Closing Bell: 9/3/26

0:00It's all about the money. I want to be the person of my family that creates an original well. How they earn it, spend it, and make dreams come true. I'm not going to sugarcoat it. It's hard, but it's so worth it. Millennial money. All new Saturdays, three Eastern CNBC. All right, welcome to Closing Bell. I'm Scott Wobbler, life from Post-Nine. Right here at the New York Stock Exchange, good to have everybody with us today. This make-or-break hour begins with the Waller rally. After the influential Fed governor said he's inclined to hold at the September meeting, yields dropped, hike expectations dropped, stocks, they move higher. Take a look at the scorecard here with 60 to go in regulation. We've been green all day long, and it's more than 1% for everything but the Russell discretionary comp services tech leading the way today another nice day for meta as well. We're going to have a report coming up on why that stock is suddenly surging, especially over the last couple of days. Different directions today for both snowflake and broadcom one, soaring the other sinking, following their respective earnings reports

1:00will dig a little deeper into both of those two. We do begin though with our talk of the tape, the big rate relief that stocks are feeling today and what it means for your money. We'll get to our panel in just a moment. Let's first though bring in our senior economics reporter, Steve Leisman. So we're going to talk about a few different things but I'll get your reaction to what just happened moments ago when our own Aiman Javras was in the briefing room, asked the vice president a question and he responded and I quote, it's proper and responsible for the Fed to lower rates. I'm wondering what you make of that statement. You know that the administration from the very beginning, Scott has not been shy about saying what it wants the Fed to do and the president has done it. Now the vice president's getting it on the act and I guess we've determined that that's okay for them to voice their recommendation and what they think the Fed ought to do. And the Fed can just sort of ignore it. I don't think that that has any way at all on the Fed,

2:02although I do think the presidential pressure does have some effects, Scott. I do think the idea that the president does not want the Fed to hike rates is something that weighs on the Fed and what looks like a very close call. I think there was some thought as to whether Fed Governor Waller wanted the Fed to raise rates and going into these comments that he was anticipated to make today, I think there was some fear if you want to use that word around that and he wasn't as hawkish as feared was he? Yeah, very much firmly on the fence. I'm calling it that the market is climbing the Waller of less inflation worry, I think is where we're at right now, Scott. He's really pinned his decision on the August inflation report which will come out a week from tomorrow. Notice that the employment report tomorrow is of less significance to the Fed. They think that the job market is stable and not a source of inflation.

3:03But Waller said, look, if inflation is not heating up and there are some signs that we have some disinflation out there that he could hold rates where they are and if it's hot, he would hike rates. This follows, I would point out the dovish comments, I would say, from New York Fed President John Williams who also sees inflation coming down. I would say there's a lot of people who disagree with them and all of this follows, by the way, some pretty hawkish comments from the Fed chair last week which does raise an interesting question of what does Worsh want to do versus what two of his senior lieutenants want to do. I mean, Waller obviously had an impact on the bond market because yields came down and hike odds came down to 54.6 from 63.2 just a day ago. What's striking still is that the market basically at 50.50 as it was going into the last meeting is this just the way that it's going to be going into almost every meeting coming up 50.50

4:03because it's so unprecedented for the market to be if you want to suggest guessing as to what's going to happen. It's usually not in that position. It obviously speaks to the lack of forward guidance. Yeah, Scott, I think there's two things. One is I do think it's a close call and I think that is part of the reason why the market is 50.50 here. But also it's the new guidance or the lack of guidance from the new Fed chairman and we don't know exactly where he comes down. I will say that people in Jackson Hole thought that the chairman was hawkish enough that he would have to hike here. That was some interpretations of Worsh's speech was that he had kind of really telegraphed a hike. I didn't read it that way but there were some very smart Fed observers there who did read it that way. But right now the market is 50.50 and I think this is a new feature. It's something that does lend itself, I think to higher yields over time in that there's more uncertainty. The market will exact more payment for that uncertainty.

5:06We'll have to learn to live with that. We went into the last meeting. I think it was 70.30 for a hold and we could go into this meeting depending upon what happens a week from today with the inflation report, we could go in 50.50. Waller said something else today that I want your reaction to that I felt was a little spicy and I wanna know what you think about that because on the same podcast where he made the comments that we referenced earlier, it almost felt like he took a shot at the quote, play the ball, not the referee idea that the chair put forth at the last meeting when he was talking about not giving forward guidance to the markets, essentially not holding the markets hand all along the way. Waller used a baseball analogy, Steve, around a pitcher and a batter that they quote, want to play the ball but they cannot do that until they know the umpire strike zone. The players don't expect the umpire to have a perfect strike zone. They just need a rough idea of its parameters and some guarantee that it won't change much on every pitch.

6:07Perfection is not needed for them to play well. Was that in fact a shot at the idea of how chair Worsh has framed his idea about this issue? How would I describe this? How about a pitch right down the middle in terms of a shot at the chairman and his idea? I will say Scott, there are a lot of people who reject the idea of a Kevin War somehow that the market can set the rate. All of the big bond people who I talk to, who manage massive portfolios, they say they will never trade what they think the Fed should do. They will only trade what the Fed will do and they can do that with more or less information and Waller is sort of giving us the conventional wisdom that the Fed needs to provide some guidance about what that box is for a strike. It, remember, Scott, it is the Fed that sets the overnight rate. The market doesn't do that.

7:07There is no market that will do that or is capable of doing anything. It can provide more or less guidance to the Fed, but all the market wants to know is what the Fed will do because at the system we have right now is the Fed sets the overnight rate. My response to Worsh when he said the market is now watching the ball, not the referee, I thought that analogy was misplaced because the Fed is the ball. That's what the market wants to know. The market sets every other rate after the overnight rate of the Fed sets, but the market needs to know where and how to think about where the Fed will set the overnight rate. I get what Worsh is saying, it's possible to get some more information from the market, but what Worsh is saying, and I'm sorry, what Waller is saying, and indeed what many other Fed officials have said, they said it to me in Jackson Hole on the record, on tape in the interviews, was that they feel they need to provide the market some guidance about how they're processing incoming information and what information they're looking at.

8:08And indeed, Worsh actually took a step towards the market and that conventional wisdom in Jackson Hole. If the criticism was in, he didn't provide his reaction function, he definitely provided some functions if not reaction. Well, you said Waller threw one right down the middle, this felt more like up and in to me, you're a baseball man, you know what that means. Steve will talk to you soon. Thanks, Steve Leiceman, our Senior Economic Correspondent. Let's bring in our panel now, CIVC's Chris Harvey, Invest goes Brian Levit, and CNBC contributor, Capital Wealth Planning's Kevin Simpson, what an all good to have you all here. Is this so Waller Rally? Today, I mean, it's a much needed relief in the bond market. I think you're right, I think it's a Waller Rally, the market's a bit skittish, rates come down, feel a little bit better about things are waiting for non-form payrolls tomorrow, and you're not seeing much out of the Middle East today, so we get a little bit of a rally, have some idiosyncratic news that are getting stocks higher, especially in the technology space, and that's okay, and we think that next week, you'll probably see more of a rally on the percent buyback,

9:11but that could be the high water market, that could be the near term high, because that's just gonna be in all likelihood, in a femoral low on the long end, and it will go back to having, talking about higher rates for longer. I feel like people started to get pretty cautious over the last few days, overly so or appropriately so. I think it's appropriate, markets up, double digits, now rates are higher, the credit markets, beginning to wigglers start to push back a little bit, and that's important to us, we have no resolution in the Middle East, and we're out of earnings season. Yes, we do have conference season coming up, and well, here are some bullish things, but for the most part, with rates doing what they're doing, oil doing what it's doing, it's time to be a little bit more cautious, it's time to start to pull back the range. Interesting, I mean, we have called this the cautious cavalry that has arrived, it feels like as the calendar turned, you think it's justified to be so? I don't think it's justified, I mean, even through this period of being cautious, the last month, two months, the S&P 500's still positive,

10:13you have rate-sensitive parts of the market that are not performing well, but in general, what I've been saying to investors, look, I don't think elevated oil prices is what takes down this cycle. In fact, we're basically flat since the middle of June. The rise in interest rates reflective of a good nominal growth backdrop, I don't think that's what takes us down. Ultimately, at some point, if you have an environment where hyperscalers pull back on investment, where there's a bond issuance that doesn't go well in that space, those are the warning signs. Not higher rates on what I would deem to be a good nominal growth backdrop. Counterpoint? Yeah, so we weren't worried about rates, but we're now getting to a level and the hawkishness that we're beginning here, and the rates rising across the globe is a little bit of concern. More so, what Vicente is doing, yes, that will send a signal to the markets in the short term, but that doesn't stop things in a longer term. You don't think he can control where the long end goes.

11:15I don't think so. I think it'll be very ephemeral. He'll get rates down, they'll be down for a period of time, and then equal their big and pricing will start to react again, and rates will probably float back up, right? That's when we begin to start worrying about, okay, is this going to be a bigger issue, and are we gonna see rates across the globe go higher, and do we need to start repricing risk? That combined with what we're seeing in the credit markets gives us a little bit of concern. Not a major concern, but it's now time with stocks up double digit, again, to start to pull back on the reins, to be a little bit more conservative, to take some of what it props. I'm sorry, what if part, at least in part what's happening with yield, is because of anticipating better growth. Yeah, if it's anticipating better growth, right? That's great, but you don't believe that? I don't think what I'm worried about is that rates begin to become untethered for a period of time, right? We're getting the cent, not the central mile, we're getting the treasury to come in and intervene. I don't think that's a good signal, right? They're going to manage things in the short term,

12:17but longer term, we have to deal with the fact that we may have higher for longer, and what we saw from Jackson Hole was a pretty hawkish Kevin Warsch. We'll see, I don't think they should raise, I don't think there's enough for them to raise in the catalyst, but now we have to price it in, that probability, and that changes the equation. More so, and to get back to Brian's point, if we do have a bond issue, instead it doesn't go according to plan, or the credit markets begin to push back, we need to reprice things. And with things up, double digits, again, it makes sense that we need to be a little bit more conservative, especially in what I consider this quiet view. This goes to a note that came out yesterday or the day prior from Citadel Securities, that the risk reward has changed. The fundamental story hasn't changed, but the near term maybe has changed for a variety of reasons, right? We already alluded to those, right? Earnings are behind us, the buyback windows closing, your blackout period.

13:18And all sorts of other reasons too. No? I'm just wondering if we're talking about, is there short term volatility in the markets, are we talking about the end of the structural bull market? No, the former. Yeah, the short term volatility. I don't think we've ever had a lot of volatility under the hood. This year, I mean, if anything, it looks like tech's put in a bottom. The SACS apocalypse is well behind us, the hyperscaler's bottom, that the 200 day moving average. So I don't think so. And you know, this whole thing about rates, Scott, you and I, we grew up in a world 80s and 90s where the 10-year rate was above nominal growth. And then we entered in a prolonged period where the 10-year rate was below nominal growth. So the fact that nominal growth is 6.5% on a year-over-year basis, and the 10-year treasuries 475, that doesn't give me a lot of cause for concern. It's been orderly. We've been in a relative range bouncing between, you know, four and a quarter and 475. That's not a big challenge, even if rates were to go to 5% orderly, I would not view that

14:20as a significant challenge to this market. Kev, you want to solve the debate? Okay, we're having on the set here. Yeah, I think I have to. I'm going to Chris's side on this one. I think 5% on the 10-year becomes problematic. And the reason for it has to do, I think, more so with multiples. You know, we look at this bond market and higher inflation and higher yields, and 4.8 yesterday, you know, kissing that on the 10-year, we can get up and approach 5%. But if it lives up there, I don't know that we can run on these same type of multiples. And really, the only reason I think the stock market hasn't reacted already, Scott, is because earnings have just been so darn good. And they continue to hold up, you know, if we're looking at guidance for the future, they continue to be holding up and for one quarter, two quarters. But I continue to look at this and I'm concerned about inflation. I love the fact that we had a little bit of a freebie from wallow today to give us a reprieve this afternoon. But if inflation continues to hold steady, they're going to have to give us a rate hike.

15:21I don't think that's going to come in September, but I do think it'll happen in December. I'm hoping it's not a rate hiking cycle. I hope inflation comes down. But my concern isn't a deterioration of earnings. It's a pullback on the multiple. And that's what's gotten me a little bit more concern than perhaps I have been for the, really, for the past couple of years, Scott. Sure, but you say the only reason that we've been hanging in there is because earnings remain so strong, as if that's a small variable. That's the whole game, isn't it? I think the economy's strong. I think earnings are beyond anything we couldn't possibly expect it. And you're right, that is the whole game. It stocks trade on two things. They trade on earnings and they trade on the multiple that we assigned to them. So if we have higher interest rates, like let's just say you can get 5% risk-free in a money market, it's going to change the dynamic of being in equities. Maybe not for us as equity players or the retail investor. But if you're an institutional trader, if you're working on quants and you can get 5% risk-free, you're going to move money from equities

16:22and you're going to move them into fixed income, that's a concern. But really more importantly, than anything else in my calculus is, earnings can hold up, but I'm not sure that the multiples can. I'm just not sure, Brian, you're going to do that. Hey, when are you going to get back in? And why would you do that if you and I know you do believe because you just said it and others believe too, that there's nothing changed about the trend itself or the structural bull market that you think that we're in? And we got to 4.8% yesterday or a couple of days ago without much incident in the credit markets and with the S&P 500 near an all-time high, I don't know what another 20 basis points on the 10-year rate would do. I don't think rates are going to 5%. And I was just suggesting if they do, then I don't think that that's a major warning sign for the market. In fact, multiples have been coming down throughout the year because earnings are so good when you think about where earnings are. I would actually think that multiples would be higher

17:23than where they are right now. So, and on the other point, look, inflation, no, the five-year break-even's 235, that's not inflation. We don't have big inflation expectations in this country. We have price control. We have price, not price control. We have price stability. This, even if they raise rates, this isn't the beginning of a prolonged rate, tightening cycle. Maybe this is just a rate scare and people are looking to make too much of it. What do you think? I think it's a little bit of a rate scare. We'll find out more next week with CPI. CPI comes in light. It's gonna be tough to push that hiking. If it comes in hot, you're gonna hear a lot more about hiking. The other thing that we didn't mention is, yes, earnings are good, but when does earnings grow with peak? We have to start looking into 2027 and saying, okay, when are we gonna see that peak and begin to start discounting? You think they peak before others, do? I mean, that's gonna be the great tell, right? You think you're hearing about 28? Yeah, I think they peak probably mid-27.

18:26And I think that's what you're saying. That's why multiples are beginning to compress because the market's looking ahead. And how much more can you pull out of the credit market? A ton of this earnings growth is from issuance and issuance is going to cap X and that multiple I effect time. Believe it there, guys, great stuff. I appreciate the conversation. We'll talk to everybody soon. Let's get to some of today's other moveers, starting with meta, the stock rallying for a second, straight day. And Julia Borsen following that action. So what's going on here? Because it's two pretty strong days, right? Yeah, that's right. Meta shares are up about 3.5% today, after gaining 2.5% yesterday. That brings this talk up about 8% over the past week. Now this afternoon, Meta announced the release of its latest AI model, Muse Spark 3.1, showing what the company says is meaningful progress over its own models and also many of its rivals. Third-party research from artificial analysis saying that Meta's model outperforms Google's Flash 3.8 and Anthropics Fable 5.

19:26And that makes it ahead of all rival models except Clawed's two most powerful. Meta's AI Chief Alex Wang telling CNBC that this shows progress in coding and agentic abilities, saying what we've been moving really fast, we're feeling really good about our momentum and pace. We're working on much more exciting larger models and we think the community will be really excited about these. Now Wang saying that you can give the new model open-ended objectives and it will come back with a finished deliverable. Today Bank of America with a by-rating on the stock, saying the new model suggests a strong pace of AI development, also noting that those agentic improvements are noteworthy ahead of a launch of Meta's AI agents, which is expected soon. Scott? All right Julia, thanks so much for that. That's Julia Borskin in video meantime, making a deal to buy the AI platform hugging face. News announced right here on CNBC. Christina Partsenevoulos has the very latest for us. Tell us more. Yeah, news announced this morning and at that almost $13 billion price in video is essentially buying control of where AI gets built.

20:28In video, we know already owns the compute side of AI. Its chips and kuda software are a huge portion of that. Hugging face is the other end. The platform where 18 million developers find and download and deploy open AI models. In video, just bought that front door. It wants that door because its biggest customers are also its biggest threats. Google, Amazon, Open AI, and Thropic, all buy in video chips but are also building their own to need it less. A strong open model ecosystem is demand in video can eventually shape on its own. In video, CEO Jensen Wong says the price was worth it. Listen to it. We pay $12.9 billion because one, that's what it's worth. And two, open models means so much to us. And if it has if a hugging face was looking for the next chapter and a home for their company, and video should be it. Means a lot to him, but open all models also mean a race with China. On hugging face, Chinese models now lead in downloads.

21:28With Ali Baba's quen overtaking Meta's llama, owning the platform puts in video right inside that fight. The catch is of course neutrality. Some concerns there. Hugging face works because it stays open to everyone including AMD, Intel, Google. And Maria says it's going to keep it that way. He promised it in a blog post this morning. And now the company that sells nearly everyone their chips owns the platform that they also depend on. Well, big news. OK. Christina, thank you. Christina parts in Naviglo. So let's talk about Robin Hood because it's rallying big time today. Oliver Renek tracking some big options trades in that name live from the Seabow global markets in Chicago. So the stock up more than 15% what do you see in the options market? Huge day, Scott, as financials hit a new high Robin Hood is soaring back into positive territory for the year. We flagged a big bullish action in this name yesterday after that analyst report. And those bulls are doubling down on more than triple average daily trading volume today. Traders are buying almost three times the amount of calls

22:28as they are puts. And eight of the top 10 most heavily traded contracts are on the call side. The most popular is the 120 strike call expiring tomorrow. Those are going for about $4 a pop. It's a bet that Robin Hood keeps the rally going into the weekend. What's notable here is even after today's 15% move higher and huge trading volume implied volatility in Robin Hood is still below its historical average and a full 30% off its 52 week high sky. Oliver, thanks so much. Oliver Renek, we're just getting started here up next. The battle over AI moving from Silicon Valley to America's backyards protest over data centers are growing. The backlash is as well and could threaten the massive build out power in the AI boom. Dan Ives is here next. It's all about the money. I want to be the person in my family that creates an original well how they earn it spend it and make dreams come true. I'm not going to sugar code it.

23:28It's hard, but it's so worth it. Millennial money on new Saturdays three Eastern CNBC. Welcome back to the data center debate taking new turns today, the backlash growing a conference in Austin, Texas drawing protesters demanding a moratorium there while they won 100 billion dollar planned project near a historic battlefield in Virginia, SACT. For more, we're joined now by Dan Ives of Yorkville Ives just backed by the way from Nebraska after seeing some data center sites in that state. Welcome. Why'd you go out there? I mean, to me, it's really it's trying to understand this. The AI data center build out. Well, I have it's happened in Midwest. And I think it's really trying to get a pulse of, you know, in terms of people that live there, the investments that are happening. And when you think about the AI revolution, the hearts and lungs of this are going to ultimately be the data centers. And I think we're going to see this accelerate. We go into the next few months, and especially into the midterm election. What'd you find? There's a good note from Oppenheimer on this topic today in

24:29which they say 241 new US data center projects are facing backlash as of the first quarter of 26 more than double the prior quarter, Washington Post today, how the data center backlash is growing in state houses across this country. I referenced in the intro to your segment, what happened in Austin, what happened in Manassas, Virginia. What'd you find? I mean, to me, look, I call it a thousand on the low and maybe 1,500 data centers that are ultimately are either in the process or in motion. Our view is probably about 10% of those, potentially 12, 15% could get ultimately cut. My view is what I see in Nebraska. You see my Southwest in Nebraska, the amount of innovation that's happening there on data centers from data from Google, the jobs that ultimately be created. Not necessarily in the data center, but the engineering town, the companies that are going to invest there. And I think part of it for me is that for the first time in 30 years, the US is ahead of China when it comes to tap. But these data centers are, they are the key.

25:32And I think as we go into the midterms, and I see it in the beltways as well, talking to so many politicians, that I view as the biggest threat. Today I revue. There's that cat backs. It's not used cases. It's not what I've used the bull. It's really politicians getting involved in the AI buildup. OK, so if that's the biggest threat, are you also suggesting that it dies down after the midterms? Doesn't feel to me like the people of this country irrespective of what the politicians say and when they say it and how they say it, are ready to let the issue die anytime soon. Yeah, it's not going to die anytime soon. I do believe we are going into a critical 69 month buildup. Because if we sit here and you start to have 25, 30% of those data centers get voted down, then I think the calculus changes. I think that's why this is a key few months ahead, especially what we see in Midwest, Southeast, and a lot of the data center of buildups that we're seeing in key states. Because what we're seeing play out today is enterprises

26:35are accelerated. As they accelerate the AI demand and it goes to the hyper scours and it goes to the neoclides, it comes down to you need data centers to get built. When you say the calculus changes, if things go the way that you fear that they could, what does that mean? In terms of what? For what does the calculus change? I think base case 10 to 15% get canceled. I think that's something that wouldn't drastically change the bull case. If that doubles, what that affects ultimately is customers going to have to pay more. Churn could happen. Data center buildouts, as that ultimately goes throughout the system, there's going to be a musical chairs where some could be left without a chair. Right, right? Well, stocks pay a price for that. No, no, stocks would pay a price when you think about hyperscours, when you think about some of the neoclides, even derivative on the software side. My view is it's why we're going to continue over the coming months, be out there across Midwest, across Southeast, to understand in this country, to get a pulse from ourselves,

27:37what's ultimately going to happen? I came away from our view over the last few weeks, Midwest, Northeast, and what I see. I do think you're seeing grounds, well, it's within a lot of these states. They do want to see the data center build because of the jobs, but we go into the midterms. It's going to be a boxing match to beat. What do you make of what the Treasury Secretary said from the G20 that the companies you cover, right? The AI companies, he said, have done a, quote, a horrendous job of explaining themselves to the American people. And I think we need a big reset on this. They're going to have to take some of the blame. What do you make of that? A black eye moment for big tech. Big tech's created a lot of the PR issues. If you tell the average American that they're going to lose their jobs in the next 18 months, and their electricity bill is going to go higher, why would they be happy about data center? Now, you're starting to see a chain from Dariel, from all men, from others. But I do agree. I think this is a PR issue where the law on misinformation, but a law that's created by doomsday type of scare tactics that we saw from big tech.

28:41And now they're trying to course correct. Can they do that? And how do they go about that? I mean, I remember, Gus, what was it? Bill McDermott, I think, right? The CEO of ServiceNow, I think sat on this set within the last six months and said there was, you know, for the job prospects for college graduates was, you know, terrible. That's a paraphrase, but it's the point that he was making because of what AI means. People hear that. That's your point. And then they grow more scared of a technology. They can't physically get their arms around. Yet I could tell you, 15% of college grads that I know, they're working at either a data center in the Midwest or some engineering-related job relative to that build out. And I think that's why McDermott has a strong respect for him, but I think that was a tech narrative. And job glosses are definitely there. But now you're starting to see that curtail a bit. And this is, look, this is a key debate, because guess what, every data center that gets voted down, you know who wins?

29:41China. Good to talk to you. Great things to do. Thanks, Dan. All right, coming up, the billionaire benched. Steve Balmer suspended. The clippers hit with a stunning fine. Could haunt the franchise for many years. We'll have more on the NBA's massive crackdown next. It's all about the money. I want to be the person in my family that creates an original well. How they earn it, spend it, and make dreams come true. I'm not going to sugarcoat it. It's hard, but it's so worth it. Millennial money on new Saturday's three-eastern CNBC. As Los Angeles clippers facing one of the stiffest penalties in sports history, following an investigation into alleged salary cap violations. Our Alex Sherman joins us now with more on this still developing story, Alex. Yeah, let's start with the news. Got just an enormous historic penalty that the NBA levy against the clippers for salary cap circumvention. Steve Balmer, the owner of the clippers, suspended one year without pay.

30:43Gillian Zucker, the president of business operations, suspended a year without pay. Lawrence Frank, the director of basketball operations, suspended for six months, a $30 million fine, and then five first-round draft picks stripped from the team. All of this for the clippers allegedly and sort of backed up by evidence from a 35-page report from the law firm, Wachtell Lipton, that the NBA hired them to do over the past year. Quite a bit of evidence there that the clippers set up sponsorship deals with Kawai Leonard in order to basically pay him off the books in essence so that Kawai Leonard was making millions of dollars through these sponsorship deals facilitated by the clippers, money that would not count against the NBA salary cap. So in essence, paying their star player money off the books so that it could pay other players on the team money that was, in fact,

31:43counted against the salary cap. Of course, that is a major no-no. It really gets to the heart of the league's competitive balance and fairness issues and such a strong penalty levied against the team. I mean, and the clippers aren't taking this sitting down. I mean, they're responding pretty forcefully, right? What are they saying? Basically, the clippers are saying that they feel like this investigation was biased, that there was sort of a predetermined outcome in essence, potentially set. The reason this investigation happened in the first place was that Pablo Torre, the investigative sports journalist, put out a series of different podcast episodes that basically led the breadcrumbs to the conclusion that the clippers had, in fact, circumvented the cap. Wachtel came to basically the same conclusion. In fact, dug up even more evidence suggesting this was the case, but the clippers are saying, wait a second, this investigation is biased,

32:47and we want to challenge it. And in essence, saying, perhaps we will even go to court to challenge this verdict. We will see if, in fact, that does happen. They were also designated as a prior offender, correct? And I wonder what that factored into this, especially harsh punishment. Yeah, I think a couple of things factored into the harsh punishment. One was that they, in fact, yes, have been dinged before and for a more minor offense, regarding a former player on their team, four salary cap circumvention. And also, Wachtel said that the clippers were often evasive in the discussions to try to dig up evidence, particularly pointing to Gillian Zucker there, the president of business operations saying, she was not on that fourth right in our questions. And in fact, we think that she was not telling the truth in certain instances. So therefore, they sort of suggested

33:49that the punishment may be stronger. And in fact, she was suspended for a year, as opposed to Lawrence Frank, who they said, was more for its right to answer the questions. He only got six months. So I think it is a severe punishment because of the second offense, but it's also a severe punishment to send a signal to all of the other teams in the NBA that this is a serious offense, and not one that should be repeated. I guess the open question there is, are other teams doing this? Have they done this? Clearly, there's a lot of evidence that the clippers were doing this, but the same level of scrutiny has not been doled out to other teams. So it is an open question if the clippers were the only team doing this, or if this perhaps is more widespread throughout the NBA. I'm also thinking about possible recourse for season ticket holders, who certainly pay a lot of money for those tickets, and who now face the prospects of having a less competitive team for the next five years, if not longer.

34:52You know, the irony here is that the NBA is actively trying to push against purposeful tanking. They've completely modified their NBA draft rules to try to alleviate the pain of teams putting out a poor product for their fans. And yet, the clippers are now put in a position over a course of several years that not only are their first run drafts taken away, but you'd have to imagine that any free agent that was thinking about the clippers as a possible destination is going to be looking at kind of a rocky runaway for that team, and they may decide that is not the best place to sign. So for sure, clippers fans, this is a sad day for them, as they kind of look forward over the next few years to say, you know what, the chances are a lot higher that we're not going to be very good than we're going to be competitive at the time that the league has changed its draft rules around to the point where they're saying to fans, look, we want all of these teams

35:52to try to be as competitive as possible. Talk to you soon, appreciate the insight, Alex, thanks, Alex Sherman. Quick note on the sports front, by the way, CMBC's official NFL 2016 valuations list drops next week ahead of the season. Kick off, you can catch the big reveal next Wednesday, September 9th. It starts on Squawk Box. I'm sure we'll have something here as well. Plus, we'll speak with Jacksonville Jaguar's owner, Shadcon, right here on Closie Bell. We look forward to that exclusive interview as well. We're back in two. All right, 10 to the bell, back to Christina now for the stock she's watching. What's on your list? Tesla, those shares gaining ahead of its cybercavve event scheduled today after the bell. And investors are expecting new details after you'll add must-teased, quote, a series of cybercabs in a post on X overnight. Tesla originally debuted the cybercavve design almost two years ago. The stock right now, up 6% pacing for its best day since the end of June. Shares of Victoria's secret, though, moving the other direction on a revenue miss and just slowing comparable sales growth.

36:53The company still boosted its full year sales outlook, but you had high expectations heading into this report with the stock up over 50% this year alone. Victoria's secret now having its worst day since April 2025 shares down 12.5% God. All right, Christina, thank you. Christina, parts of the novel is coming up next. What to watch for when Z Scaler and Lulu Lemon report earnings in overtime will do that in the market zone, which is coming up. Now in the closing bell market zone, Mike Santoli and Christopher Zook from Caz Investments are here to break down these crucial moments of the trading day. Two big earnings report to out as well. Seamus watching Z Scaler brand and Gomez taking a look at Lulu Lemon. Michael, I'll begin with you. So much needed rate relief. No surprise, I guess what stocks are doing as a result. No, for sure, Scott. I mean, rates seeming like they might get on anchored, might keep making new highs. I think it was mostly a pretty good excuse for people to keep their kind of risk budgets, close to the vest for a little while.

37:54The scene was set, though, for this little release higher in the indexes when the S&P 500 held that line. We talked about a couple days ago. Did not go back into the summertime range. Just enough rotation. You got cyclicals a little bit oversold. And Mag 7 re-engaging. This move higher has been largely a narrowing back out of the market to some of the mega caps. So that's help for now. S&P still below last week's high, in today high. So we're not really in the clearest yet. Also not dramatic moves in yields at this point. So we're still going to be to some degree in suspense about the data over the next week, what it means for the Fed and all the rest of it. But right now the market is pretty comfortable in the zone with earnings as the big support. And then obviously, maybe you see the Fed not getting hostile and rates being able to stay contained. Is that where you're going to look at about five minutes or so? Yeah, largely that. We are also, of course, going to dig into the Lululu numbers where the stock picker recovers it. But also we got Nick Colis. There's got some good thoughts on rates, whether they're a threat and what the Fed,

38:56how it might make its next decision. Oh, good stuff. Seen about four. Look forward to that. That's Mike Santoli. All right, Steve, tell us more about Z Scaler. So Scott, the three will want to know if Z Scaler's cybersecurity offerings are seeing increased demand as hacking incidents tied to AI continue to rise. Here's what's interesting though. Cyber competitors, Paul Alto, CrowdStrike, and Octa have seen their stocks outperformed this year. Z Scaler has interestingly been left out as down about 17% in 2026. Z Scaler's bottle is a bit different. It's protects networks data, user access, while CrowdStrike, for example, protects devices and workloads identities to hack those internal compromises. Beyond earnings, look for commentary on M&A as we do see more consolidation across the cybersecurity sector, Scott. All right, Steve, we appreciate that. Brandon, how about Lulu? Yeah, investors looking for signs that struggling athletic aware giant can turn things around. Shares are down 42% this year on weak U.S. demand elevated promotions and increased competition in the category. Here's what the street is looking for. $1.79 earnings per share on roughly $2.45 billion

39:58in revenue. Now, those estimates have dropped significantly following the company's last report. The bigger focus is on guidance. Lulu already cut its full year outlook last quarter. Analysts now watching to see if management does so again. There's also a leadership transition underway, hideyoneal taking over SCEO next week. Key question tonight, though, Scott, can Lulu stabilize U.S. sales, protect margins, clear inventory, and can investors have confidence growth is coming back? Retail has been a mixed bag with squatter. All right, Brandon, appreciate that. Thank you. It's Brandon Gomez. But those earnings reports, of course, Christopher, how do you see these markets here? No, I like these markets here to an extent. I think they're very, very expensive, but they've got some good tailwinds. And I also think that you do have strong earnings to be able to point to, but you really gotta be selective. 40% of the S&P 500 right now is just 10 stocks, basically. So you really gotta be careful where you are. And so we are in a stock picker's market, not just buy everything. What leads you to believe that stocks are, in your words, very, very expensive? When I look at any valuation metric compared to any of all times,

41:01I mean, as an example, priced earnings, priced cash flow, priced EBITDA, every aspect of it, when you take out just the big 10, and you look at it across the board, we're expensive, and particularly expensive relative to interest rates. We got a 5, 25, 10 year treasury, or 30 year treasury right now. You're yielded on stocks right now, is expected to be less than four and a half, because we're over 21 times earnings. Therefore, you're getting paid much, much less for the risk that's being taken in stocks broadly. There's some nice opportunities, but you gotta be real selective. And so not real comfortable, which is the S&P as a whole. I mean, you had me an expensive relative to rates. I suppose I could give you that, but expensive relative to earnings, you lost me there. Well, I mean, I just lots of data to be able to support that. We're literally the top 10% tile, basically any valuation metric wants to look at, whether it be priced sales, priced to book, priced to earnings. That historically has not ever really been in this stratosphere other than two periods. 1999, tech bubble, and then obviously 2007,

42:03right before we saw the global financial crisis. That doesn't mean that they can't keep going up, but it means that people have to understand the risk that exists, and they might find themselves with a 2022 experience, where you see a lot of those top names get hammered. That obviously means you can take a meat clover to these valuations of so many other stocks across the board. All right, we'll talk to you soon. Appreciate you being with us, Christopher, thank you. Thank you very much. They're going to ring the bell in a moment. It's been a pretty good day, as you know, we've called it the Waller rally at the very beginning of the show, Fed Governor Christopher Waller, not as hawkish as maybe some had feared, some had anticipated, rates got some relief, and certainly stocks took off. One of the big winners, of course, helping the tech trade, helping software yet again, snowflake, not the cover off the ball, and the stocks are home run. Today, there's no question about that. Broadcom going in the opposite direction, that's been affecting the momentum trade, but all in all, bulls are going to take it, because it's going to finish green across the board. I'll see you tomorrow. I'll send it into overtime, and my fingers.

43:04It's all about the money. I want to be the person in my family that creates an original well. How they earn it, spend it, and make dreams come true. I'm not going to sugarcoat it. It's hard, but it's so worth it. Millennial money on new Saturdays, three Eastern CNBC.