Closing Bell - Closing Bell Overtime: Accidental Landlords & Alphabet Earnings Preview 7/22/25

Episode Date: July 22, 2025

Innovator ETFs’ Tim Urbanowicz lays out the market backdrop after earnings from Texas Instruments and Capital One. Our Pippa Stevens tracks natural gas moves. Evercore’s Stephen Kim breaks down surging stock moves from DHI and PHM. Compass Point’s Ed Engel downgrades Circle after the GENIUS Act. Crossmark’s Bob Doll offers a broader view on bond moves and market leadership. Our Diana Olick reports on the rise of “accidental landlords.” Our Brandon Gomez reveals how U.S. spirits sales have cratered in Canada amid a tariff clash. Plus, Gil Luria of DA Davidson previews what to expect from Alphabet earnings.

Well, that's the end of regulation. Groupos invested, ringing the closing bell at the New York Stock Exchange and OFA Group doing the honors at the Nasdaq. Stocks ending mixed on the day, but the S&P hitting another all-time high. The S&P has now had 19 consecutive days without making a 1% move in either direction. It's the longest, you can call it quiet streak, since December. Healthcare, real estate, utility utilities leading the gains. Tech

and communication services lagging. The semi-stocks among the losers today with Micron, Arm, and Broadcom all down more than 3%. General Motors falling despite earnings coming in line. The carmaker saying tariffs impacted the quarter by $1.1 billion. The defense stocks moving in opposite directions on the back of results as well. Northrop jumping as revenue beat Lockheed Martin on the flip side after reporting a $1.6 billion charge related to some programs. We've got more on that sector straight ahead. Home builders rallying big as DR Horton and Pulte group beat estimates. The home construction ETF having its best day since April 9th.

We're going to dig deeper into that as well. That's the scorecard on Wall Street. Welcome to closing bell overtime I'm Morgan Brennan John Ford is out ahead the return of the meme trade with names like open door and Kohl's Soaring on seemingly no news should investors be concerned plus Alphabet closing higher for the tenth straight day ahead of its earnings right here on overtime tomorrow. Can you still trade it? We'll get you set up for the numbers. And the call-catching Wall Street's attention circle down more than 8% today after getting downgraded to sell. The analyst joins us to make his case. But we

begin with the markets and this recent move in some of these highly shortened or shorted I should say names that have investors wondering if the mean trade is making a comeback. So take a look at shares of Opendoor and also shares of Kohl's both seeing massive moves. Opendoor is up 179% in one week and Kohl's is up a whopping 37% almost 38% just today. High short interest stocks have seen large trading flows in the last few weeks. Not quite as high as the GameStop phenomenon a couple years ago, but it's growing.

And according to JP Morgan, overall investor crowding into the most volatile high beta stocks is at a record. Take a look at that chart. So let's bring innovator ETFs, chief investment strategist Tim Urbanovic. And Tim, it's great to have you back on the show. That's exactly where I wanna start. When you see moves like this, Open Doorbanovic. And Tim, it's great to have you back on the show. That's exactly where I want to start. When you see moves like this,

Open Door yesterday, Kohl's today, some of these other micro cap and small cap names that have had just massive, massive parabolic moves here in recent days, in recent weeks, does it signal we have some frothiness in this market? Well, Morgan, I think there's a level of complacency that is very clear when you look at these moves in the names like Open Door that we have seen here.

We need to be very cautious of these as we head into August 1st. If we look at the S&P 500 over the last 30 days, we haven't seen a move of up or down 1% or more. That level of calmness is very rare. In fact, if you look at rolling 30-day periods, it happens only about 6% of the time. And we need to be cautious here, again, for a couple different reasons. And the reason I'm surprised here, Morgan, is because if we look at tariffs that are set to go into effect on August 1st, they're basically at the same level that we were post-liberation

day with all of the chaos that was taking place in the market. And Morgan, we're also talking to a lot of advisors right now, and I think the sentiment here is that the economy has already digested tariffs very well, and we are cautioning that we don't yet know what the impact of tariffs is. I think a lot of companies out of the gates thought that tariffs would be short-lived,

so they were very hesitant to pass on those higher prices to their customers. That's going to be a different story after August 1st. So I think we need to brace for an uptick in volatility here. I want to go back to something you just said. The tariff levels are not where they were on Liberation Day. And I realize you have to go sort of country by country here, but they're not that high. Where are you getting that number? Yeah.

So if we look at the average rate on each country, post-liberation day we saw an average rate of about 29%. August 1st as we head in, we're looking at that exact same level. So I think, Morgan, it's been this common theme that the market has not been taking the president seriously. When it comes to tariffs, they think it's just a negotiating tactic.

And part of it is, we think that these tariff levels will still come down. But at the end of the day, the end game here, Morgan, is higher tariffs, and we need to be prepared for what that is going to do to CPI. We need to be prepared for what that is going to do to consumer spending. And we think the impact on both of those is still unknown.

And you wanna make sure that you have some protection in your portfolio around that August 1st deadline. Okay, well speaking of companies that have some exposure to trade dynamics, Texas Instruments earnings are out. Christina Parsnevelis has the numbers, Christina. Morgan, I have to preface the expectations were high going into this print. And that is why you're seeing the stock drop about 6%.

Beat on the top and bottom line, $1.41 EPS adjusted earnings per share on $4.45 billion for revenue. It's the guidance for Q3 that is a mixed bag. Q3 EPS, the midpoint of the range came in a little bit less than $1.50 estimate. And then the Q3 revenue guidance of $4.45 to $4.8 billion was just a touch higher than what the street wanted.

So that's why it's a mixed bag. In the actual report, the company said, management said that they saw revenues increase 9% quarter led by continued broad recovery in industrial. The one point though here is that the third quarter outlook does not include changes related to recently enacted US tax legislation. Perhaps that's playing a role or perhaps the fact that the stock had increased almost 45 percent just in the last three months. So perhaps this wasn't good enough as we saw yesterday with NXPI. Morgan? All right. Christina Parts-Nevelis, thank you. Those shares down about 7 percent right now

right here in overtime. Tim, I'm going to go back to you, get your response to that because this is a theme we're starting to see with certain companies in certain industries right now as this earnings season ramps up. And that is maybe they're coming in stronger than expected on sales or sales outlook is coming in stronger than expected, but we're seeing some dings on the bottom line here in part because of trade, in part because of tariffs, and maybe economic uncertainty. Yeah, Morgan, I think it's going gonna be on a sector by sector basis. And overall, pre-close here,

we'd actually seen pretty strong results from the tech sector. I think of all the companies that had reported, every single one of them had beat on both the top and the bottom line. So we look at a company like Texas Instruments, I think a lot of this, the questions around this of how much of the demand last quarter was a pull forward from fear over tariffs. I think there is a lot

to like about the stock. I mean, the commitment to returning cash back to shareholders we think is big, one of the highest dividend payers in that sector, which should help cushion any blow if we do see some type of economic pullback. But when we look at the semiconductor landscape as a whole, we really want to make sure that we're focusing capital on those stocks that are directly tied to the AI trade. There's a lot of capital moving in that direction. We don't think that trend is moving, Morgan. So this is a good stock, but we want to get really focus our attention to those AI stocks. Okay. Tim Rabanitz, thank you.

Some interesting commentary from Texan too on that broad recovery continuing in the industrial space. I'd also just note the S&P closing in a new record, 6309. Well, it's been a really rough week already for another asset class. Natural gas, Nat gas prices, which are down roughly 9% since yesterday. Pippa Stevens is looking at what this means

for energy stocks and why we're seeing this move, Pippa. That's right, Morgan. So we've seen big declines in the last two days with Nat gas really falling off a cliff here and hitting a two week low. And that's really on the heels of four key reasons. So the first is we have retreating August weather temperatures coming in a little bit cooler than expected.

You've also got high production, as well as inconsistent LNG demand amidst some maintenance on projects, as well as elevated inventory with gas and storage, now about 6% above the five-year average. Still, EBW Analytics' Eli Rubin said, "'The drop in the days leading up to the hottest week of the summer remains moderately surprising.

Now gas drillers are following the commodity lower with EQT, Range Resources, Comstock and Expand Energy all down double digits in the last month. We will hear from EQT in just a minute in what Bank of America called the most watched quarter given the company just signed new supply contracts for data centers with the market waiting for clarity on those pricing terms. Now, for much of the year, we've seen investors favor gas-weighted names over their oil-weighted counterparts, and that is beginning to shift a little bit. However, analysts still say that gas has the better setup looking forward, benefiting from the three key tailwinds of

coal-to-gas switching, rising LNG capacity capacity as well as increases in power demand thanks to data centers and electrification. Oil on the other hand has been stuck in a rut for months and with ample spare capacity worldwide, it's really hard to see that narrative shifting anytime soon, Morgan. So is this just, should we just think about this as a volatile trade, which NatGas always has been and continues to be and it doesn't really change the fundamentals longer term? I think that's how the market's looking at it right now. As you said, NatGas always has been and continues to be, and it doesn't really change the fundamentals longer term. I think that's how the market's looking at it right now. As you said, NatGas has been called the widow maker for a number of reasons, because it is always so

weather-dependent and so volatile here. But when you look longer term, I mean, Morgan Stanley sees prices rising to five bucks per M&B to you by the end of the year, simply because of those tailwinds, most notably AI. When you think about what needs to power data centers, it's not going to be exclusively wind and solar because they're intermittent.

And so gas is really that interim fuel. And so that's really what the bullish side is hanging their hat on for now. Okay, Pippa Stevens, thank you. And we'll see you soon with those EQT results. The White House, meantime, announcing a trade deal with Indonesia. Its second pact announced today.

Eamon Jabbers has the latest details. Eamon, I thought we already knew there was a trade deal with Indonesia in the works. We knew that, but we didn't know all the details of it, Morgan. So a bunch of moving parts here at the White House right now. President Trump announcing the detail of a trade framework, as they're calling it, with Indonesia on social media today, saying that the U.S. tariff rate on Indonesian goods will go to 19 percent and the Indonesian tariff rate on what the administration is saying is 99 percent of U.S. imports will be zero. The U.S. also says Indonesia will be eliminating a host of non-tariff

trade barriers. The president also announced an agreement with the Philippines, whose prime minister was here on campus today. The U.S. tariff rate on imports from the Philippines will go to 19 percent and the Philippines will not put tariffs on the U.S. on U.S. goods. That's according to the president. And remember Treasury Secretary Scott Besson said this morning the trade talks between the U.S. and China they're going to resume in Stockholm next week. But the August 12th deadline for that agreement is likely to be pushed back again. And separately, Morgan, a lot going on here. CNBC has learned that President Trump had a more than hour-long meeting at the White

House last week with tech billionaire Jeff Bezos. No word from our two sources familiar on this, what the topics of conversation were for that meeting, but it is notable, of course, in the wake of Trump's major falling out with Bezos' rival Elon Musk this year. So you can imagine what was discussed here at the White House between those two men. Back over to you. Okay. Amy and Javers, we're keeping you busy at the White House. That's right.

Well, Capital One earnings are out, and Tucson has the numbers for us. Hi, Hugh. Yeah. Hey, Morgan. It looks like a beat for Capital One on the EPS and a slight miss on revenue. So EPS of $5.48 a share compares with the $3.72 adjusted estimate. Now revenue of 12.49 billion just under the $12.69 billion estimate.

Otherwise it's a really noisy quarter because it's the first one that includes that Discover acquisition that happened earlier this year. We're still digging through the release at the moment. Back to you. Okay, Hugh Sun. Thank you. I'll share to Capital One up fractionally right now. There's no place like home on Wall Street today.

Up next, top analysts and whether you should buy the builders after strong earnings from DR Horton and Pulte today. And later, the analysts who just downgraded shares of Circle to sell that's following the crypto company's blockbuster debut last month. We got a big show straight ahead over times back in two. Welcome back DR Horton and Pulte closing out the day as some of the biggest gainers in the S&P 500 after both home builders reported better than expected earnings. Now it is D.R. Horton's best day since March of 2009. Look at that.

It finished up almost 17 percent today and for Pulte, it's best day since November of 2022. Up almost, well I guess about 11 11.5% for Pulte. The home construction ETF, the ITB, hit its best day since April 9th. So joining us now to discuss all of these moves in the sector overall is Stephen Kim from Evercore ISI. Stephen, it's great to have you on.

Let's start right there. I mean, we don't usually see these types of moves in home builder stocks, is it warranted? Well, you know, I'll tell you, the builders have a reputation for moving fast and furious and you don't get a lot of warning. The guys that traffic in these names know that you have to be early because if you're a bit late, you'll be buying them materially higher like what we're seeing today. So yeah, today's a little bit exceptional but I think that this is a little bit typical for builders in that they move very quickly. And I

would say they move really when the sentiment and the fundamentals are slowing their decline, because that's really what we're seeing right now. We have not seen an improvement in fundamentals, but the positioning and the anticipation that you would see worsening set you up for today because you did not see worsening or you saw barely worsening and that was enough to get people to say okay maybe maybe the second derivatives have started to go positive maybe these the deterioration is slowing and we want to be in before the actual fundamental improvement happens. Got it so signaling a bottoming out, if you will, here.

You just used the word late. Looking at the moves we saw on these stocks today, is it late? Do you wait for a pullback to buy now? Well, we've said that these builders are structurally undervalued, that these builders are really historically traded on book value, and that is not appropriate anymore. We have said that sort of below the surface these companies have dramatically improved their fundamentals. They are moving more land light, their overall sustainable level of profitability is higher

than it was, their leverage is virtually non-existent today, and they are regular repurchasers of their shares. And all of this has frankly been recognized by the specialists who look at this group really closely, but frankly they've been somewhat cynical that any of that would actually drive a revaluation yet. So they were kind of, we think, tactically positioned to play the kind of the negative story. What we're seeing here is that when the environment lifts, the clouds lift just a little bit, there is this realization that these companies have long been undervalued. And so you could get a dramatic revaluation in these stocks.

Just to put it into some frame of reference, we have seen one builder in the space, NVR, which has established this new model. They were trading at 18 times, even higher than that on a PE basis, and many of these builders were trading at high single digit PE multiples just very recently. So I think a big move is appropriate, and I don't frankly believe we're done. So President Trump floating the idea that the administration is exploring removing capital gains taxes on home sales to help

housing rebound here amid high mortgage rates. I realize that's going to take an act of Congress to actually see that come to market if you will. But how much does that sentiment or that possibility of more policy help housing?

How quickly does that happen? Is it going to be meaningful if it does happen? Well, it'll be an incremental help. And I'd say it's probably going to be helping you more at the higher end of the market than the lower end of the market because of the fact that you already have a tax shield, if you will, up to 250 grand in capital gains for a single and 500 for a married couple. That's a lot of capital gains.

And so pretty much we're talking about the higher end of the market that could potentially be unlocked. But frankly, that's not what really is going to matter for the housing market. What's really going to matter is a return of confidence. We believe that a lot of actually the actions that Trump has, the Trump administration has taken has created instability and uncertainty. And frankly, people who are going to make the biggest, you know, purchase of their life, they don't like to have any kind of insecurity or uncertainty.

And so we think that's actually hurt the group more than anything. Frankly, we think that things that would be best for the market would be the housing market, would be if the lower-end consumer felt it was safe to come back into the market, and that would be the biggest, we think, catalyst to a rebound in the housing demand. A tax-bistacks policy possibility,

it would be incrementally better for the higher end of the market. Okay. Stephen Kim, thank you. You're welcome. Well, Circle shares skyrocketing since the IPO in early June. Our next guest will tell us why he just downgraded the stock to sell, warning it could go in a straight line right down from here plus alphabet rallying for the tenth straight day Ahead we're going to discuss whether you should be buying this hot stock ahead of its earnings which come right here on overtime Tomorrow stay with us Welcome back. Check out aerospace and defense sector. Some big moves as earnings get underway for the group.

So let's start with Northrop Grumman because it hit a new high today. It was a beat and raise. Margins expanding. International sales jumping. It's a big beneficiary from all those nuclear modernization efforts which continue to see more funding. Those shares finishing up almost 9.5%. RTX on the other hand finishing lower but off the lows of finishing up almost 9.5%. RTX on the other hand, finishing lower

but off the lows of the day, down 1.5%. That's despite a beat on trimmed full year EPS guidance. They're finally factoring tariffs into the full year forecast but demand is staying strong, both for commercial arrow and like Northrop for defense. Similar message from Lockheed Martin but a pre-tax loss of $1.6 billion, a pre-tax charge I shouldx loss of $1.6 billion, a pre-tax

charge I should say, of $1.6 billion overshadowed that and cut into both Q2 and full your profit forecast. That sent shares down almost 11% today. Those charges tied to some legacy programs, but Lockheed CFO Evan Scott telling me he doesn't expect more, at least for now. Lockheed, like Northrop, like RTX, is seeing growing demand for its products, including some of those big ticket, what's called in the industry exquisite programs like F-35, but also missiles, missile defense, even so the Pentagon's priorities are shifting to include

more cheaper, faster to make technologies like drones. Lockheed's Scott telling me the company's focused on bringing more startups into its supply chain and striking more partnerships as well. So here's the big takeaway. Some legacy defense programs are phasing out. Lockheed today looking to get ahead of that. Pentagon priorities are shifting but growing global defense budgets amid heightened geopolitical tensions is spurring more sales, more demand for all of these companies overall and of course we will get more results over the coming days when L3 Harris reports and general dynamics. And then next week we always talk about aviation

and the commercial business, but Boeing as well. So let's turn to another under performer today, Circle. Shares closing about 8% lower. Compass point downgrading the stock to sell, citing five negative catalysts ahead of including Fed rate cuts and emerging competition from, ironically, the recently passed crypto legislation, that's stablecoin legislation. Shares are still up over 500% since the IPO.

Its market cap is now $43 billion. And joining us now is Ed Engel, analyst at Compass Point. And Ed, it's good to have you on the show. Why the downgrade? Why now? Yeah, absolutely. Thanks for having me on. So I mean, look, this is one of the most successful IPOs I think ever where you, as you said,

up over 700% at a certain point. And I think as part of the run up and evaluation was just that this is a brand new blockchain stock. The market was, didn't have many other opportunities to invest in the blockchain narrative, particularly ones that weren't related to trading volume. So I think part of it was just this kind of hype around this new type of company that had just kind of been

starved in terms of the types of companies offered to the market. And so I think with that, it was difficult for investors, especially investors new to the space, to value this company. And at one point, the stock was trading at over 120 times EBITDA. And I think it was pretty clear that investors were less so focused on year-term earnings and more so on the long-term addressable market and also the long-term margins and market share of this business.

Meanwhile, you had Secretary Besant talk about a three or a three to four trillion dollar addressable market by 2020, 30. And that really got kind of this broad based hype, particularly retail hype around it. And so one of the core reasons that we downgrade the stock was certainly part of it just on valuation where the stock trade that over a hundred times

he bit the sale even after the recent decline. You've got peers like Coinbase and Robbahood maybe not perfect comps but still have that blockchain. Exposure. Pushed to fifty to sixty times. But even beyond that I think one of the core reasons of the

downgrade was. First of all we're a little bit cautious of the long term margin profile of this business where. We don't necessarily see stable coins on achieving mass market adoption. Unless more of that interest yield is passed on to the consumer.

So similar to how banks are forced to share their yields with deposit holders, we're expecting increasingly stable coins issuers like Circle, at least indirectly, to share more of that yield with the end user. And we don't believe that that current margin profile that requires that is reflected in the stock. So Coinbase is a partner and investor in Circle. I mean, is Coinbase also a competitor here?

Or when you see deals being struck with Coinbase, does that also potentially help Circle? Absolutely. I mean, I think it is a symbiotic relationship, but it's also a competitive relationship where any activity directly driven by Coinbase, whether it's on the Coinbase exchange or on Coinbase's platform, a vast majority of those economics do accrue to Coinbase rather than Circle. And so on one hand, yes, they are helping each other. They're increasing liquidity for USDC. But at the same time, they are competing for distribution.

Okay. Ed Engel of CompassPoint, thanks for joining me. Well time now for CNBC News Update with Bertha Coombs. Hi Bertha. Hi Morgan. Columbia University has disciplined more than 70 students for participating in two student-led campus protests. The university confirming today the sanctions range from probation to suspensions, with two-thirds of the students suspended for two years. It comes on the same day as the Wall Street Journal reported that the school's board

of trustees is discussing a deal with the Trump administration to restore at least some of the university's more than $400 million of federal funding. Hershey said today that prices of its candy bars will be going up, blaming the increase on the rising cost of ingredients, including the price of cocoa. Cocoa prices hit a record in December due to supply shortages. And the ratings for Saturday's WNBA All-Star Game

were down about 36% from the previous year, but the game still posted its second highest viewership in its history with 2.2 million viewers. League standout, Kaitlyn Clark, was on the bench this year with a groin injury. Morgan? Bertha Coombs, thank you. Up next, CrossMark CEO Bob Dahl.

On the outlook for this market and whether he's betting on growth or value stocks during the second half of the year. Plus, investors in spirit stocks like Jack Daniels maker Brown Foreman are drowning their sorrows over a massive sales slump in Canada. This is over the ongoing trade war. We've got those details coming up later on overtime. Welcome back to overtime. Here's your market reset. Stocks ending the day mixed, the S&P hitting an all time high,

but the NASDAQ as you can see right there retreating down about four tenths of 1% to end in the red. Commodities moving lower across the board. Oil, Brent crude. So WTI, Brent, Natgas, Arbob, which is gasoline, futures all closing lower as well. Here are some of your other movers, specifically after hours here in overtime.

Texas Instruments speeding on EPS and revenue. The company guiding Q3 EPS of $1.36 to $1.60 per share. That's versus estimates of $1.50. You can see those shares are under pressure right now, down about seven and a half percent. A volatile after hours move for end phase as well. That stopped jumping on the initial numbers after reporting an EPS and revenue beat,

but it's now lower by, as you can see right there, six percent. Intuitive surgical in the red, despite EPS and revenue beating as well. Worldwide DA Vince procedures, one of the DaVinci, DaVinci procedures, one of the biggest drivers of revenue that grew 17% year over year, but you can still see those shares

down about two and a half percent right now. And finally, CalMain, that jumped after its results. The company saying they made significant progress on additional production capacity to mitigate egg supply shortages, noting they've seen a, get this, 48% increase in the company's breeder flocks. Those shares are at 5%, and of course,

what that means is that you're starting to see all these hens that were culled, they're rebuilding those flocks, perhaps lower egg prices in the future. We'll see what they say on the call. Meantime, treasury yields falling for the second day this week. Rick Santelli is at the CME in Chicago. He's got the details for us. Hi, Rick. Yes, not only are yields falling, but they're falling domestically as well as globally. Look at the intraday chart. You can clearly see that

we've been moving mostly sideways and over the last several days, well, we're hovering near the low yield closes of the month. Open the chart up and you can see right now should we close, it'll be the lowest yield close since the 9th of July, let's call it two weeks. And in Europe, the boond yields are closing in on the lowest close of the month. And if we look at the spread, and this is interesting and most likely because the Fed meetings next week, the volatility level in this spreads, the 2s, 10s in particular, really starting to level out as we hover right above 50 basis points that separate 2 and 10 year yields.

And finally, the dollar index. Right now the euro is hovering at a very strong level, the strongest level since 2021. The dollar index is the mirror image of that. If we would settle a half a cent lower, we'd be looking at a fresh three and a half year low close. Morgan, back to you. Rick Santelli, thank you. We'll keep an eye on that. Well, let's stay on the market because growth stocks are significantly outperforming value stocks so far this year that's driven by economic uncertainty, rising optimism,

around AI in the first half. Will this trend continue in the second half? Our next guest unveiling two new ETFs that he's launching tomorrow, focusing on large cap growth and large cap value. Joining us now is cross-mark global investments CEO and CIO, Bob Dahl. Bob, it's great to have you on and let's start right there. What do we need to know about these ETFs and what

differentiates them from what's already in the market? Yes Morgan but we think what differentiates them is they're active in management most of the launches have been passive and ours are values based. I don't think I get out of a meeting without some financial advisors saying hey when you're going to have ETFs? So we're excited to launch these tomorrow, as you point out. It's going to be a large cap growth and a large cap value, both actively managed. Now we've talked about this divergence, this outperformance of growth versus value in the first half of the year. Today specifically, if you look at the market, there was a rotation from growth to value.

How do you see this playing out in the second half? Yeah, I think it's going to be back and forth, gun to my head. I think value beats growth for the second half of the year, largely because the largest sector within value, which is financials, we think will outperform technology, which is the largest sector within the growth spectrum. But I want both in the portfolio. On the value side, I just want to be careful,

not just to buy cheap stocks. There's got to be something going on, some sort of catalyst. And I want to own growth stocks. I'm just going to be very picky about the valuation because valuations are high. So when you talk about growth catalysts and avoiding value traps, if you will, what are those catalysts? What are the types of things that you're looking for? Free cash flow, rising free cash flow,

inexpensive price to free cash flow, and then on profitability, we want high and preferably rising return on equity. And you put that combination together, low price to free cash flow, high return on equity. Doesn't guarantee that you're going to outperform, but it does provide some wind to your back, Morgan. I want to go back to something you said before,

which is interesting to me. You said values, not to be confused with the growth versus value, but values. How do you define values? How does that drive your investment thesis? Certainly, it's both what we give an extra kiss to and what we won't own. We won't own companies that make products

that maim or kill people, Cigarettes are an example. And we want to give extra credit, if you will, to companies that are doing good. How they treat their employees, their customers, their suppliers, their community, and those things are very measurable. Interesting. So if I take a step back,

how does all of this reflect your view on the market right now, especially as we have the S&P trading at a record high? Well, while fully invested, Morgan, I'm on the cautious side. Look, the economy is good, but not great. And we think slowing job growth acceptable, but slowing also inflation sticky. The housing market because of high mortgage rates and high prices, pretty difficult. The AI tailwind is for real,

both for the users and the suppliers, but the stock market reflects that, selling at 24 times earnings. That's the high end of evaluation territory. So we want to be really careful what we own. What do you think of the bond market right now? And what do you think it's signaling? Look, I think it's it's in a trading range. And of course as you just reported

We've seen now the lower end of yields I think we will oscillate back and forth the bond market is gonna watch the Fed carefully and the Fed's sitting on their hands because they Don't know enough about the future to do a whole lot. Maybe a cut this year. maybe not. Okay, Bob Dahl. Great to have you on. Thank you. Thanks so much. Up next, why the recent slowdown in the housing market is turning many Americans into accidental landlords and a trio of tech titans set to report earnings tomorrow after the bell. We're going to drill down on what to expect from Alphabet's results and others right here on Overtime. Welcome back to overtime. It's getting harder and harder to sell a home with persistent high prices, high mortgage rates, economic concerns weighing on the consumer.

So sellers are trying a new tactic that could have a big impact on some investors. Diana Olick has the details in today's property play. Hi Diana. Hey, Morgan. Yeah, frustrated sellers reluctant to lower their prices anymore are instead putting their homes up for rent, so-called accidental landlords. And there are so many now, they're actually starting to affect rental supply and the big institutional landlords. The largest investors owning more than 50,000 homes are highly concentrated geographically. Invitation homes, American homes for rent, and Progress Residential each hold over a

third of their assets in just six U.S. housing markets, according to Parcel Labs. These markets have seen rental inventory growth of well over 20 percent in the past year, much of it from former owner-occupants like Garrett Johnson, who bought a home in Dallas two years ago but was recently transferred to Houston. He tried in March and April to sell his home, dropped the price a few times, but crickets. So he decided to rent it and immediately got several offers. I expect to hold it until the market recovers. Whenever that is, I don't expect for it to recover super soon. So, you know, the expectation

is that it'll be several years. The concern for the big investors, according to Mizuho analyst Handel St. Just, is that the big landlords who have been getting 4 to 5 percent rent growth in their renewals and 75 percent retention in their portfolios won't be able to sustain that. Those big landlords have already become net sellers of individual rental properties and are instead turning more to the build for rent communities. Now this is just one of the stories in our Property Play newsletter out this morning. If you haven't already signed up, do that on CNBC.com forward slash property play or

on that handy dandy QR code. It comes to you every Tuesday morning. Morgan? Yes, it is worth the read. Congratulations on Property Play by the way, because I don't think I've gotten. It comes to you every Tuesday morning, Morgan. Yes, it is worth the read. Congratulations on property play, by the way, because I don't think I've gotten to say that to you. Just a follow up on this, obviously there's an impact here

on the institutional investors and the companies that are in the single family home market. I do wonder how it speaks to the skew, the spread that we've seen between renting versus buying homes, if you are a consumer though. Well, it's obviously a lot harder to buy a home right now because of the affordability issues and the higher mortgage rates.

So you have not only more people looking to rent, but more people staying in their rentals. And you have those who are in apartments who might have been looking to buy a home now saying, well, why don't I rent a single family home? Because then I get more space. I get to be in a neighborhood with better schools, et cetera. So you are going to start to see more of that rental demand.

We've already been seeing that over the past couple of years as home costs rose. Diana Olek, et cetera. So you are gonna start to see more of that rental demand. We've already been seeing that over the past couple of years as home costs rose. Diana Olek, thank you. Sure. Property play. Oh no, Canada. Up next. A look at the devastating impact trade tensions

between the US and our neighbor to the north are having on the American spirits industry. Over time, we'll be right back. Welcome back to Overtime. The ongoing trade tensions with Canada, Canada, she said, have started to have a very negative impact on American companies in the spirits industry. Brandon Gomez has the details. Brandon, let's talk booze. Hey Morgan, yeah Canada indeed. Companies like Brown, Foreman maker Jack Daniels and

Constellation Brands with its Utah distilled high west whiskey. Both stocks down over 20% to start the year. Well according to new data by trade groups Spirits Canada, sales of US spirits in the country fell by more than 66% between March 5th, the day when Canadian provinces started pulling U.S. spirits from shelves, up to the end of April. Now, to some extent, the shift away from U.S. spirits boosted Canadian spirit sales, up 3.6% with other imported spirits rising about the same. But Spirits Canada points out the gain did not compensate for the losses from U.S. product removal. The replacement products were typically lower margin, impacting profitability. Plus, overall Spirit sales were down year over year in April.

Morgan, I was just in Montreal over the weekend, went to a few restaurants, had a couple drinks, and when I asked if they had any American whiskeys, they told me they're not stocking it because of the tariffs. So this one is playing out in real time. We'll wait to see what happens on August 1, but until then, there are those 25 percent import tariffs on American whisky that's going over the border into Canada. I love this field reporting by you, Brandon. Just happened to be there.

Yeah, really impressive. OK, so I just want to go back to this. Is it that Canadian consumers themselves are boycotting in the wake of these tariffs? Or is it that store owners and businesses are pulling these brands off of shelves because they don't want to shoulder the cost of the tariffs? So it's the provinces themselves that are sending the directive and then the actual stores and the restaurants that are playing it out in real time. I've tried to sort of get to the bottom of why these directives are being carried out,

perhaps because places don't want to lose their liquor licenses. A lot of it was to boost the sale of Canadian import, Canadian rather distilled spirits over the American ones. Again, you have this sort of trade tension going back and forth, but Canada remains the second largest import market for US spirits. Interesting.

How similar is this to what we saw in Europe with last round of tariff dynamics in 2018, 2019 with the first Trump administration? Yeah, that's the concern. I mean, they're trying to sort of reach this agreement. Obviously the Distilled Spirits Council, which is the trade group here in the US, trying to advocate for 0% tariffs,

a free trade over the border on both sides there and in the EU, as you mentioned, but also with Tequila and Mezcal in Mexico, another issue with our neighbors to the south. All right, well, it's a happy hour somewhere. So we'll toast to the Leos on this. Maybe a little more expensive. Yeah, Brandon Gomez, thank you.

Yeah, thanks. Up next, an analyst tells us the key numbers to watch when Alphabet reports earnings tomorrow, right here on Overtime, and whether this recently red hot stock will keep rallying. And don't forget, you can catch us on the go by following the closing bell overtime podcast on your favorite podcast app. We'll be right back.

Welcome back. Let's get you set up with tomorrow's trade today. Existing home sales is the only data on the economic calendar, but it'll be another massive day of earnings. AT&T, Boston Scientific, GE, Vernova, General Dynamics, and Freeport, Mac, Moran will report before the bell. Then right here on overtime, we will get results from Alphabet, Tesla, IBM,

Chipotle, and T-Mobile. Then we will hear from the CEOs of both Chipotle and T-Mobile before they dial into the call with their analysts. Speaking of Alphabet earnings, let's bring in our next guest to break down what to expect from those results tomorrow. Joining us now is Gil Luria from DA Davidson. Gil, we've seen a rally ahead of these results.

Is it warranted? What are you looking for? Yeah, Google has caught up a little bit. It's still underperformed most of its mega a little bit it's still under performed most of its mega cap peers it's still under performed the market but over the last few days there's been this sense that there's some good things that we're going to see in the quarter and in the results and and some of the bad things some of the things we're worried about are probably not going to manifest

themselves in the short term which is why the stocks rallied into earnings tomorrow. So the good things are the consumer is still strong, the advertising market is still strong, we're going to get a little benefit from currency, all those things are happening in the cloud, we're going to get a benefit from AI. So those things are happening, they should be in the quarter, they should bode well for the results the things we worry about what happens down the line with search what happens when Safari takes other other search engines when Chad GPT turns advertising on all those things we kick those cans down the road and we're focused on more of the things that are gonna bode well for the quarter.

How about CapEx as it relates to AI? Is elevated spending a good thing in this environment, especially when you have talent wars and everything else playing out? So I would fully expect Google to follow through on the growth in CapEx for the year. Whether or not they choose to raise their guides for the year is another question. Because as you bring up,

the cost of AI is no longer just data centers. The talent war is now manifesting itself in billions of dollars of price tag. I would expect Meta when they report that their expense in the quarter on AI for talent may be as big as their capex for the quarter. For Alphabet, that may not be the case, but it's still an additional, very large expense that's going to start mounting for all these companies. How closely you're watching this, quote-unquote, winning the AI race event that's happening down in Washington tomorrow where President Trump is supposed to address the public.

We are seeing this growing intersection between AI and policy here, but we haven't seen meaningful regulations, for example, the way we are in the crypto space. I would expect a lot of really big promises, but those tend to happen at the political events and then the follow through is a different matter. We just saw that with Stargate where in an event a few months ago, the size of the project was announced at $500 billion. And then quietly in the news over the last couple of days, we're probably talking about a tenth of that.

So I'd expect big announcements about the size of investment, especially in the U.S. The follow through is a different question. And then in terms of regulation, since the state by state regulation is now allowed, that didn't pass as part of the large budget bill, then I would look for maybe some federal guidelines for what we would expect from the large frontier model companies.

This is becoming increasingly a national security question. So you would expect some conversation about what regulation we should expect, which isn't necessarily a bad thing. Regulation at the federal level could diffuse the risk for regulation at a state by state level. Yeah. Okay. So very quickly, because we have less than 30 seconds here. How much do Alphabet Cloud results

provide a read-through to Microsoft and Amazon? Very much so. If we see Google Cloud accelerate beyond 28%, that bodes very well for Microsoft Azure, which grew 35% last quarter. They may grow even faster. AWS grew 17 percent last quarter. They could be growing faster.

So that is definitely something we're going to be very focused on to see if Google Cloud is, in fact, accelerating as the usage of AI grows. OK, Gloria, thank you. Well, Constellation Energy, Vistra and NRG Energy also seeing big moves right here after hours after PJM capacity auction results, the nation's largest power grid operator set capacity prices at a new record significantly higher than previous auction results in part because of what we're seeing with all these data centers.

You can see right there all those stocks spiking on those results that does it for us here at Overtime. Fast money starts now.