Closing Bell - Closing Bell Overtime: 5/15/25

Episode Date: May 15, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

That bell marks the end of regulation. Hopefully, acquisition, we're in the closing bell to New York Stock Exchange. Enter and code during the honors at the NASDAQ in stocks. End of the day mixed with the NASDAQ, breaking a six day win streak. The S&P up for a fourth day. Utilities and staples your leaders.

Consumer discretionary, income services, your laggards. In tech, the old guard taking the reins. Cisco, IBM, T-Mobile, and Verizon hire. Fintech's Affirm, Coinbase, and Fiserv all lagging. And big moves in retail today. Dick's Sporting Goods in the penalty box after agreeing to buy Footlocker for $2.4 billion. Footlocker's making a power play on the deal. And meanwhile, Walmart ending lower as the CFO warned consumers could soon see higher prices from tariffs.

Walmart beat on EPS but missed on sales and United Health shares cratering again today after a report the DOJ is conducting a criminal investigation into possible Medicare fraud, stock down 30% in a week. And finally, oil prices closing lower after the president raised hopes of a U.S.-Iran nuclear deal. Welcome to Closing Bell Overtime. We're winners, stay late. I'm John Fort Morgan. Brennan is on assignment. We got lots of earnings to watch during this hour. Applied materials take two interactive as we await grand theft auto six and Kaba is also gonna

report this hour. Plus we'll talk home prices as a new report shows most people can't afford what's on the market right now. Best Readman of Brown Harris Stevens is going to join us. Well, a mixed session on Wall Street today, as I mentioned, with the Dow and S&P, finishing in the green, the NASDAQ inching lower, but the S&P 500 is posting.

It's fourth positive day in a row. Our next guest doesn't see this rally as a buying opportunity. Joining us now is Vital Knowledge founder, Adam Chrisafulli. Adam, what's your read on this market? I mean, we spent a lot of time reacting to some pretty dramatic moves and then digesting them. Are we in digestion mode or which way is this headed? No, so we've obviously had a very powerful rally off of the lows. You know, we got great news out of Geneva over the weekend, a huge de-escalation in trade tensions.

I think the market now roughly assumes that you're not going to really see tariffs much beyond the 10% baseline. So the tariff narrative is a little bit towards the complacent end of the spectrum, which is a little bit concerning. We've had a very strong calendar Q1 early season. We had strong April end results so far too, here at Walmart, Cisco, and we've had pretty encouraging April economic data. The one caveat is what Walmart said today about how the price hikes from tariffs aren't

really going to be rolled out until the end of this month and in June. So it's hard to get too excited about the April data when we know that the full effects of tariffs on the economy and on the data, it's kind of yet to be seen. I think that's really one of the reasons to be a little bit cautious, along with disvaluations at these levels, the S&P's trading at north of 22 times earnings,

which is obviously a pretty rich level. Still got this discrepancy between the hard data and the soft data, the hard data generally being positive when we get these numbers out, but the anecdotal stuff, how people are feeling, not necessarily keeping up with that. In a way, Walmart seemed to be giving a reason

to be concerned, and you could maybe even read some of that into Fiserv as well with what they're saying about Clover, though maybe that was isolated. Yeah, I mean, we've heard from a lot of companies, Q&A season just ended, and a bunch of companies spoke at conferences this week, and it seems like the environment is still relatively healthier,

or at least a lot better than what the narrative in the world would suggest, given all the volatility. Consumers are still spending, companies are still spending. You know, it's hard, there's definitely some noise. A whole time for just a moment, we've got applied materials earnings out now. Christina Parts-Neviles has the numbers, with the stock down about a couple percent.

Yeah, it's a mixed report, John, and this is a semiconductor equipment maker. So for EPS, earnings per share adjusted $2.39, that was a cent beat. On revenue of $7.1 billion. So ever so slightly a miss for their Q2 quarter. In terms of semiconductor revenue that came in also a little bit lower. So that could be contributing to the drop now down 2%.

Semi-revenue is $5.26 billion. So slightly less. In terms of non-GAAP gross margins for the second quarter, slightly better. We're talking about guidance. This company usually only guides one quarter ahead. The EPS 235 is higher than what the street anticipated. Revenues though, pretty much in line. What I'm seeing in this presser right now from the CFO, there is an interesting line.

We quote, we have not seen significant changes to customer demand and are well equipped to navigate evolving conditions with our robust global supply chain. So again, many companies, Core, yesterday Cisco, and now Applied Materials just in the last 24 hours, all saying they haven't seen any changes in customer demand. Back with you. All right, Christina, thank you. Adam Chrisafouli, semiconductor equipment

is something you gotta buy way in advance of actually rolling the chips off the line. And with the idea here being that there are long-term trends where you're gonna need AI equipment, you're gonna need equipment for various things, things are going digital. I'm not sure how much we should expect the demand picture to change from applied material quarter to quarter.

Yeah, I mean, I think it's a good point. We've heard decent things out of the send the equipment companies for the last couple of weeks, LAMCLAC and now AMAT. There is still some uncertainty around shift tariffs. Trump has talked about sectoral tariffs on semiconductors along with pharmaceuticals. That is something that is looming out on the horizon, but all signs point to continued robust demand for the broader industry, especially for the AI segment, which is driving a lot

of the spend right now. I do want to mention take two interactive results are out. The stocks initially headed down about four and a half, five percent. We're going through those and we'll bring them to you as soon as we've got them. Adam, the Trump administration doing a Middle East tour right now, announcing a lot of deals and there seems to be this overall message about deals whether you're talking about tariff deals or you're talking about bringing deals that bring benefit to American companies and by extension the American economy but all of the the numbers seem to be sort of hard to

digest and understand how much do you think the market is and should factor in those numbers? I think the market's taking it with a little bit of a grain of salt. It's really hard to audit these giant numbers that get thrown out. A lot of them are noncommittal, so they're not binding necessarily, but I think it is safe to say

that a lot of these Middle Eastern countries are pouring a ton of money into AI. Sovereign AI is becoming a huge topic in that industry. You had a big announcement on Saudi Arabia, the UAE, and it looks like the US is kind of easing restrictions on the ability of those countries to import high-end ships. So that's definitely a big theme. And then for Boeing, the issue with Boeing isn't so much their ability to get orders,

it's their ability to meet those orders. So they got a huge order this week, but the big question is can they ramp output and production and that's kind of major wild card so i think for those two areas ai and then aerospace that was really the big focus a lot of the other numbers it's a little bit hard to get a firm read on at this point alright, adam krisafulli thank you for kicking off the hour

uh... now let's turn to the deal of the day shares a footlocker rocketing higher up eighty five eighty six percent Shares of Footlock are rocketing higher, up 85, 86%, after Dick's Sporting Goods announced it wants to buy the company for more than $2 billion. Dick's CEO Ed Stack saying there's meaningful opportunity for growth ahead, but the street apparently not so sure with shares of Dick's Sporting Goods falling 14 1 1 2%. Well joining me now is John Kernan from TD Cowan

and our very own senior retail reporter Courtney Reagan. sporting goods falling 14 and a half percent. Well joining me now is John Kernan from TD Cowan and our very own senior retail reporter, Courtney Reagan here as well. Guys, welcome. John, tell me what's the problem with this deal here? It seems sort of like Cheesecake Factory buying Burger King where you got kind of like a big box versus an in-mall or more urban brand or like Club Lacrosse

buying pickup basketball. You've got the performance brand and you've got the culture brand. I could see ways this could work, no? It's been a busy few weeks of M&A in the sector and this one lacks strategic and financial sense. We did downgrade Dix today to hold after a five-year runway to buy on it since 2020. The stock quadrupled over that period, and the management team really executed on their

strategy. I think that when you look at the deal today, they overpaid for the business. Footlocker generates roughly $100 million in free cash flow. We're paying 25 times that. Footlocker has been a no-growth-to-shrinking business. It should be valued closer to 10 times free cash flow. So they're going to put quite a bit of leverage on the balance sheet, and they're

going to put quite a bit of risk in their strategy. Courtney, on the other hand, I can come up with an argument that in the omnichannel world, where data is important, your urban data from the likes of a footlocker is going to be different from what Dick's Sporting Goods already has. There's this 30 percent international portion of the business that that Footlocker has that now Dick's Sporting Goods has access to. Is that not right? No, yeah, and that's exactly what the executive chairman Ed Stack told me. He's also the son of the founder. He said, look, this gives us an international presence

that we don't currently have. Foot Locker also has smaller footprint stores, no pun intended, in areas that Dix might like to go, but that they can't quite put their full format stores, let alone these big house of sport concepts that they have. He's looking at some synergies somewhere between maybe 100 million and $125 million. He says it'll be a creative in the first full year,

but he really sees a lot of value here. He says it will help us deepen our partnerships with brands like Nike, like Adidas, like On Running. And I understand what John's saying about how Footlocker has been a challenged business. And I asked Ed Stack, is that sort of why you're buying it now because perhaps you're getting it quote on sale, although John argues that they're paying too much.

And he says, look, we've had having conversations on and off and really it's heated up over the last several months. And a lot of what he believes were some of Footlocker's missteps, again, no pun intended there, was that relationship with Nike through really no fault of Footlockers,

when Nike said, look, we're gonna pull back on the amount of inventory that we give some of our retail partners as we try to go more DTC. They've since reversed some of that. So yeah, I can sort of see both sides of this, but I'm not the analyst, right? It's John's job to kind of go through the numbers.

So John, what does Dick's Sporting Goods have to do to prove your initial impression here wrong? Does it have to do with their use of data, location data in Omnichannel, how well they can build customer profiles, maybe how well they can sell through Dix Sporting Goods type merchandise share of wallet-wise into Footlocker locations?

Yeah, they didn't talk to any revenue synergies. And I think the point here is Dix was having tremendous success in footwear and they were stealing market share from Footlocker. So and footwear has been the biggest drivers of Dix same store sales gain and margin gains the last three years. So now you're significantly increasing your exposure to Nike. About 24% of Dix inventory purchases were Nike pre-deal. That's going to go to 38%. So much more exposure to Nike, much different exposure to a new set of consumers. Certainly Foot Locker is more exposed to streetwear, lifestyle, mall-based retail.

Dick's is going to have to make some changes to the lower performing stores of Foot Locker, which there are many. They operate over 2,500 stores globally. Roughly 50% of the North American store base is mall based. So, Dick's is gonna have to seriously think about store closures and reduction of real estate footprint for that Foot Locker banner.

Yeah, I mean, what Ed Stack told me, John, was the footwear is the engine that pulls the train for Dick's sporting goods. He acknowledged, obviously, Footlocker has had these issues, had these missteps, but he said, look, sort of when Footlocker does best what it is capable of doing, and he believes he can bring that back,

what he said is, look, they sell the coolest shoes to the coolest kids and they have the coolest employees. They're the ones that really set the narrative. So he's trying to reinvigorate that, but wants to keep it as a separate brand, a separate business. And he wanted to reassure shareholders that Dick's strategy was going to stay the same, that it was not going to be distracted.

And as a matter of fact, he was going to lead a very small team within Dick's Sporting Goods. It was going to be retasked with this integration, but that didn't want to be distracted at all from what Dick's is doing, because to your point, it's really hitting on a lot of cylinders

and it's been quite a performer, especially post pandemic. You would call it definitely one of the winners in retail and he wants that to continue. All right, Courtney, thank you. John and Curran, thank you. We'll see if they can pull off cool because Dick's Sporting Goods is definitely not cool. Not trying to be cool.

Well, take two interactive earnings are out as well. Steve Kovach has those numbers, Steve. Hey there, John and shares are down a bit here on these results. Let me go over what we got. A loss per share of $21.08. This loss, they say, includes a $3.5 billion impairment charge for a markdown of some assets.

This is not comparable to estimates, because they use an adjusted figure here. And the revenues were a beat at $1.58 billion adjusted. Street wanted $1.55 billion. And then the guidance for the full fiscal year, which begins in the quarter and right now, significantly lower rather than expectations. They're looking at $5.9 billion to $6 billion in revenue for the full fiscal year. Street wanted to see $7.82 billion on an adjusted basis.

Obviously, this company announced a couple weeks ago the delay of that Grand Theft Auto game, which is putting things a little bit further out to their next fiscal year. We see shares down better than 2.5%, John. For sure, Steve Kovach, thank you. Meantime, CAVA, that's the Mediterranean restaurant, Fianam. Its earnings are out, stocks initial move is lower by about 3.5%. Angelica Peebles has those numbers, Angelica.

Hey John, CAVA reporting earnings of 22 cents a share for its fiscal first quarter. Now we're not comparing that to consensus estimate of 14 cents because the result includes a substantial gain from an income tax benefit and it's not clear whether analysts factored that in. Now revenue of $332 million topped the $327 million that Wall Street was looking for and same store sales jumped almost 11 percent. That's slightly ahead of estimates and traffic rose more than 7 percent. The Mediterranean restaurant chain opened 15 net

new restaurants in the quarter and they slightly raised its new opening target to between 64 and 68 restaurants for the full year. Kava also slightly increasing its forecast for full year adjusted EBITDA and they're reaffirming its same store sales growth and restaurant level profit margin outlook but like you said John that's talked down about three percent after hours. All right Angelica you. Well, let's check on shares of applied materials after hours. Take a look over there, still down about 3 plus percent. Coming up, we're gonna dig deeper with an analyst

who currently rates the stock a hold. The street's sending the stock lower here after hours. We'll get his take. Plus, dual threats to what had been a very good week for Coinbase. We're gonna explain whenime comes right back. Welcome back to Overtime. We are watching shares of Coinbase down about seven percent.

Two stories weigh on the shares. First, the company is saying cyber criminals bribed overseas support agents to steal consumer data. Coinbase says the problem is going to cost up to $400 million to fix. Separately, the New York Times saying the SEC is investigating a possible misstatement of user numbers and Coinbase telling the Times that issue is related to an old metric that it no longer uses. Now in context, the stock is still up 20% this week after its addition to the S&P 500.

Well right now, applied materials moving lower in overtime after reporting mixed earnings results moments ago. The company also reporting CapEx spend of $510 million, well above street account estimates, free cash flow about half of what analysts anticipated. Let's bring in William Kirwan of Morningstar. William, what is AMAC really up against here now? It's had a nice run over the past month as a lot of stocks have recovered, but how much

of an AI story does it have or how much is it linked to overall demand in the global economy? Well, I think what it's up against John is really what investors are expecting or maybe for a better way to put it, fearing coming over the next few quarters. We really saw the results and the guidance out this afternoon as largely positive, pretty in line. If you look at the top and bottom lines

on the income statement, both with what we were expecting and with what we think the street was expecting, but really it's about what happens after that if there are demand pressures that come from tariffs or geopolitical uncertainty. So we think that inline guidance just wasn't enough to excite investors and that's why shares are down a little bit

after hours tonight. How should investors think of the dynamics with AMAT versus ASML, which has that unique high end fab equipment? Well, AMAT is a much broader story. So ASML is really concentrated in lithography, which is incredibly complex, but AMAT does etch, it does deposition, and these are process steps

in making chips that are extremely complex in and of themselves. So we think AMAT is a key partner for chip manufacturing on the cutting edge. You mentioned AI in your last question. It is a big driver for them. We think what we see bearing out in these results in the decent guidance that I talked about earlier

is really that AI continues to drive healthy demand in 2025. So is it still not cheap enough to get off a hold? Is that the issue? Well, we'll see where we end up after tonight and where shares go, but coming into the earnings tonight we had about a 10% discount to our fair value on where shares were in the market and that's the better price compared to the other US options like a Lamb Research or a KLA, which we see as more fairly valued or overvalued respectively. So we generally like KLA, we think it's a fairly valued or overvalued respectively. So, we generally like KLA, we think it's a good long-term investment to hold

and we'll see where things shake out after we digest the report further tonight. All right, William Kerwin of Morningstar, thank you. Thank you. Well, we do have a news alert on Berkshire Hathaway. Leslie Picker has the details, Leslie. Hey John, yeah, Warren Buffett's firm filing its 13F. This is as of the end of March this quarter

During that quarter Berkshire Hathaway selling down its exposure to big banks unloading its entire billion dollar stake in city and pairing back B of A by more than 7% and Capital one by 4% in the quarter Berkshire Hathaway also doubled its stake in Constellation brandss and Pool Corp and increased its exposure to Domino. So perhaps a little bit of a consumer increase there and Heiko as well.

Its stake in T-Mobile declined by about 11% in the quarter. The firm did not, however, touch its $67 billion stake in Apple in the three months through March 31st. And, of course, just a reminder, on May 3rd at the annual meeting, Warren Buffett did say that he would be stepping down as CEO in December to make way for Greg Abel. He will, however, continue to serve as chairman of Berkshire's board with no set timeline

for how long he will serve in that role. I'll send it back to you. All right. Interesting moves in the consumer space. Leslie, thank you. Well, coming up, Mike Santoli is going to be looking at the markets, perhaps futile hopes of broadening out in this rally as Mag7 names have once again been taking the lead. And one mega cap tech name pulling back today, though, was Meta. In the last hour, the Wall Street Journal reported that the company will delay the launch of its AI model. Overtime will be right back. Welcome back to Overtime. Take a look at shares of Doximity plunging down more than 20% here in overtime.

The online networking service for medical professionals beating on the top and bottom lines, but getting crushed on weak guidance. Well, stocks continue their push higher this week with the S&P 500 rising for a fourth straight day. But as the market recovers, is it a rising tide or are the big boats doing better? Senior Markets commentator Mike Santoli a rising tide or are the big boats doing better? Senior markets commentator Mike Santoli joins me now to explain. Mike? Yeah, John, somewhat depends on the day.

Actually today the average stock did a little bit better than the overall market cap weighted index. But in general, the equal weighted S&P 500, that's what this shows here, is at a slightly less impressive comeback from the lows. It's about 5% off of its old highs versus 3.75% for the S&P. Also, I mean, I guess you can kind of draw this line that says maybe it's still in this short-term downtrend. It's got to prove itself a little more from here.

Now, I don't think there's sort of disqualifying for the rally. There's mega caps trade-off strength with those underneath, but the trend still has been tough for the rank and file stock. Take a look at the ratio of the equal weighted S&P 500 relative to the standard market cap weighted version. So this goes back a couple of years, and we've had these bouts of broadening. That would be when the equal weight is outperforming.

That was late last summer, and then of course also early part of this year. But in general, it's been pretty consistent, this trend. So I don't think it means that you have a suspect bull market, but it's a different kind of bull market. Also, it leaves room for days like today when you have bond yields coming in, a little bit of rotation out of the mega caps, and the average stock did better. So it feels as if it can kind of give and take and support the overall index over time if the macro holds together.

So if we were to take one more step back and even look outside the S&P, especially what's been going on with bond yields being higher, which tends to have an outsized impact on smaller caps, how do you read the Russell 2000's performance lately into this overall look at whether things are broadening out. Right. It does not really suggest that there is a comprehensive broadening out. I think the Russell suffers from yes, bond yields going up, the fact that there's more

debt in those companies. Also, very, very skewed toward biotech, way more than big caps are. That's not been a place to be right now. So it feels as if there's always something kind of going wrong and holding back the small caps. What you really need is kind of an accelerating economy with bond yields in check where the Fed going to cut rates. That would probably be more likely to help out

the small caps. The president would like that. Mike Santoli said something. Thank you. Well, time for a CNBC News update with Kate Rooney. Kate. Hey there, John. Israel's military said today it intercepted a missile Santoli said thank you. Well time for a CNBC news update with Kate Rooney Kate Hey there John Israel's military said today it intercepted a missile launched from Yemen after alarms went off in several areas of Israel the launch is the second in two days and it coincides with President Trump's visit to the Gulf

Earlier this month the president said he reached a ceasefire deal with the Iran-backed Houthis to stop attacks on U.S. ships. The FBI, meanwhile, is warning, quote, malicious actors are impersonating top U.S. officials using AI-generated voice memos as part of a vishing, as they call it, not to be confused with fishing, scheme targeting current and former government officials. The agency said today the scammers are using those fake voice messages to establish a bond before gaining access to personal accounts. Yes, FBI did not say which officials have been impersonated and have yet to comment. And finally, the Department of Health and Human Services is planning to stop recommending that children and pregnant women get routine COVID vaccines

in the coming days. The Wall Street Journal reporting that the change and that guidance will be announced. At the same time, the department plans to launch a new framework for vaccine approvals. The CDC currently recommends everyone six months and older receive those vaccines. John, back to you.

All right, Kate, thank you. Well, coming up, bond yields pulling back today as producer prices pull back as well. Is this a sign of inflation easing? And Fiserv mentioned earlier the biggest decline in the S&P 500 today. The company's CEO speaking at a conference and predicting soft growth for Clover. That's the company's payment platform. That stock falling 16%.

Overtime will be right back. Welcome back. Yields coming off their recent highs today after the producer price index reading unexpectedly fell half a percent month over month versus expectations for a slight increase. Joining me now to discuss his outlook for the economy is Seth Carpenter. Seth is global chief economist at Morgan Stanley. Good to see you. So we've got some positive, albeit backward looking, signs on inflation here, but we've got Walmart today also talking about passing some costs on to consumers in the future.

How do you read this ongoing disconnect between the data and what some fear are coming? Yeah, no, I think your point about it being somewhat backward looking is exactly right. I read the PPI and with it we can sort of infer what's gonna go on with the PCE measure of inflation as sort of the last gasp of pre-tariff inflation measures, we really do think once we start to get the next set of data in the next month, it will start to

building gradually, gradually rising inflation rates because of the imposition of tariffs. Now, exactly where that ends up depends a lot on what goes on with political negotiations over the next few weeks and months, but we do think that today's print was very backward looking. And what kind of noise do you expect from these 90-day reprieves now, which are increasingly getting difficult to keep track of? We've got one for the overall tariffs that were announced at the beginning of April and now this other one for China. Do you expect them to cause a pull forward on some things that affects the data or no? So we did see a bit cause a pull forward on some things that affects the data or no? So we did see a bit of a pull forward for some of the imports going back for the first

quarter's data. You know, I think from this point forward, it's going to be a little bit less dramatic. It's not going to show up quite so clearly in the data because at the end of the day, I think businesses now are just confused. There's a lot of uncertainty about what tariffs am I going to be facing and when. When it was before tariffs to tariffs coming, it was pretty easy to know your costs would be going up. At this point, do you really want to order things right now when in fact the cost might

be lower later or they might be higher later? I think that sort of uncertainty is not great for business, it's not great for spending. How do you read the state of the consumer, especially considering the student loan impact that we're only now starting to feel? Yeah, so it's again, it's a story of so many forces going in lots of different directions. You know, I think we came into this year with a super strong labor market.

Even the last non-farm payroll sprint was pretty solid. So I think there's a fundamental underlying component of the consumer that's pretty good, but we are seeing rising delinquency rates at the lower end of the income distribution, and we're starting to see some more burden from things like student loans. And we know we have for a long time seen housing costs be super elevated. So we're getting a bifurcation. Things are slowing down. I think the degree to which they slow down is going to be driven in part by just how much more

pain the consumer has to feel. Yeah, we're going to talk a lot more about housing costs and just a little bit. Seth Carpenter, thank you for setting that up for us. And more well, we got the 13F filing from David Teppers Appaloosa management management Leslie Pickers back with that Leslie Yes, John as you know David Tepper has been kind of trading in and out of Chinese tech for a bit now during this quarter

In particular, which of course ended a few days before the so-called Liberation Day But there were still significant back and forth at that point in time between China and the US There was a pulling back within Apppilousa of its exposure to Chinese tech. For example, Alibaba, that stake was down 22 percent in the quarter. Baidu down nearly half in the quarter. JD.com down 23 percent in the quarter. And PDD Holdings down 18 percent in the quarter. These are all the holdings that Alpilousa had relative to its prior quarter. In U.S. tech, Appaloosa cut in half its stake in Microsoft, Qualcomm, and Nvidia, but slightly

increased its exposure to Meta and Alphabet. It also took a new stake in Apple, worth about $277 million at the end of the quarter, and doubled its stake in Uber during Q1. I also have a very quick Berkshire update as we continue to look through that filing. They do have a confidential treatment requested. This is a confidential holding that they're building a stake, but haven't disclosed it yet.

Of course, this is so that they don't affect the stock price as people see that this giant investor is building a position and then kind of pile on increasing the stock price. So they do have a secret holding. We don't know what it is. We're not sure when we'll find out, but we do know there is a holding we are unaware of at this point in time, John. Ooh, exciting. Leslie Picker, thank you. Well, UnitedHealthcare's plunge over the last month is dragging down the entire

healthcare sector. Up next, Mike Santelli is going to come back and look at whether those stocks are starting to look cheap compared to other defensive sectors. And plus, we're just talking about housing. Unaffordability is hitting shockingly high levels. How that could impact housing stocks is coming up on Overtime. UnitedHealth once again the biggest drag on the Dow, down 11% today, hitting the lowest level in more than five years following a report that the Justice Department is investigating the company over possible Medicaid fraud. So is all this pressure on UNH a threat to healthcare as a source of stability?

Mike Santoli is back with a look at the sector's vitals. Mike. Yeah, John, well it certainly has sort of undercut healthcare status as a usual source of stability, especially relative to consumer staples. That's the other defensive group it often moves with, as you see here. This goes back five years. By the way, the XLV, that's the other defensive group. It often moves with, as you see here, this goes back five years. By the way, the XLV, that's the healthcare sector, that's surge of outperformance.

That was a lot of that was Eli Lilly and the GLP-1 drugs. Now take a look at the valuations of these two. Healthcare now trading at a pretty steep discount to the staples group on a forward price earnings basis. Now does that mean it's cheap? Does that mean there's more earnings risk there? I will point out, and aside from just UNH's issues, big pharma's under pressure, talk about drug price controls,

all those kinds of things. So you see right here, healthcare, it's about a 16 times forward earnings, pretty good discount to the overall market. Staples holding up their value, keep in mind, John, Walmart, Costco, a big part of that staple sector. How much of that has to do with the buy the dip,

risk leaning mentality that we've seen in this market, despite the concerns that have popped up so far this calendar year? Yeah, I think it's two sided. I mean, in terms of staples, they've just kind of done nothing. They've not really participated much in the upside. That to me is because of the return to riskier higher

volatility sectors when confidence returns health care seems to be on its own though it's such a diverse sector usually there's kind of both growth and value momentum and defense within it so usually it can kind of participate in market moves this seems pretty extraordinary based on headlines and corporate specific stuff. Love the contrast. Mike, thanks. Well will sinking home builder sentiment and rising home unaffordability be a double whammy

for the housing market? Brown Harris, Stephen's CEO, Beth Friedman, weighs in next. And later we'll take you to a critical U.S. copper mine as that metal draws increasing attention from investors and President Trump. We'll be right back. ["The Daily Show"] Welcome back to Overtime. We all know home prices are very high,

but a shocking new report shows just how unaffordable housing is to many Americans. Our Diana Olek has the details. Well, John, high home prices and high mortgage rates have cut dramatically the number of people who can afford a home. And the change in just the past six years is pretty stunning.

Now, before we start, just to be clear, the median household income in the U.S. is about $78,000 a year. That's usually dual income. So, for those earning between $75,000 and $100,000 annually, which would be middle to upper middle income, just 21% could afford to buy a home in March. Compare that to 49% who could afford it in 2019.

Now, in a so-called balanced market between buyer and seller, that group should be able to afford 48% of all listings. But given the current supply problems for homes for sale on the market, they would need roughly 416,000 more listings priced at or below $255,000 to be balanced. Now the report from the Realtors measures affordability for buyers using a 30-year fixed mortgage and putting 30 percent of

their income into the monthly payment. That's mortgage, property tax, and insurance. Households earning fifty thousand dollars or less, they can't even afford 10 percent of what's for sale. Of course home buyers earning 250k or more, they can afford at least 80 percent of listings. Now a lot more supply is coming on to the market and we're starting to see more price cuts, but it's going to take a lot to see affordability improve anytime soon. John? Wow.

Okay. Diana, stay right there. Let's bring in Bess Friedman, CEO of residential real estate firm Brown Harris Stevens. Bess, I guess the flip side of this is if you can afford housing, if you're on the higher higher end of the income scale if you've already been in the real estate market and you're sitting on Some decent gains. Maybe you have a lot of options including a bigger pool of potential renters Yeah, I mean that's true. There's that's discretionary and there's always Opportunity in that market, but as Donna just said, affordability is a real issue in this country.

And first time home buyers today are now 10 years older than they were, 10 years older, they're now averaging 40 years old, where 10 years ago they used to be 28. And so I think we have some real concerns. People can't afford the mortgages, prices are too high, there's more inventory, but it's become unsustainable. We have some real concerns. People can't afford the mortgages. Prices are too high. There's more inventory, but it's become unsustainable.

And so this country really needs to do something about affordability so that people can buy their first time home versus rent. Diana, it seems like the entire American narrative post-World War II about upward economic mobility, including the value of college and now home ownership is shifting based on what's affordable. But we're not seeing prices come down, as you mentioned, in part because of these supply issues. Is there any historical context that you would give

into how these things work themselves out? Well, I don't know about historical context here because we're seeing something entirely new, and that is that renters are staying put. People are choosing to rent. Even those who can afford to buy a home are choosing to rent because they just don't see home ownership as the best investment anymore. And that's a big historical change from what we've seen in the past. We're seeing that rental turnover rate fall to very low levels.

And we're also seeing home builders, in fact we saw this morning, that home builder sentiment dropped to the lowest level in three years. They just don't feel that there's that much demand out there even for their higher end products. They're trying to put more lower end products out there, but they just don't have the ability to do that

given their constraints on how much things cost right now. They're concerned about tariffs of course, but they're more concerned about interest rates and they're concerned about that demand out there. And, Beth, just because things are unaffordable doesn't mean that people aren't buying them. Homeowners are taking on more risk than they have in the past, and I guess by extension, then lenders probably are taking on more risk than they have in the past. How does that factor into your view of the housing market? Yeah, I think that's the challenge

with first time home buyers because they have to be able to build up credit to be able to afford to buy a new home. And I think what Donna said, that's an unfortunate narrative about first time home buyers or being the American dream because it is the best way to build economic security for people, intergenerational wealth, all of those things. And when you rent, I mean, look,

in New York City, the rental market is at an all-time high. And I understand that people are continuing to rent, which is great for landlords. But if you want to build for your future, people want to have families and have stability. It's an investment in your future and it's a place that gives you shelter. And so it's different than investing in stocks and other things. It's something that has dual purpose. And so I would like to make buying a home, not because it's my book, but because I really believe in it, even before I was real estate. So I would like to make the dream be real. Beth, there used to be this thing that real estate agents would say about, you know, if

you plan to be in place for at least five years, then buying is your better option. Has that rule of thumb changed? You know, I think that people are still continuing, real estate professionals are still saying if your plan needs to stay put, and on the average in New York, people move every five years, that still owning a home is your best investment. The thing is, is the appreciation that it's been flat.

So people have to weigh the pros and cons and see how much it is to rent something that would be similar and if it makes sense. And you know, it really depends circumstantially on people's situations. You know, the market, I always say, it's there to serve you, not instruct you.

And so people have to decide what makes the most sense for them. All right, Bess Friedman and our own Diana Olek, thank you. Well, we've got the 13F from Michael Burry's firm. Leslie Picker has the details. Leslie. Hey John, just two interesting positions we wanted to flag for you. Michael Burry's Scion Disclosing put options

with a notional value of $100 million against Nvidia in the quarter. The firm also doubling its long stake in Estee Lauder, worth just 13 million, so small by 13F standards. But that was kind of an interesting position to share with you as well. I'll send it back to you. All right, Leslie, thank you. worth just 13 million, so small by 13F standards, but that that was kind of an interesting position to share with you as well. I'll send it back to you.

All right, Leslie, thank you. Well, President Trump is trying to reduce the US's reliance on China for raw materials, including copper, and that's why our Pippa Stevens has been hanging out all day at a critical copper mine outside Salt Lake City. Hey, John, copper is the focus of Rio Tinto's Kennecott mine, but they also produce another critical mineral.

We tell you what this is and why it matters. Coming up next on Overtime. Welcome back to Overtime. Copper demand expected to surge more than 40% over the next decade and the metal has been conducting solid gains for investors this year. Now you combine that with President Trump's desire for more mining of raw materials here in the U.S. You get perhaps a shiny outlook for copper. Pippa Stevens is at a critical U.S. copper refinery with the details. Pippa Stevens is at a critical U.S. copper refinery with the details. Pippa. Hey John, so when you think about mining you probably think big open pit like where we were

earlier at the Kennecott copper mine, but now we're in their refinery which is as critical as the mine itself. It doesn't matter how many reserves you have of copper, if you can't turn it into a viable end product, it is a whole lot less valuable. So once the ore arrives here, it's already gone through the crusher, concentrator, and smelter, but it's still got to get up to 99.99% copper. Anode sheets are dropped into a chemical solution to start that process. They stay in the bath for about 10 days before heading over to the cathode stripper, which is where I am right now. At that point, two cathodes, each weighing 300 pounds, are separated from the stainless

steel and then ready to be shipped out. Now, copper is by far Kennecott's largest product, but it also mines other things, including gold, silver, and tellurium. That's what this is. It's another critical mineral that is key for solar panels and Rio Tinto is one of just two domestic producers. So all told this refinery supplies about 20% of US refined copper and then with the accompanying smelter as well that's one of just two in the U.S. So John, with this broad focus on vamping up the U.S. mining industry, projects like this one that are vertically integrated

are becoming increasingly important. Now, Pippa, I imagine investors need to be at least aware of the possibility of oversupply. So what should they think about as the main demand drivers here? Is it just general construction and GDP growth? To what extent do data centers and technology play into that? Yeah, so data centers are a big driver here for copper, but importantly, they're just the latest driver. What is really boosting copper and where the momentum really is is on the energy transition. Copper is the backbone of electrification. Think about all the wires, all the conductivity, all of that requires a lot of

copper. And then you add AI on top of that. And that's why there are a lot of people saying we simply will not have enough supply. But of course, you do as an investor have to think about over supply concerns. And there is also the question of recycling. That is seen as an important source of copper looking forward. But the problem is that a lot of these applications, the copper is used for a very long time, an ICE vehicle 18 years,

in a housing house maybe more than 40 years. And so that is not an immediate source of extra supply. And so that's why with all this AI momentum, people are saying, gotta have a lot more of that Dr. Copper. Quickly, what about potential kinks in the supply chain? Could a lack of access to rare earths actually affect the ability of people who wanna use copper

to actually have a use for it? Yeah, so when you look at all of these very specialized supply chains like rare earths or copper, the ability to access it is what's so important. And that's why the administration is trying to ramp up domestic output. Got it. Pippa Stevens, great shot, thank you.

Well, before we go, let's get you set up for what's on tap tomorrow. No earnings on the calendar, but there are some key pieces of economic data you're gonna need to watch. The April reports for housing starts and import prices as well as the preliminary reading on consumer sentiment for May and it's been an exciting week for stock movement so you can expect more of that for sure. Catch it here on overtime for today. That's

going to do it. Fast money starts right now.