Closing Bell - Closing Bell Overtime: Adobe CEO On How AI Is Shifting Its TAM; UPS CEO On Global Green Shoots 3/26/24

Episode Date: March 26, 2024

Stocks tumbled in the final hour of trading today, sending the major averages negative. Wharton Professor Jeremy Siegel breaks down the market action and where things go from here. Jon sits down with Adobe CEO Shantanu Narayen to talk its newest products and how AI is changing how big a market the company can serve. ULL CEO Christian Ulbrich on the company’s global real estate portfolio and the state of commercial real estate. Plus, Morgan talks with UPS CEO Carol Tomé about the global macro picture, inflation and how it plans to win back market share. 

Stocks sinking into the close as the S&P 500 falls for the third straight day. That's the scorecard on Wall Street, but winners stay late. Welcome to Closer to the Bell Overtime. I'm John Ford with Wilfred Frost. John, great to be with you. I'm Wilfred Frost. As John says, in for Morgan Bread and healthcare and financials. The outperformers while utilities, energy and tech drag the market lower. Yeah, I am here in Las Vegas where coming up, I'm going to interview Adobe CEO Shantanu Narayan. This is Adobe Summit.

Huge event for them of the year, especially given the backdrop of AI being a business driver and the guidance that Adobe just gave here on overtime before the call about a week and a half ago, Wilf. And they're going to have an analyst day here, an investor day, going to update some figures on total addressable market. Going to have those for you as well. Talk to Shantanu about them in just a couple of minutes. John, we look forward to that exclusive interview coming up in the next five or ten minutes.

But first, let's get a reaction to the market, which, as Scott and Mike were just alluding to, sold off quite significantly into the close. Of course, comes off a very hot week last week, albeit three days in a row now of declines for the S&P 500, which closed down 0.3 percent. The Dow is the best performer of the major averages, down just 0.1% today. The Nasdaq down 0.4% earlier in the day. We were talking about the prospect of a record closing high for the Nasdaq, but in the end, down almost half of 1%.

Healthcare, the best sector, up 0.4%. Utilities, the worst, down 0.9%. Also tech and energy down about three quarters of 1%. Those three sectors, the worst performers. McCormick, the best stock on the S&P 500. UPS, the worst, down eight percent. Let's get reaction to the market close. Jeremy Siegel, professor of finance at the Wharton School of Business and chief economist at Wisdom Tree.

Very good to see you, professor, as always. Long time no speak. I just wonder whether you see a little bit of a close today it's only one day's close of course and you think you know that that makes sense because we're on track whether we look at it 10 up your date on the s&p 500 or one statistic that jumps out to me we're on track for five months in a row of gains are we due a little bit of a pullback well i wouldn't be surprised, although I still think the momentum is there, Will. I still think this bull move is strong and has a ways to go.

Yeah, I mean, you could have a little corrections under the way, kind of head fakes. But, you know, I think I think the news is strong. I think the inflation is going to be being reduced. I saw a GDP estimate by the Atlantic Fed just came out after the durable goods at 2.1 percent, exactly the target of the Fed this year. So the economy is not showing signs of weakness. And surprisingly, 12-month earnings forward, instead of usually they go down as the year goes on because they're often overestimistic, are actually rising in many circumstances. So I still think, yes, we could have a 2%,

even a 5% reaction, but I don't think this bull market is over. Well, let's talk about inflation and what, of course, that then feeds back into rates in the market, because obviously we get PC on Friday when the market will be closed. Well, earlier today on Squawk on the Street, excuse me, it's been a long day. Professor Segal, I was talking to James Gorman. Let's hear his take on rates. I would be surprised if they move in the first half of this year. I would not be totally shocked if they don't do anything for the rest of the year. Professor Siegel, no rate cuts at all this year.

Do you think that's possible? What would it do to markets? It is possible. Torsten Slak is another economist who came out with that a couple of weeks ago. And I think it's unlikely. I think it's against the odds. But very honestly, what's more important for the market is the state of the economy and earnings going forward to whether the Fed lowers it in June, July, or even December, as the case may be. Now, I still think the odds are definitely that they're going

to lower it. But I think people are beginning to realize that they're going to be buying stocks for earnings more than what the timing of the Fed rate cuts are actually going to be. So if we step back, whether it's in the short term and the S&P is up 10 percent this year, despite rate cut expectations coming down significantly or longer term since the sort of October 22 lows. Do rates not really matter? And multiples for stocks will kind of ignore rates altogether? No, multiples, they matter. I think we're looking at 21 times forward earnings on the S&P. Now, you know, that is slightly rich. I've often argued that about 20, I thought, is the equilibrium.

Now, of course, if you take out the mag seven, you're down to about a 17 and 18, which is, you know, more reasonable. You know, I still think we have a bifurcated market here. And that doesn't necessarily mean it's bad because those stocks have generated the bulk of the growth of the earnings. But when I look overall at the market, I say, no, it's not cheap. But it certainly is not something that I think any long term investor should avoid. And particularly even an intermediate term investor, I think, is going to be rewarded. I wanted to get your take on gold, which, of course, has broken out to highs recently. At the same time, of course, Bitcoin and crypto surged once again. Are those sensible investments Return on gold is 0.9% after inflation.

And that's over 200 years. So you can certainly get a spurt in the short run. But in the long run, it really pales with respect to almost all the other assets. It's a store of value. And with a little bit of gain beyond that. Now, given all that, you know, I was I was really excited about gold early when inflation started and it didn't move very much and everyone went to Bitcoin. And I sort of said, yeah, you know what? The millennials knew gold is Bitcoin. They're not interested in gold much anymore. And it was really a disappointing investment at the beginning of this inflation period.

But I think it's in a catch-up mode right now. But I really am not a fan of gold as a long-term investment. Professor Siegel, always great to catch up. Thanks so much. Thank you, Will. Now, GameStop earnings, they've just crossed. Steve Kovac has them for us. Hey, Steve. Hey, Wolf. Yeah, and shares are falling quite significantly here on these results. EPS was coming in at 22 cents adjusted and revenue was $1.79 billion. That's down, by the way,

18% year to date. That could be explaining the sharp move down about 16 percent. Company doesn't really give any guidance or have a call for analysts. So this is all the data we're going to get. But again, I think the headline here is sales were down 18 percent from the year ago quarter, Wolf. OK, Steve, great stuff down 16 percent there for GME. Right. Extreme calm has settled over the bond market until the last minutes of trade there. But is it too calm for comfort? Let's ask senior markets commentator Mike Santoli. Mike, great to see you. Looking forward to this. Well, well,

yes, excellent to have you back here. Well, yes, it's been very calm in the Treasury market. And that is in contrast with how we were in 2022, 2023, where bond market volatility was one of the big destabilizing factors for equities as well. It's not just that people don't like when interest rates jump around. Treasuries are the collateral for a lot of what goes on in financial markets and capital markets. So this is the move index. It is basically the volatility index for treasuries. And you see pretty much at or below its lowest point in two years right here. We've had 10-year yields very tightly trapped within this range from the high 3% area to 4.3 for the last four or five months.

That has helped, I think, the stock market get support. It also reflects a Fed on hold for a pretty long period of time so far. And also, of course, the macro data have been relatively on target as expected. Now, there is volatility in the market. If you look at corners of the equity market where you have a little more of this sort of story stocks, the meme stock, former meme stocks, not including GameStop anymore. But this is a three-year chart of the buzz ETF. That's the social sentiment ETF that was meant to capture a lot of those sort of exciting, fast money, retail trader type names. That's had a big move off the lows. You see the peak was early 2021. DraftKings, another one. Coinbase, of course, very similar trajectories, as you can see, for all of these

things. And to me, it just says animal spirits rebuilding. We've had a rally that's been rolling for months without pullbacks. You do have, you know, a relatively, you know, aggressive part of the market that feeling is feeling pretty bullish about things. And I'm not saying this means that the froth is taking over, but it's certainly building here. Mike, it'll be interesting to see if GME takes take some of the heat out of that bounce in the sort of frothy stuff tomorrow. But but in terms of the bond market and rates overall, clearly we've had some conflicting comments today. Gorman saying that we might not see any cuts at all on the short end and the Fed funds rate. And then the Congressional Budget Office is kind of comments earlier about keeping an eye on the longer end with some dislocation potential in the months ahead as more supply of treasuries comes on board. Which of those is more important for equity markets, the Fed funds rate or the longer end of the curve?

And do we need to keep a bit of a focus on the longer end while we always talk about the Fed funds rate or the longer end of the curve? And do we need to keep a bit of a focus on the longer end while we always talk about the Fed funds rate? Yeah, I would think the Fed funds rate is right now operating in a relatively narrow band. It feels as if if the Fed doesn't have the inflation data to make a cut in July, let's say, or June, it's still be OK if they're still forecasting one and they're not going to move that much. So I think that the long end might be a little more interesting. Potentially, we do have a ton of Treasury issuance coming out on the longer end over the next several months. And it does seem as if we've had this moment of come now. Global yields have also come in a lot. So it's not just that the Treasuries are acting in a vacuum, but I would be more sensitive to anything that started to destabilize the long end. To me, that would filter more directly into what stocks are to destabilize the long end. To me, that would

filter more directly into what stocks are up to and potentially the economy. All right, Mike Santoli, we're going to see you again in just a bit. Up next, my exclusive interview with Adobe CEO Shantanu Narayan. First of all, the total addressable market figure that Adobe is just setting for 2027, about 42 percent higher versus the target for 2024 set three years ago. We're going to talk about that ahead of the investor meeting starting in less than an hour. And of course, the new products that the company announced today, overtime's back in two. Welcome back to Overtime. I am here in Las Vegas at Adobe Summit with Adobe CEO Shantanu Narayan. Shantanu, thanks for sitting down with us exclusively here on Overtime.

I appreciate you being here, John. Well, I want to start off with the news that you just posted on the Investor Relations site. The new total addressable market figure for the overall business at $293 billion. In 2021, you said in 2024, the TAM would be $205 billion. So the 2027 target is that. How much of that 42% increase over this year is AI? Well, all three initiatives that we're focused on, John, are growing. So when you think about what's happening with creative, when you think about what's happening with documents, and the reason we're here this week at Summit. So all three of them are growing. Certainly, we believe to your question, AI is a

massive tailwind in each one of those businesses, both with respect to attracting a whole new set of customers, as well as the ability to have additional value, and therefore, you know, to be able to monetize that. And I think the FA meeting is going to be both about articulating in each one of those businesses where the growth's coming from, as well as, you know, how we expect to continue to focus on innovation. Shantanu, the thing that struck me about the product announcements today was this idea of AI at scale and AI within enterprise workflows. Early on, you guys did this demo of, say, a company like Coke, a beverage company. They have a bunch of different colors and bottles that they want to put on different

backgrounds, trained on their own assets and data. It generated these backgrounds, generated kind of customized different colors, and then resized them based on different social media sizes that would need to go out and exported that into Adobe Express for a social marketing team to be able to do that. And to me, that's way different from saying, hey, draw me an elephant. What's this going to do? Well, there's so many questions in that, John. But, you know, first, if you take a step back out, it's hard not to, when you talk about scale, realize that Adobe pioneered the digital marketing business. We talked about customer experience management. And that business is on scale to drive over $5 billion in revenue for Adobe in 2024. So, you know, we have come a really long way.

And, you know, again, from a scale, we process something like 17 trillion customer activations this year. The announcements to your question. What we talked about was Gen Studio. And it doesn't matter whether you're a marketing professional. It doesn't matter whether you're a marketing professional. It doesn't matter whether you're an agency. You are now bombarded with this need for a campaign to be able to conceive it quickly, to be able to create the assets, to be able to deploy it, and to be able to activate it. And to do that in a personalized way. So if you have 100 million customers, you want to use AI to

generate 100 million variations of that. If you're in 150 countries, you have to localize that content and therefore have that content with all the variations. And so the GenStudio product enables you to do that. We're thrilled that Coke allowed us to actually use the assets that they had done in the production. Okay, those are actual Coke assets. Those are actually Coke assets. And what they do is they have this campaign that they want to run, but they have to run it on all the different social media platforms. They have to run it in different countries.

And the scale at which we can now deploy that for them is where the magic is coming in. And it's coming in through AI, because you can do AI on the front end as it relates to the ideation, and you can do AI as it relates to understanding the personalities of every single individual and tailoring the content for them. The flip side of this capability is it seems very disruptive to the creative workforce and operations chain because before you had agencies there generating these visual assets and maybe just a dozen of them. Now you've got AI generating

hundreds or thousands of assets. It seems to me you need an agency to A-B test those and figure out what's going to perform best in all these different settings. Is there a skill shift that needs to happen within the creative community because of this? Well, you're absolutely right in that it's bringing art and science together. And so if you're the creative professional or if you're the agency, you love AI because it allows you to take something that's in your head and very, very quickly translate that into a, you know, sometimes it's called a hero asset that you then want to create the variations for. If you're a person who's actually responsible for deploying that, you also love this technology because the pace at which you can deploy this is dramatically different. In the past what would happen John is if you had a campaign that you knew you were going to run around Thanksgiving time, you would start the asset production perhaps in

April or in May and you would say you know how many different segments do I have, how do I create all of this content and you didn't have the ability in real time if that promotion or if that campaign was not performing to change the assets okay so by combining not just the content creation process but the delivery and the insight we can actually in real time to your question say you know this assets not performing so maybe we should stop running that asset and conversely this asset is off the chart so maybe we should stop running that asset. And conversely, this asset is off the charts. So why don't we have that everywhere? So Shantanu, bring this home for me for investors. After earnings, there was some question, concern about how quickly

you're going to monetize this. Are you going to spend several quarters getting users used to these AI tokens and using them before really saying, okay, now it's going to cost you extra. When are these innovations going to show up for the top and then eventually bottom line? You're absolutely right, John. And I think that's the purpose of the FA meeting today, which is to actually break it up into three parts. The first part is, again, to outline all of the innovation that we've done. I could not be more proud. When you think of what our team has done, whether it's AI assistant and acrobat and reader, which is taking all the PDFs that you have and the ability to have a conversational

interface across our creative. We announced a new structure match for Firefly today, which again, you know, social media is a buzz with all of the cool creative things that are being done as well as the document and experience cloud. So the first phase of it is talking about the innovation. I think the second phase is to actually articulate, to your point, the different monetization methods. Because in creative, we have these generative credits that people can use.

The generative credits will be different for imaging as it relates to video, because when you create video, you're going to use a lot more compute. So I think outlining in phase two exactly how we are monetizing it is the second phase of it. In Acrobat it's different. Whether you're in Reader, you can now monetize consumption. And in Experience Cloud, we have these higher end

AI services and the AI Assistant. So that's phase two. And then phase three is talking about, as we did with our TAM, how we expect it. I think most people would say it's early in the monetization phase. But the first phase for us was actually making sure that we innovate and get our products out there. And, you know, we're confident that it will lead to new customer acquisition as well as increased revenue. I want to get you one more question.

Last time around earnings, I asked you about OpenAI, Sora, and generative video. Today, I want to ask you about Canva and Affinity, because Canva's buying Affinity for somewhere under $1 billion, they announced. They want to get into design, into photo editing, some of the stuff that Adobe's done for a long time. Since you can't buy Figma, since governments seem to be uncomfortable with large tech companies buying more. What kind of pressure does that put on you at Adobe to innovate within and stay ahead? Well, you know, innovation has been the lifeblood of Adobe. And as a product guy, nothing makes me more excited than to see all of the innovation that's happening.

You know, with Figma, it was an adjacency, it was a great product. With AI, as you know, we've actually invested in creating our own models. We have the models, we have the data, and we have all of the interfaces. So, you know, we will also continuously look for innovative new technology companies that are pioneering areas.

We have the capital, we have the brand. And while they may have been in opposition to that large acquisition, we still continue to believe that they are great companies that should be on the radar for Adobe. All right. Shantanu, thanks once again for having us here at Summit. Wilf, I'll throw it back to you there at headquarters in EC.

John, great stuff. Thanks to Shantanu as well. Looking forward to discussing more about that interview later on this hour. Meanwhile, UPS, the worst performer in the S&P 500 today on concerns the company's growth targets may be too ambitious. Coming up, the delivery giant's CEO and why she's becoming more confident in the outlook for the global economy. And later, we'll discuss the state of commercial real estate with the CEO of real estate services, giant JLL. So much more still to come here on Overtime. Welcome back to Overtime. Tragedy in Baltimore early this morning. A major bridge collapsing after a cargo ship crashed into it.

Our Eamon Jabbers has the latest details. Eamon. John, that's right. We heard from the National Transportation Safety Board a short time ago and gave us a little bit of an update on the behind the scenes of what's been going on at the command center here. They said that they've been working with the two different owner operators of this vessel over the past several hours. They say they're gonna examine the vessel's safety and maintenance history. And they also said that they're in touch

with their counterparts in Singapore. Remember the Dolly, the ship that was involved in this accident today is flagged out of Singapore. The NTSB has a team of 24 individuals, they say, who are onsite already beginning the investigation, even as the Coast Guard is still engaging in a search and rescue operation here. We also heard from Transportation Secretary Pete Buttigieg, who was here with other officials just a short time ago here at the media site just outside of the perimeter of the working area. And what Buttigieg was saying is the scale of the economic implications here. Take a listen.

There is no question that this will be a major and protracted impact to supply chains. It's too soon to offer estimates on what it will take to clear the channel and reopen the port. So you heard it there, a major and protracted impact to supply chains. No indication yet of exactly when all this will be cleared up. Buttigieg was talking about just the effort to get the bridge material itself out of that harbor, to get that harbor navigable again, is going to be one of the first operations after the search and rescue finishes, because as of now, almost all of the harbor activity is blocked by that bridge being down. That is a major economic impact on this region.

But for now, officials say, John, that this is still officially a search and rescue operation looking for those six individuals who are still unaccounted for since the bridge collapsed at 1.30 a.m. last night. They say they're going to keep it a search and rescue operation and not switch into recovery mode. They say they simply owe that to the families who are rescue operation and not switch into recovery mode. They say they simply owe that to the families who are here on site. Guys, back over to you. Amen. Yeah, that is just a nightmare of anybody who's had trepidation about passing a bridge.

I read some reporting about the boat losing power, the ship losing power before it crashed into that. I wonder if there's a technological issue here or a solution as well. But I suppose when you're dealing with something that massive moving through the water, who knows? Yeah, look, John, this ship is nearly a thousand feet long. It's packed to the gills with containers. The weight, the mass of that object moving at about eight knots into that tower holding

up the bridge. You can't imagine there's anything. In fact, Pete Buttigieg said there's no bridge in the world that's designed to withstand that kind of impact. Even with all the buffering and other kinds of technologies that bridges built more recently contain, nothing can withstand the impact that happened here last night. Remember, this bridge, of course, built from 1972 to 1977, so it was upwards of 50 years old.

Even so, with all the technology that they have in place now and some of the new-build bridges, you can't imagine a direct impact like that would do anything other than take down just about every bridge in the country. Eamon, great stuff, as always, on that very sad story, shocking story from this morning. Amen. Jabba's there. It's time now for a CNBC News update.

Contessa Brewer has that for us. Hey, Contessa. Hi there, Wilf. A New York judge issued a gag order this afternoon on former President Trump and his hush money case that will bar him from attacking witnesses, prosecutors, court staff, and jurors. The order comes at the request of the Manhattan District Attorney on the case.

Prior to the order, former president lashed out on truth social at the judge and the judge's daughter. President Joe Biden teamed up with Vice President Kamala Harris in North Carolina in the last hour to promote their health care agenda in the election year battleground state. This is the final stop on a union tour as the president really just makes his case for a second term. And it's official. Independent presidential candidate Robert F. Kennedy Jr. just announced Nicole Shanahan as his vice presidential pick. Like Kennedy, Shanahan has never run for elected office, but she has contributed heavily to his campaign and super PAC. Kennedy called the fellow lawyer a brilliant scientist, technologist and warrior mom who overcame obstacles to achieve the American dream. That's the news, Wilfred. I'll send it back to you.

Contessa, great stuff. Lovely to see you. Up next, the CEO of UPS on the outlook for the global economy and whether she's starting to see business picking up. And check out shares of Reddit surging again today. The stock's now nearly doubled since going public last week, up some 91 percent of times today. As you can see earlier in the session, it was indeed double its IPO price. We'll be right back. Welcome back to Overtime. Shares of Donald Trump's social media company, Trump Media and Technology Group, up 16% today. That's well off the highs, but at one point it was higher by more than 50%, which would have given it a market cap of more than $10 billion.

Its latest financial statement report covered the first nine months of 2023, an operating loss of $10.6 million on revenue of 3.4. The former president owns as much as 69% of the company, and he is subject to a six-month lockup, but the board could waive that waiting period. The ticker for the company, DJT. Will. Great stuff, John. Well, shares of UPS moving in the other direction, down 8% for its worst day since January,

the biggest loser in the S&P 500 today. That's despite an initial move higher in the morning after the company released long-term financial targets, calling for consolidated revenue between $ billion and 114 billion dollars in 2026 well our morgan brennan sat down with the ceo carol tome earlier on today and after ups's investor day and asked about growth in international markets to help meet those targets i have identified the premium market outside of the United States to be about a $50 billion opportunity, so plenty of room for growth. And we've always had a great presence in China, that China-U.S. trade lane.

But what we have observed is that manufacturers are moving out of China to other areas of Asia and nearshoring closer to Mexico. And so as we watch our shippers move out of China to other areas, that's an opportunity for us to follow them and ensure that we can deliver them the best service. And to do so, we have announced two major expansion opportunities, one at the Hong Kong International Airport, which is serving 37 percent of the commerce that comes out of that area, as well as a new expansion in the Philippines. Both of these are going to contribute to nutritive growth over the next several years. Now, they won't be done until 26 and 28, but these are big investments

that set us up for the future. Given the fact that UPS is such a bellwether of the global economy, you handle tens of millions of packages per day. You operate in hundreds of countries. What do you see in terms of the macroeconomic environment and how do you expect that to play out as you do issue these multi-year forecasts? Well, we see, at least in the United States, a resilient economy and the small package market is projected to grow in the United States in 2024. Last year, it contracted. Some of that was because of anniversaring all the bump in e-commerce sales during the COVID lockdowns. So we expected some contraction. The other contraction occurred because of high inflation. Inflation was taking a bite out of consumers' wallets as they were spending more on food than goods. The good news about inflation in our country is that it's down, down from 6% last year to now around 3%, heading towards the Fed's target

of 2%. So that supports growth in the United States in 2024. And then looking outside the United States, candidly, we're seeing some green shoots in part of the world where we didn't see it last year. That's good news, too. Well, let's get more on UPS with CFRA equity analyst Stuart Glickman. Stuart, great to see you. Thanks for joining us. I mean, it was a very positive tone, I thought, both in that portion of the interview and the earlier portion that we played during the day on the exchange. Yet the stock is down 8%, 9%, the worst performing the S&P 500. Why was the stock down? Hi, Will. So I think that part of the concern that we're seeing in the market today is perhaps some skepticism by the market that the three-year financial targets that the company has laid out might be a bit ambitious. If you look at the cadence for how revenues and margins are going to make their

way towards those 2026 targets, there's an awful lot of heavy lifting that takes place in 25 and 26. I would point out that some of that improvement is not really under the control of the company, certainly from an automation improvement towards more digital, things of that nature, I think UPS certainly has the ability to expand in those directions and drive more productivity. On the other hand, the volume growth, I think, is a key piece of their platform. We really didn't see any of that in the fourth quarter of 2023. And so I think there's some concern that if the recovery volume is slow in coming, so will likely recovery in revenue per piece. And that might put some risk towards those targets. So are we talking about a credibility problem with management that people don't believe these new targets?

No, I think it's I wouldn't call it a credibility issue. I would say it's more of a timing issue, if you will, that, you know, we're not really seeing near term much in the way of volume growth. And so perhaps investors are looking for, you know, when is the inflection point going to be occurring? It certainly doesn't look like it's going to be in the first half of this year. They are suggesting that perhaps things improve in the second half of this year. But I do believe that the targets overall are somewhat ambitious. And keep in mind as well that the CapEx guidance, 5.5% of revenues between 2023 and 2026, that also likely occurs with substantial CapEx in 2025 and 2026. That also likely occurs with substantial capex in 2025 and 2026. That might put some of the free cash flow plans at risk too. So Stuart, finally, it sounds like you're saying in order for UPS's guidance to work, they're going to have to really gain a lot of share

in small premium. Does that mean e-commerce ex-Amazon, since they've taken so much of delivery in-house? What practically would have to happen in order for Carol and UPS to hit these ambitious targets they've set? Right, John. So I think, yes, you have to have improvement in market share in small U.S. business. You probably need to take some share in international premium. I think the easiest way to get there is if the market volume overall improves as well. That's kind of the free lunch for both them and FedEx. But I think it may be

slower in coming. So at the moment, we only have a three stars or hold opinion on UPS. And we actually have a two stars or sell opinion on FedEx. Stuart Glickman, thanks so much for joining us. Much appreciated. Thank you. We have a newsletter on TikTok. Kate Rogers has got the details for us. Hi, Kate. Hey there, Wilf. Politico is reporting that the Federal Trade Commission has been investigating TikTok over what it is calling allegedly faulty privacy and data security practices.

The report says that the FTC could decide in the coming weeks to either bring a lawsuit or settlement. Politico citing several sources familiar with the matter in the report. The commission, it says, is weighing allegations that TikTok and its parent company ByteDance deceived users by denying that individuals in China had access to their data and also violated a children's privacy law. Now, the FTC did decline to comment to CNBC. We've also reached out to TikTok, and we will bring you any updates as we get them. Back over to you. All right, Kate Rogers, thank you.

Up next, Mike Santola is going to dive into the latest consumer confidence survey and what it could mean for the market. And check out this sweet treat for investors. Krispy Kreme rolling in dough today after McDonald's announced it's going to sell the company's donuts in all its U.S. locations by the end of 2026. That news sending the stock up 39 percent to a 52-week high. And Homer Simpson's got to be happy about that. Overtime will be right back. Welcome back to Overtime. Mike Santoli's back to break down the conference board's latest consumer confidence survey.

Mike? Yeah, John, released this morning. The overall index was little changed, just a little bit below expectations. It's been going kind of sideways. These are the two major components, though, and it is an interesting dynamic, the gap between the present situation, consumers' assessment of the here and now relative to their expectations for the future, for the economy, for business and things like that, which is really at quite depressed levels, really only seen lower than this coming out of the great financial crisis over the last couple of decades.

So this is sort of this bad mood that society's been in for a while. They think that things are kind of broken. It's the aftereffects of the inflationary shock, no doubt as well. But this is also one of those pre-recessionary indicators that's been in place for a long time and has not led as of now to a recession, kind of like the yield curve and the leading economic indicator. So it's hard to know the utility of forecasting the economy based on this. One other little recognized subcomponent, though, of the Consumer Confidence Survey, they asked these same group of

consumers, how do you think the stock market is going to do? And this is the percentage of them that say over the next six months, they expect stock prices to be higher. It is close to 50%. It's basically as high as it's ever been. I believe this is the very start of 2018 after the market was melting up in 2017. It did proceed a little bit of a rockier period, a correction, a little bit of a tough go the rest of 2018. It was not the end of a bull market. So just take it with a grain of salt. But on some level, this could be seen as a bit of a short-term contrarian indicator for the stock market, Wolf. Mike, great stuff as always. Thanks so much. We'll up next here on Overtime, the CEO of real estate services giant JLL on whether he's starting to see green shoots emerge in the commercial real estate market. And don't forget,

you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We will be right back. Welcome back to Overtime. Global commercial real estate and investment management company JLL says there are reasons for cautious optimism as they're beginning to see green shoots emerge. Joining us now to break it down, JLL's CEO, Christian Albrecht. here because you say in logistics that there's a limited supply of ESG compliant, I guess, real estate. What is it specifically that's going to need to be developed, redeveloped in order to get compliant? Well, the whole topic around ESG is a topic which is not only around industrial, it goes also into offices. Just remember about two-thirds of the Fortune 500 companies

have significant commitments around reducing their carbon footprint and that has obviously to be reflected in their built environment which they are picking up. And what we see in the office sector is that we have three times as much demand in carbon reduced office space versus the offering over the next five to six years. And we have a similar picture on the industrial space. So ESG will be a major driver of the property markets over the next couple of years. So tell me, since this stretches across not just logistics, but also data center, there's a lot of talk, especially with AI

and these accelerator chips running so hot on what's going to be necessary to fulfill requirements there. But then across into office, is this a lot about solar? What is it that is really going to need to be purchased to not only from an energy perspective, bring these sites into compliance, but also just make them more efficient? Yeah, I think it starts with the efficiency of the buildings

that you have just much more efficient buildings so that you just use so much less energy for heating and cooling of the building data center is a specific topic because there the need for power is coming from the wrecks in the data center and there you want to combine that with the purchase of green energy but also that the technology in the data center is obviously as efficient as possible. It doesn't need that much energy, but whatever they need, it needs to be green going forward. Christian, I'm interested in how rents in office space are holding up and not just the rent level, but the length of leases that you're settling for. Are you getting slightly shorter leases than you would have seen

a decade or so ago? Not necessarily. It depends a little bit on the quality of the buildings. We still have a highly bifurcated market, which means that the best space with the best amenities is meeting really high demand. And if companies can secure that type of space, they are happy to secure that for 10 years or even 12 years. But then if we look at more commodity type of space, kind of the type of office space you can find around every corner, there we see leases obviously much shorter because people don't want to commit as long into those type of buildings. So it's not a one-dimensional picture. It depends very much on the quality of the underlying building. I'm interested as well, Chris, in your view broadly on the sort of office sharing space,

which obviously was all a rage when WeWork was in the headlines first time around. In the headlines again today with the talk that Adam Neumann might be trying to buy the company out of bankruptcy. Do you think it's peaked? Do you think it could have a resurgence? WeWork specifically and office sharing more broadly? Well, the whole concept of flex space is obviously very attractive for potential tenants, because as the name already says, it provides them with lots of flexibility. Now, that was for the last two years, obviously significantly under pressure because there was so much sublease space in the market at very low rental levels. And so what was flex space before moved a little is attractive for clients to pick up those type

of space for parts of their overall occupancy demand. What hasn't worked so well in the past, and that was demonstrated also by WeWork, it didn't work so well for the other side because they had these long commitments and then short-term income. And so they have to adapt their business model so that it works for both sides. Christian Ulbricht, thanks so much for joining us. Pleasure. Thank you. Now, a different kind of real estate

will take centre stage tomorrow when the weekly mortgage applications report is released. So we'll have a look at what else should be on your radar ahead of the training day tomorrow when we return. Welcome back to Overtime. Wall Street's going to get some key readings on consumer spending tomorrow when Carnival and RH report quarterly results. Also on the earnings calendar, paychecks, Cintas, and Jefferies Financial. And, Wilf, we're going to get some more clues about the health of the housing market

when weekly mortgage applications data is released because it's Wednesday. And I don't know if you remember, we do that on the side of the pond on Wednesdays. I do remember. I remember very, very well. And there's so many more data releases, which is so fun for geeks like us here that everyone gets to focus on. I was talking about that with Steve earlier. All the Fed members talk so often as well, which again, you don't really get back in Europe. So lots of stuff to always pour over. There's also consumer confidence data out of Europe, not a huge one, but worth keeping an eye on as there is a bit of an uptick in sentiment over there as well. Carnival Cruises also reporting before

the bell, so we'll keep an eye on that. John, before we go, I'm just interested in your take on your Adobe interview and all the updates they've put out. I was really interested hearing him outline all of the AI-empowered tools and focus of the company at the moment. I just wondered whether you feel like it's caught the wave of AI market sentiment in the same way as other stocks have relative to clearly the focus that the company's putting it on? Well, the software is where things practically have to happen, right? I mean, when you're buying the chips, you're expected to do stuff with them, and that happens in software. So when Adobe announces this stuff, then we've got to see what's the pace of adoption,

and then how much does it disrupt the creative process? Some of the stuff that they showed here on stage used to take weeks, maybe months to do. Now it can be done in hours, right? The whole process from generating the things to sharing and deciding. So that's going to be something, Wilf. Well, we'll look out for that, by the way. Adobe up about a percent or so after ours. It's been a pleasure being here on Overtime today.

But that does it for the show today. Fast Money begins right now.