Closing Bell - Closing Bell Overtime: Bessemer’s Byron Deeter On When The AI IPOs Are Coming; Bitwise CEO On Spot Ether ETFs 7/22/24

Episode Date: July 22, 2024

Tech stocks staged a turnaround to start the week, helping lead the market higher. Vital Knowledge’s Adam Crisafulli and Richard Bernstein Advisors’ Dan Suzuki break down the market action and what’s ahead. Earnings from NXP Semi, Cadence Design, Cleveland-Cliffs, Zions and Nucor. Stifel’s Tore Svanberg on what NXP numbers mean for the rest of the industry. Mark Mobius on his top plays in emerging markets. Bessemer’s Byron Deeter on Silicon Valley and Kamala Harris, plus what’s next for AI and cloud companies. Bitwise Asset Management founder & CEO Hunter Horsley on his spot ether ETF on the eve of its first trading day. 

Well, that bell marks the end of regulation. Domino's Pizza ringing the closing bell, much like a doorbell at the New York Stock Exchange. P.S. International Group doing the honors at NASDAQ. And tech making a comeback to start the week with the NASDAQ outperforming, led by chips and Tesla. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford with Morgan Brennan. We've got a jam-packed week of overtime earnings getting underway this hour with results from NXP Semiconductor, Cadence Design, Cleveland Cliffs, Nucor, and more.

We're going to bring you all of those numbers and instant analysis. Plus, cloud and AI venture capitalist Byron Dieter is going to preview the big tech earnings coming in the next few days, including Alphabet tomorrow. And investor Mark Mobius joins us right here at CNBC headquarters with his global playbook and how the exit of President Biden from the 2024 race could impact international markets. We're going to get straight to the analysis of these major averages kicking off the week with green across the screen, mega caps and small caps getting a boost. Let's bring in our market panel vital knowledge powder adam christopheouly and richard bernstein advisors

deputy cio dan suzuki guys happy monday dan is the rotation into small caps still rotating i mean the russell's up but roughly the same as the nasdaq today yeah i think it took a bit of a breather today but i think there's reasons to believe from a fundamental perspective that there's a lot of legs here. I think it's not just a Trump trade. It's not just a Fed story. I think if you think about earnings this season and going into next season, I think that's going to be the real story that drives this rotation to continue for at least the next couple quarters, John. And Adam, people often say on this network, don't invest or even trade based on politics, but there's a lot of potential volatility, like extra volatility over these 100 days

before election day, roughly 100 days. Can you afford to ignore politics here? You can't completely ignore it. And it's fascinating to watch, which is why I think it's receiving so much attention. But, you know, as far as dissecting what's happened in the market over the last week and a half with this really aggressive rotation, you know, a lot of it really was economic data where you had Goldilocks June figures, especially the CPI, retail sales and jobs. And then you've had a notable shift in Fed rhetoric, which will likely be formalized at the upcoming meeting next week.

I think that's driven the majority of what you've seen in this rotation. And so to the extent we see that continue, you're going to likely get more favorable inflation figures this Thursday and Friday with the PCE. And then next week could be a pretty seminal meeting where Powell is relatively explicit about a rate cut in September. That all can help propel this rotation that we've seen continue. Obviously, politics is going to be, you know, it's going to be the dominant theme going forward over the coming weeks. But I think in the immediate term, it's really more about data policy and earnings than it is politics.

OK, Dan, I mean, as we do get earnings really underway here with more than 100 S&P 500 companies reporting this week, if this rotation has legs, what do you invest in right now? And how much does earnings growth actually matter here above and beyond those big cap, those big tech names that we talk about day in, day out? Yeah, Morgan, I think it's not really rocket science here. I think what you want to own is the companies that are going to drive the earnings acceleration from here. So if you dig underneath the surface, you know, the S&P is going to accelerate a little bit over the next couple of quarters. But hidden beneath that is sort of the mega caps. Their growth is not really going to get a whole lot better.

In fact, it could actually be slowing in the next couple of quarters. And so if you look to the areas that are going to drive the acceleration in earnings over the next couple of quarters, you can look within the index, you can look outside the index, and there's a lot of opportunity there. I think emerging markets from a global perspective is going to see some pretty big acceleration over the next few quarters. Within the U.S., I think small caps could be one of the biggest growers by the time we exit the year. And then within the cyclicals, you know, moving away from sort of the mega tech oriented cyclicals toward some of the older traditional cyclicals like energy, industrials, materials. I think those are the areas where we'll see some of the big acceleration over the next two or three quarters.

OK, we've got our first earnings report. Cadence design results are out. Kate Rogers has the numbers for us. Hi, Kate. Hi, Morgan. And the stock looks to be higher after hours on this report. 4Q better than expected on Q2, rather, better than expected on the top and bottom lines here. EPS coming in at $1.28 adjusted. That is better than the $1.22 estimated by analysts. Revenue is also a beat for Cadence here, $1.06 billion for the quarter, better than the $1.04 billion for the quarter. The company also reiterated guidance that is within the ranges it previously gave. But as you can see now, the stock is higher by more than 2 percent. Back over to you. Okay.

Adam, I'll go to you on this one because Cadence is one of the biggest tech names that we don't always talk about on CNBC. But you see the stock up 2 percent right now, and they're talking about robust demand from AI, from automotive, which is an area we're going to be looking for more results in NXP earnings as well. What to make of that? How does that set us up here? Yeah, I mean, they play an integral role in the industry. They provide critical design software, you know, and they have a lot of very powerful tailwinds, which they call that in the release. So it's not the biggest bellwether as far as driving overall tech stocks over the coming weeks. You're going to have other names that are going to be more important.

But, you know, certainly an encouraging data point. This is one of the first semiconductor reports that we've seen of the season so far. Like you said, I think NXPI will be a little bit more critical as to kind of what they're seeing over the coming quarters, especially with autos and industrials. But, you know, certainly an encouraging release from Cadence and the qualitative commentary about industry trends remains very favorable. Dan, finally, how much do the timing and number of rate cuts affect how you see the market performing for the rest of the year? Yeah, I don't I don't think it's a huge factor, John. I mean, I think at this point, the market has it more or less right. Maybe it's shot overshot a

little bit, but I think penciling in one or two cuts for the rest of the year, the market's a little ahead of that. I think that's going to be reasonable. So whether they do one more or one less, I don't think that's going to be the swing factor. I think it's really going to be about how those earnings numbers come in this quarter and next quarter, John. OK, Dan Suzuki, Adam Christofoli, thanks for kicking off the hour with us. With all the major averages higher, the Nasdaq up one and a half percent as semis have led the charge today. We've got Cleveland Cliffs earnings out as well. And for the steelmaker, it was a beat for EPS coming in flat at zero versus estimates of a two cent loss.

That's GAAP, which, according to Refinitiv, seems to be the way that analysts have crafted their estimates. Non-GAAP is 11 cents per share. Revenue, though, that missed expectations, 5.09 billion. Cleveland Cliffs lowering its outlook for capital expenditures. CEO Lorenzo Gonsalves saying, quote, despite a less than ideal steel demand and weak pricing throughout the quarter, Cliffs operated very well. They met cost reduction targets and shipped the tonnage that they had planned for. Now, Cleveland Cliffs expects to benefit in Q3 from another major step down in costs. They're saying their largest end market automotive sector remains in good shape

and that orders from service center customers are expected to increase as seaborne steel imports dry up. You can see shares are jumping right now up 4 percent in after hours. Well, let's turn now to CNBC senior markets commentator Mike Santoli for a look at tech's bounce back after last week's drop. Mike. Yeah, Morgan, the Nasdaq 100 responding to kind of a short term oversold set up down about five or six percent from its highs into Friday's close. Also just broke through that twenty thousand mark, which is one that I was sort of watching as it cleared it at the end of the second quarter. Really, if you look at this on this one year basis, it just looks like the index sort of checked back to sort of the June lows. And it's so far solidified at this point. But it's only really come back to where it was a few days ago. So sometimes these pullbacks,

you know, evolve over time. As we saw back in the spring, the initial bounce wasn't the one that really stuck. Now, take a look at NVIDIA in terms of the analyst sentiment set up here. You got a couple of price target increases today for NVIDIA. As you can see, buy ratings continue to overwhelm holds. No sell ratings on the stock, as you might expect, given its multi-year performance here. What I have found interesting, the white line here, the gray line, is the consensus price target for NVIDIA among all the analysts that cover it. And you've had a few times where the stock price itself has kind of bumped up against that target price. It seems like the sell side was having a hard time rationalizing more immediate upside. And that's around where the stock has kind of pulled back and gone on these multi-month sideways periods. Also happened here, as you can see, a few months ago, crossed above it and then back down again. So what's happened now is you've rebuilt a little bit of potential upside to the analyst targets. And by the way, the stock today closed a little bit higher than it looks on this chart, you know, 124 type area.

So that gap is narrowed, but it has been restored to some degree, Morgan. The six largest stocks in the S&P, Amazon, Apple, Alphabet, which we get results from tomorrow, Meta, Microsoft, and Nvidia, they're expected to grow EPS 30% year on year. The other 494 expected to grow 5%. It kind of goes back to what Dan Suzuki was just saying. But when we talk about this rotation and this catch-up trade with the other non-tech names, how much does EPS have to grow with this contingent versus the others to actually see that play out? Yeah, I mean, to be bullish on the rest versus the others to actually see that play out.

Yeah, I mean, to be bullish on the rest of the market, as many people have begun to become, you have to believe that this is kind of the last quarter when you have those six companies, you know, more or less dominating earnings growth to that degree. And that's the way the forward projections have it, that by the fourth quarter, it's going to be a little bit more balanced. And in fact, the earnings growth rates are sort of going to look less flashy among the Magnificent Seven relative to everything else. So some of that is just, you know, a base effect. It was, you know, a lot of cyclical earnings coming off of depressed levels. But that is the argument. But also to your point, it's also why we got a narrow market, because earnings growth was also pretty narrow for several months or half a year here, John.

All right, Mike, we'll see you again soon in the show. Much more on today's After Hours action is ahead, including results from NXP Semi and the potential read through for the rest of the chips after a strong day for that space. And later, global investor Mark Mobius on where in the world he's putting money to work right now and how the changing dynamics of the 2024 election could impact markets. Overtime is back in two. nxp semiconductor earnings are out stock is tanking initially. SEMA Modi has the number. SEMA. John, here's a story. NXP Semiconductor reporting quarterly results $3.20 adjusted, which is one penny short of what Wall Street had anticipated. Sales coming in line with expectations at $3.12 billion, but its outlook for revenue, third quarter revenue coming in below what analysts were predicting, and that's perhaps what is weighing on the stock.

The street context here, the street had grown more positive on NXP Semiconductor ahead of its earnings results tonight. Talking about improvement in vehicle demand. This is a company that generates about half of its revenue from the automotive sector. And there were some remarks from Cantor Fitzgerald and other analysts that the upturn in electric vehicles could also help NXP's business. Clearly, the stock now responding down about 7.5 percent. Shares were up about 17 percent this year going into today's report. The conference call is tomorrow morning. Back to you guys.

All right, Seema, thank you. And now for more on NXP earnings, let's bring in Stiefel Managing Director and Semiconductors Analyst, Tore Svanberg. Tore, is this the guide that we're getting reaction to? And can we read through at all on autos to the likes of Qualcomm and Marvell? Yeah, no, thanks for having me on. Yeah, the actual quarter itself was fine. It was an inline quarter, but you're right. The outlook is certainly lower for

the September quarter. And given the company's 50% roughly exposure to the automotive market, we do believe that the automotive market remains fairly soft. Keep in mind that this has been sort of an ongoing issue this whole year with interest rates high, obviously with EVs still being quite expensive on the market. So, yeah, we definitely think this is an issue with the guidance for the September quarter. Does it depend at all how much of this might be NXP specific and an inventory issue? Because I know there have been questions about automotive inventories. Would those be the same across various chip makers or unique to them individually? No, I do think that this is an industry phenomenon. I don't think this

is uniquely an issue for NXP. Keep in mind that during the pandemic, there was a lot of shortages in the automotive industry. So it took a long time to sort of get the supply of semiconductors up and running. I think now that the market is weak, it will also take quite a while for all that inventory to clear up. So from my perspective, this is a typical example of weak end demand. And with weak end demand, it just takes a little bit longer for that inventory to clear out. So how much of this is driven by the softness we've seen in the EV market versus traditional ICE vehicles? And I ask that knowing that EVs, at least it's assumed that there's much more technological impact there. You're probably going to need more chips. So how much of it is outsized to that? Yeah, no, I think that's an excellent point. And you're right. EVs

tend to carry much more electronic content and obviously therefore also more semiconductor content. And I think the other issue is that EVs, the price tags are actually being pretty high. So when you combine high content, high prices, high inventory levels, and then obviously interest rates, especially in North America and Europe that are less from ideal for purchasing cars, that is definitely the issue that continues to plague the industry at this point. Okay. So stock's down 8% right now on initial reaction to this print. Do you buy here or do you put your money to work somewhere else? And if so, where? So we have a hold rating on NXP. We have a $275 price target. We've been concerned about the automotive market all year, especially in light of some of the excess inventory that were out there as we entered the year. So we're basically

staying on the sidelines for now until we get a little bit more clarity on the automotive market and perhaps also a bit more clarity on interest rates, because obviously at the end of the day, that's what's driving the purchasing power for consumers going forward for these high-end EVs. Okay. Torres von Berg, thanks for joining us. Thank you for having me. Shares of NXP under pressure right now. Up next, Mark Mobius joins us in a rare appearance here on set with the parts of the market he's most excited about

and how the election could impact global investing. And later, cloud and AI investor Byron Dieter is going to join us with his read on tech stocks ahead of earnings this week from Alphabet, ServiceNow, and many more. We'll be right back. Ion's Bancorp earnings are, I think the stock's higher. Leslie Picker has the numbers. Leslie. You are correct, John. The stock is higher, up more than 3% in after hours, about 3.6% on a sizable EPS beat. The company reporting $1.28 per share here compared to street estimates of $1.10

per share. There are some interesting aspects to those EPS figures. For one, there's a $0.07 per share positive impact from gains on a sale of the company's enterprise retirement solutions business, as well as a bank-owned property. And then also something interesting in the quarter is the EPS impact of provision for credit losses. Only $0.03, which is by far the lowest provision impact that we've seen in at least the five quarters that they show in the presentation here. Net interest income for Zions coming in essentially in line with estimates, maybe a little bit higher here. And ending deposits were down about 1% in the quarter, a little bit lower than analysts were expecting. But all in all, a pretty much a better than expected quarter for Zions. You can see shares up 3.6 percent.

All right. Leslie Picker, thank you. Well, Farnborough has set the stage for airspace and defense this week. Earnings for the sector kicked off tomorrow with Lockheed Martin. Then we get General Dynamics, Northrop Grumman, RTX and L3 Harris, among others this week. But despite heightened geopolitical tensions, defense stocks have underperformed the broader market. Valuations have fallen back to levels last seen in 2021. So before Russia invaded Ukraine, that's according to Jeffries, amid a modest a modest 2025 budget request outlook here in the U.S. and uncertainty in elections. Basically, defense stocks look cheap, but lacks catalysts. Even so, some of the defense dollars appropriated for 2024 and 2023 have yet to flow to contractors' financials. That could, according to some analysts, provide some upside.

Bottom line, defense spending is surging globally. That should continue, even if budget growth in the U.S. stalls. But contractors need to be able to deliver on orders and supply chain challenges and impacts from inflation. Well, those persist. This is why defense stocks have underperformed, why margins continue to be in focus for investors, because even as the companies are seeing backlogs balloon and international sales swell, margins have pressured profitability, even as you have seen the top line grow. Meantime, a political earthquake this

weekend after President Biden dropped out of the race, endorsing Vice President Harris to become the Democratic nominee to face former President Trump. Let's bring in Mobius Emerging Opportunities Fund Chairman Mark Mobius, who joins us here on set. It's so great to have you. Welcome. Thank you. So given the fact that we do seem to be in election season, we are seeing the volatility associated with it begin to permeate the markets. What does U.S. policy crafted around economic populism, which we could argue how much of it exists with future candidates, but it's still there in the market for the last couple of years. What does this mean for emerging markets, international markets for investing in them? Currently, it's total confusion because of the changes that have taken place with Harris now coming into the picture.

Before this, with the possibility, good possibility of Trump winning, people overseas were getting ready for trade restrictions, but some of them would benefit from this kind of situation. Now, with this confusion on the election, out there they're very confused. So it remains to be seen what happens going forward. But generally speaking, these markets are beginning to take a life of their own. For example, if you look at India, it's going from strength to strength. It's outperforming the U.S. market. And now if you look at the Emerging Markets Index, finally, it's beginning to move up. And the reason for that is China. China is beginning to perform.

So with the new push on tech in China, there's going to be some very interesting things happening and good opportunities, I believe. Does that mean that China is investable now, especially when you come out of the plenum and all of the political meetings that we saw in that country last week. It doesn't necessarily seem to be changing the economic needle, but we did get the surprise rate cut on the flip side. Yeah. You must remember the China market is driven by the Chinese, not foreign investors. Like many of these smaller emerging markets, foreign investors really drive the market. But it's really the chinese that are driving it and now with the housing crisis being to come down people are beginning to recover from that shock you're going to see more and more chinese moving into the market and the chinese market i believe will

move up india has been doing well for quite a while the market has china not so much so short term which is the better trade, China or India? That's a good question because India has gone up so much. But if you look at the latest numbers, 8 percent growth, real growth. Can you imagine if you look at 8 percent growth, you can say double that for the growth of the market. So I believe India is still a good trade. It's a good idea to get into India. And I keep talking about the demographics, right? If you look over the next 10 to 20 years in India, give me your thesis on beyond that. So longer term, five years plus, why is India an attractive, particularly attractive emerging market for people to invest in?

Mr. Mayor, India is where China was 10 years ago. Now we're getting into a situation where in China you see consumers becoming more and more important. They're richer. India is now embarking on that. So as we go forward, you're going to see richer and richer Indians. The per capita incomes are going to go up. So there's going to be incredible opportunities for consumer stocks.

So in addition to the tech stocks, the software stocks like Infosys, you're going to see companies like Reliance doing very, very well because they're in telecoms, they're in consumer, in addition to petrochemicals. So I believe that it's going to be an incredible ride we're going to see for India going for the next 10 years or more. We talk so much about volatility in equity markets, but we've seen it in the currency markets as well. How much does the dollar, dollar dominance, dollar strength, how much does it impact this entire narrative? It has an incredible impact. People are always watching the U.S. dollar. And anybody who wants safety overseas, they come to the U.S. for dollar exposure. But at the end of the day, the Chinese and Indian markets are driven, again, by domestic consumers

and they have local currency to spend. So they're not really looking at the dollar in that sense. The ultra rich, of course, are doing that. But the normal investor will not be looking at the dollar. Europe's been perking up lately, but there's a lot of uncertainty there, certainly with Ukraine and then with U.S. politics and what happens with NATO. Can you take a flyer on Europe based on how lackluster it had been for quite a while? I would not favor Europe over, except one exception, Turkey. Now, OK. Talk Turkey with us. Yeah. You look at Turkey and say, God, you know, 80 percent devaluation of Turkish lira. Should I go there? Yes. You should go there because

some companies are doing very well with a weak lira. They're exporting, they're producing dollars in their businesses, and of course they're paying in Turkish lira. So Turkey, I would say, would be the exception. But the rest of Europe, not so interesting. Very slow growth, lots of bureaucracy, problems with the European Union, etc. Gold, it's at a record high right now. Yeah. Do you go near it? I love gold. I always recommend people to have gold.

And of course, why? Now, India, who loves gold the most? The Indians. And of course, the Chinese. But the Indians are big, big gold buyers. So I believe longer term gold will continue to do well. All right. Those demographics in India help gold too. Mark, thank longer term gold will continue to do well. All right. Those

demographics in India help gold, too. Mark, thank you. Thank you. Mark Mobius. Well, speaking of Europe, earnings from German software giant SAP just crossing. The stock is popping. The company matching second quarter earnings estimates at one euro at 10 per share. Revenue was above estimates at 8.29 billion euros versus estimates of 8.24 billion euros. SAP CEO Christian Klein saying cloud growth momentum remained strong in the second quarter with business AI enabling many deals. Well, time now for a CNBC News update with Kate Rogers. Kate. Hey there, John. The director of the Secret Service failed to answer major questions before a visibly frustrated House Oversight Committee earlier today. Kimberly Cheadle did not give specific figures, such as how many agents were assigned and how

many times the service denied Trump's request for more security. Lawmakers from both parties called on Cheadle to resign over the failures to protect the former president. The Senate Ethics Committee took the first step toward Senator Bob Menendez's possible expulsion from Congress after his conviction on bribery and obstruction charges. In a letter to Menendez today, the panel said it will begin a review on the New Jersey Democrats' alleged violation of Senate rules. He has so far refused calls to resign. And Karen Reid, who was accused of killing her Boston police officer boyfriend by hitting him with her SUV in 2022 and leaving him to die, will stand trial again in January. The judge declared a mistrial earlier this summer after

jurors said they couldn't reach a verdict. A judge will also hear oral arguments next month on a defense motion to dismiss two of the three charges. Back over to you. All right, Kate, thank you. When we come back, stocks tend to move in a positive direction ahead of an election when an incumbent is running. But it's kind of a different story if a president isn't up for reelection. Mike Santoli is going to break down what could happen for stocks now that President Biden is out of this race. And as we head to break, check out Verizon, by far the worst performer in the Dow today after missing revenue estimates, citing a slow phone upgrades in the U.S. You can see shares finished down 6 percent. Stay with us.

Welcome back. We have more earnings to bring you. New core results are out. It was a beat for the steelmaker. Earnings per share of $2.68. That was much better than the $2.35 expected. Revenue of $8.08 billion, also better than expected. They're representing a decline sequentially in year-over-year. Talking about softening market conditions after recent record setting years for the steel industry. But for third quarter, the steelmaker expects earnings to fall sequentially in the steel mills segment. That's the biggest pain point, again, in the steel product segment due to lower

average selling prices and to be down in the raw materials business, too. But a beat nonetheless on the top and bottom lines. And you can see those shares are up more than 4 percent right now. Yeah. Nice. All right. Let's get back now to Mike Santoli with a look at how the election trade may have just gotten complicated. Mike. Yeah, John, if you certainly if you believe the history of how the market has behaved in years when there was or was not an incumbent on the ticket in November. So this is from Ryan Dietrich over at Carson Group. You see here in yellow, when an incumbent president has been running, you see the market actually having very strong average returns on a blended basis. When there's been no incumbent running, obviously it has

struggled more. Now, lots of notes of caution I would want to sound here. One, there just haven't been that many elections. So I don't think any of this rises to statistical significance. And in terms of how many have been without an incumbent, that would be also, by the way, if a president has already served two terms, there's only been seven since 1950. So three of those, there was the incumbent vice president running. But some of these years we're talking about are 08 and 2000, where it seems to me you had really bad market years having essentially nothing to do with the with the election. So I would throw all that in there in terms of grains of salt. But it is interesting that the market seems to prefer when there's really a known quantity in there and they can decide maybe well in advance whether that incumbent is likely to be reelected or not.

They kind of like to be working off of something that's very much sort of a known quantity. Mike, what if there's an incumbent running for half the year? Yeah, exactly. I mean, you have to start to throw that in there. Now, there are two of those years where you did have an incumbent that was allowed to run for reelection who chose not to. So that was LBJ in 1968. He kind of decided not to run in the spring of that year. So a good deal earlier than now. And before that was Harry Truman. And I think that was also earlier. So essentially nobody in July, I don't think, of the election year has said, guess what? I'm off the ticket. All right. Unprecedented. That's why I continue to cover

it and watch it and see the impact on the markets. Mike Santoli, thank you. I love that you could just trot that out, too. Up next, venture capitalist Byron Dieter on the barrage of upcoming cloud earnings and which presidential candidate he thinks would be the most beneficial to tech startups. Plus, we will get his reaction to the CrowdStrike fallout, whether the stock sell-off is a buying opportunity following its software update that led to a massive global IT outage on Friday with ripple effects this week as well. We'll be right back. Welcome back to Overtime. Vice President Kamala Harris racking up the endorsements from Democratic leaders, including Representative Ro Khanna, the congressman for part of Silicon Valley.

Prominent angel investor Ron Conway tweeting his support for Harris in the last hour as well, saying on X, I have known Kamala for decades and she's been a fighter, a leader and an advocate for the tech ecosystem since the day we met. Meanwhile, some other industry power players are backing the GOP Trump Vance ticket, including both Mark Andreessen and Ben Horowitz, Elon Musk and others. Joining us now is Byron Dieter, partner at Bessemer Ventures. Byron, good to see you. Want to get to software, of course, but first, VC Ben Horowitz argued a few days ago he's got to vote for Trump because small tech's future is on the line. Do you think Vice President Harris now potentially running as the Democratic nominee? We'll see how that shakes out.

Might that change the calculus for part of the V.C. community? So thanks, John. Great to be back with you, especially as things are getting fun and exciting these days. And the short answer is it's an opportunity. If you step back, there's almost this head versus heart debate going on within tech right now. It's a community that tends to be pretty progressive on social issues, pro-choice and the like, and pretty moderate financially, which has typically played well to the Democratic agenda. But over the last few years, they felt in many ways under attack by the FTC and SEC and many of the Biden policies, whereas you see over the weekend and over the last few weeks, many tech voices flipping and on X and other sources saying that they're pro-Trump and now GOP supporting

because of what are perceived to be pro-business and pro-technology policies. Now, with Vice President Harris potentially being the nominee, she'll have to shore up the party base maybe in the next few days or potentially even this week. And then I see this as a huge golden opportunity for them to reconsider some of those positions and potentially come back to the middle for the general where they can play into some of these tech and business policies and revisit the pro-growth, pro-business voices that are really starting to waver on them a bit. All right. We'll see if Vice President Harris comes home, at least from tech's perspective. Let me ask you about software. Some pretty strong results for SAP, which will be at all-time highs tomorrow if these overtime levels hold post earnings.

And we've got ServiceNow coming on Wednesday. So is this a potential extension of the AI trade, even for names that have already been doing quite well? So I think this is an extension of the MAG7 and the large tech trade that's pulling through. And really, SAP represents old tech. And so they're really taking advantage of business efficiencies and cranking out more productivity there. I'm not looking to them to drive this next AI revolution, though, and I don't see that as the trade for the future. What we've seen so far is really, it's been the large cap and the hardware vendors and the infrastructure vendors, the hyperscalers, NVIDIA, et cetera. What we will see in the coming

years, though, is this rotate almost in the reverse of how the cloud market played out, where it went apps first with Salesforce and NetSuite and the like down to infra. The AI trade is happening in reverse. It's starting with the foundational layers, models, and chips, and it's moving up. And I've said before, and I'll say it again, artificial intelligence is an extinction-level event for incumbent software companies that don't react. I see folks like SAP that are slow in this movement. ServiceNow is much more nimble. They're proactive and leaning into it more. However, I think that the leaders in the application side of AI haven't yet gone public and in many ways aren't even revealed yet. Okay. I want to go back to the policy piece of this, because we know VP

Harris was basically tasked with helping to usher in this executive order on AI. I mean, for better or worse, artificial intelligence is going to be in focus on the campaign trail. It's going to be in focus for whoever takes the Oval Office in 2025 and beyond. So how do you game this out if you are investing? Is AI and all of the money going into it just a force to be reckoned with regardless of what happens on the regulatory front? So I think what you'll hear with the industry is agreement that some level of regulation and policy is important around privacy, data management, those things. Where the disagreements lie is this idea that breaking up tech and blocking M&A and in some way containing this

progress is a good thing. Artificial intelligence is not only critical for economic supremacy for the U.S., but also national security. This is a race we do not want to lose. And so the subtext, what I've liked about Vice President Harris's comments through the years has been a recognition of some balance. And she hasn't necessarily supported the FTC and SEC positions on this. And I think it's a campaign opportunity to make a statement essentially in support of business growth and success while acknowledging that there's a balance here to be had. OK. And of course, the national security piece is why defense tech has become such a hot investment in the private markets as well. We keep talking about these big, growing AI unicorns. When do

we see one? When do you see one of these pure play AI megaliths actually go public? I'm with you. We're all waiting. And unfortunately, it's not going to be this year. The market turmoil, the valuation dynamic, some of the regulatory dynamics, these things are rolling to next year. And so we're going to see a few smaller IPOs slip out in the balance of the year. Many of them are trying to think about this post-election window, which is incredibly narrow between early November and the holiday break in December. But really what we're looking for is some of the monsters. Everyone's been waiting for Stripe. Databricks is the name folks want. Canva, companies like that to really drive this IPO opening in 2025. And so that's really the chatter that people are going

to be focused on, is when do these private filings flip to public? And the unfortunate news is I don't think that's happening in the next two quarters. So meantime, what happens when you're a VC sitting on hot names and you can't exit easily? Is private equity going to get more interesting? Are there going to just be more rounds where employees need to be allowed to cash in? So that goes back, one, to the policies of the FTC and SEC. Right now, it's very hard for large tech companies to buy anything. This whiz potential acquisition with Google Alpha, that's a notable exception because it's so adjacent to their core businesses. But there's almost this paralysis with M&A, which is absolutely rolling through

and stifling the exit environment, stifling some innovation there. And so private equity has somewhat filled the hole. But for the best companies, they're going to continue to look for the public markets as their path. And if you look at the large foundational models that everyone would be waiting for with OpenAI and with Anthropic and their cloud models, they're not rushing to go public anytime soon. And so that's going to stay in the domain of the private investing world, which is why you've seen VC dollars spike so much towards these infrastructure foundation bets. But we do expect the next layer up to start to break out. And Databricks is the one next year I'm most excited for. I wish we were investors. We're not. But that's the type

of quality company that will be ready to go public. And they are definitely benefiting from this AI trade. And they're making a real run at Snowflake's core. All right. Byron Dieter, great to get your thoughts, as always. Always a pleasure. Up next, all the overtime earnings movers that need to be on your radar ahead of the calls with analysts. Plus, we are still awaiting approval of spot Ethereum ETFs. And coming up, the CEO of Bitwise is going to join us on how these ETFs will impact his company and the crypto industry. Be right back. Welcome back. Let's get a check in on the big overtime movers.

NXP Semiconductor getting hit hard after missing on earnings and matching revenue estimates. Also giving a weaker than expected outlook for the third quarter. You can see those shares are down 8%. But Zions Bank Corp getting a nice boost after a nice beat on the bottom line. Net interest income rising 1% year over year. Their total deposits were down a percent. You can see those shares up 4%. Cleveland Cliffs turning in a mixed quarter.

Beating on earnings. Missing on revenue. Saying it's on track to hit its cost reduction target, though. You can see those shares are up about 3%. Nucor, another steelmaker, also up, John, in overtime. Yeah. All right, Morgan, thanks. Up next, the CEO of Bitwise on the outlook for the spot Ethereum ETFs and which presidential candidate is likely to be more friendly to the crypto industry. Be right back. Welcome back. Ether hitting its highest level since June 20th today. Many investors are waiting for spot Ether ETFs to start trading as soon as tomorrow.

Joining us now is Hunter Horsley, CEO of Bitwise Asset Management. June 20th today, many investors are waiting for spot Ether ETFs to start trading as soon as tomorrow. Joining us now is Hunter Horsley, CEO of Bitwise Asset Management. Their ETF is expected to trade tomorrow. Is that the plan? That's the plan. The word is just in. The Bitwise Ethereum ETF, ticker ETHW, will begin trading tomorrow morning. The market open. OK, so what does this mean for this market when we talk about spot Ether ETFs? Do you expect similar inflows to what we've seen with Bitcoin or given the fact that Ethereum has a staking aspect to it? It's sort of held maybe perhaps for for different reasons that this could play out differently. I think I think it'll be a historic launch,

but I think it'll play out differently. You know, a lot of investors view Bitcoin as digital gold, a store of value, whereas investors view Ethereum more as a technology play, sort of in the same way that NVIDIA is powering AI. Investors view Ethereum as powering Web3, that's stable coins, tokenization, DeFi. And so I think it's a bit of a different story. And so reception could be different from investors. But I think it'll be a historic launch as Ethereum finally is available to a broad set of audiences through the ETFs. Hunter, if we look at that chart of Ether, say, over five years, it's been incredibly volatile. So, I mean, it's one thing if you got into it before 2020, great for you.

But right now, what's the thesis? We've been talking during the show. We understand maybe the AI thesis in the U.S. around names like NVIDIA, the hyperscalers, or in India, the youth demographics thesis. What is the ether thesis that perhaps equals those? Yeah, that's a great question. And I have to say, when we got started at Bitwise six years ago, I didn't have nearly as much gray hair. So I know what you mean when it comes to the volatility. I think that the big picture thesis, so Ethereum today is valued at maybe one eighth of how Microsoft is valued market capitalized. And the thesis behind it for many investors is that there is a new version of the internet. People refer to it as Web wise. And the thesis behind it for many investors is that there is a new version of the internet. People refer to it as Web3. And Ethereum will be the underpinning that applications

and databases and services run on. And so in the same way that if you as an investor could buy, say, a chunk of Windows or a chunk of iOS, the operating systems that software runs on, that's how people view Ethereum, which is as Web3 and things like stablecoins and tokenization and DeFi develop, you have a chance to participate by owning the underlying platform. And investors think that could be a lot bigger than the value of any one single company like Microsoft, even though Ethereum today is valued smaller than those companies. Do we need, though, to hear another exciting storyline for this? Because before we were talking about Metaverse, we were talking about Web3, and it kind of didn't pan out.

That's right. That's right. Well, you know, I think that thinking about Ethereum as a technology is a really helpful way of making sense of all of this stuff. So if you can rewind back and think back to when the iPhone came out in 2007, you know, for the first year or two, I had a BlackBerry. You may have had a BlackBerry, John. I think a lot of us said, do we really need this thing? And we didn't get Uber in the first year. We didn't get TikTok and Snapchat and WhatsApp in the first year. We didn't get in the second year or the third year. Early on, we got Google Maps, and that was useful. And then over time, developers innovated on new applications,

and that brought in more and more users. And so I think it's a typical new technology platform story where you'll see some early applications that really resonate. And in Ethereum today, that's stablecoins, did $3 trillion of US dollar settlement in the last quarter alone. That's more than PayPal. That's more than MasterCard. And there are other things that have to be explored. But today, there are over 2 million apps on the iPhone app store, and maybe only 40 or 50 that the average person has downloaded. And I think similarly, you'll have to see in the Web3 space a lot of

shots on goal and only a few that will come to fruition. But we're seeing the developers trying. We're seeing the early use cases resonating. And I think that gives people the view that this is a high growth opportunity. OK, Hunter Horsley, we'll be watching this when these ETFs, including yours, start trading tomorrow. And then, of course, John, we've been talking about policy and election impact. What former President Trump at the Bitcoin conference in Nashville this week is going to mean, too, for cryptocurrencies. Yeah, a lot of crypto fans certainly excited about that ticket. All right. Well, that's going to do it for us here at Overtime.