Closing Bell - Closing Bell Overtime: Amazon Earnings, Blackstone’s Real Estate Outlook, and Jim Beam Owner on Tariffs 02/06/25

Episode Date: February 6, 2025

Amazon is the latest megacap tech company to report earnings and we have you covered form every angle. Other names reporting include Pinterest, Expedia, Elf Beauty and Take-Two. Barbara Doran of BD8 Capital gives her take on what the earnings say about the broader economy. DA Davidson’s Gil Luria and Wedbush’s Scott Devitt break down Amazon’s results, while Seaport’s Aaron Kessler weighs in on Pinterest. Blackstone’s Kathleen McCarthy shares her outlook on real estate investing and why she is changing her tune for some office and retail opportunities. Suntory Holdings CEO Takeshi Niinami discusses the impact of tariffs on the alcohol industry for the maker of Jim Beam and Maker’s Mark. Plus, Qualcomm CEO Cristiano Amon on the company’s growing presence in autos amid tariff concerns.

That's the end of regulation. The Hartford ringing the closing bell. The New York Stock Exchange plum acquisition doing the honors over at the Nasdaq. It was a seesaw day for stocks as Wall Street gets set for Amazon's earnings in just a few minutes, as well as tomorrow's January jobs report. Mixed picture with a Dow lower. That's the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Well, as I just mentioned, the Dow snapping a two-day win streak while the S&P 500 and the Nasdaq were higher for the third straight day. And now investors are turning their attention to earnings from Amazon, Expedia, Pinterest, Take-Two Interactive, Cloudflare, Affirm,

and Elf Beauty, just to name a few. We will have instant analysis of all of those numbers. Plus, Blackstone Global Co-Head of Real Estate Kathleen McCarthy on the big investing opportunities she's seeing in housing, retail, data centers, and more when it comes to real estate. And let's bring in BD8 Capital Partners CEO Barbara Duran and our own CNBC Senior Markets Commentator Mike Santoli. It's great to have you both here, Barb. I'm going to start with you because there are a lot of different cross currents for this market right now. What matters the most to it? Well, I think with the Fed on hold for their foreseeable future, the economy strong, I think it's really a focus on fundamentals about the economy and stocks. I mean, earnings really are the key to watch here. And we're

certainly about halfway through. And of course, then we have the Trump administration, which I consider a wild card. You know, you saw what happened early in this week in terms of tariffs and the fright that happened there. The stock market did a big swoon. So I think there's going to be that is going to add to volatility in the market, particularly with valuations, where they are in general for the market. But I think it's really about earnings and that that's what we have to watch closely. And it's stock picking at this point. All right. Speaking of, we have our first earnings report. Amazon results are out. Stocks under pressure. Kate Rooney has the numbers. Kate. Hey, Morgan. So at least for the quarter, it was a healthy beat here on EPS and revenue for Amazon.

That EPS number coming in at a dollar eighty six. That was better than expected by almost 40 cents. Revenue of one hundred and eighty seven point seven nine billion. Stronger than expected. And then that AWS revenue number, that cloud sector, 19 percent growth. That was the number the street was looking for. So right in line there. We're going to keep digging through the numbers, though. We'll bring you more. You can see stock down more than 5%.

So something's got to be going on here. We'll find out. All right, Kate, we know you're getting back to work on that. We do also have Expedia results. We're going through those, too. In the meantime, Mike, I want to bring you into this conversation your reaction to the beat we just got in the top and bottom lines for Amazon and the fact that cloud did come in, as expected, 19% growth after we saw Alphabet fall short and Microsoft's results disappointing as well. Yeah, I mean, I think it probably says a combination of the challenging setup in terms of the buy side having pretty big eyes for, let's say, revenue

beats and what AWS is going to deliver, and then maybe a little something in the mix in terms of guidance, which I wanted to take a quick look at. But it has really been the favorite in the internet group in terms of how the stock has performed, in terms of consensus on the sell side and the buy side. So let's see it settle out and, you know, if this is just sort of the reflex reaction. Okay, Barbara, you're a shareholder. Your clients are shareholders in Amazon. I realize we're looking for some more details here. What do you want to hear from this company? Well, there are a number of things. I mean, obviously, the AWS is what's being closely watched because of Microsoft and Alphabet's miss there because it's really been driving

a lot of their growth and also the AI monetization. We want to know about the e-commerce margins, what's happened both in sales and in the margins there, particularly what's happening in their distribution and wholesale. They are really doing some big improvements in automation and robotics. So we want to hear what that's doing to margin. So I think there's a number of levers that we want to see. And it's surprising because they really beat on the EPS number. And so this sell-off, it may be short-lived, you know, because even their revenues were not dramatically higher, but they were higher. So it looks like very good numbers. It looks like, if I'm reading this correctly, that Q1 sales are projected to be $151 to $155.5 billion,

which is softer than consensus expectations right now. And Kate Rooney has more details on that and other things in this report. Kate. Hey, Morgan. So the guidance here, at least for Q1, appears to be weighing on Amazon after hours. So Q1 revenue looking below consensus at the midpoint, $151 billion to $155.5. Street was at $158, so significantly lower. And then same with Q1 operating income. That's looking lower than expected, or at least where the street was. There is a note in here,

guys, about foreign exchange. They say net sales are expected to be 151 billion between 155, as I mentioned, growing between 5 percent and 9 percent compared with the first quarter. They say here the guidance does anticipate an unusually large, unfavorable impact of approximately $2.1 billion from foreign exchange rates. And as a reminder, they say there was a leap year in the quarter. So there's a little bit of messiness on the comparisons, but that is likely what's causing that knee-jerk reaction. Morgan and John in Amazon, you can see. Okay. Kate, thank you. And it looks like we're pairing some of the losses here. We're now down about 3.5%. So, Barb, actually, I'm going to go back to you on this because we did get a softer

guide. We've been getting softer guides from quite a few companies across quite a few industries, some of them because of the strong dollar and FX impacts, some of them maybe because of some caution and some uncertainty here coming into 2025. Your thoughts? Yeah, no, that could be true. And there's also a question of tariff impact, because about 80 percent of their paid sales are from third party, even though it's a very from the fees, it's a very small percentage of their revenue. And you think most often of Sheehan, Temu, you know how that's going to impact because they were big advertisers. And I think that's not going to be a huge impact, but we need to hear a little bit more and what they're going to do about that and how they're going to deal with that.

So I think that's one thing we want to hear on the call. And the question is, where's the softness coming from? Because holiday sales should have been very strong, given the other reports we had from retailers and what we've seen in credit card spending and consumer spending. So it'll be interesting to see where the shortfall is in terms of their guidance for this quarter coming up. Okay, we've got more earnings to bring you. Expedia results are out. Contessa Brewer has those numbers for us. Contessa. Hey there, Morgan. Yeah, we're seeing beats here on the top and the bottom line right now. The earnings per share, 239 adjusted against the street's expectation of $2.04 on revenues of 3.18 billion, just coming in a bit higher

than the 3.07 billion from the street. Look at the EBITDA here, 643 million, a handy beat over the 571.2 million that was consensus, and booked room nights up 12 percent year on year for the quarter at eighty six point four million versus the eighty four point four nine million. Here's some news investors are going to love. Are you ready for this? Because it's been a long time since the pandemic. Now you're hearing Expedia say they are reinstituting the quarterly dividend of 40 cents. And you can see the shares liking that as well, up six and a third percent

in the after hours trading, Morgan. All right. Contessa Brewer, thank you. We've got more earnings. Elf Beauty results are out. Christina Parts Nevelis has those numbers. Well, Elf's latest earnings paint a sobering picture for the cosmetic space. They posted adjusted earnings of 74 cents per share. Company missed on revenue expectations, reporting $355 million for the quarter. But the most significant development comes from the revised outlook. Management has cut full-year guidance with the CFO citing weak January trends. The CEO told CNBC's Gabby Fonrouge there was heavy discounting during the holidays and a slowdown in, quote, social commentary online amid TikTok ban concerns and the wildfires in L.A.

The lower guidance really just marks a dramatic shift in sentiment. Just last quarter, there was strong demand and that prompted the company to raise its full year guidance. So this sudden reversal in outlook has really sent shares plummeting down almost 10 percent right now. Morgan. All right. Christina Parts Neveless, thank you. Don't miss Jim Cramer's exclusive interview with Elf's CEO. That's coming up at 6 p.m. Eastern on Mad Money. We've got Pinterest earnings as well. And Julia Borson has those numbers. Julia. Morgan, Pinterest revenues beating expectations 1.15 billion, a herald of expectations of 1.14 billion. The company reporting adjusted earnings of $0.56 per share. That is not comparable

to analyst estimates due to a deferred tax benefit, though the adjusted EBITDA did beat the street consensus. The company's monthly active users, $553 million, was ahead of estimates of $547.5 million. And average revenue per user of $2.12 was three cents better than expectations. The company also guided to first quarter revenue in a range of $837 to $852 million. That's well ahead of the $833 million estimate. And they say that this guidance does assume about two points of headwind from foreign exchange shares up 26 percent in after-hours trading. Make sure to tune in tomorrow morning at 10 45 a.m. Eastern. I'll be sitting down with Pinterest CEO Bill Reddy in a CNBC exclusive. Morgan? Sounds good. We just showed the promo for Elf, but we will be looking forward to

that Pinterest interview. Shares are up 25 percent right now. So, Julia Borson, thanks for bringing those results to us. We're still going. Take two interactive earnings are out. Steve Kovac has the number. Steve. Hey, Morgan, they sure are out. And the shares are up here a bit despite a slight revenue miss. EPS coming in, it's actually a loss per share here of 71 cents, though that is not comparable to estimates there. So we're not comparing that one. Revenue is one point.37 billion. Street was looking for $1.39 billion, so more or less in line, just a slight miss there. And revenue guidance for the fourth quarter, that's the one we're in right now, $1.48 billion to $1.58 billion on the low. It's more or less in line, a little light on the guidance there, but still you see shares up 3%, and it

looks like they're still on track. Everything that investors are watching here is that launch of the new Grand Theft Auto game this fall. Sounds like they're still on track to release it. Shares up 3% now, Morgan. Okay. Steve Kovac, thank you. Affirm earnings are out as well. And Mackenzie Segalos has the numbers for us. Hi, Mackenzie. Hey, Morgan. Affirm shares are up around 5% in extended trading. That follows a beat on the top line with revenue coming in at $866 million versus the analyst consensus of $807 million. The company posted an adjusted profit of $0.23 per share, but it's unclear if that's comparable to the $0.15 loss expected by Wall Street. Now, gross merchandise volume, a key metric that helps gauge the total value of

transactions, increased 35% from a year earlier. It's the first time the company's GMV has surpassed $10 billion in a quarter. The Affirm card, which is its big bet for driving greater usage overall, has seen volume more than double. Now, the company is guiding third quarter revenue in the range of $755 to $785 million versus an estimate of $772 million. Back to you, Morgan. All right, Mackenzie. Thank you. Shares are about five and a half percent right now. We just whipped through quite a few names. So Mike Santoli, I'm going to go to you and get your initial reaction, especially since it was a mixed bag in terms of some of these consumer facing names, in part, perhaps when you look at Elf because of things outside of its control, like that on and off again, TikTok ban. But in general, perhaps looking at Affirm,

it speaks to strong results in the consumer space, which we saw throughout the day today as well. Yeah, for sure. I mean, I think that the rule is if the company is guiding really any increase above consensus at all, because everyone else is being relatively conservative and affirmative is in this category and you know you're accounting for FX which usually isn't in the consensus then the stocks can get rewarded at least on a short-term relief basis. You know when it comes to Amazon even if you add back what they say the effect of foreign exchanges on the current quarter guide, it falls a little bit short of consensus.

So I think that's why there's just a slight stutter step in that Amazon stock reaction. We'll see what they have to say about forward-looking things on the call. But so far, I think it kind of met high expectations. Pinterest, remarkable, because that's a very global business. The vast majority of users are outside the united states so again they they managed to come in with their guide better than anticipated and the stock's getting more also a very reasonable modest valuation in the scheme of a bigger uh kind of internet advertising place barbara get your thoughts on some of these reports we just heard. I mean, Expedia reinstating a dividend.

Travel continues. Yeah, that's pretty interesting because it's like Expedia and Penn Interest both have, it's a question of consumer spending and also execution issues for the companies. Expedia is probably selling half of what, in terms of PE, of what Airbnb is and Booking.com, and yet they're still seeing the same growth. and they are all benefiting from the online travel. You saw that in Delta's report last a couple of weeks ago. You saw it in Hilton today. Travel is still strong. And so they should do well. And the question for Expedia was really, can they execute? They have a new CEO of just the last nine months. A CFO is about to start

probably tomorrow. And so they've really been focusing on cleaning up the company and the balance sheet and really prioritizing things like Vibro and international travel and really trying to right the ship there. So this could be the beginning of a PE expansion if earnings are going to be good. And certainly they surprised nicely in both revenues and EPS. So I think it speaks to consumer spending strength. OK, Barbara Duran, thank you for joining us. Mike, we'll see you in a little bit with some major moves on the screen here with earnings in overtime. Up next, a pair of analysts with buy ratings on Amazon react to the company's earnings and what they want to hear from management on the call at 5 p.m. Eastern.

Overtime is back in two. Welcome back. Bill Holdings' earnings are out, and Seema Modi has the numbers for us. Hi, Seema. Hi, Morgan. This is the cloud-based software company reporting earnings at Hanley Beat Street expectations. Revenue for the quarter also ahead of what Wall Street had anticipated, but its Q3 revenue guidance a bit light and expectations were high going into this report. So perhaps that's why we're seeing such a dramatic reaction in shares right now in overtime, down about 28 percent. Executives adding that they are moving fast to address the vast market opportunity to transform financial operations for millions of small businesses. But investors here left wanting more. Morgan. All right, Seema,

thank you. Let's get another check on Amazon as well, because those shares are lower, but off the lows as investors continue to digest the numbers. And with Amazon, there certainly are quite a few. We're down about three and a half percent right now. Joining us is D.A. Davidson's head of tech research, Gil Luria, and Wedbush managing director, Scott Devitt. Great to have you both here. Just in terms of some of these metrics that matter for Amazon, I mean, we had operating margin of 11.3 percent. That was better than expected. It looks like North America revenue and operating income, both better than expected. AWS basically in line. Online stores also better than expected at 75.6 billion dollars. Physical stores better than expected. A little light on advertising services here. And then, of course,

we know the guide is softer than the street was anticipating. So, Gil, I'll kick it off with you because overall, this report seems pretty solid. Is it really the guide that's pressuring the stock right now? Yeah, that's really all it is. And we'll get more granularity on the call. Clearly, Forex was a bigger impact than we thought. Leap year, we should have had in the numbers, but it's also a factor. But if you were to focus on the two key numbers here, AWS growing 19%, which is the same as last quarter, means Amazon has regained the leadership in AI. Both Microsoft Azure and Google Cloud decelerated in the quarter, in fact, significantly decelerated in Google's case, while Amazon has been able to maintain the same growth while expanding margins. And then on the retail side, 8% margins in North America is unprecedented. It's by far the highest they've

ever had. And it means they've taken that retail business to another level in terms of profitability. So those things are great. We'll have to see what they say about the guy. Scott, how much is CapEx going to matter here, too, especially as this company does continue to maintain these margins, at least for now? But we know everybody among the hyperscalers are spending quite a bit of money to build out their infrastructure, despite all the concerns around the deep seek shakeout a couple of weeks ago. Right. It seems like that was years ago now. But the the the CapEx, if you take the twenty six billion that was spent in the fourth quarter and annualize that for twenty twenty five, they're on a run rate to spend about $100 billion worth of

CapEx in 2025. Did I lose you? We've got you. Okay. So the other thing that I would add to what Gil said is that 26 number annualized is $100 billion. And so getting them to talk a bit about that and what the run rate is for that for 2025 is important. But I would caveat that with they also guided to the 1Q number. They've now beaten the high end of their operating income guidance for eight consecutive quarters. And so the high end of the op-inc guidance, I think, is more relevant than that revenue dynamic, which is affected by the 400 basis point move in the currency and the leap year. And the op-inc

guide was actually quite strong. Gil, I do want to get your thoughts on spending here, because obviously AI is a big chunk of it. But I just think back to last week when UPS's CEO joined me here on CNBC to talk about the fact that they're going to start paring back their deliveries of Amazon packages over the next, call it, two years. They spend a lot on transportation and supply chain and other aspects of infrastructure, too. We know they've tightened their belts there. Is that dynamic going to change when you think about a partner like UPS pulling back and also things like tariffs on goods coming in from China?

Yeah. So a few years ago, UPS and FedEx made a huge mistake by not giving Amazon the price concessions they should have. So Amazon has built its own capabilities that are now far exceed those of UPS and FedEx, and they continue to invest there. So let's not forget, when we're talking about Amazon CapEx, we're also talking about fulfillment centers and distribution and the retail side.

And part of the reason they can spend so much on data centers is that they can ratchet those down. So even if Scott's right and they continue with this CapEx run rate of $100 billion, that's still a lot less growth than Google and Microsoft have had to put in. So Amazon is a bigger business. They are used to spending a lot of CapEx, so they can absorb that spend better

without having as much of a drag on margins as the other two will have. So Amazon has the capacity to invest 100, even maybe 110, 120 in CapEx with a lower drag on margins than those other two. And they're winning in AI again because they're adding more AI business now than their competitors. That wasn't the case a year ago. And now it's clearly the case. Scott, the fact that the advertising revenue came in a little bit softer than expected, how much does that matter here?

What is the read through, especially since this has been, yes, a smaller business for Amazon, but one that's growing very fast? I'd like to see it a little bit faster, but I mean, it's good. It's a 60 plus billion dollar business, probably with operating margins that are as high as 60%. So it adds quite a bit to the overall profitability of the business. In fact, it almost adds as much profit in dollar terms as AWS does. You know, the challenge that they have is much of the advertising that's happened to date has been on-platform advertising or product listing ads. And the company's now expanding into video advertising and other areas off-platform advertising or product listing ads, and the company's now expanding into video advertising and other areas off-platform, they're going to just take some time, I think, to work in, and you could see a re-acceleration of that advertising growth in the coming quarters.

Okay. Scott Devitt and Gil Luria, thank you for joining me. Shares of Amazon down about 2% right now. We've got CloudFlare results as well, and Seema Modi has those earnings for us. Seema. Morgan, this is the cyber software company reporting earnings that handily beat street expectations, revenue above consensus, thanks to winning bigger clients. In fact, customers are spending more than $1 million. That specific bucket grew 47 percent compared to the same time a year ago. And I would point out that cybersecurity firms in general have performed well, their stocks, since President Trump took office. Matthew Prince, co-founder and CEO, says they're really touting the success of Cloudflare's business in artificial intelligence and how that remains a top focus for the company in delivering return on investment with Cloudflare

shares here up about 4.5 percent, Morgan. Okay, Seema Modi, thank you. Speaking of Matthew Prince, Cloudflare CEO will break down those numbers with us in an exclusive interview right here on Overtime tomorrow. Well, Pinterest shares popping after a revenue beat. Up next, a top analyst on the key things investors should be listening for when that call begins in just a few minutes. Plus, Blackstone's global co-head of real estate on whether she still sees investing opportunities in AI data centers following the emergence of China's deep seek. Welcome back. Shares of Pinterest are soaring in overtime after beating on the top and bottom lines.

You can see up about 18.5%. Right now, let's bring in Seaport Securities Senior Analyst Aaron Kessler. He has a buy rating on that stock. Aaron, it's great to have you on. We talked about it. Strength on the top and bottom lines. Q1 revenue guidance also stronger than expected. Monthly average users better than expected and average revenue per user also better than expected.

It seems like they're firing in all cylinders. Your thoughts? Yeah, pretty strong across the board. I think the issue the last few quarters is expectations have been too high on the street. I think expectations have now been reset a little bit. The company's starting to beat numbers again. We think it's set up well going into 2025 here. And we think they can grow kind of 15% plus in 2025 and continue to show some nice leverage on the bottom line as well. But yeah, you're right. I think it is strength across the board in the quarter. So if everybody's gotten right sized in terms of expectations and how the business is performing, what do you want to hear from the company in terms of continuing to build on that momentum? Yeah, so a couple of things we want to hear

is how they're doing bottom of the funnel. That's been a big driver of growth this year. Some of their 3P partnerships, including Amazon and Google. And then I would say the Performance Plus, which similar to maybe Facebook or Google's doing, helps automate the advertising for advertisers as well. That'll be, we think, a key initiative in 2025. We're hearing pretty good traction on that thus far, but still early. All right. Aaron Kessler, thanks for joining me. Great. Thank you. Don't miss an exclusive interview with Pinterest CEO. That is going to be tomorrow on Squawk on

the Street. Well, it's time now for a CNBC News Update with Deirdre Bosa. Hi, Dee. Hey, Morgan. The Federal Reserve has reportedly told Wall Street banks they don't need to submit data for climate stress tests. That's according to Bloomberg, which says the information won't be required because the program has been shut down. The Fed started that program in 2023 to help lenders identify and manage climate-related financial risks.

The NCAA has changed its policy on transgender participation to limit competition in women's sports to only athletes assigned female at birth effective immediately. The move comes just a day after President Trump signed an executive order looking to ban transgender athletes from taking part in girls' and women's sports. NCAA President Charlie Baker told a Senate panel in December that he was aware of fewer than 10 trans athletes in college sports. And the PGA Tour released a statement today writing that

it's closer to a deal with Saudi-backed Live Golf after Commissioner Jay Monahan and Player Director Adam Scott met with President Trump earlier this week and asked him to get involved in talks with Saudi Arabia's public investment fund. Back over to you guys. All right. Deirdre Bosa, thank you. Amazon just becoming the sixth MAG7 company to report quarterly results. Up next, Mike Santoli looks at how that closely watched group of stocks is impacting the broader market's valuation. Plus, going shopping for real estate. Blackstone's global co-head of real estate on where she sees a big investing opportunity

in the retail industry. Welcome back to Overtime. Mike Santoli returns, and he is looking under the hood of the market. Mike. Yeah, Morgan, pretty deep under to the smallest stocks, actually, in the market. This is the ratio of the micro cap index to the mere small cap index. So the very smallest stocks against the, you know, just a little bit larger stocks in the Russell 2000. What I find interesting is this uptrend in relative performance by the microcaps over the last few months. Obviously, you saw a real

sprint higher in this relationship going into the very end of last year. That was in the market was going to be very frothy. That's auary 3rd peak that's when the quantum stocks were starting to hustle and this is a similar move we're seeing right here the extreme extremes in this relationship by the way go all the way back to early 2021 when the meme stocks like gamestop and amc were in the microcap index by the way that's 1400 stocks in the micro cap the largest holding is soundcloud it's 1.1% of the index. It's a $6 billion company because it has been meme-ified as well. Now, take a look at somewhat different, all big stocks, but separating out the very largest seven, the MAG-7, at this point against the other 493 in the S price earnings multiple. Everyone likes to say, you know, the market is a lot less expensive if you take out the MAG-7. It's true. It is appreciably less expensive, but it's still above 19 times earnings for the 493. And it's a much smaller gap than we saw a couple of years ago between these two things.

And 19 times forward is still well in excess of the average that you would see in the 493. Now, you could hang your hat on broadening earnings growth, and it's going to grow into it. And a lot of these stocks haven't had a lot of growth in the last couple of years. But you can't say the rest of the market is cheap at this point, Morgan. You've been all over this for a while. It's good to revisit and see where we're at right now. Mike Santoli, thank you. Up next, Blackstone's global co-head of real estate,

on where she sees the biggest opportunities in that sector as interest rates remain high. Plus, the CEO of Suntory Holdings for a total of 100 basis points but the 10 year note has stayed fairly range bound we're basically just below four five what does that mean for the real estate sector as investors look to deploy billions in dry powder that's been on the sidelines well joining me right now right here on set is on set is Kathleen McCarthy. She is the global co-head of real estate at Blackstone. And it is great to have you back here. Welcome. So good to be here. Thanks, Morgan. So let's start right there, because it has been a fascinating dynamic to see rates, particularly the longer end, move higher since the Fed began cutting. We know the Trump administration is focused on the 10-year, maybe more so than the

federal funds rate. What does it take to bring that down? And if it doesn't come down right away, what does that mean for real estate? Well, real estate's on a road to recovery. And I think you and I have been talking about this for, it feels like a year now, because really we started to pick up those pillars of recovery coming into place when we started seeing the short end of the curve come down and then additionally spreads coming in. And that's been happening because more capital is coming back to the real estate space. So in 2024, CMBS issuance was three times what it was the prior year. We're now seeing really banks get back and much more active as they've seen repayment activity, and they want to be participating in this market with their big clients. And I think very importantly also, you've seen a sharp fall off

in new supply. So you have this combination of things where our borrowing costs are down nearly 40 percent year over year because of that combination of spreads and rates. And then additionally, we're seeing in logistics, our highest conviction theme, new supply down 75 percent or more, housing down 60 percent. So that really paves the way to cash flow growth. As far as the 10 year, I mean, the way I think about it is like this road to recovery was never promised to be smooth, right? There are going to be some bumps. That's an example of that. But I think you can continue to have great performance in real estate in a higher rate environment provided that you have cash flow growth.

And that's where we're really focused is making sure we're in the asset classes and positioned to benefit from kind of this change in the supply-demand dynamic. I want to get into some of the specific sectors you're focused on, but first, just one more macro question for you. We've seen gold on this record run, in part because of maybe fiscal uncertainty, trade and tariffs have been brought up, the possibility of inflation being stickier than expected. Real estate has long been seen as a hedge against macro uncertainty and inflation, too. So does this environment actually create more demand? Well, we definitely want to be in the asset classes where you have shorter lease terms or leases that really allow you to capture inflation. But I'd say as it relates to inflation, when we look across our portfolio, not just Blackstone Real Estate's $600 billion of assets, but really the entire Blackstone ecosystem where we have 250 companies. What we see is inflation very much coming under

control and we look at the rate of wage growth, we look at job openings, input costs, importantly kind of increases in rent in our housing portfolio and it would really actually suggest that kind of the environment is conducive to rates coming down. We anticipate we will be in a higher rate environment. But I think, again, like we see sort of signs that inflation is really in a controlled place. It's interesting because you and I have had conversations about office. We know it's been pretty hard hit in the last couple of years coming out of the pandemic. There have been reports that Blackstone might be dipping its toe back in a bigger way into some office real estate, perhaps in Manhattan. Is that

happening? And if so, what is attractive about it now? Well, certainly we've seen so many companies coming back to the office. I'd say my commute every day with my girls also would suggest that's happening. But what we're seeing is that for select assets and select submarkets, you're seeing really a strengthening of the market. And probably the best example of that is where I work. We're in the Park Avenue corridor, Blackstone itself extended and expanded its lease. And what you've seen is that vacancy has come down into the mid-single digits in that corridor. And we're starting to have, again, the footing for rent growth. And so what that will start to do is really fill up other parts of the market as well. And so I think we're seeing

that tenants in the market in New York City for very large blocks of new high quality space are starting to have trouble finding kind of the assets they want. But for us, our focus is really, especially in office where there is obsolescence risk in certain assets. We're going to focus on the highest quality, newest assets we can find. We want those assets where tenants want to be. We want to really just follow that demand. And then, you know, and of course, that's going to be an amenitized building, newer building in a great spot. Class A, Class AA, those terms I've been hearing. Exactly. Retail, you like that right now, too? Yeah, I mean, we ended the year, I guess, with a bang. We took private a company called ROIC, a $4 billion transaction. And this is following over a decade of real caution around the retail space. But you

have to understand what ROIC owns. It's the grocery-anchored shopping center. So one of the things that's proven super resilient is the fact that we all go to our grocery store, we go get an ice cream, we get our nails done, we go to the gym. And what's happened over the last 15 years among all the negativity around retail is that there hasn't been much of that built at all. And so, as I mentioned, tying this through to cash flow growth, buying assets that have proven resilient, these assets are focused in the highest density population centers of the country. They're not making more of that. And so we really feel very well positioned in that particular part of the retail market. You've made big bets over the last couple of years on data centers and AI related infrastructure. They've been very, you were very early to the game and it's certainly

a game that seems to be paying off. Is that, do you feel right-sized with that part of the portfolio or do you continue to invest there, especially given some of the concerns we've seen that we've peaked in spending and that maybe costs for things like LLMs are coming down? Well, yeah, we were, I guess you could say, an early adopter. In 2021, we took private a company called QTS and B-REIT, and we've grown that company eight times when you look at its least footprint. And today, Blackstone has $80 billion of data centers, a pipeline of $120 billion. And I think what we know from all of our insights into the market, our ability to be in direct conversation with the biggest technology users, is that the demand for digital infrastructure, these places and the power

to produce computations, it continues with great strength. And DeepSeq is certainly something to really focus on. But I think what it really has done is evidenced how the cost of the compute, the efficiency, was always going to come down over time. And we anticipate that. When we build a data center, it's fully pre-leased for 15 or 20 years to a high-credit tenant. We build it in a way that's flexible for the type of technology, type of computation happening in it. And we just continue to see how all of the tenants we talk to, you really continue to see demand for their business and therefore demand for the assets that we have. All right. We didn't get to housing. We'll

do that next time. We covered a lot though. Kathleen McCarthy, thanks for joining me here on set. Good to see you. Up next, some of the under-the-radar overtime earnings movers that you need to know about when we count down to Amazon's call at the top of the hour. Plus, Qualcomm, a big loser today despite earnings beat and as licensing revenue guidance came in weaker than expected. So up next, the chipmaker CEO tells us exclusively how the threat of tariffs is impacting his auto business. Welcome back. Let's take a look at some movers here in overtime. Skechers shares are tumbling after missing earnings and revenue estimates. The company

noting continued headwinds in China as a factor. Shares are down about 12.5%. Shares of microchip are also under pressure. That company missing earnings and revenue estimates. Guidance also coming in below expectations for the chipmaker. Those shares are down 4%. And a big mover in today's session, Qualcomm. Those shares closing down in regular trading nearly 4% despite beating earnings and revenue estimates. One area of strength was the company's auto segment. John Fort spoke with Qualcomm CEO Cristiano Amon last night and asked him about how potential tariffs could impact the auto business. Qualcomm is designed across the entire automotive industry. We're designed with virtually every single OEM.

So we're not depending on one or another car or model. The second thing is the technology is becoming so relevant for cars that even at the premium tier, when you expect those silicons to be at a premium, we just announced at CES Snapdragon Ride Elite for ADAS and Snapdragon Cockpit Elite, and design traction is increasing. The pipeline is actually increasing. We're not disclosing a new number. So we're actually optimistic about the story of how to continue. And while it's early to tell about tariffs, I think the technology that we built is very

relevant for the automotive industry. Amon also said he expects DeepSeek to be a tailwind for his business. We are getting some news out of Washington, and Megan Casella has more. Megan. Hey, Morgan, we are just learning that Meta CEO Mark Zuckerberg was at the White House today. That's according to a White House official. Not clear whether he was meeting directly with President Trump or not, but we know from a MediCom staffer via X on social media posting that Zuckerberg was there in order to discuss how Medi can help the administration defend and advance American tech leadership abroad. So confirming that Zuckerberg was at the White House today.

And Morgan, remember, this is after we learned that two CEOs were also there for meetings with President Trump earlier today. That's U.S. Steel CEO David Burrett and FedEx CEO Raj Subramanian both there. So busy day at the White House for executives. Morgan. All right. Megan Casella, thank you. Up next, the CEO of Suntory Holdings, which owns Jim Beam and makers Mark Bourbon, on how he's prepared to change his company's strategy

if President Trump's trade war leads to boycotts of American products in some countries. Stay with us. Welcome back. President Trump's proposed tariffs on Canada and Mexico may be on pause for a month, but spirits makers have expressed concerns over potential impacts. Joining us now is Suntory Holdings CEO Tak Mi'inami. Tak, it's great to have you on the show. Welcome. Thank you. So that's exactly where I want to start, because we have seen in some ways this playbook before,

going back to 2018, when tariffs were put in place on some imports and then retaliatory tariffs on things like American spirits and wine. What are the lessons learned from that time, and how are you bracing for this possibility now? We had expected that President Trump will impose tariffs to many countries, such as between U.S. and Europe. So we increase inventory in Europe, such as exporting lots of the American whiskeys to Europe. So we piled up at least one year inventory in Europe

so that we can mitigate the risk of the tariff impositions into the Europe. Just like that, we've been working on mitigating the risks of the tariff imposition to other countries like Europe. But we are working on lots of scenarios of the more tariff, tit-for-tat actions amongst the U.S. and other countries. What would you anticipate in terms of tit-for-tat actions? Well, like, I think, China. We've been working on promoting Jim Beam and the maker's mark to China.

It's been more or less successful, but we are so worried about it. So I hear you talking about basically a pull forward or a stockpiling of inventory into countries that could be affected if and when the time comes with tariffs and retaliatory tariffs. But in general, what would if this were to play out and if this were play out for a long period, what are some of the other strategies you would be looking to implement? Does it come down to taking higher prices, especially when you're talking about bourbon or you make tequila as well? And these are spirits that are tied to the locations in which they're made. So you can't exactly move those supply chains. Well, as a matter of fact, first, in terms of American whiskey, which is our strength,

we'll be more focusing on the U.S. And we are not thinking about increasing prices immediately. efforts to stress higher quality than our peers in the industry in the United States. And second, we piled up tequila, but like to export tequila because that segment has been growing, so will increase our effort, such as appealing the better quality, again, of tequila in the United States. So all in all, we have plans, but we have to be flexible. So the current growth potential of the RTD, we will be more focusing on RTDs by putting more resources in the United States. So we expect that the business in the United States will be better because its economy will be growing. That's our expectation. So we will be putting more resources

to the United States. Okay. And finally, quickly, since we're up against more resources to the United States. Okay. And finally, quickly, since we're up against the end of the show, Japan's prime minister is coming to meet with President Trump tomorrow. What do you want to see come out of that meeting? Well, I think, first, the objective is to create the further win-win situation between the two countries. First, the personal relation of trust will be established between Mr. Ishiba and President Trump. And

the key thing is they might be talking about, first, how we can increase investing, I mean, investment. Second, AI, I mean, collaboration. Third, I think how to maintain the stability in East Asia. We are against the end of the hour, so unfortunately I have to cut you off. Tak, Nii, Nami, thank you so much for joining me on Centauri. That's going to do it for us here at Overtime. Fast Money begins right now.