SOTS 2nd Hour: OpenAI Makes History, Banks Tank, & LIVE: Zscaler, Autodesk CEOs 2/27/26

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Carl Quintanilla (0:58)

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker and David Faber live at Post 9 of the New York Stock Exchange. Sara is out today. As for markets, closing out February with a little bit of drama. Dow is down about 800 S&P back below 6850 Financial is definitely a drag along with tech. Some support from Energy going into this weekend of Iran. Jitters, healthcare and staples a little bit. Ten-year below four and it has not cracked back above. Ahead this hour, OpenAI closing a massive $110 billion funding round with backing from Amazon, Nvidia and SoftBank. Tech investor Dan Niles with us to discuss. We'll talk to the CEO of cloud security company Zscaler down sharply after results and the latest, of course, on the Warner Brothers discovery saga as the company deems Paramount's bid superior.

David Faber (1:46)

First, though, let's get some new economic data that just crossed. For example, San Tele has it for us. Rick.

Rick Santelli (1:52)

Yes, David, this is construction spending for December. Also, they will be releasing very quickly November, which was not released yet. Up three-tenths of a percent for these. This is one-tenth better than expected. And it really does underscore some pretty decent data. Chicago PMI was pretty strong. And interest rates, while they're under 4%, a good thing for the housing market. And ultimately, we want to see if it can close under 4%. The last close under 4% was November 26 of last year. Leslie, back to you.

Leslie Picker (2:25)

Rick, thanks so much. Rick Santelli for us. Let's get to the broader market with red across the screen to end the week after a hotter than expected inflation print. Joining us now is Max Kettner, Chief Multi-Asset Strategist at HSBC Bank. Thank you very much for being here, Max. Help us understand what exactly is going on under the surface because you've got PPI, you've also got the block news and the potential concern surrounding replacement of jobs with AI and other bots. How would you characterize what you're seeing on the screen today?

Max Kettner (2:58)

Yeah, look, I think there is a lot of narratives going on right now. Just you mentioned the job displacement narratives, then obviously a couple of weeks ago, I think two or three weeks ago, we had the narratives around what kind of sector are we going to sell off today?

I work up every day and I thought, okay, which sector is it going to be? Is it the transport and the freight sector? Is it going to be insurance? And then one day it was commercial real estate. So I think there's a bit of a narrative inflation almost going on. And at the same time, we're focusing very, very little on the data. Look, you mentioned PPI, you guys have just mentioned Chicago PMI, but actually not only in the US. When you look across the globe, you look at the most open, most manufacturing driven economies. Look at the likes of Korea, Taiwan, Sweden, Netherlands, Czech Republic. You're really seeing across the board some proper, proper cyclical momentum, particularly in the manufacturing sector building up. And I don't think there is enough emphasis on that. There is a bit too much emphasis on the AI narrative. Who knows what's going to happen in a couple of years? Who knows? I think we're really, really ignoring a little too much, and particularly the US rates side of things. Ignoring too much what's happening under the hood is a proper textbook style cyclical recovery right now.

Leslie Picker (4:18)

Yeah. I think that one of the big drivers of the moves today are financials. You've got alternative managers under pressure, big banks under pressure as well. And I'm just curious, as you mentioned the cyclical recovery, we are seeing pockets of defaults in certain portfolios, especially across the BDC landscape. How concerned are you about this being early innings of some sort of credit cycle, given what we've seen this week with those BDC earnings?