Closing Bell - Closing Bell Overtime: Alcoa CEO On Earnings, Tariffs; Needham’s Laura Martin Dives Into Netflix 10/16/24

Episode Date: October 16, 2024

Earnings season is in full swing and we have you covered with every angle. Get the numbers from CSX, Kinder Morgan, SL Green, Alcoa, Discover Financial, PPG and Steel Dynamics. Alcoa CEO William Oplinger talks the latest quarter and what impact tariffs is having on his business. Lithium Americas and GM announced a joint venture to developed a key mine in Nevada; LAC CEO Jonathan Evans on what the deal means for his company and the production timeline ahead. Plus, top analyst Laura Martin on what she wants to see from Netflix earnings this week and what to do with Apple stock. 

Well, that bell marks the end of regulation. Cocoa Merchants Association of America ringing the closing bell at the New York Stock Exchange. Vine Hill Capital Investment Corp. doing the honors at the NASDAQ. And stocks mostly rebounding today with earnings-driven gains from Morgan Stanley and United Airlines providing support. Small caps outperforming the Dow. Yeah, looks like it closed out a new record. The S&P not far from that record level. We will see where it all settles. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan.

Looks like the 38th record closed this year for the Dow. We've got a wave of earnings on the way. We're touching on a number of industries, including CSX, Kinder Morgan, SL Green, Discover Financial and Alcoa. Plus, an exclusive interview with the CEO of Alcoa before he talks to Wall Street analysts on the call. And you might want to take a look at lithium stocks. Shares of Lithium Americas are surging on news of a joint venture with GM. And that comes after Rio Tinto's deal for Acadium Lithium earlier this month. The CEO of Lithium Americas will join us to talk about the renewed interest in the space. But are they going to crack?

Well, as we await earnings, let's bring in our market panel, Vital Knowledge founder Adam Christofoli and Charles Schwab, senior investment strategist Kevin Gordon. Guys, good afternoon. Kevin, you say the labor data is murky at this point. By the time it gets clear, it seems like we're going to be in the holiday shopping season. So how much does that consumer boost or not matter here? I do think it puts more of the onus on retail sales.

So it's important, you know, to look at that indicator, especially for this week. But, you know, as we move forward and some of the labor market data does get murky, because, you know, whether it's the impacts from the hurricanes, whether it's the impacts from anything union or strike related, it probably pushes you into early December, to your point, until we can get a real clear read on the state of the labor market. So far, so good. If you're going to look at the September jobs report and some of that sort of bucking the trend, whether it was for the unemployment rate moving up or whether it was for payroll growth moving lower. So I think that you're still in a relatively good state right now.

It's just that you go through this period now where even data like claims, which we've become more reliant on over the past several months, you may not even get as clear of a signal there because you have spikes like you did last week, driven by maybe a couple of states, Michigan related to Stellantis and then North Carolina related to, you know, hurricane effects. So I think that's going to be more of the important story from a consumer spending and a consumer health perspective, which, you know, so far consensus is for retail sales to be relatively healthy, especially the core group that matters most for GDP. But it does put more of the onus on retail data. Yeah. Valuation stretched.

But we keep getting some numbers that justify, including Adam Christofoli, when we combine the good news out of the banks, their earnings over the last few days with the recent rebound in some China stocks where the full story, I feel like, hasn't been told yet. What did we get? Yes. I mean, I think as far as having insight into the U.S. economy, there are a few sectors that have a broader look than banks. And so we've heard from pretty much all the major money center regional banks in the last couple of days. And it wasn't enough to keep the results for spectacular. They were strong. But I think more importantly, it's just the qualitative guidance and messaging from management teams about what they're seeing on the ground was very much a Goldilocks type of atmosphere

with resilient growth, fading inflationary pressures, just a normalization of the economy as you kind of get past all of the COVID excesses and distortions. And I think that kind of more than anything has really helped put a bid underneath the market, and it's helped catalyze a lot of these cyclical value groups more than anything. And you've seen tech take a back step a little bit in the last few days because of it. So that, to me, is the most significant market event. It's just, you know, listening to these bank CEOs and what they're seeing in the economy and how encouraged they are about just the underlying conditions.

All right. Well, we've got our first earnings report out. CSX results. And I have the numbers here. It looks like I'm missing the top and bottom lines. CSX EPS coming in at 46 cents per share. That was two cents light of street consensus. Revenue is also a bit light, 3.62 billion versus 3.67 billion dollars. That was expected. We've got growth here, though, in merchandise and intermodal volume, as well as in merchandise pricing gains. That was partially offset by a decline in coal revenue. That led to

total volume growth for the quarter of up 3% year on year. Revenues did grow 1%, but as I mentioned, coming in light of expectations, still moving through the numbers here. But in the meantime, you can see shares of CSX are down about 2% right now in overtime. Don't miss my exclusive interview with CSX CEO Joe Henricks. That is going to be tomorrow at 10 a.m. Eastern on Squawk on the Street. Adam, I'm going to go to you for this one because we have seen a number of transports report earnings in the last couple of days. And just today in the regular trading session, you saw the Dow transports touch a new 52 week high, perhaps finally following the Dow Industrials higher?

Yeah, we heard from J.B. Hunt last night. You know, they had a healthy Q3 report. Some of them might have been a little bit of a pull forward from Q4 because of the effects of the port strike. So I'll have to kind of look through the CSX details. You know, I would say we're just now at the beginning of the industrial transport earnings season. So there's a lot more to come. But some of the early indications, you know, J.B. Hunt, Fats and all on Friday was somewhat encouraging as well. You know, we heard from PLD today in the industrial REIT space, which is levered to some of these end markets. So it does seem that there is, you know, modest stabilization and improvement in underlying trends. Obviously, that isn't coming through in CSX yet. But there's still kind of a lot more names to go through in the coming weeks for results. All right. Two more names that are

industrial facing, at least an industrial facing part of the economy are out. PPG and Kinder Morgan are going through those results. We'll bring them to you momentarily here. Kevin, I want to go back to the fact that really all of the bank CEOs have said with the earnings we've gotten so far have basically said, look, soft landing is on track here. It's sent financials higher. And if you look at the data that we've gotten so far and I realize it's poised to get noisy now because of strikes and weather impacts with hurricanes. But if you look at all the data, it's coming in stronger than expected, too. If the Fed bias is towards perhaps less cutting as that econ data remains strong, is that a good thing for the markets and for stocks here versus more cuts more quickly? I think if you were to look at it in history and look at prior Fed cutting cycles when they do take

a more aggressive stance and they have to cut aggressively, whether it's every single meeting or larger cuts in nature, which, you know, that was a lot of the fear, I think, when they started with 50, was that it was going to be a repeat of what you saw in the cycles that started in 07 or 01. But, yeah, for the most part, I think it's better that they're not going aggressively, because if they're pulling back and maybe taking a more gradual approach, because economic data is allowing them to do so, that's a better position for them to be in. That's historically a better position and better backdrop for the equity market. So I think broadly, yes, that's probably the best case scenario.

But from a soft landing perspective, from our standpoint, it's more of a process, not as much a destination. You eventually go back into a full-on expansion or a sustained expansion, as Mary Daly put it yesterday, which I really liked, or you go into a recession. We think that parts of the economy, a lot of the discussion around transports and anything cyclical related, has already gone through its own version of a recession. It hasn't necessarily hit services or labor as hard. But as long as you can continue to go through that roll through and you sort of maintain this expansion for the broader economy, that's probably the best case scenario. Certainly keeps the Fed on track for sort of a more, I would say, tepid cutting cycle and them to ease at a little bit more of a gradual pace.

And so, Kevin, just to close out, do we expect a baton handoff now in this next leg for the market? Do we see the Magnificent Seven or mega caps? Do we need to see them continue to lead? Or is it a necessity of this broadening out, whether it's into application software companies on that AI story, or it's to some of these more general players? I'd argue it's already sort of started to happen. And I didn't see exactly where tech closed today. But I find it remarkable that last time I checked on an intraday basis today, tech still hadn't made it back to its all-time high. Yet you've had sectors

like financials and industrials that had already been making new highs. So some of that handoff has already happened. I think that you'll go through these swings at times where because the flows into tech tend to be aggressive at times, you could get a pretty significant leadership shift. But up and down the cap spectrum, it has been the case that tech has really ceded its leadership status to other parts of the market.

Financials, I know, have been in focus a lot, but I find it quite remarkable that it's not just banks that have been sort of leading the charge there. It has been this broad base turned higher, both at the large cap end of the spectrum, but also the small cap end of the spectrum. So that, to me, is more of the important part of the story, particularly because participation at the sector level was pretty weak in the first year of this bull market, definitely changed in the second year, but I would argue now it's still broadening out and it's still part of this healthier backdrop where if tech is pulling back in that sort of caps, your cap weighted index gains, at least it's a better, healthier backdrop for sort of the equal weighted S&P under the surface. We'll see. Earnings

season has just begun. Kevin, Adam, thanks to you both. While Kinder Morgan earnings are out, I should be able to say Morgan, Pippa Stevens has the numbers. Pippa. Hey, John, it's a top and bottom line miss here for Kinder Morgan. EPS of 25 cents adjusted. That was short by two cents. Revenue coming in at three point seven billion. Also short of estimates. Now, the company did say that during the quarter quarter, they reached a finalizing their investment decision for the expansion of their Gulf Coast Express pipeline. They also said that conversations continued during the quarter about the significant opportunity for new nat gas demand, thanks in part to electric generation as well as data centers and AI. The stock is down a little bit right now. Guys?

All right, Pippa Stevens, thank you. Well, we got PPG earnings out as well. We're talking about industrial paints and coatings. Steve Kovac has those numbers. Hey there, Morgan. Yeah. And it's a miss on the top and bottom line here that the stock's not moving much. It was unchanged just a second ago. EPS came in at two dollars and 13 cents adjusted. Street was looking for 215. Revenues was also in this four point five eight billion versus the $4.65 billion expected. And also just some notes here. There's some increasingly challenged global industrial production is one thing they highlight in this report here. And again, I missed the top and bottom line shares down about a tenth of percent, Morgan. All right. Thank you.

It'll be interesting to hear what they have to say about China specifically to Steve Kovac. Thank you. The S&P 500 closing higher for its third positive day in four. It's just shy of the record finish that we saw earlier this week. Let's bring in Mike Santoli for a look at one technical yellow flag that is signaling a potential near term top. Mike. Yeah, Morgan, at least a short term pause, if nothing else. This is the number of 52 week highs we saw yesterday within the S&P 500. We got about 114 of them. I think it was, more than 20% of the index, obviously.

There's 500 stocks in there. And you see, based on this lower chart, that that is quite high. It's extreme on a given day to get more than 100 new 52-week highs. So, obviously, those high numbers do not mean the uptrend is over. But if you look at some of these places

where it was a comparable number of highs when the market was already on a run as opposed to coming off of a big correction, then you'll see that at least if nothing else, the upside was sort of limited before you sort of flattened out a little bit. That's just one sign that you get to this phase of a rally where it becomes all inclusive. People grab for, you know, for the for the momentum names And maybe it just needs a breather out there. So, again, trend is positive. But be aware that the bullishness of this market is no longer much of a secret out there among investors. I mean, bespoke wrote about this today, too. And they said Ford returns the S&P 500 consistently have been positive after strong readings in net new highs. So it does seem like perhaps the bias is toward higher rather than lower.

Higher eventually, exactly. And so, you know, I think around the six-month period where it was very, very strong indicator of future returns, yes. It was much more about do you get to a stutter step or do you have to have a little bit of a reset or not? You know, obviously, there's no single one keystone indicator that's going to tell you, but this is much more about, you know, we had this little bit of a buying grab, and do we need to sit back a little bit? Yeah, which would not be atypical for October. Exactly. All right, Mike, we'll see you later this hour. Mike Santoli, much more on today's After Hours Action is straight ahead, including an exclusive interview with the CEO of Alcoa. This is long

seen as a key economic bellwether before he talks to analysts on the earnings call. And up next, we're getting you set up for tomorrow's trade when Netflix kicks off big tech earnings here on Overtime. Noted analyst Laura Martin tells us what she's expecting with shares trading near all-time highs. Overtime's back in two. Welcome back to Overtime. Netflix set to report earnings tomorrow right here. Stock has had a strong run so far this year, up 44 percent. But can the hits keep streaming? Let's bring in Laura Martin of Needham & Company, who has a buy rating on the stock. But Laura, you also got a $700 price target that's right where it is. So has the story shifted back toward sub growth, particularly international sub growth? What does it take to hypothetically get you to

raise your price target here i think the most important thing we're listening for tomorrow is they added 23 million new subs from this uh paid sharing but they didn't increase any of the engagement hours engagement only went up by one percent so what we need to hear here is what's going on with average engagement because that's what gives them pricing power, that people are spending more hours on Netflix, not less. So we really, pricing power is dependent on engagement lengths per person, per household. So we need to hear that. We need to hear that they're going to raise the price on their ad-driven tier, which is the

lowest of all the streamers for the ad- driven tier. So that's another price increase. Otherwise, I think people are I think increasingly hitting all time highs here. We have investors concerned about the fact that they may not be able to hit the 23 buck sort of bogey for next year or even the 19 dollars for this year in EPS. So what if they say that they're not increasing the ad pricing because it's not like the ad environment is, you know, extra robust right now and they want to get traction going in, does that cause you to back up and say, OK, well, it's been a nice run, but I'm not betting on it going too much higher? Yeah, I mean, I think that definitely gives I think that definitely gives pause to

this year's $19 a share that I think the market's looking for. I mean, already, like they've guided to like $9.72 billion of revenue for the quarter they're going to announce tomorrow. The street is already at, I think, $9.78. So the streets say, no, no, no, they're being too conservative. Well, if the street isn't being too conservative, these all-time highs are at risk for Netflix stock price. All right. So takeaway here is the bar is very high, especially as we've seen big gains in the stock so far this year. We also know that the ad tier isn't going to meaningfully offer much to the revenue picture until perhaps earliest next year. So in the meantime, how much do things like live programming matter?

So live programming or cost center, I think it's really important to drive new subscriber growth, but probably at the paid end. Usually for sports, as you know, people have to pay a premium. So they're going to give you two NFL Christmas Day games for free. But if they do go more into live, I would expect them to charge a premium for their lives, especially sports, because of the cost of sports rights. Is there any possibility that Netflix starts to see more increased competition from some of the other more traditional players as they begin to tighten their belts and reach for profitability and the market perhaps here begins to mature?

Yeah, I think that's one of the reasons they're keeping the ad price so low is that adoption rate has been slower than they thought. Not only ad revenue, but just that's one of the reasons they're keeping the ad price so low is that adoption rate has been slower than they thought. Not only ad revenue, but just the adoption rate of the cheaper tier has been slower than they thought. And I think that's all about competition. Like Deloitte says that the average U.S. home has four streaming, pays four, four streaming services. But if you ask Tebow, they say it's five streaming services. Average price now just for streaming, $60 to $80 per home. So absolutely, I think consumers are being taught to churn out of things that they're not using,

including Netflix, and move month to month depending on where the best content is for that month. Laura, you got a buy on Apple, $260 price target, I believe. And it seems like every few days there's been a conflicting report about the lead times on the iPhone 16, people trying to extrapolate that to demand. Are you paying any attention to that? What part of your thesis is driving your price target now? Look, I think the biggest question for Apple is China, which is 18 percent of their demand and who the president of the United States is and what tariffs are going to be on China is the biggest risk to Apple, way more than the things they can control, which is the 16.

I think the 16 is going to be disappointing, but because generative AI isn't here yet, those capabilities, Android's ahead of them on that. But I don't think that's the big risk to Apple shares. I mean, Trump is ahead in the betting polls now. He said he's going to impose somewhere between a 20 to 60 percent tariff on China. Unfortunately, I think Disney and Apple become pawns in that geopolitical drama between the U.S. and China. Imagine that if a U.S. instigated tariff either tanked gross margins for Apple or raised the price of phones. I guess we'll see. Laura Martin, thank you. Well, SL Green earnings are out. Steve Kovac has the numbers. Steve? Yeah, John, and shares are down a bit here on these mixed results. Let me start with the loss

per share of 21 cents. That is better than the loss of 50 cents the street was expecting. Revenues was a miss, though, coming in at $139.6 million. Street wanted $142.5 million. You see shares down nearly 2.5% here. Morgan, I'll send it back over to you. All right, Steve, thank you. Shares of small cap lithium miner Lithium Americas jumping today after teaming up with General Motors in a $625 million joint venture. As the auto industry looks to source key EV battery components. The CEO of Lithium Americas joins us next to talk about that deal. And we're expecting more breaking news this hour, including steel dynamics earnings.

We're going to keep you up to speed on all the after hours movers. We'll be right back. Welcome back to Overtime. Alcoa earnings are out. The initial move is higher by better than 3%. We are going through those numbers. Discover earnings also out. We're ready to give you those. Hugh Sun has the numbers.

Hugh. Hey, John. Yeah. EPS looks to be a beat at $3.69 a share compared to the $3.42 estimate. Revenue of $4.45 billion is also a beat compared with the estimate of $4.35 billion. Loan loss provisions coming in better than expected at $1.47 billion. That's lower than the street account estimate. Shares are up, looking to be a little bit less than 1% at the moment.

John, back to you. All right, I'll take it, Hugh. Thank you. Well, Lithium America's share is soaring today. The small cap company, around $500 million, announcing a new joint venture with General Motors. GM will invest $625 million into the project developing the Thacker Pass mine in Nevada. Now, this agreement replaces the remaining equity investment from GM that had been scheduled from a deal announced back in January of 2023. You can see shares of Lithium America has finished up today 23 percent. Joining us now in a first on CNBC interview is Lithium America's president and CEO Jonathan Evans. It's great to have you on the show. Welcome. Thanks, Morgan. Thanks for having me. So that's exactly where I want to start, because you're talking about six hundred twenty five million dollars from GM, both in cash and letters of credit, which is perhaps small for

the automaker, but it's very large for you, especially when we do talk about a company with a market cap of $500 million. So break down to me what this investment enables, why a JV made sense, and how quickly Thacker Pass can come online. So our relationship with GM, as you mentioned before, goes back to 2023. They made an initial investment at buying capital shares in the company of $330 million. This replaces that, but also increases it and brings $430 million of cash plus a line of credit on top of that of approximately $200 million. This plus a loan, which on top of that of approximately 200 million dollars. This plus a loan which we're in the closing process with the Department of Energy essentially finances the bulk of the project for us to, we're already in construction, but for us to go into full construction and to get the project completed and into production by late 2027.

That aligns well with General Motors needs. I think you hosted their CEO and they had quite a great investment day about two weeks ago. You can see the various plans that they have. And we play a key part in that in applying it, basically supplying it critical material for all those batteries basically to be in the cathode. So it certainly helped us a lot for us to motivate and get going on the project a lot quicker. But also really, it's the financing. And this is a difficult environment for us. The lithium sector has been in a slump as the adoption of this technology is still immature.

So it was super helpful. And we're very proud to be a General Motors partner and a key supplier and playing their strategy going forward of being an EV leader. You just talked about, I mean, lithium prices are down something like 80 percent since their peak in 2022. We've seen shares of lithium stocks, including yours, fall in tandem with that. So what is your outlook for lithium pricing, especially if something like Thacker Pass comes online? How much of that weakness is tied to the slump we've seen in EV demand versus China overproducing and flooding the market? So EV demand, I think it's a little bit of a misnomer in terms of EV demand. It has decreased. It's actually just slower than what I think people are forecasting. So quarter over third quarter, year over year, EV demand in the U.S. is up 11 percent. Total year, it's up 10 percent. Glo% total year it's up 10% globally it's

up 22% so it's a slower uptick again it's an immature technology that goes through an S curve lithium prices have had a huge impact on that's typically we go to the capital markets to look for financing and of course it's been a risk-off environment pricing I do believe will go up because our project even in the current environment is is positive capital generating. So it's a globally competitive project. But you're going to need more than us. And it's very difficult, even for the larger cap folks in this sector, to raise money right now. So this was super helpful. Okay. Jonathan, there's been a lot of back and forth that you've had with a number of Native American tribes that were arguing against fully developing Thacker Pass.

It's hard for me to get a clear read on whether that's over, fully resolved by the courts, and whether it has any impact on your ability to start getting productive out of this site. We're fully permanent. So our permit was issued in 2021. We defended it in federal court. It was appealed. It was also approved. So we're fully permitted. We've actually started construction.

Over 50% of the excavation is done. We have utilities on site. We've mobilized Bechtel, who's our ABCM partner. And I'll say that in court, you can look at all the court records, all of all the claims have been disproven. So we're on public land. We're permitted by the Department of Interior. And we're in an area that's actually seen mining in the past as well.

So to what degree do you feel like you have control over your ability to get the most out of this site? It always, you know, when it comes to mines, it always seems so unclear exactly what the factors are that determine whether the production ends up reaching the potential that was pitched in the beginning. That's a great question. It's a massive resource. So it's the largest in North America. It's third largest in the world. So we have all the ingredients in the United States actually to be very successful in this sector and to build batteries here, lithium being a main ingredient. We have the ability from a resource and reserve standpoint to do several successive phases beyond the initial phase of 40,000 tons a year. And it's all in a relatively compact area in our project site, which is on the southern end of the McDermott Caldera.

So really the issue here has been really financing more than anything. If we were a larger company, and I'll actually correct, we're actually a chemical company. Most of the capital that we're spending is actually on the conversion facility. So when it leaves the site in northern Nevada, it's essentially a pharmaceutical grade material that's going to go to the Midwest to feed GM's Ultium factories and partner Samsung in Indiana and directly into batteries that will end up on U.S. roads. All right. Jonathan Evans of Lithium Americas, thanks for joining me. Thanks a lot, Maureen. Yeah. And in a week that's been very busy for lithium as well. I think about Rio Tinto acquiring Arcadium, too. Well, we've got

another materials company with earnings out. Alcoa earnings are out and it looks like it was a beat on the bottom line. So Alcoa's EPS was 57 cents adjusted per share. This is versus estimates of 28 cents per share. Revenue, a little bit of a miss, 2.9 billion versus street expectations for 2.97 billion. Alcoa also expects total 2024 alumina segment production to remain unchanged from the prior projection and for its aluminum segment production and shipments to remain unchanged from the prior projection as well. You can see shares are jumping right now of about 5.5 percent. And coming up shortly, we've got Alcoa's CEO, William Opplinger, is going to break down those results for us in an exclusive interview before he speaks with analysts on the call. And now we've got a CNBC News update with Pippa Stevens. Pippa.

Hey, John. McKinsey & Company is close to making a deal to pay at least $500 million to settle federal investigations into its past work, helping opioid makers boost sales. Sources tell Bloomberg the settlement could be announced in the coming weeks, federal investigations into its past work helping opioid makers boost sales. Sources tell Bloomberg the settlement could be announced in the coming weeks, and it would add to the penalties the consulting giant has already paid U.S. states. The DOJ and McKinsey declined to comment. The Supreme Court today allowed a regulation to remain in place that's aimed at limiting pollution at coal-fired power plants. It will stay that way until other court challenges play out. Republican-led states and industry groups argue that the Environmental Protection Agency

overstepped its authority and imposed unattainable standards. The rule requires many coal plants to capture 90 percent of carbon emissions or else shut down within eight years. And for $400 a person, you can cut the line to get on rides at Disney's U.S. theme parks. The resorts will start testing the Lightning Lane Premier Pass starting next week, which will allow visitors to use the pass once to each available ride that has the Lightning Lane without having to choose a specific arrival time for it. You know, I remember the days when it was only Fast Pass. Now there are all these tiers.

Yeah, well, if you're willing to pay, which people are, Pippa, thanks. Well, after the break, we just talked about powering EVs. Next, we'll hear about powering AI. Mike Santoli looks at the potential winners and losers from the electricity needs of the artificial intelligence revolution. And the CEO of Alcoa joins us for his first comments on earnings ahead of the call with Wall Street. You don't want to miss that with shares up five and a half percent right now. Stay with us. Welcome back to Overtime. The utilities sector surging today, leading the S&P 500 and hitting an all-time high. Let's get back to Mike Santoli for a closer look.

Mike. Yeah, John, you know, the utility sector has been running for, we know, a variety of reasons. Obviously, bond yields coming down, Fed cutting rates makes dividend stocks more attractive. But then you have the independent power producers, the less regulated parts of the industry, seen as having high leverage to the AI power generation boom, just the need for all that power. This is a very long-term chart, back to 1980, of overall industrial production by utilities. It's electrical power generation in aggregate. You see it was kind of a steady uptrend up until you got into the 90s. This last little burst of pretty sharp growth was during the late 90s technology boom, everything getting

digitized, electrified. And then you see what is fascinating is this century gone sideways, right? We've reached a point of either efficiency or everything is already kind of plugged in and we didn't have much growth. Now, very suddenly, maybe there's a little uptrend happening at the end. This goes through August. But the expectations are this is going to just soar forever. I wouldn't point out, though, the expectations in here were that the Internet was going to have insatiable power needs forever and also broadband. And we know what happened there.

It didn't actually come to pass. People got more efficient. Take a look, though, at utilities relative to the S&P 500 long term. To me, this is another part of the story. This is just kind of one of these generational lows in relative performance. It just seems like there are people are underinvested. And if, in fact, it's kind of a growth story in the near term, that just adds a little bit of a kicker and a little storyline for why capital might flow into this area, John. Two things, Mike, the economic crisis and the iPhone. So going back, looking at that chart that you've got out, it seems like the relationship

was heading in a different direction until right around 2007. Now, going back to the first chart you had, to my eye, it looks like about a 25-year relatively uninterrupted path from around 1982 up to 2007. Not really the beginning of the 2000s, but maybe until, you know, we had mobile technology and started relying more on batteries. And maybe I don't know, but how much does mobile technology. I also think in the 80s and 90s, you were still like, you know, air conditioning was still actually getting fully penetrated in that period of time. So I don't want to point all only to kind of computing and technology as a power demand. But I'm with you. There's lots of other influences, and you're right to point out the economic crisis

because it is a reminder that power demand is ultimately cyclical. If you have a recession, it's going to go down. All right. Mike Santoli, thank you. Well, up next, Alcoa's CEO joins us exclusively to break down the aluminum giant's earnings before he dials into the analyst call that kicks off the top of the hour. Don't want to miss it. Welcome back. Alcoa shares climbing right now, up almost 6 percent here in overtime after the aluminum giant reported earnings that topped estimates. Joining us now exclusively before the earnings calls, Alcoa president and CEO Bill Opplinger. Bill, it's great to have you on the show. Thanks for having me on. I appreciate it.

So you blew profitability expectations out of the water much stronger. You also reaffirmed your aluminum segment guidance, but you did up the projection for shipments of alumina. The last time you and I spoke back in April, you talked about strong demand in all of your major markets. Is that what's propelling results today? Yes, we had a really strong third quarter. And as we look out into the fourth quarter, we expect it to be strong also. So when I reflect on the third quarter, we're hitting our operational imperatives. We're delivering the tons. As you see, we've maintained our guidance for the full year. Secondly, we really acted on a couple of strategic initiatives in the quarter. We closed on the Illumina Limited transaction, the biggest transaction that we've ever done as an independent company,

and it was accretive in the first quarter. We've announced that we're exiting our joint venture partnership in Saudi Arabia. And then on top of that, the markets, as you said, the markets still remain strong. And we see our markets steady to potentially up a little bit. And so really strong performance in the third quarter. So we do talk about the strong performance or I guess the market, the market for your products. How much of this is a reflection of what's been a robust macroeconomic environment and perhaps just as importantly particularly when we think about north america how are tariffs factoring in so i look at it in two product lines when we consider aluminum globally and we're big players

in north america and europe as we look at demand near-term demand for aluminum the packaging business is very strong so So the transition to aluminum packaging is very good. Transportation continues to grow. Even though the growth in automotive has slowed down a little bit, we continue to see growth. Building and construction, which has been our worst market for 2024, we think with lower interest rates will get better. If I then transition to the aluminum market, which is the interim product before making aluminum, in which we are now 6 million metric tons long, alumina has become acutely short in the marketplace because of some supply disruptions. So we're seeing alumina prices go up a lot.

Your question was specifically around tariffs. You need to keep in mind that we have two smelters in the U.S. We have no mines. We have no refineries in the U.S. So U.S. tariffs are a smaller impact on us than you might think. In addition to that, we're a 130-year-old company. We've seen tariff structures come and go over that 130 years. We're going to work with whatever administration comes in and we'll work with them to have good sound industrial policy. Bill, when it comes to the Illumina Limited acquisition that you guys completed in August, how close are you to fully realize the synergies that you said would be realized pretty quickly? So the synergies are fairly small because they were just a 40 percent ownership in

our operations. We will we will realize those synergies very quickly. Probably more importantly, though, is the financial flexibility that it provides us. And in addition to that, the ability to move quickly. When we talk about our exiting the joint venture in Saudi Arabia, one of the ways that we were able to move as quickly as we did was because we own 100 percent of our upstream business. We were able to make those decisions rapidly. And that transaction is a fantastic transaction. It simplifies our structure and it allows our investors to see one point one billion dollars of value in that joint venture that we now own as shares in the parent company.

Yeah, you also issued an update on San Ciprian operations as well today, which I know analysts were watching for closely. Another, I guess, macro question for you, and that is we're seeing stimulus measures in China. There's a presser expected overnight in China that's meant to support the property market. And we know that that is a market that continues to produce and maybe perhaps even overproduce aluminum right now. How is that impacting global dynamics in your business? China is really interesting on the global market.

The global market for aluminum is roughly 75 million metric tons. The Chinese have set a cap that they will only produce 45 million metric tons. So they are massive in the global market. They have stuck to that cap over the last year or two. And we believe they're committed to sticking to that production cap. What that means is that there will have to be growth outside of China to fulfill the demand. Demand growth continues to grow for aluminum. We see the highest demand ever for aluminum right now, and we see continued growth going into the future.

And I did mention this operation in Spain. What is the update? So we made an announcement just this evening. We're working towards a partnership in Spain, whereby we would form a partnership with a Spanish energy company by the name of Ignis. They will own 25 percent of the entity in Spain. We will combine our expertise on making aluminum, their expertise in energy, which is the area that that facility is the least competitive on, and we think it'll plot a path forward for a viable operation in Spain. Along the way, we need to make sure that there are a couple of key stakeholders who will support us in that process. We will need support and cooperation from the local governments

and the national government and from the unions. Bill Oplinger of Alcoa, thank you for joining us. Thank you, Morgan. Thank you, John. Appreciate it. Well, we've got a news alert on Lucid Group. Boy, that stock is dropping in overtime. Phil LeBeau has it. Phil. Yeah, John, it's down about 13 percent. Here's the reason why. Two moves by Lucid.

262 million new shares are going to be offered to the market. So they're diluting the share base. The other part of this is that there is an affiliate of the Saudi Investment Fund, PIF, which is going to be taking a further stake in the company of 347 million shares. Put it all together. Once again, you see a strong investment in Lucid by the Saudi Investment Fund or some of their affiliates and this dilution of shares. That's the reason why you see the stock down almost 14 percent. Guys, back to you. All right, Philip Boe, thank you. Well, Alcoa, not the only big overtime earnings mover, even besides Lucid. Up next, we're going to round up all the other names that need to be on your radar. Plus, check out Cisco. This is the big winner

in the Dow today. Citi upgrading the stock from neutral to buy, hiking its price target from $52 to $62, citing increasing opportunities for AI revenue growth. Stay with us. Welcome back. Got some more movers for you here in overtime. CX, CSX shares are down about four and a half percent after the company missed on earnings and revenue, citing a decline in coal revenue. Steel Dynamics, on the other hand, moving higher about four percent. The company reporting earnings of two dollars and five cents per share beating by eight cents. Revenues also above estimates and Equifax. That is down about 2%.

Despite a bottom line beat, revenues were in line with estimates. Guidance a bit light, Morgan. All right. Well, up next, Scott Cohn looks at how economic sentiment could determine the outcome of the presidential election in swing states. Scott. Hey, Morgan, are you better off than you were four years ago? How about your state's business climate? We've got some numbers from our exclusive CNBC America's Top States for Business study, which we do every year.

That's coming up on Overtime. Welcome back to Overtime. The presidential election is just weeks away, and a handful of states will likely determine who wins the White House. Scott Cohn is in the key swing state of Arizona with a look at how the economy could impact the election in that battleground. Hey, Morgan, it is the economy and Arizona is doing pretty well. Arizona, in our America's top states for business study this year, finished 12th overall.

That compares to 20th at the peak of the Trump economy before the pandemic in 2019. Behind me is a big reason why. That's Taiwan Semiconductor's massive chip manufacturing complex. Of course, it was announced in 2020 under Trump. It's been supercharged under Biden-Harris under the Chips and Science Act. Arizona now has the nation's fifth best economy, according to our study. That's up from 12th in 2019. It has the sixth best workforce, though that is a decline and it's a concern here. Production here at TSMC has already been delayed due to worker shortage.

Arizona has the second best infrastructure, all important in our study this year. And it is particularly important in Arizona and a particular positive here because the state has one of the nation's most reliable power grids, so it can handle all this development even in the Arizona heat. But the state has some serious weaknesses as well, some issues that keep it from becoming a contender. Arizona ranks 47th for education, which is exactly where it was in 2019, consistently bad with large class sizes and small spending. The cost of living is rising with all of this growth. And with poor health care, even worse air quality, and a 15-week abortion ban,

Arizona finishes 41st in our study for quality of life. We've been looking at the seven big swing states through this top states lens, and here's what we found. Five of the seven states have improved their top states rankings during the Biden-Harris years. Arizona, Georgia, Michigan, which is now in the top 10, North Carolina, which was a top state twice, and Pennsylvania. Two swing states declined, Nevada, which dropped in some key categories including infrastructure and business friendliness, and Wisconsin, which suffered a big drop in education. We've got snapshots of all of the swing states at topstates.cnbc.com, and you can always see where your state ranked not only this year, but in all our years past. Guys?

Scott, you just talked about workforce, but you didn't talk about immigration. And that's obviously a key issue and a key part of the economic dynamic in Arizona. It is. And it's, of course, as you know, and as you've heard discussed so much, debated so much during the campaign, it kind of cuts both ways. There is a need for workers. As I said earlier, there's a worker shortage here in Arizona. And immigration fuels that, however workers come in. And if there are restrictions on that, that's going to make the problem even more severe here in Arizona and in a lot of the states that are dealing with worker shortage.

When we rank the, weight the categories in our top states for business study, workforce comes in right behind infrastructure. Infrastructure has been a big deal because of all the government money that's out there, but there are still are worker shortages, even as the unemployment rate and the workforce, the number of workers, the economy cools down a little bit. It still is a big issue, and it's going to continue to be. All right. Scott Cohn, thank you. And, of course, Taiwan Semi reports earnings overnight, too, which we watched closely after what we saw with ASML

and the moves we've seen in both directions with chip stocks this week. Tomorrow, Netflix. And this might be hard to believe, but when we talked about FANG years ago, that N didn't stand for NVIDIA. It stood for Netflix. So it's going to be interesting to see whether it can get farther above this $700 a share level near all-time highs. I mean, all this talk about megatech, which in part it is not. Yeah, we also get initial claims, which could be noisy because of some of the dynamics.

Retail sales could be watched closely from a macro perspective as well. And we did get a new record high on the Dow today. For sure. All right. That does it for us here at Overtime.