Yields Surge, Stocks Fall… And Apple’s Foldable Phone 9/9/26

0:00It's NFL kickoff time exclusive NFL team valuations with sports business expert Michael O's a N F L is by far the most popular believe in F L team valuations now on C and BC dot com slash sport. Lots of the Nas X markets. I didn't know you're a city's time square. This is fast money. Here's what's on tap tonight. Right on the rise even as the treasury takes unprecedented steps to keep long term yields lower. My market still seems spooked in what this week's inflation reports could mean for future moves. An apple gets brought into the fold the tech giant unveiling its latest two thousand dollar device by one top analyst thinks fans are going to be lining up to get this one plus crude oil hits three month highs. Chewy shares in the dog house after earnings and we camped down to Oracle earnings what to expect from the tech giant tomorrow night. I'm a list of Lee live from coming to you live and see you be at the Nas X market site on the desk tonight Steve Brasso Carter-Brockston worth Dan Apen and Guy Dominic. We start off with that great rate rally that sent in your treasury yield to their highest

1:02level since November 2023. The benchmark topping 4.85 percent at its peak today while the 30 year briefly crossed 5.3 percent the two year hit its highest in more than well two years. The move comes despite treasury secretary Scott Besson saying the department will buy back up to six billion dollars worth of 10 and 20 year notes tomorrow. A strategy designed to help bring down rates that's three times a normal amount a strong tenure auction also did a little to take the pressure off and it wasn't just here at home yields in France Germany and in Japan also hire today all this ahead of two key inflation reports coming this week. August producer prices out tomorrow morning CPI on Friday and of course next week's Fed meeting where markets currently see a 60 percent chance of a rate hike. So what does today's action tell you Guy. Tells me listen in our world we all have egos clearly I mean if you watch this show you know we all have some level of egos and it's important that you have one but it's also important to have a level of humility as well because the market can do things that

2:03you rarely if ever expect and I think we're borderline now I think treasury secretary Besson is a bit too egotistical in his some of the statements that he's making and some of the things that he's doing and the market will shoot against that so I think that's what we're seeing now he's the big stack he has the biggest hedge fund basically in the world right now at his disposal but the market has other plans and we've been saying on the show for a while that rates are going higher and they're going higher for the wrong reasons. Yeah you can use the term hubris you know we've been in the business for a long time and normally when somebody kind of puts a billboard up and says you know this is what I'm going to do and you guys are wrong you know folks kind of shoot against it and you know again you know he's been a very successful money manager I think managing the treasury of the United States is kind of a different game especially when we're in a position right now geopolitically where there's a lot of folks who just don't see us as the sort of reliable steward of democratic capitalism right now and I do think it's really important to kind of juxtapose what's going on with treasury secretary Besson who is a political pick right and he was approved by the senator or confirmed by the senate

3:06and then Fed Chair Worsh and so Fed Chair Worsh comes into this he wants to kind of speak less let the market kind of tell him what's going on and it looks like Besson is on the exact opposite side and it'll be really interesting to see how monetary works against some of the fiscal stuff they're looking to do but also some of the I don't know what you want to call it whatever these twists and all this stuff you're doing I mean it's meant to kind of affect monetary policy but right now it has not proven to do so and I think once we get some of this inflation day to this week and we see what Fed Chair Worsh and what the panel says and what they do I think that's going to be a lot more impactful than what Besson is saying right now I mean I was I was comments to work centrally that you know treasury secretary Besson is basically taking on to the deepest most liquid markets in the entire world at this point trying to influence the direction of these the currency markets when it comes to dollar yen as well as a treasury market when you set up the markets for expectations for something and it comes up short that's when people get caught offside yes so he hasn't done anything yet this is just been all posturing at this point but I get your point that we're

4:10talking about billions against trillions so he can't win with sticking his finger in the dam but he can win on rhetoric so if he's talking about it what's the risk if you're a trader and you say I have multiple other spots to pick my battles do I want to pick it with the US treasury and the Fed now I think the the administration is most likely saying maybe the Fed does raise rates or maybe a cut is not in the cards they had to come up with another strategy to avert the market crisis crisis for them higher rates but when we take about a deep pullback markets are at all time highs the market seems organized we don't see massive selling yet we're coming into a seasonally volatile time period but where it used to be all about rates I think the market's telling a story that they're comfortable around rates right now someone's going to win in the end but the market has not sold off just yet I mean it's for rates it's

5:13about rate of change right it's it's the path travel that that is sort of well documented and yeah there are two ways to look at it we have moved up aggressively we're flirting with five and that could be seen as a negative and we could also say that it's we're lapping the three-year anniversary of the peak the peak actually was intraday on October 23rd three years ago 2023 we went briefly above 5% so if we're below where we were three years ago and the markets doubled since then equities is it a big problem it's about rate of change the market handles this but it doesn't handle quickly going to 512 514 if we were to inch there by the end of the year 512 514 I don't think that would matter it's rate of change and for now the equity markets are are a dealing with it yes in the charts you see 512 or 514 I mean the uptrends intact and there's no reason they can't get to 5 and a little bit above that but once you start talking higher numbers than that I think there will be some consequences which have yet to be seen yeah when you make comments like I am

6:14the house now and I have asymmetric information when it comes to the B.O.J. yes it's just I don't think it's particularly helpful maybe true doesn't mean you have to say it and listen I'm happy it comes me to know that there are where that there's a problem problem in terms of what's going on with Japan and problem clearly what's what's going on the bond market here that's a good thing that they understand it but it's not necessarily good thing to sort of take on the market in its entirety and make comments like that because invariably the market will shoot back against you and I think that's what we're seeing now to these guys points though it's markets yeah I was saying that these are the ego guys here the markets are doing just fine the markets are doing just so why are we fighting about this well we're not for it we've seen pretty come over here I mean it's more when cheer to Carter's point you know back in 2023 here's the one issue right now is like we just cross that 40 trillion dollar debt sort of level here back then when yields were at 5 percent we had

7:1632 trillion so if you think about that when yields do go higher this is a really difficult spot for the treasury to be in to have to kind of you know finance all of that debt and it just keeps going higher and higher so higher yields at some point is going to be a huge drag on right well no well no I mean it's just going to be a huge drag on growth I mean sooner or later but the market did take to Carter's point the market has doubled yeah the stock market has not been bothered about rates going higher I mean that's the point and we said here and somebody there when that's the hard part when's the tipping point what is that number nobody knows the answer to that I mean if if it is predicate ultimately always on the rate at which you can earn profits the profit margins are so big for these big companies that moving up in rates doesn't matter the margin you know obviously 9 percent rate matters but for these big AI what have you want to call it right to tag on or the the margins are so fat the profits so big the interest rate doesn't really impact them unless it were to get wildly higher but it is actually if you think about this we're getting kind of along in the tooth of this AI build out right and if there's a the trillion and a half on balance

8:21sheet right now and they have to get really creative and go off balance sheet with all these SPVs and we have all these private equity and private credit companies and all these real estate and investment try I mean it's really getting a bit crowded and there's 1.65 trillion off balance sheet right and why are they doing that a lot of these companies the credits and we're going to see Oracle tomorrow night after the close I mean they're raising money at like 7 8 9 percent a lot of these neoclowns too so sooner or later you don't get the demand you don't even you're getting you're you're crowding out all the good stuff that's the Microsoft that's the Google that's the Amazon those are the ones with great credits but the other stuff it's that sort of incremental finish line it's that incremental last mile that's going to get us to the promised land which is return on this investment and that is being 100 percent fueled by debt that's coming increasingly in high rates in March there's two sort of sins in market the liquidity right you mess around with small caps thighs you get drool and debt right I mean and obviously with the case of the US government it never seems to matter what you're pointing my point but to you these against the other one so in some relative basis so here's a company core weave okay it's got a 53 billion

9:24dollar market cap they lose a ton of money they have 51 billion dollars in debt this is one of the most leveraged companies we've ever seen in technology at this scale so things have to go so right for this company to be able to execute and stick around by the way you know what I mean because if there's any hiccups in the near term that's just one of these situations and I'm not picking on this company this might be in a great situation they may have so much leverage that sooner or later everything gets realized all of this demand right and and this company could be you know a half a trillion dollar market capa who knows but all that debt right now if we do have some sort of credit situation they're coming for those stocks first I mean let's let's pretend that there isn't even a lot of the situation there's a situation per se but it does impact how you calculate the rate of return for the IR on these investments I mean it it prolongs the time frame potentially to recoup what you borrowed and so it changes how you calculate how you you the stock I mean the reality is without a mistake or you know some kind of big dislocation this is the

10:28US economy is not built for higher rates and again the Fed can lower rates he he uh... chair walls can come on the show today in in five thirty say we're lower rates rates will go higher that's exactly what will happen and I think I hope certain people understand it because I think that's what happened but the point is it's not an economy built for higher rates at this position and it's certainly not a market that's built for higher rates but that's what we have right now but with every turn on invested capital though they could always pull back and turn off that spikot it's the same way that Amazon was with AWS where that was the growth engine it could foster that growth or it could pull it back so if the mega cap names are the ones that were responsible for the market doubling and they're the ones that are going to be responsible for cutting in half because they're spending too much they come they come back on spending. From what to expect from inflation and next week's Fed meeting let's bring EY Parthenon's chief economist Greg Dacco Greg always good to see you what are you expecting in terms of the inflation reason how it feeds into what the Fed does next week. Well I think we have two elements

11:29when it comes to the inflation picture the first one is a very short term I think at the next release when it comes to the CPI data we're going to see core inflation rise about 0.2% month of a month I mentioned 0.2% because that's a key anchor for Fed policy makers anything above that will likely trigger a rate hike at the September meeting. When we look further out on the horizon and I think that's actually more important we're going to see higher energy prices feed into core inflation and that's a real risk for the US economy because we have an environment where there are a few pillars of growth that are resilient but we also have exposure when it comes to the underlying drivers of economic activity namely consumer spending activity consumer spending has been financed to a great degree by wealth accumulation coming from very strong stock market earnings if you take that out and if you have a flat stock market environment and you're increasingly relying on income that's where the rubber hits the road because we're currently in an environment where real wage growth is actually contracting real wages have been contracting for the last

12:32five months and that's a key constraint for many households. How is this picture though different from other periods since the Iran war started where we've seen oil prices where they are and we've seen them feed through. It's the accumulation of stocks which is really an issue what we've had over the past two years arguably is a series of negative supply shocks that have been hurting consumers, hurting businesses because the cost of living, the cost of doing business has continuously increased. We were just talking about interest rates and the cost of capital. The cost of capital is much greater than it was just a year ago the cost of goods, the cost of inputs for many businesses are also much higher. So when you're asking what does this shock do? Well this shock comes on the back of a number of prior shocks that are leading to this higher inflationary environment and constraining gross capacity. I often talk to clients about the economy that could have been. We could have been right now talking about a US economy growing out of 3% plus. Instead we're talking about a 2% economy and that is in line with its potential. It could have grown

13:34much faster thanks to the AI boom that we're currently seeing. Unfortunately we're in this negative supply shock environment. As Mel knows the NFL season starts tonight, Mel will be watching. Go part cells used to say you are what your record says it is. So if you're 5 and 12, you're a lousy team. My question is is a 4.1% unemployment as great as that seems? Is it a great number or are there things below the surface of the employment picture that concerns you? So it's a solid number. I think there's no escaping the fact that a low 4% unemployment rate is very encouraging. Many people that want a job have a job. The question I am going to pose is the following. If you have an environment where wage growth is decelerating while inflation is accelerating at one point they cross over and that point happened 5 months ago. 5 months ago we had inflation surpassing wage growth. That means that real wages are in contraction. What do you and I depend on when it comes to spending? Our income at the end of the month. So that's really the key fundamental pillar that we have to watch very attentively. And that's why I am very cautious about

14:36the fed potentially raising rates in this environment because it's likely to impact interest rate sensitive sectors disproportionately without necessarily affecting the underlying causes of inflation being above the 2% target. You're not addressing the Middle East conflict. You're not addressing tariffs. You're not addressing what is a very inelastic CAPEX boom for AI. So what does tightening really do beyond just affecting some financial conditions and some pockets perhaps of exuberance in the market? So Greg that's where I was actually going to go. It doesn't solve anything. It doesn't drill a new well. It doesn't bring anything else. This is a supply shock. So all inflation is not creating equal. There's demand, pull, supply push or however you want to phrase it. But this is a supply shock. So are they making a big mistake that we're even contemplating this because it was political with Powell and Trump coming from Trump originally. Now it feels political coming from the other way that you are demanding that we raise rates as a political gesture versus an economic one. It's a very interesting point. And I think

15:41what I'm hearing a lot of is this narrative that the Fed has to raise for credibility purposes. And I think that's a sad situation because we've had political pressure. We've had the fear now of fiscal dominance with the Treasury intervening in markets. And we have a lack of transparency from the new Fed chair that are all contributing to this question of Fed credibility. That is sad in today's environment because you can make a very rational argument for raising monetary policy if you think that inflation has been above the target for more than five years. If you fear a transmission of these price pressures into core inflation. If you think that inflation expectations are at risk of becoming the anchor, you could very well argue for a rate hike. But you can also argue very intelligibly for a hold in terms of monetary policy because underlying inflation dynamics are not inflationary. Wage growth is disinflationary and inflation expectations are still fairly anchored. So you could make both sides of the argument. And that's why policymakers are in this very difficult situation of having to ask what's driving inflation, how is the trend evolving,

16:46and does tighter monetary policy really address the underlying root cause of higher inflation? So if it doesn't, then is there anything the Fed can do? The Fed can be very clear in terms of its messaging. One, you deliver 2% inflation. You don't deliver it overnight. It's going to take time and it's going to take a monetary policy stance that remains relatively restrictive. That's number one. Number two, you are aware of the potential risks that the economy, you have to talk about potential scenarios. We're in this highly uncertain environment. The tendency when there is uncertainty is to not do anything. You can't appear as though you're not doing anything and just watching and without necessarily acting. So you have to say these are the potential scenarios. This is how I would react in this environment. It's not going to do that. It's not Ford guidance. That's the problem. Kevin Worsh has confused us all by mixing Ford guidance and a reaction function. A Ford guidance is essentially an unconditional resolve to do something. No matter what, I will tighten monetary policy.

17:48A reaction function is conditional. If inflation does not move back towards the 2% target, I will tighten monetary policy. These are very distinct things. The latter, the reaction function is 101 for a central banker and that should be expressed by the Fed chair. Yeah. Great, great to see you. Thank you. Always a pleasure. Great. Go. EY Parthenon. Parthenon, Carter's into Parthenon as well. That's a different Parthenon. Sure, he could be in the Parthenon too. Makes great point. He should be because the points he makes are excellent. I'm of the belief, look, I don't think they should raise. I don't think they should cut the point we've been making is they could probably do nothing until the spring and be okay. But the problem with that is the bond market is doing everything for them right now. I mean, you say what you want, but Treasury is basically fighting against the Federal Reserve right now in the market taking over and you're seeing a manifest almost on a daily basis in currencies and obviously in the bond market. We haven't even talked about the central bank meetings that are happening next week and how traders are vastly expecting all of those ECB, BOJ to all raise rates and decisive raise rates

18:49by the end of next year. Yeah, they have single mandates, so that differentiates them. Right, right. But the poll higher. Oh yeah, it's a global. We live in a global rate world. So wherever the direction is, normally that's where all central banks go to and that's why you see those odds of him raising reach 60%. But a month ago, we had CPI that everyone's talking about was the lowest print in, I don't know how many years. So you could see that flip on a dime. I'll tell you, I'll wrap it up one last thing. Five year, 10 year, 20 year break, evens. Don't tell me inflation is running away. They're right at the feds, 2% and small target. All right, meantime. Oil prices rising for a seventh straight day after the latest run, a strikes in the Persian Gulf. WTI crude hitting its highest levels since early June, well, Brent topped $100 a barrel for the first time in nearly seven weeks. The move helping energy stocks rally today, the ex-Heli closing at a fresh record led by gains in APA, Exxon mobile, Chevron and Valero. Carter, what do you make of this move? Well, again, we've only just now got back above the pre-sell off high. So a major drawdown

19:51and major recovery. There are areas that are very extended and we're sellers of those. That's particularly PSX, Valero, MPC, nothing wrong with Chevron, nothing wrong with Exxon and others. Generally speaking, obviously a very small sector. Yeah. Three and a half percent weight. And ironically, the biggest sector at 38 percent weight, tech, they're both up 48 percent here to date. So little guys can sometimes do big things. Energy, I think again, one thing we've talked about now for good tilt time probably the last year, year and a half is how attractive energy stocks are. Now it's happening right before your rise. You have Exxon lead in all time high. Crude is not nearly where it was in the spring. And it goes yet again to show you, you don't need crude to participate for these stocks to. And refiner's do well downstream. OIH seemingly is breaking out. You stay with the energy trade here. Coming up, rough times for retail. The stock's getting hit hard as today. And whether it's time to scoop up the names on the discount rack plus a day late, but not a dollar short. Meta shares rallying the day after its big AI agent reveal why investors are rushing in.

20:56And whether you should too, don't go anywhere fast when you'd be back in two. It's NFL kickoff time exclusive NFL team valuations with sports business expert Michael Zanian NFL is by far the most popularly NFL team valuations now on CNBC dot com slash sport. Welcome back to fast money. The consumer trade under pressure again today shares of convenience store Casey's general seeing their worst day since 2020 despite earnings beat and revenue beat and pet supply company chewy down double digits as consumers paired back spending on their furry friends or friends. Other consumer stocks like Lulu lemon and Nike adding to their rough runs and even recent darling target saw pull back in today's session. How how would you define this weakness? Well let's see there's players joining what has been going on for a while right so Walmart

21:59Costco really the two biggest in many ways regardless of fact that you might say it's grocery store have been stalling and rolling topping out bullish two bearers reversal sales for months and then TJX joined the party. You see dropping down your things like a Casey and then Burlington I don't know where so it's it's one after another the XRT there are some names look at Abrahamian Fitch bringing out to big new highs but the general space of consumer discretion is poor because of Tesla Home Depot and then retailers in particular then you've got marquee names like think about it Disney and Nike just the whole space is generally not a place to be. Plus if you look at results to Carter's point you have to pull out who got the biggest tariff refund checks so we saw Nike get a big check we saw it target get a big check. Walmart got the biggest check of all but said that they were putting it back into savings for the consumer FedEx UPS they were giving rebates back to the consumer try to see who's beating who's raising

23:05guidance based on a one off non-reql duplicated issue with the tariff refund check and see Lula lemma got a check not as big as the other ones but they're still getting checks see who's beating because of those tariff refund checks that will not be duplicated next quarter. Even aside from refund checks I mean you take a look at Nike and Nike is just in the doghouse regardless of how big a check or how it's going to be record whatever it is. Yeah Nike is its own probably story I mean a lot of Nike's self-inflicted but this competition comes in a meaningful way when you least expect it and that's what look Lula lemma is going through the same thing specialty retailers where hope goes to die a great line from Jeff Mackey and it's playing out over and over again but I will tell you American express made it tie Carter probably looking at it now in January of this year it's traded poorly since it's up again and up up trend and it feels like it's going to break through it now why do I mention that well guess what they take credit risk and this is a premier brand so the liquids he rates are up nobody's talking about it they should the consumers not nearly as

24:06healthy as people want to believe. Yeah and just talking to Greg. Yeah to Greg he was going to say you know 4.1 percent we're in full employment we've had wage growth if inflation comes down that should be good for the consumer but then you go forget the discretionary names you know especially retail that sort of thing I mean you know Dix is tracking Nike you know we know Lula let's go on and on but it's Walmart and it's Costco and it's Kroger and if you're just looking through the way that these stocks act it's going to tell you I think this is what we're all trying to say here it's something very different about a consumer at least the way investors are expressing that view in the markets. There's a lot more fast money to come here let's come in next. Better late than meta shares getting a boost as Wall Street perks up to the company's latest AI reveal the new agent taking on the competition and what it could mean for the stock's future and speaking of new tech everything you need to know from Apple's product event and the bold fold coming for your iPhone you're watching fast money live from the Nasdaq market site in time

25:09square we're back right after this it's NFL kickoff time exclusive NFL team valuations with sports business expert Michael Zania NFL is by far the most profitable league NFL team valuations now on CNBC dot com slash sport welcome back to fast money meta popping nearly 7% today after unveiling its new personal AI agent muse the company selling the product as a tiered subscription service with a free option as well as tiers with monthly payments of $20 to $100 meta was the only mag 7 stock in the green today is now at more than 10% in the last month weighing out was inter weighing was a chief AI

26:09officer I'd met us said last night that the usage of muse was way past their expectations at this point and it's going to be I mean on a free basis I mean they're basically giving you the memory and the compute that's like in a lot of computers in goodbye and it's for free and it's on their servers and you know here's the opportunity for them to obviously monetize that spend that they've been penalized for relative to a bunch of their peers and you know they have that distribution we talked about it last night it's the combination of subscription and then transaction revenues is going to be something that is very new to this company for all intents and purposes and they're finally monetizing what's up so again I think this is going to be something might it be threads might we look back in you know six months or something and say yeah I mean threads was the fastest growing app I think since tiktok when they released that a few years ago and no one even talks about it no one uses that so this company has had some fails but this seems like egentic AI this is the right time for it and whether it's going to be profitable for them or not we're not going to know probably for a year or two you had an excellent point last night and I'm highlighted because they're so

27:14right it down right it down now I'm getting completely no but in terms of the information it has access to on the meta platform maybe it may not be as useful to an AI agent to actually do work that needs to be done for any individual user if it's going to go through your social media and your WhatsApp etc it doesn't have an email it doesn't have you know all these other things that maybe a Gemini or you know an Apple Siri AI might have Dan embraces technology like no person that I've met the other point made last night was the risk reward if you want to use that term for Facebook here is extraordinary I mean there's a lot limited downside there's huge upside for company that basically has half the global population on one of all of its platforms so you flip this switch and this could be a huge mover we said it last night the stock move today I still think there's more upside in the name what do you think more upside in the name well let's talk about the current move right we've moved up 25% off of the low so this is a stock that peaked 13

28:15months ago it was August 15th here we are September 15th 13 months later what was it $800 a share it drops to almost 525 and now this is the fourth count them ricochet of 25% are greater and each one of them failed yes and it's up to a downtrend line I think you take profits if you caught this well reduce exposure somehow yeah it's been to to that point it's been in the clining trend line for a year now a little bit over a year but when you think about trust and you need trust for this type of endeavor you don't think about meta first right it's just I mean yeah not to be glib ask the winkle bosses right this was based on something that I don't want to bring you know so far back but when you think about everything that they've done along the way they spend too much then he cuts back what I love about it is that he can throttle better than nobody when it comes to the investment I'm not sure about this when trust comes into play in addition to the cap expan coming up fighting

29:15into apples latest product event the AI updates and new devices and house eo john turn is spared in this first showing the details and analyst reaction went fast money return welcome back to fast money stocks lower for a third straight day as rates continue to climb the Dow falling 400 points sb 500 down half a percent Nasak down 6th 10th percent and the Nasak 100 also posting a small loss and a communication breakdown and telecom stocks comcast falling nearly 7% charter dropping 8% with AT&T and T mobile lowers well both down about 2% Adobe shares slightly lower after hours opening I reportedly will no longer accept chat gbt advertising for image and audio products that compete with its own features that includes Adobe's Adobe reports tomorrow after the bell apple shares closing a quarter percent lower after its product launch event

30:17the first with john turn is the CEO the company unveiling the next generation of iPhone air pods and air watch but perhaps the most closely watched device was the iPhone duo apples first foldable phone McKenzie segalas is in kupertino with all the details hey mac hey mel so the iPhone duo is the device that everyone wanted to get their hands on today and I just tested it here at Apple it starts at 1999 but max it out with two terabytes of storage and you're just shy of $3200 a new high for a mass market smartphone and that gets at the broader strategy here from john turnis it is first event as CEO push consumers further up market while making the duo additive to the apple ecosystem not a replacement for another iPhone there's no base iPhone 18 this fall just the pro and pro max and ios 27 handoff lets your phone number follow you across iPhones encouraging apples installed base to own both a foldable and a pro turnis also position the iPhone is apple's central AI device with Siri working across the ecosystem now the most

31:22consequential example may actually be on the watch Siri recap and audio intelligence effectively turn it into an always listening AI device but much of the new Siri experience today was demoed not something that we can test out ourselves at this point and even when ios 27 rolls out Monday Siri AI will still be gated behind a wait list mel i guess this was sort of an answer to the concern that this would be cannibalizing right future iPhone sales the fact that you can sort of port the information across devices exactly and i mean this has been part of the reasoning behind why we've waited so long for a touch screen MacBook or a foldable in and of itself you don't want to cannibalize your existing lines and that's why also when you price it out like this the apple upgrade this new leasing program that they established a few weeks ago you're almost at a price point that is so high that you have to opt into this kind of system so forcing people's hands into this premium end of the spectrum is a lot more palatable you take the sting out of

32:23the sticker shock when you brace it down break it down rather into these monthly payments a leasing system of course encourages you to upgrade every year and that's been the standing problem for apple for a while now the fact that they would have these super cycles and then these multi-year lulls and if you move into a leasing model then you you shy away from that and then in terms of your point about the foldable being additive and not a replacement for a pro and a pro max that is really key here they're trying to make this they want Siri AI to be the connective tissue across all of these devices and the foldable would just be the new cool factor because at this point it's what two percent of the overall smartphone market there's a question as to whether apple can change the calculus here for the broader foldable scene including for the names names like Samsung all right mac thank you my kind of sigalis from our all the this let's bring a gene monster managing partner a deep water asset management gene great to see you I take you from the nose you you like this device I'm wondering from a product portfolio standpoint what hole does this fill in the apple lineup well it whole it fills a hole about where humanity is going which

33:29is this insatiable demand for content and people get up in the morning so first thing they look at they touch their phone and look at it 100 plus times a day it's the last thing they look at before they go to bed and I think that's the market the foldable market that hasn't played out because last five years Samsung and Google really haven't had devices on the foldable side that that people want 2% of the overall smartphone market so it's not necessarily feeling a hole in the product lineup it's really in terms of I think an unfortunate reality of how humanity is playing out and I would say going into the event that my my expectations like this was not I knew the foldable phone as everybody knew that it was coming it was not on my list of what I think the big takeaways are but after seeing it I'm convinced that this was a really big deal for apple today and as far as filling that product hole effectively what they did is they launched the first product consumer product that people are really want I mean vision pro really didn't hit the mark since basically

34:30the AirPods came out December of 2016 and so what that means ultimately is this device is even though it doesn't fill a hole necessarily in the product lineup I think it's probably going to account for 5% of probably 8 to 12% of iPhone revenue 5% of overall revenue this is going to be like the AirPods effectively and that's really notable. Gene when do you think that will be because let's just do a little math you talked about vision pro you know they sold what for four five hundred thousand of them over a couple years and you know you do the math on that it was a product that generally you know I think a lot of people tried they just kind of got rid of it didn't really do that thing and I know you're big into you know physical AI and spatial computing that's what I think I look at this and I say to myself okay if they were to sell a million of these over the next year let's say an average price point of 2,500 bucks we're talking about two two and a half billion dollars it's like a rounding error on that number so when you think about it as an investor yes the signaling of it looks amazing it looks like a great device I just would not have any interest in this

35:34for a very long time it's too big you know it just whatever and I think we'll look back and and I think this will be the way it plays out Gene but I'm just saying from a financial impact like as a someone who's looking at the stock would this be the sort of thing that would get you excited to go out and buy the stock I think it would and Dan I love our our back and forth over the years and I would I would propose here that to kind of revisit this conversation for fun a year for now I think that they'll do 20 plus million of these in the first year and where I get that math from is that if you look at I mean really what they're going to first take from is the iPhone Pro Max base that's about 30% of total iPhone revenue comes from Pro Max if they take a third of those just the ASP bump is 54% so if it fully cannibalizes you still get a 5% lift on the iPhone business overall and so just to put some context that excludes any sort of other upgrades coming from Pro or any of the other models and so my sense is that I mean the big negative here I haven't I haven't

36:37actually held one but from what I hear and talking to people who have is it's heavy that is a negative but I think the experience is going to be remarkable again I went in on the same page you were Dan I thought that this was going to be a rounding air that it's nice cool tech but I just come back to unfortunately this is what people want they want a device that they can just plow all their attention and it's really cool the animation when you open it up is just spectacular so I'm in the camp that this actually is going to move this dock higher over the next week all right Gino always great to speak with you thank you thank you Gene Munster deep water asset management well we will see in a year you know if it does fill that whole of humanity desire and content which is an interesting way of thinking about a device but you know I hadn't thought about it until when when Gino actually said that in terms of how we consume and if we have a phone it's a single screen that phone is a double screen basically to consume content at the same time or larger screen to game or look at a document or whatever I mean it kind of grew on me and just that sort of you know Gene said going

37:41in that he was bit of a skeptic and then he came out saying you know what he's a believer now he also pointed out in a tweet earlier today that looks like they're going to split the upgrade cycle which sounds like well it's still one plus one equals two but his point in splitting the upgrade cycle it's not it's actually one plus one could equal three so there's some tailwinds there as well listen Gene is the guy to go to here you know he's been positive negative but right now he seems to be sort of uh geeked up the valuation is a concern but again it's been a concern for while milms the apple chart well I mean the here now chart is decent right it's an uptrend albeit not a particularly exciting one I guess the the big issue is apples relative performance to other choices one could have made right and we know that apples relative strength line are relative performance chart peaked exactly four years ago in the third week of September of 2022 four years later it remains a real laggard um what's going to change that I don't know coming up could AI kill us all the stark warning for one top AI researcher and why he says there is a chance that the

38:45tech could end humanity much more optimism when fast money returns welcome back to fast money a series of posts about potential risks in AI making waves today researcher Jacob Coxon resigning from anthropic accusing it in open AI of racing towards super intelligence at the expense of human safety one of anthropic safety leads echoing that warning putting the odds of a human extinction extinction in the next decade above 10 percent without a course correction earlier on closing bill over time we talked to George Kurt C.E.O. of cyber security firm crowd strike about AI safety risks here's what he had to say now the new apex predator is the agent state right and they're not at at your perimeter they're on your payroll so we're actually thinking about this corporate America everyone is letting them into their own environment and what happens afterwards having a hard time controlling it so I think from the standpoint of how you get

39:48in front of this is you have to have the right level of AI and focused on security activities uh it is interesting that we are you know as a society inviting AI into our homes into our lives into our businesses and yet we don't really know how well our defenses can actually protect us from what those agents that are so capable and improving themselves constantly can actually do yeah well I think if you go back in history right nuclear war during JFK and the Cuban Missile Crisis was probably more than 10 percent chance of a nuclear war so I think we're always battling with humanity like what's the next thing that's going to take us out the ice age nuclear war AI I think it's always going to be there and do I believe there's a chance I would think a lot of safeguards have to be hurtled before we get to human extinction I think it could be cumbersome I think we could see a lot of negative headwinds but I'm not buying the 10 percent human extinction yeah let's dial that back and not and say it's not extinction entirely but maybe physical harm to a factory

40:51physical harm to human beings um I don't know I feel like that's a force in the air and thank you for that chance maybe not extinction but uh all very speculative and hard to make sure yeah one of the points was being made is everybody rushing to be first in the rush to be first you sort of look past some of the potential pitfalls and they're in lies of vulnerability I think so I don't know how you trade 10 percent extinction but what I'll tell you is all these security names these cyber security names these scale or Palo Alto me they are volatile but those are the names you have to own in this environment I think it gets worse before it gets better with this technology and I think to your point there's figuring out what the vulnerabilities are right and we have that example just with open AI and hugging face there's another one with anthropic you know it's great to hear these security guys they obviously have a huge vested interest and kind of um you know being a bit of a firewall pun intended there for all this sort of stuff but there's going to be some some disasters you know people are going to die I mean it's just that simple and we're already starting to see that there's massive lawsuits against these um you know anthropic you know well maybe

41:55open AI I don't know about anthropic about you know suicides and all this sort of stuff so it clearly gets worse before it gets better but in the meantime just some fun stuff going on it's a technology coming up oracle results on deck and the software stock keep it late summer momentum going after its results and what the traders expect from the numbers more fast money is you you welcome back to fast money oracle shares just in the red today as the software company gears up for fiscal q1 earnings after the bell tomorrow that's a key test of course for the AI trade the stock hitting a record after this earnings report exactly one year ago it's market kept briefly topping a trillion dollars shares have been cut in half since then they've been trying to mount to come back over the last few weeks so what do we expect here grassau yeah so if you look at the chart and carders here so i'm sure he'll weigh in on this it's down 17% year to date and what do you think about the stock what do they have to do to force a

42:55re-rating of this stock so there's got to be some sort of a free cash flow in inflection there's got to be cloud growth cloud growth has been great they've got to they've got to continue with their cloud growth inflection on free cash flow and then maybe some pillar maybe some pillar AI contracts but you can't tell me that the worst news isn't isn't already priced into the stock i think i think upside is at risk now versus downside what's your take yeah i mean 350 to what 115 and i think those are good lows those lows back three four months ago early stage bearish to bullish reversal buy 12% implied move i think ten in the last 12 you've seen moves of eight and a half percent or more so stay tuned sports fans up next final trades

43:56final trade time steven or go i think the risk has been taken out the majority of the stock Carter Braxton or general motors among so many very poor consumer discretion stocks we like this one danathan yeah meta with Carter i think you let this one go i think there's a lot of good news in stock guys i didn't want folks to know that mellows are saying she would be locked into this patriotic game this evening against the Seattle sea hawks just so you folks understand always for love of sports uh southern copper Melissa thank you for watching fast money mad money the jim crane where starts right now all opinions expressed by the fast money 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 an opinion such opinions are based

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