Closing Bell - Closing Bell Overtime: Apple Earnings From Every Angle; Venture Capital Scorecard With Francisco Partners Co-Founder 11/03/23

Episode Date: November 3, 2023

It was the best week of the year for the major averages. G Squared Private Wealth’s Victoria Greene and CFRA’s Sam Stovall break down the market action. Founders Fund’s Keith Rabois talks where VC money is headed right now, plus the role of corporate America in geopolitics. Former NEC Deputy Director Bharat Ramamurti talks the cooler-than-expected October jobs report and what it means for the Fed. Redfin CEO Glenn Kelman on his stock’s volatile week and a potential landmark court case. BitGo was chosen as the custodian of FTX creditor money; CEO Mike Belshe joins to discuss what’s next after Sam Bankman-Fried’s trial. Piper Sandler’s Craig Johnson on key technical levels.

What a day, what a week. It's the best week for stocks of the year. That is the score crowd on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Fort. And coming up on today's show, Founders Fund partner Keith Rabois is going to join us to talk about the setup for venture capital in this higher rate environment and the state of e-commerce through the lens of his startup, OpenStore. Plus, we will talk to the CEO of Redfin as that stock jumps 22% today on the back of earnings. We'll get a stake on this week's broker commissions ruling as well. But let's get straight to the market, capping off a huge rally for the week, the best so far for the year for the major averages,

the Dow and S&P notching a five-day winning streak. And it's the sixth in a row for the Nasdaq, the 10-year Treasury yield moving dramatically lower today to every sector in the S&P in the green for the week and for the day. Joining us now, G-squared private wealth CIO Victoria Green and CFRA Research Chief Investment Strategist Sam Stovall. Victoria, I'm going to start with you because we started this week in the green and that had been the case for a number of weeks. What we would see is we'd start the week strong and then fade the rally and it would get uglier as the week would go on. The fact that that did not happen this week, the fact that we have closed the S&P 500 at 43.60, well above the 200-day

moving average, how bullish is this? It's manic, not necessarily bullish. It's great. You got some lift. We saw that bounce off. We saw the buy the dip work. They, you know, buyers stepped in as they've been doing all year. But for me, you're still a little bit facing some downtrend winds from that July high. So I'm kind of still holding my breath. See if this this manicness will hold next week, because we have we've been lurching from everything's terrible after like Tesla, Google, and Meta to everything's fine and even an Apple miss we're willing to overlook because the Fed's going to just rescue us all. So I think we just have to step back, take a little bit of a deep breath. These grades are great. Everything rallied.

Bonds rallied. Stocks rallied. Gold was off a little bit, but not terrible. Energy rallied even with oil prices down. It's just one of those Goldilocks weeks. But again, we're going this manic, like everything is terrible, everything is amazing. So take this week with a grain of salt, enjoy it, but just realize that it's kind of one in a million week. Yeah. Sam, I want to get your thoughts on this, especially since stocks did very much take their cues from the bond market. And we saw this rate reprieve for a number of reasons. You saw that refunding, that Treasury refunding overhang was removed. You had softer macro data, including the jobs report today. What some folks have called dovish Powell commentary from the Fed decision on Wednesday.

And then some dynamics globally as well with the BOJ policy tweak. The fact that we touched 5% on the 10 10 year yield and then that was it. It was very fleeting. We came back down. Rick Santelli had said to me earlier today, that's because at that yield, it's become more compelling and bonds have become more competitive against stocks. Do you see it the same way? Well, Morgan, what I see is, as Victoria sort of said this week, is investors were pulling petals from a daisy saying we should buy versus we should sell. We should buy. We should sell. So in the near term, I think investors were saying, OK, let's see what's setting up this overall market from a seasonal perspective. Yes, we've come to an end of that very cautious sell in May period.

We have entered into the fourth quarter, which traditionally is good, but it's even better when it's a pre-election year of a first-term president, since it's never declined since World War II. Also, investors are saying, hey, the Fed is likely to be finished raising rates. And whenever that has happened, we traditionally have seen the market up 13% in the nine months between the last rate hike and the first rate cut, along with all styles, sizes, sectors and almost all of the sub-industries. So I think investors are going to take heart with today's action or this week's action, but they're also going to be very vigilant to see whether that 10-year yield was simply a fakeout, head back up to the 5% level, for certainly it is

adding to the substitution possibilities that we did not have during the prior bull market. Victoria, something else I'd like your take on. The Russell 2000 was up almost 3% today, about 8% for the week. That's better than all but two of the stocks in the so-called Magnificent Seven, the mega caps. Amazon and Nvidia were both up more than eight percent for the week, but those are the only two. Does that speak to a shift in this trend toward the bigger stocks outperforming with the smaller stocks catching up? I still think the mega caps are going to be the make or break on this market. You know, Nvidia doesn't report till later in November. So we'll look to see them to see if they can continue the semi strength or not. Look, the Russell 2000 has had such a rough year. And

that's been one kind of the issue with this bull run here is that the small caps haven't confirmed yet. So, yes, this is a good sign that you're finally seeing the small caps participate. You saw EM participate, the dollar fall. But you have a lot of questions on how much of that growth in the small caps is really sustainable, especially with liquidity and lending and kind of putting more and more pressure on the smaller companies. It's harder for them to refinance. It's harder for them to access capital, especially as we've seen these financial conditions tighten. I'm not really buying that this is the end-all, be-all, and here it's going to be a small-cap run from here to the end of the year. I think you still stick a little bit with your

mega caps because I like the quality and balance sheets that they have much better than I like the small-cap balance sheets. And Sam, a lot of attention now kind of has to turn to Black Friday, right, to the holiday season and the consumer. How much is that going to influence the market from here on out? Well, I think the consumer is certainly going to help carry this market toward the end of the year. Small caps are trading at a 36 percent discount to their average relative P.E. to the S&P 500. Mid-caps are about 30% discount. So there's an awful lot of attractiveness available in these groups. Traditionally, small and mid-caps tend to outperform the S&P 500 by a more than two to one margin in the first year of a bull market, which it has not done because

every bull market over the past 30 years, except for 1988, was accompanied by a decline in interest rates, not either a holding pattern or higher interest rates. So I think the consumer will hold up well. I think we do end up seeing gains in this holiday period. But the real question is, how long will we end up seeing investors gravitate back toward the smaller cap issues? Yeah, it's a high bar now for next week. Sam, Victoria, thanks. Regional banks, meanwhile, had a standout week. The KRE regional bank ETF jumping double digits, gaining back some of the big losses for the year sparked by the Silicon Valley bank crisis.

We all remember Leslie Picker is here with us with a look at what happened this week and maybe a bit of what's next. Hey, John. So this conversation you were just having is the perfect segue to the conversation about what happened with regional banks this week because it largely comes down to rates. The decline over the last few days relieves some of the funding cost pressures and nerves that are out there surrounding credit. I just got off the phone with KBW analyst Chris McGrady, who attributed the moves to rates and said this is largely a sentiment-driven rally coming off a few weeks of underperformance in financials. And during that time, several regional bank executives said on third quarter earnings calls that margins were at or near a trough. This short-term rate decline supports

that possibility. Then you have Bill Gross. He seems to agree. In a post on X, formerly known as Twitter, yesterday, he posted that the, quote, regional bank falling knife has hit a bottom. He says he's buying Truist, Citizens, Key Corp, and First Horizon. Then he went on CBC's last call where he explained how some banks, which are sitting on unrealized losses in their securities portfolio, benefit when rates decline. Remember, many of these banks took on more bond investments during the pandemic when they were flush with deposits, but yields were low. More recently, of course, yields have soared. The value of fixed rate bonds plummeted, contributing to billions in unrealized losses. And it's likely that in most cases those losses will stay unrealized,

but they do impact tangible common equity. That's a metric of capital. So if you look at some of the biggest moves over the course of the week, it's the ones that are largely exposed to some of those unrealized losses. Okay. I realize that we've just given up the gains in treasury yields on the two year, the five year, the-year for the month of October. They're gone. But we're still so much higher than we were at the start of the year. And yes, you can argue that Powell was maybe a little bit less hawkish than he's been at previous FOMC press conferences, but they're still pounding away on the higher for longer inflation has not been arrested narrative. So if we do see rates at these still elevated levels, what does that mean for the banks?

Yeah, I think that it's a really good question. I think that's why the KBW analyst I spoke with, Chris, said this is largely a sentiment-driven rally because higher for longer isn't really going anywhere. Now, if you went back to, you know, banks investing 101, you'd say, oh, well, higher rates are actually pretty good for banks. What's different this time is something that Bill Gross was talking about with those unrealized losses in the bond portfolio, given just the overall dynamic of the past couple of years during the pandemic, where that excess funding was invested into these now underwater securities. And so there are a lot of aspects of this current environment that are different this time. But theoretically, higher rates should be OK for the banks' businesses

because they can therefore lend out at higher rates. And it's just kind of depends on where they are in that cycle, how much of that spread they're able to capture. Well, and also the yield curve. So we see that D inversion of the yield curve. That's going to be meaningful, too. Absolutely. And of course, there's the overarching question as well of a recession. And that's been another key sentiment aspect for bank investors, because if there is a recession next year, you don't want to be owning a lot of bank stocks because they don't normally perform well. Then you see rates come down that just because the rates are coming down, that's usually a sign that there's a recession, which isn't great for banks. And that, you know, credit fear that I mentioned earlier in this conversation, that becomes more realized than we're seeing today because defaults are still

relatively low. Leslie, thanks. All right. In a somewhat related space, take a look at Bill Holdings. That's the parent company of financial operations platform Bill.com and Divi. Making a big move lower today on the back of earnings. Top and bottom line results actually beat the street, but second quarter EPS and revenue guidance were below estimates. Not dramatically below, but the bracketing, Morgan, the low end of the guide and some of those was a lot lower. Also interesting on the conference call, Bill's CFO, John Reddick, said with higher interest rates, tighter credit conditions, and cost increases for businesses, SMBs are focused on finding ways to lower expenses. This is most pronounced with larger SMBs and mid-market companies went on to say that some

of the suppliers in their network are choosing lower cost payment methods. And that has an impact on how they're guiding for the rest of the year. It makes me wonder what the real economic impact of this slowdown might be. These are small businesses that are getting ready for the holiday season where Bill is seeing a slowdown in their spend, right, heading into October. So what happens in November? What's their spending on ads like? Looked like it was pretty strong before based on the digital ads numbers we heard from Meta and some others, but do they get the sales to justify that?

I mean, the conversation has been repeated, Laney. We had the GDP Q3 first read last week, 4.9%, kind of blew the lid off of everything. But then immediately behind it, the trader talk was this is probably peak economic growth. We know and we saw it even today with ISM services, for example, in the jobs report. Yes, I know there's noise there because of all the UAW strikes, but we know the economy is slowing. To your point, how much is it slowing? And this is the area of the this is the area you want to watch most closely first. Right. Small businesses, small and medium businesses are going to tighten their belts and they're going to rein in spending. They're going to show signs of distress if there

is distress macro economically speaking before the big businesses. So it's interesting that he points that out. That's why we've kept asking Bill's CEO, Rene Lassert, on this program what he's seeing in the impact of these tightening conditions on small and medium businesses. Up to this point, he hadn't said that there was a huge impact, that they were hanging in there. Now the language has changed. So how does that play out financially? We'll have to see. Okay. When we come back, we're going to talk to a former top White House economist who

says today's cooler than expected jobs number is the final nail in the coffin for future Fed rate hikes. He's going to join us to make that case next. And later, we'll ask a bullish technician for the key levels he is watching into the weekend after this big rally in the market this week. Overtime's back in two. Is the Fed finally seeing signs that its policies are working? The October jobs report came in cooler than expected. Unemployment rate rose to 3.9 percent, highest level since January 2022, still quite low. Joining us now is Bharat Ramamurti. He is the former deputy director of the National Economic Council. Bharat, welcome. So you think this is the nail in the coffin for future Fed hikes, but is it just right? When will we know if conditions are too tight? Well, yeah, I think that if you look at the totality of the data that has come in over the

last several weeks, you see an overall very strong picture. You've got a pretty robust job growth. If you look at with the adjustments we got today, about 200,000 jobs a month over the last three months. That's very solid for this stage of the cycle. But at the same time, you're seeing wage growth declining a little bit. The CPI and PCE data over the last couple of months has been pretty solid. And so, yeah, I think that I would be surprised if the Fed would raise rates again this year. And this may well be the top of the of the hiking cycle. But then what about the economy? We were just talking about Bill. It's down 25 percent. They deal with small, medium sized businesses and their payments back ends. And they saw this big slowdown heading into October, really at the end of October.

And I just wonder, setting up for the holiday season, might the economy be slowing more than some would hope? How soon will we tell that? Or does it have to do with, you know, how much top line growth these businesses are able to get? And does that reassure them? I think, honestly, there's a bit of a mixed picture out there. If you look at some of the latest data we've gotten on business investment, on consumer spending, it remains fairly strong. But there's other signs, like ISM that you guys noted earlier,

that maybe shows a bit of slowing. I think that clearly we are not where we were in the third quarter of the year, where we had extremely strong economic growth. I would be shocked if we were in the third quarter of the year where we had extremely strong economic growth. I would be shocked if we were going to reach that level anytime soon. But we should remember that, historically speaking, 5% economic growth in the United States is way above the norm. I think we are settling into the kind of steady growth that the president actually talked about back in the summer of 2022, when we had very high inflation, he talked about how his goal was to transition the economy from the recovery period we were in then to a time when we would have declining inflation, steady job growth, and good wage growth. And that's really what we've achieved over the last few years. So overall, I think that the economy is in strong shape. I think that the risks of over-tightening are more severe than under-tightening. And I think hopefully the Fed takes that path.

Yeah, even not doing anything with rate hikes is doing something. And what I mean by that is that the end of hikes is not the same thing as the start of cuts. The market is pricing in cuts next year. So far, the Fed is holding steady and saying probably not until the end of next year. And all of this is going to be data dependent. What would it actually take to see the central bank start to make those actions? Well, look, I think you would have to see a significant slowdown in job growth. You'd have to see that reversal on wages. You'd have to see, you know, a variety of other factors like consumer

spending and business investments start to turn the wrong way. You know, my hope, obviously, is that we achieve the soft landing that everyone has been talking about. I think, largely speaking, the combination of fiscal policy and monetary policy over the last three years has gotten us to that elusive soft landing. I remember we should look at the United States in comparison to its leading competitors. Since the pandemic began, the United States has had the highest economic growth of any developed country. It's also had currently has the lowest level of inflation. So I think both the fiscal policy and monetary policy has done a commendable job. And I think now is the time to sit back a little bit and wait to see how things develop. I should note, by the way, that there is

one important risk that I think is worth highlighting. At the beginning of the pandemic, the federal government provided significant aid to the child care industry in order to keep places open. That's going to expire at the end of this year. And I think that there's a severe risk of a lot of child care centers closing next year without additional funding from Congress. That would lead to losses in that sector, of course, but also could have a pretty negative effect on labor force participation overall as people have to stay home because there's no child care available. It's something that I really hope Congress will address before the end of the year. All right. How meaningful would that be if you saw

that actually play out? Well, I think that during the pandemic, when we saw a real shortage of child care available, there was a significant effect on labor force participation, especially for women. And what we have right now actually is record high labor force participation for women. We don't want to go backwards on those metrics for both men and for women. Childcare is a critically important part of the economy. And I just hope that Congress won't be penny wise pound foolish in terms of failing to fund this necessary investment. Yeah, we've seen that recovery in the last couple of months only. Bharat Ramamurti, thank you so much for joining us today. Thank you. After the break, shares of Redfin are still deep in the red from their 2021 peak, but the stock surged today on the back of

earnings. CEO Glenn Kellman will join us next to break down the quarter and share his thoughts on this week's broker commission ruling that rattled his industry more broadly. Stay with us. Welcome back to Overtime. Shares of Redfin surging today, finishing the day up 22% on the back of last night's earnings. The move comes as mortgage rates sit near multi-decade highs, and after a ruling this week in Missouri found that realtors were liable for inflating commissions, sending shares of many online brokers lower.

But joining us now is Redfin CEO Glenn Kellman. Glenn, it's great to have you back on the show. I do want to start with earnings because the market really liked what you put up in terms of profitability and your adjusted EBITDA. A lot of focus on cost cutting over the last couple of quarters, and it really seems to be coming to fruition. I guess, walk me through the quarter and how this positions you, not only for the rest of the year, but beyond. Oh, well, thanks for asking. So we improved adjusted EBITDA by $59 million, which is a hefty amount for a quarterly profit. Last year, we were running big losses from Redfin

now, and we've just really focused our business on taking share from other brokers. That's the other side of this, that we grew share sequentially after having failed to do so through the first half of the year. So getting back to growth on a lower cost basis means that almost every dollar of incremental revenue can drop to the bottom line. Brokers are also just competing more fiercely than ever. So we launched this all variable pay plan in California, which we think will let us recruit top producing agents in addition to the ones we already have. So that was something that analysts were really interested in, too. I do want to dig a little deeper into this idea of broker competition

and specifically commission and what that structure could potentially look like. We did have this ruling earlier this week. Stocks reacted to it, including Redfin. It's unclear quite what this ruling is going to, how it's going to play out in terms of future regulation, your expectations and what it means for Redfin? Well, there's two possible outcomes from this verdict. One, reform. The second, revolution. I think most of the industry thinks that only modest reform is possible. Redfin has felt that a more revolutionary outcome is still possible, too. We have 100 years of cooperation between buyers and sellers agents, and yet both this verdict and the Department of Justice seem intent on ending that cooperation.

In most places outside the United States, there is only one agent handling a real estate sale instead of two. That is a trend that has already strengthened here in the United States just because there's such low inventory. So many listing agents try to get two customers on every listing by offering to represent the buyer of that listing, not just the seller. So that's something that's been increasing for the past couple of years. And I think that trend is only going in one direction. Glenn, even though inventories are low, as you guys acknowledge, sellers are dropping prices. Rents in the apartment arena are flattening on growing supply. And you guys have said, I believe on the conference call, that if there's not a strong start to the spring season, you're prepared to cut not only marketing, but people.

Should we be bracing for a real slowdown, potentially, in the real estate market in 2024? Well, we didn't talk about cutting people in the first quarter. We did talk about deferring media expense. I just want to be careful about that, especially since some employees may be listening to the call. We think that we're near rock bottom in terms of sales volume. So we're going to expect that just as 2023 is ending with a whimper, we'll go into 2024 with the same expectation. starting to pile up. We've had more price cuts than at any point since 2015. You always get price cuts in the fall because people who didn't sell their houses in the summer start to mark their listings down. But it's just happening more. And I actually see that as a welcome development because for so long, American homes have been unaffordable. We're now at a four-decade low.

The reason we can't get a break in home sales is because nobody can afford to buy the dang house. And so getting some softening in prices, I think, is usually how a correction works its way through the system. I guess it's, yeah, the difference between some softening and a lot. It depends what happens in supply. Not too much. I saw an analyst note say that you were looking at taking actions on personnel spending. Maybe I misinterpreted that. Or they did. What are some ways beyond marketing that you were looking at taking actions on personnel spending. Maybe I misinterpreted that or they did. What are some ways beyond marketing that you're prepared to save on the bottom line? Well, we're not going to be traveling any. We had a bunch of expenses related to an annual sales kickoff. There's obviously the media that we were going to run in the first quarter that we're more

likely to run in the second. There's all sorts of discretionary expenses that we'll defer. And then there's backfills. So I think the difference between a layoff and just not allowing people to hire replacements is still meaningful to us because we just want to make sure most of the people at Redfin who have jobs keep them. Sure. Yeah, that's very meaningful to the people who are hoping for and working for a check. Glenn Kelman, thank you for joining us. More than a check. Bye. Yeah, hopefully more than a check. Time for a CNBC News Update with Julia Boorstin. Julia. John, President Biden is in Lewiston, Maine, after last week's mass shooting that killed 18 people.

Jill and I are here, though, on behalf of the American people to grieve with you and to make sure you know that you're not alone. The president and first lady traveled to Lewiston this afternoon to meet with victims, first responders and the community at large. The judge in Donald Trump's fraud trial expanded the limited gag order to include Trump's attorneys. The judge cited harassment, threats and remarks made about his staff. Trump's attorneys are barred from making public statements in or out of court that reference confidential communications between the judge and his staff. Moroccan archaeologists said they uncovered a Roman-era site dating back to the second century. The site contains a bath, a port district, a cemetery, and a now headless

statue of a Roman deity. This is the third largest archaeological site in Morocco, with the baths spanning more than 20,000 square feet. Back over to you. Julia, thank you. We're going to hear men love thinking about the Roman Empire, so lots of men will be thinking about this Morocco dig. Those baths at 20,000 feet? That's huge, says the former archaeology major. Okay, well, you're the one who'll be thinking about it. I will not be thinking about it.

Still ahead, Founders Fund partner Keith Raboy, who is also the CEO of e-commerce firm Open Store, is going to join us with his read on the consumer and the state of venture capital during this volatile time for the 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, a landmark ruling last night as FTX founder Sam Bankman-Fried was found guilty on all seven counts of fraud. Despite the negative headlines, Bitcoin charging higher over the past week, past few weeks, above that key level of 35,000 at one point. So what's next for the industry? Well, joining us now is BitGo CEO Mike Belshi. BitGo provides operation support to many of the world's leading crypto exchanges

and platforms and was selected by the new FTX team as the sole custodian of FTX creditor money. Mike, it's good to have you on. And I'm going to start right there. What what is next? Because it sure seems like these convictions last night are a black eye, not only for FTX and Sam Bankman-Fried, but for cryptocurrency more broadly. Well, I would look at it a little bit differently. Remember, this is financial fraud. This is Bernie Madoff. Has nothing to do with an asset class by itself, but has to do with some very bad actors in the space. And so, look, insofar as it's a black eye for the industry, we actually have everything we need. And it's now time, I think we've had a

year looking at FTX, but it's now time for the SEC to really start thinking about things that would protect investors. There's been a lot of time wasted on things that frankly haven't protected anyone. They prosecuted a library case, which is a coin that really didn't hurt anybody, innovative startup. They went after XRP and failed on that lawsuit. They've blocked the ETF through the Grayscale conversion and others from BlackRock for like years. All of that would have helped prevent people from having assets over at sites like FTX. So there's other things as well. There's an SAB 121 ruling about accounting. We just got overturned by the GAO. That's the General

Accounting Office here in the United States, saying that the SEC completely overstepped its bounds. And that particular thing is prevented, like Bank of New York Mellon, BNY, from coming into the space. So it's time to get serious about protecting it. I'm actually really happy about what happened today. It's a complete, it's what everybody needed to see would happen for that type of financial crime. And it's been a year. It's time to move on, get serious. That's what BitGo is about, is about actually bringing market structure, which would be a real solution to this problem. so what so what do protections and smart regulation, I'll call it, look like? And I ask that because it isn't just Bankman Freedom. You do see regulators not only here in the U.S., but in other markets as well, circling a number of founders and

entrepreneurs that are tied to cryptocurrency. There's the SEC focus on Binance right now and its founder, CZ. I mean, we could talk about Doquan with Terraform Labs. We could talk about Celsius. I could go down the list. So in terms of some of the, in some cases, nefarious, in some cases, ruled illegal activities that have been associated with the industry, has it been flushed out? The solutions are right in front of us. They're here today. Basically, we need market structure. Every other asset class already has this. You don't have the trading engine or the broker dealer also simultaneously holding full custody. You have to separate these two functions. It's critical in every other asset class we have. And we haven't

applied that to crypto just like we do everywhere else. What this does is it creates a check and a balance. You've got the folks that are doing the trading that are off promoting whatever they're promoting, and they're regulated in a certain way. But the custodians are just here to make sure that we keep the assets safe. So BitGo launched Go Network recently, I guess earlier this year, which is all about post-trade activity, doing things that you would expect of good custody. It's escrow. It's settlement. It's not taking trading activity. It's not promoting various tokens of whatever

security or commodity or whatever they may be. It's very simple. And that's why we also did a partnership today with Copper, which is about making it multi-custodian. So you're not even dependent on just a single custodian. We have this in other asset classes. We can do it in crypto today. We just need the SEC and the. We can do it in crypto today. We just need the SEC and the regulators to start pushing and enforcing that. Meanwhile, Mike, the narrative around crypto and Bitcoin has shifted dramatically over the past couple of years. I mean, now interest rates are at a healthy level and people can get a return on their cash.

Gold has done quite nicely over the past few weeks. We're not talking about NFTs anymore the way we used to or really transacting in Bitcoin. So what's the narrative for the need for crypto now that cash is back again and meme stock era is over? Well, I would say cash is probably still one of the worst assets you can hold over the long term. I mean, we've got a debt that's looming at $33 trillion. And we know that the U.S. can't repay it. We know that there's been no cessation of spending by Republicans or Democrats or anyone in between. And Bitcoin is the sole asset that actually has pure scarcity. So, look, Bitcoin is going to continue to grow.

There's a lot of excitement at the ETF right now. Good news. It looks like kind of with all the progress that's been made, we're at the verge. It's a few months away. Maybe it's early next year. I don't know. But once that ETF comes to market, all of a sudden, a tremendous number of people that did not have access to digital assets, crypto, are going to have access.

And we're expecting that there's a lot of people that are going to invest in Bitcoin rather than dollars. 5% is OK. But remember, they're eroding it. And inflation is much higher than 5%. So holding cash is a losing asset. Well, you can also hold something long dated. We'll see.

Gold's doing quite nicely. Mike, thank you. Gold's good too. Coming up next, Keith Raboy from Founders Fund breaks down the signals he's seeing in e-commerce. After a number of names in that space saw big rallies this week. We'll be right back. Welcome back. E-commerce ETF iBuy notched its best week of the year on the back of strong performances from names like Affirm, Shopify, and Amazon. Joining us now is Keith Raboy, general partner at Founders Fund and CEO of e-commerce company OpenStore.

Keith, welcome. So OpenStore, very much about Shopify and helping small businesses get better operationally on that platform. You had OpenStore Live, your first event like that this week, 55 merchants there. How important is operational discipline for SMBs right now? We just heard from Bill saying that the SMBs are experiencing a real crunch. Well, it's difficult to operate a small business, you don't have economies of scale typically you don't have leverage with suppliers you don't have things like engineering teams that can scale ios apps so there's just a lot of disadvantages and what open store does is we give those advantages

to people who build real brands successfully on Shopify, but want to tap into the expertise and the economies of scale. So we allow you to propel your business into, you know, hopefully 5, 10x the stratosphere, so to speak. Keith, it's Morgan. What are you seeing in terms of the state of the consumer? We're having this debate every day on CNBC. We know they're still spending on things like services, not so much on goods. What are you seeing? Yeah, it's hard to figure out what's going on here. I mean, if you look at the data really carefully, it's hard to tell, like, that we're entering a recession. On the other hand, I hear data points and anecdotes like 20 percent of a car dealership in Indiana's payments, like leases, are leaked and delinquent. And, you know, I sort of subscribe to the Jeff Bezos school of when the anecdotes conflict with the data, the

anecdotes are probably right. And so I think there's more under the hood and it's also just logical. You know, the debt the American consumer has times the interest rate that they now have to pay on things like a mortgage or it's a very low rate mortgage or on a lease are extremely expensive. And so there isn't that much disposable income. So to some extent, or if they're running credit card debt, you know, the minimum payments are just incredibly high. So this has to at some point show up in real macro data, but it's really hard to find it. Well, I want to pull back the aperture a bit,

talk about the situation in the Middle East and the impact on business and education, which I know you're watching closely. Twenty top law firms this week sent a letter to top law schools underscoring the importance of keeping students safe from violence and harassment, specifically anti-Semitic harassment. You tweeted VCs and tech companies should start sending those to Harvard, Stanford, Penn, and Columbia, too. We'll stop hiring any grads from these schools until they fix their blatant anti-Semitism. Are you literally going to stop hiring grads from those schools right now? I think we may need to. I was very impressed with Sullivan & Cromwell taking a leadership position, organizing the top American 20 law firms. I spent four years of my life working

at Solvay and Cromwell, and I probably haven't been happier since to see that. So I think that the reality is American universities are broken. The elite universities are clearly broken. And they don't care about, the professors there don't care about market pressure. They don't care about actual substance. They're kind of in their ivory, their true ivory tower. But the reality is no one is going to put up with people that are anti-Semitic. We're not going to have them in our fund. We're not going to have them in our companies. We're not going to fund them. And I think there may be points of leverage to teach Stanford, Harvard, some of the worst offenders like Northwestern, Columbia, that the reality is this is completely unacceptable 80 years after the Holocaust, period.

Yeah, nor should anybody tolerate anti-Semitism. It's repugnant. Is there a distinction here between passionate disagreement with the policies of Israel toward Palestinians and anti-Semitism? Sure. I mean, one has the—you know, I can critique the UK, I can critique the Biden administration, but I cannot call for murdering people, slaughtering people, raping people. That's insane. And I cannot support people who are raping babies, kidnapping babies. That's

also insane. The whole point of the Holocaust, the reason why we have Holocaust museums, the reason why we teach history is if you don't stop this now, it's going to end exactly like it ended 80 years ago. And we do not want that to happen again, and we're not going to allow it to. Keith, I wonder what you think the role of corporate America is in this topic specifically. And I ask that because I know it has been a key source of discussion in boardrooms and C-suites, in many companies across many industries in recent weeks. And a company you know well and Founders Fund knows well, Palantir, Alex Karp came out with some very strong wording in their earnings call yesterday. And they said, we're supporting Israel in every way we can.

They called it terrorism. And then also said, quote, at Palantir, we have seen that our view of the world, which is that there really are people that are violent and not in conformance with morality, need to be fought, referring to this situation with Hamas. Is that the outlier, or should more companies be wading into more of these geopolitical topics? It is an outlier. It's unfortunate. Now, it is very related to their business. They are in the business of finding evil people, helping law enforcement, helping the military of democracy, finding evil people that are attempting to do terrible things to normal people. And so it is very relevant to their business. I think it's very fine and very acceptable for companies not've taken a stand on any issue over the last decade, Black Lives Matter, blah, blah, blah, affirmative action, blah, blah, blah, abortion, blah, blah, blah, then it is completely hypocritical to not be fighting terrorism and not supporting

Israel, who's on the front lines of supporting terrorism and the attacks against the entire concept of a Western democracy. Clearly, the political waters there are challenging. I know there are people who would disagree that if you're against terrorism, then you must support exactly what Israel is doing. I know there's even disagreement to some degree within Israeli society about how this particular administration is pursuing that. But that aside, going back to the markets and IPO markets specifically, it does not appear that the IPO window is opening again anytime soon. What kind of challenge does that present for startups, smaller businesses that are in need of capital in a high-rate environment? Well, I personally think the IPO market is always open for high-caliber companies.

Now, there may be a disconnect between the valuations in the private market that many companies raised at over the last three to five years. And the reason why the market is quote-unquote closed is they don't want to price an IPO if they need to raise money at a lower valuation than when they raised at it. There may be terms in those and structured terms in those prior investments that make it prohibitively expensive. But for quality companies, there's demand. There aren't that many quality companies. And the reality is we're in a parallel business. Startups are a parallel business. Venture capital is a parallel business. So by definition, at any given time, there's like one to 10 companies that are really impressive. And those companies have lots of options, private and public. But there still hasn't been a complete harmonization and recognition

that these multiples are real. They aren't suppressed. They aren't abnormal, as I've talked about on your show before. They're the historical average of 50 years in technology. And I think every founder and every investor has to come to grips with reality that this is the real world. All right. Keith Raboy, thanks for being with us. Pleasure. After the break, we were just talking a little bit about it, but cracks in the low-end consumer. We'll tell you about the red flags that companies waved on this and look ahead to key retail results that are coming in the next few days. Stay with us.

Stocks just posted their best week of the year. And up next, Piper's chief technician, Craig Johnson, is going to tell us the chances we get a 10 percent rally in the S&P 500 by year end. We'll be right back. U.S. markets just had their best week of the year. Our next guest says the charts point to more upside. Craig Johnson is Piper Sandler's chief market technician. Craig, please convince us. Thanks for having me on. I think this is going to be an easy case to make from the simple perspective of what else are we going to go throw at this market? This has been

a really Teflon tape. If you go through and you look at the fact you've had an inverted yield curve for more than 16 months, you look at the fact you've seen the Fed raise rates 11 times over the last 20 months, and the market keeps going higher. Some of these facts that are happening out there, you would have thought that this market would be breaking down, but that's not the case. You look at how beaten up stocks have gotten over the last three months. It's sort of like a beach ball that's been pushed below the waterline of a pool, and you're just starting to see that spring back happen. And technically, at this point in time, with 10-year bond yields starting to break the uptrends, you're seeing oil prices coming down. You're seeing gold not breaking out. All the macro factors are there for this market to move

up another 10 percent. And we're looking at 48.25 by year end. Craig, my pushback there is we're supposed to be having a big surge right around this time in Q4. We just had a really strong week, but we've got real numbers for the economy in the holiday season coming up. What if they're not so great? Well, what if they're weaker than expected and the Fed's job is already done. I know that Sam Stolval was on earlier talking about last hike, the first cut, market up 13%. All the economic data that came out today really suggests that the Fed's done a really good job in managing this. And we are seeing things slowing down. It seems like things are working in the right direction. And there was a lot of fear built up in the market for a lot of reasons. And at point in time that fear seems to be kind of dissipating look at the

dollar also seeing a pretty meaningful move lower today too have treasury yields peaked uh in terms of 10-year bond yields i think for this point in time they have uh peaked for the short the intermediate term in here and what i want to remind everybody is money is no longer free. You know, we've seen a 40-year secular change in 10-year bond yields, and everybody had basically free money. Every quantitative analyst, every fundamental analyst, they all plug in the same risk-free rate into their models, which was the 10-year bond yield. Things have got to be more expensive. They got to adjust their models and think about them differently. And when you ultimately see a 40 year reversal like we've seen in 10 year bond yields, we're ultimately going to come back and retest support. And I've

said publicly, I wouldn't be surprised to see the 10 year have a three handle on it in coming months. Wow. OK, that got my attention. What also gets my attention looking at your notes is the fact that you came to us with some specific stock picks where you've taken a look at the technicals. Break those down. Yeah. So let's first look at service now. Here's a stock that has just started to reverse out of this bull flag. We're starting another leg up. It looks like you got another 10, 15 percent before you get back to the old highs. So I think that's technically setting up very well. And again, I think as you move through the remainder of this year and into early part of next year, I think some of these more long duration stocks are probably going to do well. Tech should do well. Industrial should do

well. And also some of these services companies. And then one of the other names, Morgan, we called out was Uber. They're going to be reporting results next week. Chart is starting to turn around very nicely, looking like it's setting itself up for a meaningful upside move from here. OK, Craig Johnson, thanks for joining us. Thank you. A three handle on the 10 year Treasury yield in coming months. What would it take for us to get that? I believe. Yeah, almost almost anything is possible at this point.

The moves that we've seen, the volatility in that market, the rest of November, starting with next week, certainly going to be interesting. Pretty soon, we've got Microsoft, Ignite, and there's rumblings about an AI chip from them. And then, keep mentioning it, those holiday sales start. The holiday sales start. You start to get some of the retailers and some more consumer-facing names next week as well, including Kava and a flurry of Fed speakers, too. But in the meantime, major day for the markets, major week for the markets. Try to get some rest. All right.

That does it for us here at Overtime.