CNBC The Exchange
2026-06-26 · Hosted by Kelly Evans · CNBC
Executive Summary
Broadcasting live from the CBOE trading floor in Chicago, the show paired a contrarian value case against the AI frenzy with insights on the booming options/prediction-market business. Value investor Bill Nygren (Harris Oakmark) leaned against Micron’s 16% surge and the semis’ ~20% S&P weight, touting cheap, cash-generative names trading under 10x earnings — Salesforce, General Motors (6x), Global Payments (5x), GE Healthcare. CBOE CEO Craig Donohue detailed record options volume (~70M contracts/day in Q1, on pace for 17B+ for the year) and a coming push into KPI-based event contracts. Northern Trust CEO Mike O’Grady (stock at an all-time high, +30% YTD) and Rick Santelli discussed the inflation/rate backdrop, with core PCE at its highest since October 2023 but bonds shrugging it off as crude dipped under $70. Polestar was effectively shut out of the US market by the White House’s China-EV stance.
Key Stories & Changes
1. Bill Nygren’s Contrarian Value Case
Clients now asking why Harris Oakmark doesn’t own AI names — an unusual sign of frothy sentiment
Semis are ~20% of the S&P; Micron’s market cap “hard to fathom”
Picks: Global Payments (~5x earnings, buying back ~30% of stock in two years), Salesforce (double-digit FCF yield, ~20% buyback authorization), General Motors (~6x earnings, praising Mary Barra’s EV pivot), GE Healthcare (adding on weakness)
On the AI parallel to dot-com: behaviorally similar, but today’s leaders are real earners — the bet is whether cyclical chipmakers can sustain “80% margins”
2. CBOE & the Options/Prediction-Market Boom
US options volume hit ~70 million contracts/day in Q1 (record), pacing for 17 billion+ for the year
Micron’s options had priced a ~10% move into earnings; actual move was ~double (15–16%)
CBOE expanding event contracts (XSP yes/no on S&P 500; “plus”/vertical-spread contracts that pay on directional correctness)
Filing soon with the SEC for KPI-based event contracts (e.g., Tesla cars manufactured, earnings vs. consensus) cleared through CBOE Clear US
Focus is securities/economic events, explicitly not sports or election gambling
3. Inflation, Rates & the Yield Curve
Core PCE at its highest since October 2023; bonds “shrugged” the data as old, with crude under $70
Rick Santelli: next meaningful signal is a bearish steepening (yields up, 2-year easing back), likely two-to-three CPIs away; lost his oil bet (the “road to 70” vs. 125)
Northern Trust’s O’Grady: a healthy, non-inverted yield curve is “pretty close” to ideal; 10-year below ~5% is constructive
4. Northern Trust at Record High
Stock at an all-time high, up nearly 30% this year; ~$2 trillion AUM; 136-year-old Chicago firm
Excellent conditions for wealth management on strong equity levels, constructive rates, manageable volatility
Bank stress-test results described as “almost a non-event” — capital strong; liquidity/regulatory review ongoing
5. White House Slams Door on China EVs
Per Phil LeBeau: starting 2027, no Chinese-manufactured vehicles in the US; Volvo got an exemption, Polestar did not
Polestar (owned by Geely) won’t sell 2027 models in the US, will service existing ~5,000–5,300 vehicles and focus on Europe
Subsidized Chinese automakers (BYD, etc.) deemed an unlevel playing field; protective stance benefits GM/Ford near-term
Trends Identified
1. Value vs. AI — Two Different Worlds
Nygren framed a bifurcated market: AI investors have made far more money, but a deep bench of sub-10x-earnings, cash-generative companies are aggressively repurchasing shares. His thesis is that these can re-rate without the AI trade collapsing — “two different worlds” coexisting.
2. Retail-ization of Derivatives
CBOE’s record volumes and the rise of sophisticated “pro-tail” traders and prediction markets signal a structural deepening of options as both hedging and speculation tools, with KPI-based contracts poised to let investors decompose equity risk far more granularly.
3. Inflation Data as “Old News”
Both Santelli and Goolsbee-adjacent commentary treated hot retrospective PCE as backward-looking, with the post-conflict drop in oil expected to reshape the inflation picture over the next few months — bonds are already looking through it.
4. Protectionism Reshaping Autos
The White House’s China-EV shutout cements a protected US auto environment, near-term supportive of GM/Ford but raising longer-term global-competitiveness questions as Chinese makers dominate elsewhere. —-
Sentiment Analysis
Overall Market Sentiment: Contrarian / Constructive on Value
The floor mood balanced AI skepticism with genuine enthusiasm for cheap cash-generators and a thriving derivatives ecosystem.
Risk Factors Highlighted
AI/semis concentration: Semis at ~20% of the S&P; froth in sentiment per Nygren.
Unsustainable chip margins: Bet that cyclical chipmakers maintain ~80% margins is “not easy.”
Sticky core inflation: Core PCE at a multi-year high keeps the Fed cautious.
Yield-curve dependence: Banks struggle if the curve re-inverts; steepening not yet confirmed.
Value-trap behavior: Investors won’t add to value managers, starving them of inflows to deploy.
China-EV protectionism: Near-term US auto benefit but long-term global competitiveness risk.
Derivatives/speculation growth: Rapid retail options and prediction-market expansion raises oversight questions.
Oil re-escalation: Renewed Strait of Hormuz threats nudged crude up, a lingering inflation wildcard.
This episode was covered in today’s The Market Signal — 2026-06-26, a cross-source synthesis of multiple podcast reports.