big thing I heard from investors over the weekend, Mike, the big question that they have is training is how much of the committed capital for compute is going to have to shift and maybe pull back if they stop training the models at the same rate. Within that essay, Daria Amade says that they're not going to necessarily slow it down and tries to put some nuance behind it. But the headlines line is a slowdown. So investors are really trying to parse through what that actually means and who is going to agree to this? Because it's, he talks about having safety standards, but it's not clear that everybody in the industry is going to see that the same way. And it comes at a time, of course, when this company's going public, open AI is looking to go public. They are tasked with impressing Wall Street, growing their revenue. And a big way to do that is to have the best and most expensive model. And so they really are walking this tightrope of holding back a bit, which again, from a perception standpoint and them avoiding legal liability, regulatory pressure, they need to do that. And they've had to react to what we saw last week and some of the risk factors. But at the same time, they want to impress investors. And the big thing that investors have been focused on and is likely to be front and Center for the IPO roadshow is that revenue growth rate. If that starts to get dented, that's where you're going to see the risk of the valuation. And it's all about, you know, future earnings, future profitability, I think the hangover and the question of what does this actually mean if this moves blower is the big unknown, at least for folks that I'm talking to. Speaker 3 Yeah, for sure, Kate. Thanks so much. ## Chapter: How Market Rotation Reacts to AI and 5% Yields So Joe, the market is finding something to react to here, right? Semiconductors, the Sox is down 5.3%. That's not nothing obviously, especially since we came into the week down 20%. Where do you view this? I guess along the spectrum of nothing burger to game changer. Speaker 2 I think it's consistent with the 2026 playbook where the market just wants to rotate and that's what I'm seeing today. Let's remember for the semis specifically, the SMH, the high was back in June, so it's never been able to exceed its previous highs. And then the interim, the market has played this game of kind of cat and mouse believing that there would be a restart. The momentum factor in semis itself that kind of stalled out. When that occurs, it seems as though the market wants to go to the mag sevens. You have app once again advancing today, approaching that all time high at 3:40. It's the software names that are performing really well today, healthcare as well. So I'd still think it's this game of rotation that's being played in the market. One other point at 10:26 this morning, a 10 year touch 5% and we are seeing if you could show an intraday chart of the intraday chart rather of the 10 year that we have pulled back about 5 basis points. Look, that's a pretty big move in basically a 90 minute window for. Speaker 3 Sure no, that's a definite element of what's going on today and it was interesting, Liz, because it came into the day saying that the market's premise of why it was able to stay near the highs was almost attacked on 2 fronts right. You had the yields oil story, but then you know the AI earnings power story and if the market is happy to say, well maybe the spenders are going to be OK, even if the vendors have to do with less in the future, you know, we can get to that point of having built out quicker. That's OK for hyperscaler type earnings. Speaker 5 Well, I think first of all on the point about the 10 year we hit 5%. I think the market is making a bet that the Treasury, the Fed isn't going to let the 10 year get much more above 5%. I'll take that bet. And I started talking about buying the 10 year around 480. I would still buy it here. So I think the 10 year piece of it right now we're sort of flirting with danger, but everybody is aware in the AI trade. I'll answer the question for Joe too that you gave him. Is this really an issue that changes the game? I don't think this statement changes the game. I mean, in reality, he's talking about hoping for collaboration among AI companies, among countries around the world, among the government. I don't think that's going to happen very easily. So the solution is not going to be put in place that way. But the market trend was already in place before this essay that we were going back to the Meg 7, right? The market cap weighted. S&P has caught up to the equal weight this year now, and small caps are sort of losing their footing. Investors are going back to, and I've said this many times, it's that muscle memory, this entire cycle, the muscle memory of those Meg 7 names of some of those hyperscalers. And right now, yes, they're a little freaked out about semiconductors because that's the high beta play. But I think if there's a buy that comes out of this, it is cyber for security for the long term. I mean, where else can you say in technology that demand is going to absolutely stay high other than cybersecurity? Speaker 3 That's all true, Steve. ## Chapter: Analyzing Fed's Dilemma with Crude and Stagflation Risks That's how the market is digesting this. On the other hand, semis themselves are a big part of earnings growth projected into next year. And so it's really hard to sit here today and say, you know what, we think 2027 numbers are too low, at least harder today than it was Friday, if this matters at all. And I guess the other piece of it is the market, you know, the NASDAQ hasn't made a high as Joe suggested since June. It's like 15 weeks. And part of that is the amazing earnings season we just saw represent some degree of pull forward, some kind of over earning and all the rest of it. So how does that all shake out into the here and now? Speaker 6 It shakes out with not much credibility right now, and I'll tell you why for not only the pull forward, but when you take a look at crude, it's such a big feedstock. There's so many things that we do away from semis. We'll get that second that that's going to impact margins and that will impact earnings. And then you've got demand. And The funny thing here is ironic, funny, not ha, ha, ha, funny is that even the Fed tightens, tightening to reel in a supply shock doesn't work. And what we're seeing with oil is supply shock. So the question is how much can they really tamp down inflation by raising rates? So, and then what you see in the last half hour is the president came out for the 30th time, maybe it's the 50th time, said that Iran's link for a quick deal. That's just an last night's statement as we've heard so many other times and the market, they're stupid enough to believe it on the 51st time. Let them do it. In my view, we're going to go through 5%. You know, the Fed's not going to be able to help that. And that the Mark's going to be in a trading range favoring the lower end as far as semis go. Yeah, there's a lot of air there. I still think that the AI story, the spending is not going to stop. Are they going to slow it down a little? Possibly. But you see, and you alluded this before, is that we're seeing Meta and Microsoft and Alphabet move up because say, OK, great, they're going to slow down spending. So you see both sides of it's the market's really taking both sides. Whereas I think if we went back six months, they would say everything's down. So it's kind of a mixed market. I just don't still don't believe you put new money in here and take a look. Let me just give this one so Broadcom. Broadcom missed, right? So they missed arguably this time they missed last time. He can say, okay, they reported good numbers, guidance, squishy things in their margins. The stock has never bounced. It bounced for a brief time, right? I bought it after the prior quarter, bounced a little bit, sold it flat and it traded at 4:10. Now it's back down to, I mean, or below where it was before 346. To me, that's the message in the market. You can pick a falling knife here, particularly when you still have valuations that are too high. Speaker 3 Jim, you own Amazon, Alphabet, Microsoft, So you know, that's the port in the storm today. Whether it really holds water in terms of, OK, we're going to stop spending, we're going to stop borrowing so much to spend. We're, you know, the CapEx plans for 2027 maybe are kind of, you know, skewed to the downside. I don't know what conclusions we're drawing, but somebody wants to own these rather than Broadcom. Speaker 7 Yeah, I mean, it's hard to get awfully negative on the markets, Mike, when those names that you just reported are actually up. Now, Amazon's obviously red, We see that. But Alphabet and Microsoft and Microsoft, let's not forget, has had a heck of a nice bid recently. So, you know, when something as big as Microsoft is performing as well as it is, again, really hard to get negative on this market overall. And for all that's thrown at it, Steve, you pointed out very aptly where diesel prices are and crude prices. You know, that's a lot, Joe. You pointed out the tenure. That's a lot for a market to digest test and yet we're only 3% ish off from the all time high in the S&P 500, only 4% ish off from the Nasdaq's all time high. Ultimately, this is a market that goes higher. You can wait if you want to, you can do the September seasonality thing, but ultimately I think this is a market that will crescendo into year end. That's usually the pattern when you've had a strong year and then you fade a little bit in September. Profit growth, labor markets are more than stable, they're good. I'm going to say that. And you've got an economy that's growing nicely. That's a good combination for a strong end to I. Speaker 3 Guess the big question, if it happens by the way, is what level we're ramping off. Speaker 6 Of but you go into midterms. Midterms always unsettle the market, particularly now usually, OK, always a generalization that we use here in halftime report, but I'll just say usually, not always. And so that's something else to figure into the calculus and what happens, right? And do we pay down any debt right now, best in saying we'll grow into it. When you grow into 4 trillion to the negative, that's ridiculous as well. So there are lots of other headwinds here with the base case being your optimistic case. So the question is, does that hold up right? Speaker 2 If I could, Mike, so if you look from a secular perspective, I think we would all agree there's an overwhelming bullish bias. I maintain that bullish bias as well. Here we are in September. You have headwinds in front of you. You have no visibility in earnings. So this market can go anywhere. I said that last week, Jimmy, 50 up, 50 down, who knows the answer to that. So you say to yourself, what's the risk as you move forward? And I hope the scenario doesn't unfold. The risk actually is, is that the market is still 3% from the high. The market has not caved just yet with oil prices, with what we're hearing from AI, what we're seeing from yields. It is not because people believe 60 to 90 days from now this all resolves itself and the full narrative is back. And candidly, that's kind of the biggest risk in the market because in that scenario, everyone is positioned one way. And if they are not receiving what their expectation was, they are very quickly exiting from what will only be 1 door. That is the inherent risk in the market right now. I don't subscribe to it. I hope it doesn't happen, but you always have to know it's there. Speaker 7 Let me back that up and this goes with what Steve was saying is what's happening in the oil markets is exactly what the CEOs of ExxonMobil and Chevron said would happen back in April. ## Chapter: Assessing Market Fragility and AI's Impact on Industrials They said you can get away with drawing down on inventories, You can get away with China curtailing its demand, but only for so long. And we're seeing that without Iran resolved, you have this perpetual problem now, particularly with diesel, which is going to factor through into food prices, into transportation costs. Steve, you made a point, it's a good one. I want to repeat it, that the Fed is raising to adjust to a supply shock, which is not a good way to raise rates. They can't open the Strait of Hormuz. They can't solve this problem. Nonetheless, they are probably backed into raising rates more than once based on what Chairman Warsh has said at Jackson Hole and just based on what the inflation numbers are. It may be a mistake to raise into a supply shock, but that's likely what they're going to do. Speaker 6 So the biggest risk then, Joe, is stagflation, yeah, where you have a slowing economy and raise and rising prices. And I think that we're going to start hearing that word more often now. Speaker 3 But the number of times we've heard that word in the last six years agreed. Honestly is, I mean, I, you know, we're starting from a place of like 6% nominal GDP growth. I mean, first we're worried about an overheat from CapEx and now I mean, maybe it could be that we lose some of those, you know, the cyclical drivers from behind. I do think though, Liz, you can look subtly and say, Yep, the S&P 500 taking like a champ down less than 3% equal weight, cracked a little bit, broke the 50 day moving average. So the median stock has actually been, I guess succumbing a little bit to the macro pressure. And in fact, you've seen some defensive parts of the market start to wake up a little bit. Speaker 5 OK. So a couple points that were made earlier in the show when you look at midterm election years, the sectors that tend to do the best are healthcare and staples because they're defensive. This year, Healthcare is absolutely living up to that. And I think it will continue to, maybe not from a defensive perspective, but because it's been a beneficiary of the rotation trade out of tech into growth, the areas like pharma and biotech. When you look at the 10 year treasury, I think it hit 5% because yes, we have a supply shock issue. Yes, we have oil problems, not because the economy is overheating. So even with 6% nominal GDP growth, the Fed hiking into an economy that's just doing meth, in my opinion, we got 1 1/2 to 2 1/2% real GDP growth is the biggest risk right now. I don't think it's what we've already talked about. I think the biggest risk is that the Fed puts the dampen on this economy in places that it can't hold up. So the market's strength right now is not as broad as it's been throughout the year. And we've as investors been hanging our hats on this broadening of the economy. Look at what's happening in industrials. There are some cracks going on right now that are to be concerned about. And I think we have to pay attention to them. It doesn't mean that they're permanent, doesn't mean that they're the Canary in the coal mine of a recession. That's not at all what I'm saying. But the market going back to a concentrated large cap leadership is a more fragile place to be. So I think we do have to be careful. I think the Fed has to be careful here. And it's becoming more of a political battle, which is again a risk. Speaker 3 To them I would yeah, I guess it's debatable as to whether it's more fragile. It's certainly, you know, has fewer legs to stand on. I do want to get to the industrials though, Joe, because AI levered industrials are getting smoked because that's the area where it really matters. What's going to happen in 345 years. It's not just next year's numbers because they're sold out for next year. We all know the story. AIPO is the AI power and infrastructure ETF. It's got the vertives and G Vernovas and Eaton's and all the rest. So I know you, you know, you have some of those in the. Speaker 2 Portfolio, how are we thinking about that now? Not particularly happy about it and troubled by the fact that the momentum factor has broken down late in the second quarter and has had this inability to rebuild upon what was a really first half of 2026. That inability is going to put a lot of these power names in a difficult position as we move forward through the end of the year. It's very easy to come on the network and say, OK, this is a buying opportunity, you want to be long these names and that in fact is where we sit. GE, Vernova, Verta, Quanta, Eaton, we sold out of Caterpillar in the last rebalance, but we're sitting there and we will remain there till the next rebalance. But they are in a much more perilous position when you're relying on the momentum factor itself relative to where they were just three months ago. From a fundamental standpoint, you also have to obviously call into question for whatever the motivation might be, if open AI is saying, OK, let's take a pause. And maybe, and my perspective is I think it has a lot to do with maybe putting Anthropic in a position that we don't see them IPO in 2026. Maybe that's the motivation behind the scenes. But whatever it might be, if you tell me we're slowing the rate of spending and if you tell me that yields are going to remain high, that's a disincentive to see more supply in the debt market hit the market. That is absolutely going to affect these industrial names, Mike, because they have lived, they have thrived over the last eight quarters on the continual spend and the build. Speaker 3 Well, they're living off of the forward order books for which nobody has the money to pay for. So that's the has the money has to be raised, the revenue has to grow for the, which includes buyers, right? For sure. It definitely does. Now, I mean, you mentioned the IPO store. I mean, obviously this is the CEO of Anthropic, who's the one who's actually out there saying let's slow down. I don't know that it's meant to be a signal about the pacing of its IPO. But you know, Steve, it's funny. One of the bare talking points coming in was, Oh no, too many big IP OS. It's going to swamp the market with new equity supply. And now people are saying, Oh no, the deals might not happen because that means capital's not going to be raised. Where do we think this is going to hit? Speaker 6 Well, right now the market thinks that it's going to slow down all IP OS. So we can take a look at Goldman Sachs and see that down, which is, you know, sort of like a practice of the IP OS. I think there'll be less supply coming on. And I also believe that that'll be a function of the private markets. So the private markets are really where AI lives and breathes much more so than the public markets. And if you're saying spending is going to slow down, these companies aren't profitable anyway. They've got to extend the timelines when they are profitable, which means they're going to have to raise more capital. So I think you'll see a thinning of the herd if this in fact goes on, if there is in fact a slowing in the private markets will put up less candidates in the pipeline to come public. So that's going to be, we haven't really seen trouble in the private market. Speaker 3 I think the key will be assuming Anthropics S1, it goes public, we see the numbers and then we'll debate what the numbers mean, how they're characterizing, you know, their actual profitability adjusted for everything they pay for. And then we can, you know, we'll have a better debate on all of that. Speaker 6 Which can be the most interesting in the S ones is seeing what they talked about as the risks, Yeah, so David Sacks mentioned today the product liability risk for their agents. So what does that do to your valuation? Speaker 3 Mostly for IP OS, the risk factors are it won't do immediately ignored and so probably nothing, but we'll see. It's still ahead gaming out the Fed's next move and what it means for the financials halftime. It's back in 2 minutes. ## Chapter: The Fed's Rate Hike Decision and Financial Sector Outlook Welcome back. Market continues to narrow its losses. S&P and NASDAQ down just a quarter of a percent. Right now, it's a big week for the Fed with a rate decision coming on Wednesday is the 10 year crosses 5% for the first time since October 2023. Wells Fargo out with a note saying that JP Morgan, Bank of America and City are among those set to benefit. Steve, quick word here. First of all, Wells Fargo, that's Mike Mayo. He loves the big banks, always loves the big banks, likes him here. That being said, the market seems OK point to point with the clarity that we're getting a Fed rate hike on Wednesday. Speaker 6 Yeah, I think so. I mean, it's been talked about for a while now. And I think it was messaged by Walsh even in his first meeting, he said let's let the market talk. Well, market's spoken. You're at 5%, so you're going to raise rates. I think it is good for the bank. We've seen some steepening of the yield curve over the last month or two. So that means they can make more money minor. It's not a lot, but it's going the right direction. And I think you could possibly see that continue. So look, I think the banks look great here. I mean, to me, it's also a hedge on the economy in terms of if the economy, if I'm wrong, the economy doesn't slow down. I'm not looking for a major slow down, right. The banks and I own Goldman Sachs, the only one I own, I am looking at Wells Fargo, but that you continue to do well. So today aside, because the IPOII guarantee you they've got enough M&A to do and they've got enough other high margin business to including IP, OS, they're going to be fine. Speaker 3 I don't know. I'm not worried about Goldman Sachs at this point. Liz, you suggested you think a hike's a mistake for I guess the Main Street economy or the sort of non financial market dependent one. How would that play into the outlook for banks? Speaker 5 Well, banks usually do well when the Fed hikes rates. But a flatter yield curve is problematic for banks over the long term because it crimps their net interest margin. I'm not worried necessarily about what it does to the financials. I do still think that a hike would look like a mistake in hindsight. I think right now it would be a reaction to the market, not to the economy. And that's where you see the pain longer term. Now if we want to compare it to the 90s, it depends on whether you think this is 1997 where they hiked once 25 basis points, or this is 1999 where they kept going quite a bit and that was the beginning of the end. I happen to think that this would be more like 1999 because Kevin Walsh has committed so much to that 2% inflation target. 25 basis points isn't going to get us there. So I think it starts to look like a hiking cycle and that's the real problem which eventually is not good for. Speaker 3 Just to get into the details of 99 June of 99, they start to hike again after the 1998 financial panic by February of 2000. Markets up, huge economy is ripping, Greenspan says. I thought it would have more of an effect. It didn't work. Another 75 basis points and then it's over. So that's kind of how it goes. Like you think it's fine tuning until it's something else. And Joe, I think a key point here is I know that there's a conventional wisdom developing that Fed rate hikes, we get 123. Whatever it is, it's going to control the long end. Yeah, right. So I don't know, that's a pretty debatable issue. Speaker 2 So I think we all appreciate that encyclopedia of knowledge. I just was looking it up last week. That's pretty good, Mike. But here's what I would say about a rate hike. I think the minute you get the rate hike, the market begins to price in when you're going to get the rate cut to take it back, because I think that's the game we're going to play. I think we're going to get the rate hike and then everyone's going to say, OK, oil prices relaxing. We've got yields moving lower. Now we need to take the cut. We need to take the hike back and put in a cut. Speaker 6 I don't think what they say though, I'm sorry, doesn't depend what they say. Speaker 2 I know. I think the market gets in front. I think the market gets in front of everything. I think the market got in front of the rate hike. Speaker 3 Well, it got in front of the rate hike, but we got three cuts last year and then we came into the year pricing in three more. It's not like the market says, oh, the turn's coming. I mean, I think that it's one and done. It's exceedingly rare. Speaker 6 It's not, and half more than done. Speaker 3 Right. So the reason to go is if you think you need to do more than 25, right, Jim? I mean, so if we take out the 3:00 we three cuts from last year. Speaker 2 Consecutive fights. Consecutive fights are a problem though, Liz. Speaker 7 Liz pointed out, though, that Chairman Warsh painted himself in a corner. And he did. He did. He's got to go or he loses credibility. I mean, we can debate, and we are debating whether it's the right move to make in terms of hiking into a supply shock, but I think it's pretty sure he's going to go. Then you've got October coming up and you're one week before the midterm elections. Look, we know the Fed is not a political animal, but they're not oblivious to the optics politically of raising rates one week before the election. They're not going to do that unless they're incredibly stupid. Speaker 3 The Fed was hiking every meeting from April of 2022 through the midterm elections. But they were. Speaker 7 Hiking in 2006. Much different. Much different. Speaker 3 Of course, everything's different all the time. Yeah. And right now, inflation's been above target for X number of years. The two years of 4 1/2 percent. What are we doing? Speaker 7 Listen, I look, I think they raised this, I think they'd be crazy to raise one week before the elections, notwithstanding the point you just made about history. And then the question is, what do they do in December? Unfortunately, I'm of the camp, I've already said it twice that these energy price spikes haven't yet flowed through in terms of the overall inflation. I don't like saying that, but it's just what the logic to me says is that diesel prices well at a record and really no sign of capacity coming online. It's not like Russia can all of a sudden fix their refineries and start exporting diesel again. I think we're going to be battling with this for the next couple of quarters. Speaker 6 This way, the Fed to lose credibility is to let hint at all in any of their talks. I know they're not doing what we had Jay Powell doing with all the constant dialogue, but for the market to get the perception the next move is going to be a cut that would destroy all credibility the Fed has. Speaker 2 I think you have a series of rate hikes and your bull thesis and my bull thesis and the general bull thesis that we close the year going back towards the high. I think you have to really take a very strong look at that because I don't think that's what's happening. You're telling me we're getting multiple rate hikes? Speaker 3 All right, we'll see you 3 steps in a stumble. We got all the old sayings we can go back to. All right, coming up, our top calls of the day, bullish analyst activity on gold software and more. We'll debate it all. Speaker 5 Well, we're back on halftime report. I'm Contessa Brewer with your CNBC NEWS UPDATE. A shocking new report that reveals detainees were confined in small metal cages at the now shuttered immigration facility in Florida. It was known as Alligator Alcatraz. According to the Department of Homeland Security's independent watchdog. These outdoor cages, about the size of phone booths, were used as so-called calming areas. The report called this practice highly unconventional and said it did not align with standards for humane treatment. A group of mostly Democratic states has filed A lawsuit federally to stop a new Trump administration green card policy from taking effect Friday. The new rule would give immigration officials wider authority to deny green cards to people using public assistance programs. The states argue that's illegal, and the European Union once again is looking at tougher guardrails for children using social media. A new proposal would create a tiered system for social media access for those younger than 15. France, Austria, Denmark and a number of other countries are not waiting. They're just pushing ahead with their own social media laws, fueled by growing concerns over the effects on mental health. That's the news now, Mike. I'll send it back to you all. Speaker 3 Right, Contessa, Thank you. ## Chapter: Expert Analysis on Gold, Disney, and Netflix Stock Calls Well, let's get some calls of the day. City bullish on gold, eyeing $4800 an ounce in the next three months. So, Liz, the iShares Gold Trust was your final trade last time you were on. You've been on this one. Higher real rates in theory should hold it back, but how are you thinking about it? Speaker 5 It was my final trade last time and the time before so on August 19th and September 2nd and it's down 1 to 3% depending on what your start date is since then. I think it's more attractive now and I would still buy it. Continue buying it. It is generally A0 yielding asset. So when rates rise, gold is less attractive. But I think now it's become a geopolitical hedge again. We are worried around the globe about what central banks might do, what inflation is doing, and I think this is an attractive entry point with gold trading below 4300. I remember when we were so worried about it being 5000 and people were calling for seven and 8000. So I think 4300 is a good place to be. I'm still long and bullish. Speaker 3 One of the questions, Joe, is if we'll get back to that point when it really became also a retail kind of momentum play, so. Speaker 2 We have a chart of Spot gold. If we could get Spot gold up, you could see that it was back in January where you had that parabolic peak in the precious metals. What I'm seeing in near term is that over the last 30 days you had this little reflex momentum driven goal move higher in the context of a larger downslope for 2026. So a little bit different than your perspective. Just looking at it from a technical and momentum oriented standpoint of I don't trust the rebound that we had recently, I think you could fall back towards. Speaker 3 The lows that we made in June and July on some individual names. Morgan Stanley cutting APP Lovin's target to 450 from 6:50. I mean, obviously this is just kind of marking this to market. The stock peaked above 600 a few months ago. Joe, you on this one? Speaker 2 This is a broken momentum stock. It's now 42% if you're looking at a 12 month momentum score. If you're looking at a three month momentum score, it's down as well. So from the perspective of it residing in the Jyoti ETF, the next quarterly balance accordingly based on what the rules are for momentum, we'll figure on the position. As far as advocating it to buy it here, I don't think you want to do that. I don't like buying stocks that are near a 52 week low despite what might be the vision of some really good fundamentals ahead, allow the stock to stabilize and begin the recovery period, then step in, buy it. I think the same thing could be said for what we talked about before with those industrial same thing if you have them. OK, let's see what happens as we move forward here. If you're going to have to liquidate them, but don't step in and buy what is near a 52 week low. Let it prove itself first. Speaker 3 Let's get to Disney. Rothschild cutting Disney's price target. I mean, it's a trim to 125 from 160, Jim. So nobody thinks that, Rothschild, this one's going to run away from you. Speaker 7 I'd be happy at 1:25. I mean, let me start there. The stock has had a little bit of a rally since they reported earnings in early August. Now a little bit of a rally, up 10:00-ish percent. Obviously, the market's been flat to down in that period of time. There's a lot of rotation to use Joe's terms going on in the travel sector. We've seen Marriott roll over just as Disney is coming up. When I get to the end of the analysis here, what I look at is a stock that's trading at 14 times forward earnings for a well known brand, one that does have consumer appeal. And I'm going to stick with this for now. Speaker 3 Netflix, Weiss at Evercore just raising the price target to 110 from 100. Did notice it was among the S&P leaders. It kind of gets stuck in that AI disruption basket along with some other stuff. So we got a little bit of a nice bounce today. You sold it a little while. Speaker 6 Yeah, I did actually. And I'm glad Scott's on here because I neglect to mention I brought it back. Is that? Speaker 3 The only reason you're glad? Speaker 6 No, there are many, many, many others. I bought it back not far from here actually, because I do have a lot of cash. I thought this was a safe one. I'm not so sure about the upside on it, but I think the downside's been taken out as you see other streaming services raised prices. They actually are close to the value player on the street. Yeah, so I think it's okay here. I'm not sure it gets to 100 anytime soon. Speaker 3 All right, we have some breaking headlines crossing on mortgage rates. ## Chapter: Rising Mortgage Rates, ETF Trends, and VIX Options Action Let's get to Diana. Oh, if Diana. Speaker 5 Like the average rate on the 30 year fix jumped yet again 5 basis points this morning to 7.17% according to Mortgage News Daily. That is the highest level since January 2025. Mortgage rates of course loosely follow the yield on the 10 year Treasury which did cross over to 5% to a multi year high. Note this after the August consumer Price index Friday came in right along expectations, but was still way above the Fed's goal of 2% inflation. Now mortgage rates are now up 29 basis points in just the past week. The timing not great as the Labor Day weekend marked the start of the fall housing market after a pretty slow summer. Inventory is rising, but affordability is weakening with every push higher on the 30 year. Fixed Mike. Speaker 3 For sure. Yeah, well, we'll see if that 10 year yield is has peaked and I guess mortgage rates would only then follow. Diana, thank you very much. Up next, your ETF edge with Dominic Chu. Dom, what's coming up? Speaker 1 All right, So Mike, the rise of retail traders in the market has taken off in the years post COVID pandemic, but it's not just plain vanilla index products they're using anymore. A wave of ETF product innovation is giving traders a lot more tools in the kit. We're going to take a look at some of the big trends driving the retail trade in ETFs. That story is coming up next on ETF Edge on the halftime report. Keep it right here. Welcome back to the halftime report. I'm Dominic Chu with today's ETF edge, skyrocketing demand from retail traders and investors is drawing and driving a new wave of ETF products. But are all of them well received or some just missing the mark amid the frenzy? Joining me now for this conversation is Justin Schack, the Rosenblatt Securities partner and Head of Market Structure. Over the years, Justin, you've seen a lot of things develop in markets with regard to products being unveiled and kind of what happens in times of calmness and stress. ETFs have come a long way. What exactly are retail traders doing these days with the ETF products that are out there and how exactly are they trading them? Well, we tend to see a lot of interest in products that offer the opportunity for like a quick movement in a short period of time to capture that if you want to trade short term. If we look at the products that were most active, the Etps in the month of August, 8 out of the top ten were leveraged or inverse type products, ultra long, ultra short. The other two were Bitcoin. So fitting into that category then if we back out even more and look at just the top five stocks, not just ETF stocks in the entire market, four of them were ultra long or ultra short single stock ETFs. The other one was a Bitcoin of five of the top ten were ETFs in that category. And what do you think is driving that kind of sentiment? I guess, is it that retail traders versus institutional, as much as you can draw a generalization, are more geared towards kind of those bigger moves and there are willing to tolerate the risk that they have with them? Yeah, I think there's a segment of the retail base that's definitely geared toward that. And that's a difference between what we see today and what we saw maybe with the first wave of online brokerage 253035 years ago. There's more of a sense that like, hey, I need to get involved with these really sort of high risk, high reward type products because maybe I can't afford that first house. Maybe I can't afford that middle class lifestyle the way that my parents or grandparents could. So I'm turning to these markets and sports books and everything else out there to try to make up that difference. All right, well, this is an interesting conversation. We're going to continue it over at etfedge.cnbc.com. Justin's going to be joined by Sylvia Jablonsky, the CIO Co founder of Defiance ETFs. And Mike, what we're going to talk about is the advent of recent and reset hourly, hourly ETFs that are levered and inverse. It's a mouthful, but there's products like that that are being in the pipeline and coming to market. It could be an interesting move on market structure in the coming years. Speaker 3 I'm sure when 6 1/2 hours is just too long to wait for the reset. There you go. All right, Dom, thanks very much. Next options action Oliver Rennick is tracking a move in rates today. We'll take you live from Chicago. Half time is back in 2. See the Dow turned slightly green out to the Russell 2000. Let's get to today's options action Oliver Rennick joins us from SIBO Global Markets in Chicago. Oliver. Speaker 2 Hey Mike, options traders look a lot more responsive to AI scares than they do bond market scares. Vicks popped to 18 this morning and Vicks options volume is more than twice the 30 day average with a lot of call buying. That is basically the opposite of what we saw on Friday, when Vicks crushed despite the bond market all but locking in an interest rate hike for Wednesday's Fed meeting. We even saw a heavy call buying in the TLTETF this morning, with more than five times as many calls bought versus puts before Treasuries reversed and rallied. One argument is that bonds present a slower moving and known threat now, whereas big changes to the AI path might be reason to buy up crash insurance. And we absolutely saw some of that this morning with someone buying in addition to other bullish VIX contracts. $2.7 million of the 31 strike calls expiring in mid November. Contracts going for about a buck each right now. Speaker 3 And need a. Speaker 2 Big sell off to pay off. Speaker 3 All right. Up crash in long term Treasuries, haven't heard a lot of talk about that lately. Albert, thanks. Good stuff coming up. ## Chapter: Navigating Airline Sector Headwinds and Committee's Final Trades We are trading the airlines, those stocks also under pressure today. How the committee is positioned now. Airline stocks losing altitude over the past month. Jim, talk a little bit about Delta here. Speaker 7 Yeah. Well, you know, it had a great run up until earnings. I did say at the time that I thought it was a little bit ahead of itself. I didn't know that oil prices were going to rise this much. And look, that offsets the gain that you're seeing from the demand side of this equation. All you have to do is take any flight going to any airport. I don't care if it's Indianapolis or JFK, they are packed. So the demand is there. You are seeing in the CPI Friday that airline price ticket prices are going up but oils A headwind and it will be for the forward seeable future. Speaker 3 Joe, any technical damage done here or Delta or? Speaker 2 Remember, you know, we own Delta and United in the ETF. Why? Because they are momentum players. So they're in all of the major momentum funds and that's been punishing over the last several months. I think Delta is in a much better position. Technically, it sits above the 200 day moving average. United's broken down. I like Delta's loyalty rewards program Premium Flyer and they also have the refiner exposure. Speaker 3 Yeah. I mean, that's been why it's been able to kind of separate a little bit from the pack. All right, stay with us. Final trades coming up on half that. We are back with our final trades. Jim, get it started. Speaker 7 Well, in a topsy turvy market, we're not quite sure which way it's going to go. I am with what Liz said, going with healthcare. AstraZeneca is right in the middle of the fairway for that space. Speaker 6 Weiss I'm going with Lidos. It's up today but it's off the previous highs. I think it's got a very attractive offering going forward and it's defensive being defence companies. Speaker 3 There you go, Liz. Speaker 5 I'll take a 494 yield on the 10 year I would have. I would have rather taken 5, but 494 is still pretty good. Speaker 3 We'll give you credit for catching the five you liked it coming into the day, and I guess the bond math starts to work if you started with a 5% yield. Speaker 5 Thank you. I appreciate that all. Speaker 3 Right, Joe? Speaker 2 Expeditors International of Washington is a $25 billion company with over 68% revenue exposure overseas and hitting a 52 week high today as we speak. Speaker 3 All right, we'll see how the afternoon goes. You have the S&P 500 down just .2%. The Dow is slightly positive. Russell 2000 as well. It does it for halftime. The exchange starts right now. Speaker 1 You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. 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