Closing Bell - Closing Bell Overtime: Apple Unveils $3,500 AR Headset; SEC Sues Binance, CZ 6/5/23

Episode Date: June 5, 2023

Major averages closed lower after last week’s gains. Wells Fargo’s Chris Harvey breaks down the market action. Investors were keyed in on Apple today as the company unveiled its AR headset: Apple Vision Pro. The stock ended the day lower. Bank of America’s Wamsi Mohan on what the $3,500 product means for the stock while Epyllion CEO Matthew Ball talks the implications for the metaverse. The SEC announced it is suing Binance and CEO CZ; Global Digital Asset & Cryptocurrency Association CEO Gabriella Kusz and former SEC Senior Trial Counsel Howard Fischer discuss what it means for the ecosystem and if investors should worry about another FTX situation. Plus, Wedbush’s Michael Pachter on the video game angle of Apple’s announcements.  

Well, you got your scorecard on Wall Street with the major indices closing near the lows, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort. Morgan Brennan is off today. Coming up this hour, we're going to talk to Matt Ball, the founder of the Metaverse ETF, about Apple's pricey Vision Pro headset and what that means for other companies in the AR and VR worlds. Plus, Bitcoin and crypto-related stocks pulling back hard today after the SEC sued Binance and its billionaire founder, CZ. We will break down crypto's latest crisis with a former SEC attorney. But now let's get straight into today's market action. Joining us now is Chris Harvey from Wells Fargo Securities. Chris, we've got this sort of top-heavy market where

not only are the big stocks doing better, the big stocks have been driven higher lately by AI. So what's an investor who wants to be more broadly focused, diversified? What's an investor to do? So, John, I think there's two answers to that. I think if you want some tech exposure, but you don't want to pay up as much, a lot of the media and entertainment names, they do give you some AI exposure, but at much more reasonable prices. They've popped year to date, but over the last couple of years, significant derating on the fundamental and on the price side. The other thing you might want to do is mid-cap growth. Mid-cap growth is a space that's up four or five percent year to date. And we think there's very attractive valuations.

Again, if you look at the fundamentals, if you look at the price, significant derating over the last couple of years, we think there's a lot of opportunity for these stocks, both with self-help and also potentially multiple expansion. So big picture, how would you say investors should be positioned at this point in time? We got a couple weeks before the end of the first half, right? We've got a Fed rate decision coming, which everybody expects is going to be a pause, but probably not forever, right? So what do you do? Yeah.

So John, I think there's a couple things you want to do. One, if you haven't taken a lot of risk off the table, you should take risk off the table. We do expect some sort of pullback over the next couple of weeks related to the macro. And as we let off, you really do want to play that rotational game. You want to look and rotate to things that haven't performed as well, such as mid-cap growth. But at the end of the day, you've made a lot of money year to date. It's more about protection going forward, at least in the near term, and you don't want to be a hero at this juncture.

What if, this is going back to kind of implications from my first question, what if you're in index funds or equivalent because those were viewed as safe, but right now those are so weighted, right, toward some larger, more specific bets. What do you do with that? Because, I mean, you don't want to try to time the market or anything, but diversification isn't what it used to be. Right, so if you're an index fund, if you're in some

of the bigger index funds such as the S&P 500, hey, you've had a great year. You should be very happy with that. I know you don't want to time the market, but maybe you take a little bit off the top, and you can get 5% in some of these short-term money market instruments, and maybe just play it a little bit safer. Because, again, you're up double digits. That's a pretty good rate of return, and we're not seeing a whole lot of upside as we go

forward in time. If you want to play it more rotationally, again, it's back into those smaller cap, not small cap, but mid cap group that we think will perform much better over the next 6, 12, 18 months. What is your read on the possibility of a recession? How likely is it? How likely is it to be? Hold on. I just want to mention, of course, we've been tracking Apple's Worldwide Developer Conference event all day. Apple CEO Tim Cook just entered the demo room there at Apple headquarters in Cupertino. This is after the announcement of the Vision Pro headset.

$3,500 for that device. So pricey indeed. Apple is positioning it still not as just sort of for professionals only, but something that everybody is going to want to have. Not everybody in this inflationary environment with consumers strapped, of course, is going to be able to pay $3,500. But we imagine that there is a long roadmap for this, as there has been for so many other devices where Apple will try to make it more affordable.

But you see Tim Cook there posing with the Vision Pro devices on display. We're going to be covering more of that this hour as we get a sense from people on the ground, hopefully, maybe not today, but in the hours ahead of what the thing feels like, especially compared to other AR, VR devices that have been out there. And, you know, I do want to mention here as well, we were just talking about larger companies, larger stocks that have done so well. Apple, Chris, touched all-time highs today ahead of this announcement. And it came back, pulled back a little bit after that $3,500 price was announced. And, of course, this headset doesn't go on sale until early 2024. How much should investors be betting on the future and kind of building that into these valuations at this point with an expected recession in the windshield ahead? And what's the likelihood? What's the percentage likelihood that you place on that recession? So, John, a couple of weeks ago, what we were saying is, hey, we thought there was more upside in Ubercaps or LargeCap. We've gotten to that spot.

Now we're overbought. We like them longer term. We think the premium that you're paying is not high. It's only, it's probably less than 15% versus the broader market. But we would, we are looking for some sort of pullback. You mentioned the performance of Apple. If you look at the top five names in the S&P 500, I think they're on average up over 50% year to date. That's a heck of a return. I think this

is a pause that refreshes, but we do have to pause. We do have to pull back a little bit. But going forward, we think this is a space that you want to be involved in. And it's a space where a lot of institutional investors are still underway. All right. Chris Harvey, thank you. Thank you. Since we've got Tim Cook on the screen, let's talk more about Apple with Wamsi Mohan from Bank of America Securities. Wamsi, there's the Vision Pro headset, which everybody was waiting to see. Then there are other announcements that Apple made, including the M2 Ultra, which, you know, Apple's chip work is at the core, not only of the Vision Pro, but of their success so far across so many devices. Did you get what you expected here in the announcements today? And is it buy worthy or is it kind of sell the news? Well, thanks for having me

here in your offices in San Francisco. Excited to be here. Look, John, I think that the key thing that we learned really is that Apple's engineering prowess in hardware and semiconductors is really unmatched. I mean, what you've seen, you mentioned the M2 Ultra. You've also seen the R1. I mean, this is a semiconductor design powerhouse, and that is just getting more and more solidified in every product that they announce. Secondarily, I mean, I think that the skew of everything that they announced today is very broad across their ecosystem and ties things really nicely. And that is something else that Apple uniquely does. So you've seen those two things really nicely. And that is something else that Apple uniquely does. So you've seen those two things really come to fruition. As far as expectations go, I think

what you got was maybe a little bit even better than expectation from a hardware technology perspective, right? For no controllers in this Vision Pro. That's amazing. And the price point, yes, I mean, it is a little higher than I think what people expected, but not with like all technology, pricing typically will be deflationary over time. The mix sometimes will overwhelm that, like we've seen it in iPhones. But I think that this is something that enables Apple to deliver on incrementally driving services growth over the long run. So I would say kind of net neutral, which is what our rating is.

You know, you expected sort of, you know, really good engineering, really good technology that really came to bear. It's not going to move the needle for numbers in the near term. But again, like it opens up a TAM that is much larger in the longer term. Interesting that you point to services growth because this does tie in to the iPhone and iPad ecosystems. The app store for this will enable the apps already written for those platforms to appear in the Vision Pro. But project for me a little bit. Based on the price point here, based on the use case of this is sitting on one person's head, is this likely to do iPhone volumes which only the iPhone has

done for Apple ever iPad sort of volumes which is a little less or Mac Pro volumes which is way down at the low end because it's expensive because it's for a niche of professionals yeah look I mean it it's not gonna do iPhone volumes right I think we can be we can be pretty certain of that. What it does do, though, over time, I think, is approach sort of what you could consider like as console, gaming console volumes, right? Like that's an easy replacement. You could add like TV kind of volumes onto that. So you've got sort of more niche consumer electronics products that are very specifically geared to certain applications. So it's never going to hit sort of, you know, super high volumes, right? Like we're not talking about 30, 40 million even. That's too high, right? And iPhones are 230 million. So

we're talking about the tens of millions of units here in the foreseeable future. And remember, like, this is not the final product even, right? Like, you could get AR glasses, which would be the next step. That, I think, has the scope to be significantly higher in volume, right? If you talk about another product that might match iPhone kind of volumes, that might be AR glasses, not sort of this mixed reality headset where you got to walk around with, you know, a cable hanging off the device on your head. But something that's much more free and something that allows you to be much more mobile and flexible while integrating and collaborating, which is what Apple wants to do. But that tech is not here yet in a usable fashion. So we've got to wait maybe five, six, seven years for something like that to show up that can drive significantly higher volumes. But for this product that we saw today, I think the volumes are going to be

somewhat muted, not just in the near term, but over the next two, three years. Right. Okay. Stick with us. Let's bring in CNBC's Steve Kovach, who is at Apple's headquarters today for this announcement. Steve? Hey there, John. Yeah, I'm actually outside the Steve Jobs Theater. Just moments ago, we saw CEO Tim Cook come in and take a look at the Vision Pro headsets that were on display. They're actually downstairs in the floor below me. You couldn't play with them. They were just basically dummy devices playing something on that front screen, like an animation on loop. But we did get a better look at the battery pack that is connected to it. I heard the last guest talking about that. It's actually quite big. I didn't get to touch it or hold it yet, but it's bigger than an iPhone. So this is the battery pack that attaches to the cord, and you either need to slip it into your pocket or you have to use the device just plugged into the wall itself. Tim Cook was absolutely mobbed by people taking selfies and all that good stuff

and doing his standard photo op whenever they announce a new product. But look, this isn't coming out until early next year. So everything everyone's witnessing down there, they're just standing there on a pedestal, just getting a look at the design and the feel of it. But as far as using it, we haven't had a chance to actually see what it's like to use yet. So a lot more speculation to come, John. Steve, have you heard outside of the presentation itself yet anything from Apple executives about how they're positioning it? I was maybe a little bit surprised that they weren't trying to say, oh, this is a demo thing or just for developers. They were positioning it. It sounded like in the presentation itself as something everybody's going to want.

Yeah, and that's exactly right, John. sounded like in the presentation itself as something everybody's going to want. Yeah, and that's exactly right, John. And in fact, Tim Cook opened the presentation saying this is a new kind of computing platform, I think the quote was something along the lines of you look through it, not at it, and so they definitely he definitely sees it as a new kind of computing platform, not a lot of mention of, you know, this is an experiment or anything like that. My read is just just by nature of Disney CEO Bob Iger being there and really playing up the entertainment factor. It seems like that's

really how they're positioning it. They're talking about, I know this is something you're into, Apple Arcade as an avenue to grow that business for them. There's going to be a huge gaming element to this on top of all the video and movie content and the immersive stuff. Gaming seems to be a big aspect of it too. Productivity seems to be taking a back seat. Yes, it can run 100,000 iPad apps that are currently out there, but it's still right now being mostly pitched as an entertainment device, John. Interesting, but not calling it a hobby like they did Apple TV when that first came out. Steve Kovac, thank you. Wamsi Mohan, thank you as well. And now CNBC Senior Markets Commentator Michael Santoli

joins us from the New York Stock Exchange to talk more about what else? Apple, Mike. Yeah, John, just to put Apple's performance in some perspective relative to other parts of the market, take a look at how the stock has performed. This is compared to the entire energy and materials sector ETFs.

And I scale them this way because Apple's percentage of the S&P 500, about seven and a half percent, is above the combined weighting now of energy and materials. So clearly, that's massive. Margin of performance has opened up this year. Apple's gain has probably put on about two percent net to the upside of the S&P 500's entire performance. As everybody's been saying, it's been top heavy. It's been narrow. We'd like to see it broaden out. Maybe the large growth stocks have done what they can for the overall market for a time. But if you dial back a couple of years, you can see a lot of what's gone on in tech in terms of their performance is mostly a comeback move as opposed to carving new ground to the upside. So over the last three years, you see energy is actually still ahead of technology over that scale. So, yes, this has been a really aggressive

move with barely any appreciable pullbacks. But you're still kind of just making up that lost ground of last year in a hurry. I would point out, too, energy. The sector last year was up 60 percent in a year when the overall S&P was down 20 percent. So you can see that these performance gaps can persist over periods of time, but never forever. Never forever. And Brian Sullivan, our Brian Sullivan, has been on air today talking about how the Saudis seem to have perhaps put a floor under crude prices for now. So what historically should we expect in terms of most likely movements from now and kind of the disparity you've been pointing out there? Yeah, a floor is great, and maybe that's the way it looks right now.

It does seem that way, that the WTI in the 65 to 70 dollar range is sort of proving to be tough to crack on the downside. Probably a decent operating environment just, you know, as a run rate for big energy companies. I don't see it necessarily as some kind of quick swap back to energy and commodity leadership, but just not really in that moment in the cycle where you're going to gain confidence that that's where it is. Also, let's keep in mind, they just don't have that big a sway over the overall index right now. By the way, also don't want to make it seem like it's always a zero sum game. Things can go down together and they can go up together. It doesn't always have to be one type of stock being traded to the exclusion of another.

All right. A floor, maybe not a trampoline. I will be careful. Mike Santoli, thank you. Meanwhile, we have a news alert on Mobileye. That company, of course, spun out of Intel about a year ago. The company says Intel is going to offer an additional 35 million shares of Class A common stock. Mobileye says it will not receive any proceeds and Intel will continue owning beneficially all of its Class B common stock after the offering. You can see Mobileye moving there after hours. Intel, I will note, not moving much after hours at this point. Mike Santoli, 35 million shares, That's not insignificant. There were some who questioned Intel's decision to spin off Mobileye in difficult market last summer. Higher price for Mobileye now with

this offering. What does that tell us? Yeah, it's a pretty standard playbook. Once a big company spins off a division, usually you can spin off a minority percentage of the company and then you retain the shares to either participate in the upside or sell them for cash later down the road. So this is not unexpected when you have kind of a stub of a company out there spun off. And clearly when, you know, Mobileye says we're not going to receive the proceeds because it's not them selling it. So I wouldn't necessarily say it's an outright, like, lasting negative on Mobileye. It's much more Intel being opportunistic, probably that the market's gone in their direction on this one. All right. Mike Santoli, thank you.

Up next, we will break down the potential ways Apple could make money from this new headset, and we will discuss with the founder of the Metaverse ETF, Matt Ball. Overtime's back in two. Welcome back. Apple shaking up the VR world today with the unveiling of Vision Pro, due early next year at $3,500, a premium price. So how does that stack up against other consumer electronics? Well, it looks like Apple's selling this thing like a premium PC. You buy it at the store, the company makes a profit, that's the end, right? So at one end of the premium PC market, you've got Dell and HP selling larger volumes of Windows PCs at lower margins because they're paying Microsoft for software and Intel and AMD for chips. On the other, you've got Apple selling fewer Macs but making far higher profit margins because it makes its own operating system, Mac OS, and software and chips. Okay, then you've got the premium smartphone market where wireless carriers often subsidize the price of phones, right?

You pay them every month. So could VR headsets, mixed reality, one day get subsidized? As long as there are just two hours of battery life in this thing, probably not by wireless carriers. And broadband providers, well, we'll see. And then finally, you've got gaming consoles. Now, in that market, premium hardware makers initially take a loss on the console sale, instead make money on games and services sold on top. Meta seems to be taking that approach with the Quest, at least to start.

But is Apple perhaps blowing a hole in that? Well, to discuss it all, joining us now is Matthew Ball, CEO of Epillion and a venture partner at Maker's Fund. He is the author of the book, The Metaverse, and how it will revolutionize everything published last year. Matt, kind of unusual for Apple to be coming out with something this expensive. How is it going to affect the market and perhaps Meta? Well, in some regards, it's actually not that expensive. It turns out on an inflation adjusted basis, it's actually $50

cheaper than the first Apple one. And if you saw their presentation today, they emphasize the fact that it is essentially an HD sound system, an ultra high definition television, an iPhone and a video game console. And the cost certainly shows that. Okay. But this also potentially, it seems to me, poses a problem for Meta because they seem to be taking more of the traditional console gaming console approach of we'll take a loss on the hardware to get it out there and build an ecosystem and then make money down the line. If Apple can sell enough of these things, right, the Vision Pros for $3,500 and build an ecosystem stronger than

Meta's, then all these tens of billions of dollars they're spending go up in flames, don't they? Well, whether they go up in flames is don't they? Well, whether they go up in flames is a different question. Certainly, when you take a look at Apple in the smartphone category today, they've got roughly a quarter share globally, but three quarters of App Store revenues, while still leaving a very large lane for Android. And that approach, the latter Android approach, seems more likely for meta. But you're not wrong to say that the ecosystem approach is where we're going to win or lose over time. Apple boasts the fact that hundreds of thousands of apps will ship day one supporting the XR headset. At the same time, we should note that the MetaQuest 3 will be 85%

cheaper or seven times cheaper than Apple's device. That puts it not just out of reach for the average American, it puts it out of reach for nearly every American. But I guess the issue for me is Meta's shareholders are paying the price for that, right? Because Meta is selling. The reason why they're so cheap is because Meta is selling them at a loss. Meta isn't exactly taking the Android approach to this. I don't think Google spent tens of billions of dollars developing Android. They left others to develop

the hardware. They managed to sort of support their own ecosystem on the strength of giving something away, giving some software away for free. So what are Meta's options here? And at what point does it become a binary Apple wins, others lose? Well, I think when you take a look at nearly every computing platform, there's rarely evidence that a single platform is going to win. It's usually shared by two or three, typically two. And Meta is clearly going for the global mainstream consumer. There is still a question of how long is it going to take Apple to build down? Again, three and a half thousand dollars. When you take a look at the average smartphone today, it's still purchased for about $60 to $70 globally. And so it's now a battle of timelines. Can Meta start to build up

more of a beachfront with its developers while also building up a toehold globally? But the clock is ticking. We see that now. Yeah, I don't know. And DVDs and broadband wireless, one platform did win. So we will see. But when you look at the performance of the Metaverse ETF year to date, how much of that is driven by this meta rebound by NVIDIA? Are there tweaks? Are there adjustments that you're making as you see so many other players maybe expressing interest? Disney, for example. So we're a thematic rules-based ETF. It's passively managed, not actively. There are, of course, modular changes as new information comes to market, which triggers various rules. But we're up about 41% year-to-date. It's the seventh best-performing ETF year-to-date,

primarily through the rise of Apple, our second-largest holding, NVIDIA, our largest holding, and Meta. Certainly, some of those gains are coming from other categories, but we shouldn't look beyond the fact that most of the drivers today are nevertheless built on the same technologies intended to build the metaverse. NVIDIA, founded as a gaming and GPU business, it's no mistake that Jensen Huang, the founder and CEO, has the most bold declaration for the economy of the metaverse. He says eventually it will be half of world GDP. Well, we'll see how long that takes to prove one way or the other. Matthew Ball, great to have you. Thank you. Thank you. Now, tomorrow on Overtime, more on this. The CEO of Magic Leap is going to discuss her strategy for competing with Apple in the augmented reality headset business. That is

Peggy Johnson, formerly, by the way, of Qualcomm and Microsoft. Meanwhile, GitLab results are out. That stock is surging on a much smaller than expected loss. The software firm reporting a six cent loss versus expectations of 14 cents worth of a loss there. Revenues also topped estimates coming in at $127 million above the consensus estimate of $118 million. And the company's CEO is touting the firm's strong positioning when it comes to, yes, you guessed it, AI. Also helping the stock, guidance for both the current quarter and full year coming in above expectations.

And now after the break, CZ in the hot seat, the SEC suing the billionaire crypto magnate and his company Binance on more than a dozen charges, sending crypto assets and related stocks sharply lower today. We will talk about the fallout when Overtime comes right back. Bitcoin falling more than 5 percent today after the sec sued crypto exchange binance and ceo cz over multiple securities violation allegations other crypto players also taking a hit including crypto exchange coinbase marathon digital riot Digital, Riot and MicroStrategy. Joining us now, Gabby Kuhs, Global Digital Asset and Cryptocurrency Association CEO and former SEC Senior Trial Counsel, Howard Fisher. Welcome, guys. Howard, how significant is this moment, you think,

for the crypto sector in the U.S.? Does this play into the hands of Bitcoin maximalists who say, hey, that's the only safe cryptocurrency out there? Well, I think the answer to that is yes and no a little bit. In some ways, this case is just a rehash of some of the SEC's greatest tits. They make an argument about a confusion of functionality, that Binance is an exchange, it's a broker-dealer, it's a clearing agent. They make the same arguments about selling unregistered securities and lying to investors about risk management metrics. But what I think makes this case more unusual and which brings it out of the line of recent SEC cases are the extensive allegations

of market manipulation. The SEC alleges that Binance and related entities engaged in what are known as wash sales, i.e. transactions to pump up the price of crypto securities. And by doing so, they did two things. First, they gave the illusion of liquidity in what might have otherwise been an illiquid market. And two, they pumped up the price. If people who participate in digital asset marketplaces start to believe that other digital assets might have pumped up prices and might have liquidity that doesn't reflect a natural liquidity, but as a result of bad actors pumping it up, I think that even for Bitcoin, that's going to have adverse impacts. OK, OK. But Gabby, to me, it seems like if you're Bitcoin or if you're a believer in Bitcoin, if you're Coinbase, you can easily argue, hey, that's why you should be with us because Bitcoin is big enough. It's too hard to manipulate the price of it. Coinbase, we're public. We're under extensive scrutiny as a public company because of that. We're filing

quarterly. And so this might be trouble for others, but not for us. How do you see it? Sure. So, you know, I kind of want to reiterate some of the conversation points of my colleague, which is that I think we're seeing a bit of a replay of the SEC's greatest hits. I think one of the things that we can continue to see is an effort to regulate by enforcement. I think one of the key pieces is that, yes, the U.S. has one of the most vibrant and liquid capital markets. And those that seek to play by its rules and are developing and advancing responsibly like Coinbase, this is a point where they can differentiate in terms of market and also drive sort of a wedge between their competitors. I think one of the things that it'll be interesting to see, you know, most importantly,

is the drive for responsible innovation in this space. And so I think those that are watching, especially those from industry such as myself, are eager and excited to see sort of this next stage of evolution and maturation of the digital asset space. Howard, is this argument about legislation by enforcement, it seems to me to be getting a little tired, but I don't know if that's how it plays in the ears of experts. So tell me, a lot of the crypto industry has been saying, don't regulate us too much, don't regulate us too soon, let us move fast. But then, you know, we need clarity. There's a lot in here that doesn't have to do with that kind of clarity. It's just plain allegations about funky business practices. Can they keep making the legislation by enforcement argument to any effect?

Well, that's a great question. And I think that there is some heft to that argument in that the SEC is regulating through enforcement. But the fact is that the rules are there. The rules exist. And as the SEC says in the Binance complaint, the rules were not designed when they were set out to cover a set list of circumstances. They were designed to be flexible. They were designed to apply to new technologies as they came out. And that's what the SEC is doing. I mean, leaving aside tokens such as

Bitcoin, which under any analysis are probably not going to be seen as securities, if you look at the traditional analysis, all of the coins that, or not all, but most of the coins that are out there fall into the category of securities under the traditional analysis. The real issue here, I think, is not that the SEC is overstepping its bounds by bringing these cases, but that Congress is failing to act. To me, this is a legislative failure more than an issue of administrative competence or administrative overreach. Well, it wouldn't be the first time. It was big news over the past several days that Congress acted on time. Howard, Gabby, thank you.

Thank you. And we're going to act now with a news update from Bertha Coombs. Bertha. Hey, John. Thanks very much. The FBI considers the most damaging in the agency's history has died in prison. Federal officials say Robert Hansen, who was 79, died in his Colorado cell Monday. He was serving 15 consecutive life sentences after he was found to have provided

highly classified national security information to Russia in exchange for cash, bank funds and diamonds. Republican House Oversight Committee Chairman James Comer says his panel will start proceedings to hold FBI Director Christopher Wray in contempt of Congress on Thursday. The announcement came after the FBI briefed Comer and Democratic Congressman Jamie Raskin on a document outlining a bribery allegation involving Joe Biden, which a senior law enforcement official says was unsubstantiated. Comer wants to hold Ray in contempt because the FBI has not physically turned over that document. Canadian officials are predicting an especially severe wildfire season this summer. They believe the risk will be

elevated through August. Wildfire smoke has been traveling south across the border since the season started, leading to poor air quality throughout the U.S. John, back over to you. Bertha, thank you. Now the S&P 500 is up double digits for the year after last week's push higher. Coming up, Mike Santoli is going to look at how those gains stack up to the historical average and whether we dare expect more gains through the end of the year. We come right back. Welcome back to Overtime. Mike Santoli joins us again, this time with a look at the S&P 500's rally so far this year.

Mike? Yeah, John, and how it stacks up relative to, let's say, the blended historical pattern of a year that would fit this profile, which is a third year of a presidential election cycle, as well as the third year of a decade. And of course, there's the annual seasonal pattern. All those things get blended together by Ned Davis Research in this orange line, which is the cycle composite. And it's good to check in on it once in a while. You'll see that we're roughly tracking at least in the shape of the performance so far this year. Now, notice that the units on each axis are different. So we're actually ahead of the game in terms of absolute gains of where we typically would be based on these historical patterns,

but definitely very similar in terms of the cadence of it be based on these historical patterns, but definitely very similar in terms of the cadence of it. So what it would suggest if all else were equal and you could actually rely on on history bearing out would be a little more upside into July, then maybe some chop and some flattening out those often tough periods of September, October, and then maybe a stronger finish for the year. I guess it's just really a reminder, John, that it's nothing particularly unusual in the abstract going on with the market being up where it is roughly this point in the year, given what went into it. If you ignore the headlines and all the fundamentals, really just talk about what year it is. OK, that's a perspective that we can take because, hey, many people have been wrong about how things are going to pan out so far.

So you never know. Yes, exactly. Yeah. So it's tendencies. It's not predictions. Yeah. Up next, a top analyst on how Apple's new augmented reality headset could impact video game companies, including names like Unity, which spiked on today's Vision Pro launch and Unity's inclusion in it. We'll be right back.

Welcome back to Overtime. Apple announcing the Vision Pro, a mixed reality headset featuring exterior cameras that allow users to interact with digital content. Apple previewing the headset's gaming capabilities during the presentation and shares of Unity Software spiked on news that it's working with Apple on games for the device. Let's bring in Wedbush Security Senior Analyst Michael Pachter. Michael, what's the impact here that you see on the gaming industry and its business model? Because what the potential I see anyway is that this is Apple's stealth launch of a gaming console. It's going to take potentially a high end gaming revenue from this thing, especially if it eventually reaches unit volumes.

Thank you for having me, John. And yeah, I think you're right. I mean, I guess it comes down to how many units of Vision Pro Apple expects to sell. And, you know, at $3,500, it's seven times the price of a game console. And those guys sell, you know, $30 million-ish per year. So, you know, I would be shocked if Apple was able to sell $30 million a year, but it's Apple, so you never know. I think that what's interesting here is, you know, Apple came up with the iPhone, and I don't even think they were considering games being a killer app. I think they saw what happened with the iPhone, and they recognize now that games will be a killer app. Oculus, MetaQuest has been doing that for quite a while. And it's, again, not a big install base, so it's been hard to get a lot of content.

But it's going to be led by brands, and if it's games, then it's going to be led by gaming brands. So EA Sports and Activision with Call of Duty, you know, Take-Two with Grand Theft Auto, those are going to be experiences that people want to play. Are any hardware makers or platform providers at risk if Apple can get the cost of the Vision Pro cut in half, say, in the next three to five years? Well, Meta's had the market to themselves, so clearly they're at risk. And none of us think of, you know, Facebook, Meta as a hardware manufacturer. Sony is probably the one that's most at risk. Obviously, the PlayStation has been a big seller for 30 years, and they have their own virtual reality game headset. Apple has a chance because Apple understands hardware, understands

the customer. And what Apple's particularly good at is all of its hardware works so well with all of its other hardware. And apps are so easy and so intuitive. So I'd say Sony, probably the most at risk. I don't think Facebook was going to win in any case once Apple entered the market. By working with Unity, does Apple potentially create a web 2.0 type effect where they were able to make it less relevant that Microsoft and Windows had this installed base of applications that worked on Windows and didn't work on Mac. As software development moved to the web, it didn't matter as much. Is there that potential here with this device and with this working with Unity?

I think that's really insightful. And yes, John, I think you're right. Unity is the democratic small d approach to game development. They make their software free for anybody who is pre-revenue. So students and startups can use the software for free. And that's a pretty cheap entry price. So pretty much if they are partnered with Apple and you want to build an application for Vision Pro, you're going to use Unity. So that's really good. And think of it like making a YouTube video

and having Carrie Underwood or somebody emerge from YouTube videos, Justin Bieber. That's what you're going to see. You're going to have everybody have access to the software. And that means that you're going to get really innovative, creative things that come out of that. OK, so don't pay too much attention to the hardware sticker price because there's disruption happening on the software. And all of the video game industry investors should be aware. Michael Pachter, thank you. Thank you, John. All right. Still ahead, the big biotech news out of this year's ASCO conference and the stocks that should be on your radar because of it. And June is Pride Month and CNBC is celebrating all month long in sharing stories of corporate leaders with you. Here is Dow Chemical CEO

Jim Fidderling. Supporting Pride is one way that we can show the LGBTQ plus community that we all accept and respect each other for our differences, whatever those differences may happen to be. Supporting pride gives hope and reassurance that each of us can be our best because we are accepted as who we are, our true and whole selves. It really comes down to simply treating others how we want to be treated ourselves, with empathy, understanding, and compassion. Up next, a look at which drug makers could be the biggest winners in the fight against cancer during the annual meeting of the American Society of Clinical Oncology.

We'll come right back. Welcome back. The annual meeting of the American Society of Clinical Oncology is underway right now in Chicago. Pharma companies showing promise in the battle against cancer, including AstraZeneca, presenting data showing one of their drugs cutting the death rate in half for certain lung cancer patients where it's caught early. Matt Herper of Stat News joins us now from Chicago. Welcome, Matt. First, give us a perspective, investors, on the importance of this gathering of cancer fighters in effect and the sorts of innovations that get announced and discussed here.

You know, this is maybe the biggest medical show in biotech. This is where a lot of the data are presented to doctors, you know, the people who prescribe these drugs, and where we find out about a lot of the treatments where they're going to change practices, doctors say, that they're going to help patients live longer and do better. And a lot of the biggest and best cancer drugs that have ever been seen were introduced here at this meeting every year. So, in effect, this is, I mean, not to be crass about this, because cancer fighting is so important. It's the WWDC of cancer fighting. We talk about Apple, but giving this time.

Sure, or the Super Bowl. Right? Yeah. It's the WWDC of cancer fighting. We talk about Apple, but giving this time, right? Yeah. It's the big, big. This is where you're gathering people who are going to do the work to put more efforts behind some of this research. And so what is at the cutting edge and what companies are being most closely watched for their work there this year?

Well, AstraZeneca, as you noted, had some amazing data. This is a study originally presented a couple of years ago where they showed that for people whose lung cancer was caught pretty early and removed by surgery to keep it from coming back. But this just proved that they lived longer. And we talk a lot of medicine about, you know, that's the gold standard, right? That you randomly give people one thing or another, and one thing makes people live longer. That's what you want. So that's an amazing result that people are really galvanized by. And AstraZeneca is having an amazing run right now.

Susan Galbraith, who is their head of cancer research, was walking around with a pin on her lapel that had the AstraZeneca symbol and the number five. And that's because they've been at the biggest presentation, the plenary session that is at this ASCO meeting every year for the past five years. So that is definitely a big one. Okay. There was also a study you mentioned about care on the Mexico border. And that's an amazing story. yeah, tell us about that. This is the absolute opposite of a big pharma study. What happens is this practice called twinning, where you take a hospital that has really good cancer care and kind of one that doesn't. And what that one showed was that there was a dramatic increase in survival for these kids.

You know, we've been curing cancer for decades in children. Those are the first places that chemotherapy worked. But they were just kids that weren't getting access. And they showed that these programs can work and that, you know, kind of bringing in oncologists can result in better care. And so what are the implications, if there are implications, for quality of care within a developed economy like ours, but where access to quality care, to quality insurance is not universal? Well, they're exactly that. I mean, the big lesson you hear a lot at just about every medical meeting now is that, I mean, doctors talk about financial toxicity a lot at this meeting. You know, the price of drugs are going up, but people's out-of-pocket share of that cost is going up much faster.

And the lesson really is that a treatment is only effective if people can get it. And that's why you see so much struggle around drug costs, around insurance, around access. You know, we don't live in a system where everybody has access. We live in a system where there are people who do have access, and there are a lot of people who struggle in one way or another with the health care system. All right. That is something, indeed, that we have to balance. Finally, quickly, if you can, what is the most cutting-edge effort that we expect to hear anything about out of this that perhaps investors should be aware of?

So it's been a big pharma meeting the past few years, and there haven't been a lot of smaller company news. There is an interesting study coming out actually tomorrow where there is a device used to treat brain cancer from a company called Novacure. And we're going to find out about the data for using that device to treat lung cancer. It's an electromagnetic field. In brain cancer, they were held in lung cancer. We'll listen out for that, for sure. Matt, unfortunately, got to leave it there. Matt Herper from Stat News. Thank you. We're going to have much more on the health care sector tomorrow when we're joined by the CEO of Doximity, Jeff Tangney. And wow, with with quite a day of news, both there and from Apple, that's going to do it for overtime. Fast money begins right now.