Closing Bell - Closing Bell Overtime: Bitcoin Mining vs. AI & The Impact of Rate Cuts 8/30/24

Episode Date: August 30, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Well, that bell marks the end of regulation. Evertech ringing the closing bell at the New York Stock Exchange. Lenz Therapeutics doing the honors at the NASDAQ. And the Dow closing at a record. Stocks saw a whoosh higher late in the session, right around before 2 o'clock, before I was first on on this final trading day of August. That is the scorecard on Wall Street. But winners stay late.

Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, coming up this hour, a rare and exclusive interview with the global co-head of real estate at Blackstone, the world's largest commercial property owner. We will get her take on the real estate market and how the start of the Fed's easing cycle could change the game. Plus, Intel seeing a major pop today as reports saying the company is working with bankers on strategic options to fix its business. But we'll talk to an analyst who says there's another move Intel needs to make, and it's a big one. And to cap off a week filled with AI headlines, and we certainly got a lot of them,

we've got the CEO of under-the-radar AI energy play, Iron, which is up more than 50% in a year. Well, let's break down today's market action and maybe the month's market action with our guests, Adrian Yamaki from Strategic Wealth Capital and Bob Elliott from Unlimited Funds. Welcome to you both. Happy almost September. Bob, do you believe this market rally or do you think things are still too expensive? Well, I think we are seeing the effects of pretty good growth data. You know, if you go back at the employment report almost a month ago, we had a bit of a growth scare. And that unemployment number looked a little high relative to all the data that we were seeing. And since then, we've basically seen further confirmation in other data that the economy continues to plug away pretty well, and that that scare probably was overstated. I think the thing that's interesting is we got

stocks back to highs, but bond yields still haven't really recovered from that growth scare period. And I think that's really where the gap in the market is right now, where those bond yields still look a little much like they're pricing in too many cuts over the course of the next 12 months relative to the strength of the economy that we're seeing in the data. Adrian, what do you have to believe about the economy, maybe about what the Fed's going to do to think you should be buying in to the market here with the S&P just shy of 5650? Good to see you again, John. It's interesting because if we're thinking about the upcoming jobs report. So usually we look at how generally when we look at we want a jobs report that's fairly strong because there's an inverse relationship to stock market and unemployment. There's a reason that this particular report, which is on the 6th of September, is going to be significant. And that is that it is a week, about a week and a half before the next FOMC meeting. And what that also tells us is, so in July, we saw unemployment tick up a small, tiny amount to 4.3 from 4.1. But it's actually in the bigger picture. So normally,

we would think that would be negative, but it's actually very positive for stocks because of the upcoming FOMC meeting. It gives the Fed a little more space to be able to lower interest rates, and markets are looking very carefully. In addition, it's also the last FOMC meeting before the election. Bob, I want to go back to something you just said, because Treasury has just had their longest monthly winning streak in three years. So you think yields need to go higher from here, even with a Fed that's poised to start cutting? Well, the question when you're buying bonds today is not whether the Fed's going to cut or not. The question is, how much do they cut relative to what's priced in? And right now we've got relatively aggressive cuts that are priced in the market,

the sort of cuts that you typically see during a recessionary environment. You know, 200 basis points over the course of 12 months. We saw that in the depths of COVID, the depths of the GFC and the depths of the tech bust, you know, 25 years ago. And so I think the real question is, are they really going to deliver those sorts of cuts when you see growth measures that are 3% real growth ongoing basis, roughly 3% consumer demand? Those are very strong numbers. It's not really necessary to be cutting at a recession-like way when you're seeing growth numbers that are holding up that well. So do you steer clear of fixed income, at least in the near term, maybe because there's a correction brewing there and pile into equities or you see it differently?

Well, I think there's equities pushing back to new highs with earnings growth expectations in the mid double digits as you move to 25. It's certainly rich, very high expectations there. So I'm not sure the lesson here is to dump bonds and pile into stocks. More, be careful of the duration exposure that you've got and be cautious and probably more of a picker's market in stocks than buying the index here. Adrian, how closely are you going to be watching the consumer spending trends toward the end of the year, particularly holiday, as there have been questions about now the full range of incomes and how the consumer is holding up. Well, if we're looking at I mean, for the next couple of quarters, it's going to be really hard to know,

because there's a lot in the mix in terms of what is is the Fed going to be able to attain a soft landing? And one reason that I care so much about what, not just what's going to happen with the interest rates, but what the labor market is, is for businesses, labor is one of the most expensive components and most affects their profits pretty substantially. So rent and labor. And ultimately, those costs get passed on to consumers. So as someone who owns a private practice in wealth management, a slightly softening labor market can be very positive because we don't have to pay as high a premium to attract quality workers and quality employment. And that's the case across many different sizes of company. So that ultimately will be affecting how consumers spend and pricing. And one thing we'll see at the end of the year, too, with the election is depending on the party who which is in power,

whether tariffs are another thing that gets added to the mix, which is also inflationary and can soften demand and consumer spending as well. So there's quite a lot to look at in the next few months. Yeah. Bob, I want to get your thoughts on this as well, because we got through another round of data tied to the AI trade this week, most notably NVIDIA, but quite a number of companies as well with earnings. We got PC inflation. We haven't talked about that yet.

It does seem like, at least for all intents and purposes, for the Fed's purposes next month, the war against inflation has been won, or at least it's far enough along. How much does this now put the jobs report next Friday into the spotlight? How much does the labor data and some of this other data we get around the consumer, especially this week after we just had more retail earnings, how much does that now drive the narrative? Well, I think when you look at the labor market data, the stock market has largely has faded the growth concern that happened earlier. And so right, pushing back the new highs. And so if we get a pretty good jobs report, which many people expect, you're probably not going to see a lot of a lot of

action in in the in the stock market because it's mostly priced in. It's really a question of the bond market, and particularly the short rate market, is going to need confirmation of deterioration in the labor market to get the kind of cuts. Remember, we still have more than 100 basis points of cuts are priced in through the end of the year. And there's only three Fed meetings, which means that we've got to get at least one of those going 50 if we're going to meet what's priced into the short rate market. And that's going to be pretty tough unless we keep getting the labor market deteriorating, which seems unlikely given what we're seeing with the broader growth data. OK, well, we will see. Bob Elliott and Adrian Yamaki, thanks for joining us

and kicking off the hour with the S&P and Dow finishing not just higher on the day, but higher on the week and now higher on the month. The S&P 500, as I mentioned, just locking in its fourth straight month of gains. But energy, that has sat out the rally. It's the worst performing S&P sector today and for the month of August. Pippa Stevens joins us now with a look at what's dragging on the space. Pippa. That's right, Morgan.

It was the worst sector in August and also one of just two groups to end the month in the red. There is just not a lot to get excited about here. Oil has been stuck in a range down another three percent today on reports that OPEC plus will move ahead with an output hike while gas has suffered from ample production. Pickering Energy Partners, Dan Pickering, adding that the sector continues to be a hedge against the broader market. Now, looking under the hood, the services names, that's Halliburton, Baker Hughes and SLB, are the biggest losers this month. Drillers aren't undertaking vast new projects, which means less demand for the services names. And the wave of upstream consolidation also means that service companies might lose some of their pricing power.

On the flip side, pipeline stocks are a bright spot, especially OneOak. This week, the company announced it acquired global infrastructure partners stake in EndLink, as well as Medallion Midstream and two deals worth nearly $6 billion, therefore solidifying its hold in the Permian. That stock up 11% this month. Morgan? Yeah, those MLPs have had a good year in general. Pippa Stephens, thank you. Let's turn now to CNBC's senior markets commentator, Mike Santoli, for his dashboard. He's looking at the tight range the S&P 500 has been stuck in for, call it a month and a half or half a month, I guess, Mike? Yeah, just about the past couple of weeks, Morgan, although at the close today, kind of threatened to break above that range. Not quite. Take a look how it looks on a year-to-date basis here.

Almost a completed modified V bottom after that correction we saw into early August. I'm talking about this two-month period right here. We've basically been at a little 1% range, high to low, over the course of that time. Now, what's happened below the surface is a lot of rotation, and many people would view it as a favorable rotation away from the year to date winners of the first half. The mega cap growth stocks were doing it here were just about a few points from a record high setback in July 16th, even as the semiconductor sector is like 13 percent off its highs. Even consumer discretionary is four to five percent off its highs. So other stocks that had lagged coming to the rescue of the index for now.

Now, of course, we're still facing high valuations above 21 times forward earnings. We still have September to deal with. You still have to test the soft landing premise with every incoming data point. But right now, looks like a pretty benign outcome. Now, take a look longer term at the sector weights within the all country world index. This is not just the U.S. This is the world from Michael Hartnett over at Merrill Lynch, Bank of America Merrill Lynch. So tech, telecom, health care, the big growth sectors, that's in blue. Look how high it is. Forty four percent of global market cap right now relative to the value

sectors, financials, energies, materials. And you see there's kind of this ebb and flow over the decades. You see here the value sectors peaked right before the global financial crisis as tech was troughing after that bear market in 2000. Here you have the iPhone launched and you have cloud and mobile coming through. So there are fundamental reasons for this. The question is whether there is this kind of longer term pendulum swing back toward value. Value has come up off the bottom on a relative basis. We'll see if this is anything like an enduring trend, Morgan. Of course, I'm going to point out the last time we saw a divergence

like this in favor of growth. I mean, we're looking at 99-2000 here. Sure. How much to make of that? Well, you can make plenty of it in terms of how lopsided the market became at that point. I do think it's important to note the distinction between the slope, just the acceleration in the growth sectors back then was phenomenal. OK, the Nasdaq, it almost tripled within like a year and a half. I mean, it was really off the charts in terms of how fast it happened, whereas now it's probably a little bit more based in terms of earnings power, and it's been a little more measured. But, you know, you can't deny the fact that, you know, the real old economy sectors have lagged to this point. Whether that's justified or not,

we're going to have to wait and see. All right, Mike, thanks. We'll see you in just a little bit. Now still ahead is the worst over for Intel shareholders. That stock getting a big boost today after reports that the company was working with bankers on strategic options. We'll talk to an analyst who says there's one specific move Intel needs to make to avoid a dire fate. And after the break, a can't miss interview with Blackstone's global co-head of real estate, Kathleen McCarthy, with her read on the property market and why she's so excited about opportunities in one part of the world. Overtime, back in two. Welcome back to Overtime.

Real estate values bouncing back this year, and with the Fed widely expected to cut rates or begin cutting rates next month, where are property investors placing their bets? Well, joining us now is Kathleen McCarthy, Blackstone Global Head of Real Estate, who runs the world's largest real estate portfolio by assets. It's so great to have you back here on set. Welcome. Thanks for having me. The last time you were here in April, you talked about the fact that it seemed like real estate was bottoming. Where are we at now in that cycle?

We are still seeing that pulling through, and we've been very clear on that, even publicly starting with our earnings call in January, talking about how we saw real estate values bottoming really because cost of capital was coming down. And you don't have to wait for a rate cut to see that spreads are compressing. We look at the AAA portion of the capital structure. They have come in 50 to 60 basis points, 50 to 60 percent, excuse me, since their wides in 2022. And so kind of with that, we have really tried to go on offense, not wait for an official all clear signal, but really use this moment where the environment is more capital constrained,

where we see a lot of dislocation in the market to really position our clients in interesting, large transactions in particular in our favorite sectors. And so most recently, that was the $10 billion take private of a company called Air Communities, a housing investment business that's really concentrated in urban markets, high quality product. But, you know, there have been all kinds of opportunities, including in partnership with public companies. We did a $7 billion joint venture with Digital Realty where they had sites in Europe and the United States, but not the capital, to really catalyze those opportunities. And we were able to come in

as their partner and do that. And I do want to get into housing. I want to get into data centers, some of these other areas that you're very focused on right now. But first, just one more question on the macro, and that is, OK, Fed's short, all but short to start cutting rates next month. But we don't know how many cuts. We don't know over what period of cuts. And what I do wonder is, is the risk still out there more broadly looking across real estate and the subsectors for this wall of debt we've been talking about that is going to have to be refinanced to still hit some issues here and what's left of 24, 25, et cetera? Well, I think you are going to continue to see

bad news. We think about it kind of like the aftershocks of an earthquake. But I think what we have to all focus on is that there's actually a tremendous amount of resilience in the economy. We see spots of softening, places where consumers may be impacted. So we're seeing that pull through into hotels or leisure businesses. We're certainly seeing kind of job growth and wage growth come flatten out. But, you know, what we would expect to see is that you've had this experience where with the sharply higher cost of capital, higher construction costs, you've seen a sharp fall off as well in new supply. So in the sectors that are our favorites, logistics or rental housing, new supply is down 70% in logistics, 40% in multifamily housing when you compare that to recent peaks in 2022.

And so while you're gonna continue to hear bad news, you know, I think a lot of it is going to be isolated to the office sector or to transactions that were done, you know, just with too much leverage for an environment that we're in today. You mentioned the digital realty transaction, Europe and the US.

What's your thesis that you use to really drive those kinds of investments, especially since energy costs seem to be an even more important part of the calculus with AI driving so much heat in the data center and liquid cooling requiring on existing builds expensive retrofitting? Well, you know, I would just start by saying we are thematic investors. We invest behind megatrends. And with data centers, the megatrend is just the digitization of our economy. And you can think about data centers like the infrastructure for an information economy. And what we are seeing is technology companies making unprecedented commitments to

that digital infrastructure that they need in order to propel their businesses to meet their customer demand. There's the opportunity today in everything from cloud computing to content creation to kind of all the information we're creating and processing and into, of course, the growing demand created by AI. AI requires an enormous amount of compute power, something like 10 times as much as a regular Google search, and companies are really focused on trying to get ahead of that. We have tried to really position ourselves to be a provider of choice. In 2021, B-REIT took private a company called QTS. QTS is a data center business.

It owns and develops new product. It was the fifth largest data center business at the time. The combination of our vision about where the world was going, where this mega trend for digitization was gonna take us to, and our capital has enabled us to propel this company to new heights.

It's seven times larger as far as a footprint from when we bought it. It has a $22 billion totally pre-leased development pipeline. And we see ourselves as just at the beginning of this. And as it relates to the environment and the power constraints, interestingly, I think the power constraints, as well as the sheer amount of capital required to develop these sites, really creates somewhat of a natural supply constraint.

You don't build these buildings speculatively. You have to be in the places where either you have access to power or where you can gain access to power. And I think we have positioned a company to participate in that. And then in partnership with others, we're doing that in all different ways all around the world. A $22 billion pipeline. It's a large number. We said we're going to talk about it, and I do want to get your thoughts on what we're seeing in housing, especially as Blackstone has been forging further. One of the early pioneers of single-family rentals, stateside, but you've been forging further into this, not just here in the U.S., but internationally as well. What are you seeing in these markets that's perhaps similar to what you've seen in the U.S., and what does it say

about the housing inventory right now in general? Well, I'd say across the world and certainly in the U.S., we have not kept up as far as supply with the amount of demand for housing. And we look at housing in all forms. And so when you think about in the U.S. and in so many markets where we invest in the world, one of the things that has propelled housing prices higher, that has made it as a compelling place to invest as far as rent growth, is because we don't really have enough supply to meet the demand for it. So, you know, just to give you a sense, in the U.S. today, we're building new housing at the same rate we were in 1960, and yet our population is two times the size as it was then. We're four to five million units short of where we need to be. And so, you expect to continue to happen is that particularly as you see new supply coming off sharply,

I mentioned that 40 percent decrease in new supply in rental housing, you're living through a period right now where rent growth is flattening. That's because of new supply that's coming online that was happening a couple of years ago. But from a long-term perspective, it's a really interesting place for us to invest because we continue to see really attractive fundamentals in the space. Where's the best opportunity in retail? And is there anything to be made

of these hollowed out old malls? Well, I mentioned again that we're trying to put our investors' capital where we see the greatest benefit of tailwinds. And retail is certainly a place that has largely had some headwinds for a long period of time. And you think about, you know, really for the last 15 years, we have not invested in a large-scale regional mall in the U.S. And instead, we've put our capital into warehouses, where over 40 percent

of our portfolio is concentrated. Because on the flip side of those retail challenges, you've had all this demand driven by e-commerce for warehouses. And that's really been a global phenomenon. We've had tremendous success in retail in India. That's a place where just a growing middle class, a growing economy has propelled demand for both formats, online and in-store, and where there really is very little modernized infrastructure for retail. But I'd say by and large, across the world, retail is a place where we're going to be really selective and instead really try to focus on data centers, rental housing, student housing, and warehouses is really the place we want to be with our clients.

Okay. Kathleen, thank you so much for joining us. There's always so much to talk to you about within real estate, so we appreciate it. Thank you. Kathleen McCarthy. Retail in India, though, like that. Well, we've got news alert on Supermicro computer. Kate Rooney has the details. Kate. Hey, John. So it's a bit of a sigh of relief here for Supermicro shares. They're up slightly after the company said it does not anticipate that its 10K is going to contain any material

changes to results for the full year and for the quarter that ended June 30th. This comes after the company said it would not file its annual report with the SEC on time and that delay this week, plus a report from short seller Hindenburg Research, sent that stock down 19% or so earlier in the week. Hindenburg accused Supermicro of accounting manipulation, which CNBC could not verify. But again, stock getting a bit of a boost here after it said no material change for those results. Guys, back to you. Yeah, especially important given the boost that rival Dell got on its AI servers. Kate, thanks. Well, speaking of, Intel has lost more than half of its value this year, by far the worst performer in the Dow.

But the stock making a comeback today on reports the company is exploring options, including spinning off and selling businesses. An analyst is going to weigh in with his grim outlook for the company if management doesn't make one specific move. And as we head to break, check out the biggest winners in the Dow this month. They're all consumer-facing companies. Walmart, Nike, McDonald's, and Coca-Cola, all leading the blue chip index in August. We'll be right back. Welcome back. Intel had its best day of the year today after reports said the chipmaker is working with advisors on strategic options to turn around the company. Joining us now is Ed Snyder from Charter Equity Research. Ed, welcome. So you say unless the

company, unless Intel ditches Gelsinger and gets a reformist CEO from the outside, the company's in trouble. But Gelsinger is the reformist CEO from the outside, the company's in trouble. But Gelsinger is the reformist CEO from the outside. So what's next? No, he's not. He was born and raised in Intel. He did another company on the outside and then came back. And we've been doing this a very long time, something like 22 years now. We've had ringside seats in the decline and fall of other giants like Nokia and RIM and Motorola and long before they fell into trouble. And there's a pattern that gets established for a well-established company that's been successful for a long time where they tend to deny the reality

of the situation and try to put it off as long as possible. I'll tell you this, from the very first conference call the guest leader was on, i mentioned to my clients and to my associates that this is going to be really bad because he does he didn't come in uh i'm not just picking on him if you if you've seen this repeatedly a reformer ceo comes in there has no ties to what's been going on you would have thought that would have been his case um but uh he didn't he basically praised the previous management and he just took the playbook they had and continue to run with it and you can see where that's led him. Until since that peak, he's down 30% revenue, 95% in earnings. And most importantly, its data center, which is where all the money is these days, is down 45%.

Wait a minute. I've got to ask you, in what way did Pat Gelsinger continue the playbook of previous management? I mean, the criticism, as I understand it, of Gelsinger, and I do understand it, is that he was very radical and poured all of this money into keeping Intel's design and manufacturing together and kind of throwing out some of the older playbooks, moving faster than some people might have advised. So would you break up the company and have them, I don't know how they would capitalize the manufacturing business if they didn't attach it to the design business? You can.

This is where you get into the details of what Intel's done and where they wound up, how they wound up where they were at here. Their manufacturing assets had a three-year lead over everybody else including tsmc in the early part of this late part of last decade early part of this decade um and what guestlingwood basically did is we're just going to continue with moore's law what he did is we're going to spend more we knew five nodes in five years uh and basically that's what the one that brought us but it was evident to just about everybody in the industry both the manufacturers and most where the one that brought us. But it was evident to just about everybody in the industry, both the manufacturers and, most importantly, the companies that used foundries, that you were getting the end of Moore's Law. And the time required to catch up and the effort and the money required to catch up was stretching enormously.

That's why you saw, for example, the TikTok system of Moore's Law that was supposed to be every 18 months is stretched to three years now. And so throwing that kind of money at it that late in the game was probably down a hole because TSMC and Samsung were already leading. And that's where we are today. More importantly, really, when you get down to it is Intel is incapable, in my opinion, from looking at the whole history and understanding TSMC well, capable of being a foundry. If you've been involved in the space and lots of companies that have bought Intel and lots of the guys who left Intel, look at the track record of M&A. I'm not picking on M&A as a sign of this. What I'm saying is Intel's culture is we're Intel. We know what's best. Shut up and do what you're told. That's why almost every one of their M&A actions has failed. That's why they got out of it.

Infineon, McAfee, we could list them. The same thing applies to the Foundry business. Their factories are really designed for the specific product they're building. So if you're building an I-Core server chip, that's what it's designed for. And then the few folks we've talked to about working with them at Foundry, they don't have the tools. They definitely don't have the customer service. They don't have the culture to support about working with them at Foundry, they don't have the tools. They definitely don't have the customer service. They don't have the culture to support a Foundry. So Foundry is a lot more than just the technology, and they don't have it.

And so he's pouring a ton of money into that, and that's not going to go anywhere. All right. So you've just laid out what you think is wrong. What would you do to fix it? How do you turn it around? Well, I'm never asking analysts that because they don't know enough about operations to do this. But if you looked at guys who have come in there, I'll give you a good example. When Motorola fell into serious trouble with handsets and they were losing a billion dollars in cash a year,

we went through a couple of CEOs that brought in Sanjay Jha from Qualcomm. I was quite surprised. And he did a phenomenal job. He walked in. He said, here are the problems. He recognized the problems. And he came up with solutions. You have to know the details of the operations to really articulate those. Hoctan is a perfect example of a CEO that could get a hold of Intel

and probably figure out where the value is. He would definitely be selling off divisions of it, but there's a lot of value in Intel. The problem is it's encumbered by all these other things that they're still trying to do because they've always done them. And you're seeing the results. You were right. Gaslinger came in and he accelerated everything. How is that working out? Look at the results. In terms of AI chips, just for an example, because that's the hot thing right now. Intel has built and canceled so many different versions of AI chip. They bought two companies. As soon as they bought the first one, they started trying to release the part.

And when they bought the second one, Habana, they canceled the first one. Habana has been in with them now for several years. And the products, they're forecasting maybe $500 million in revenue this year. Just put that perspective. You know NVIDIA's numbers, tens of billions. Broadcom is doing almost $10 billion in custom chips this year. So the AI business is slipping through their fingers. You're not moving fast enough

and you're not moving radically enough, I think, to save a culture that just is way too slow. Okay. Ed Snyder, thanks for joining us. You bet. Shares of Intel finished up 9.5% today. Well, it's time now for a CNBC News Update with Julia Borsten.

Julia. Morgan, a Brazilian Supreme Court judge just ordered social media giant X to be taken down in the country immediately. According to today's court decision, the order comes because Elon Musk did not name a legal representative for the platform. The judge and Musk have been in a months-long feud after X failed to comply with a legal order to block certain accounts accused of spreading fake news and hate messages. Florida Governor Ron DeSantis is facing intense political pushback over a controversial plan to put golf courses in a state park, despite saying he never approved it. The proposal is now on hold after bipartisan pushback and statewide protests. But

if the plan had been approved, golf icons Tiger Woods and Jack Nicklaus would have been involved in course design. And the film The Apprentice, which follows a young Donald Trump's rise to power in New York, has found a distributor. Briarcliff Entertainment will release the film in the U.S. and Canada in October, just weeks before the election. The film had struggled to drum up interest following its Cannes Film Festival premiere over potential legal action from the Trump campaign. Back over to you.

Julia, thank you. While consumer stocks were some of the biggest winners in August, but up next, Mike Santoli is going to look at a hidden warning about spending. That's in today's inflation report. Be right back. Welcome back to Overtime. Mike Santoli returns to dive deeper into this morning's PCE report and get some red flags on consumer spending.

Mike? Yeah, John, I don't know, maybe yellow flags at this point. The personal savings rate, which is a sort of a fallout number that, you know, take personal income minus personal spending. It's down to two point nine percent in the latest month. That goes back to level seen in around 2005 and six. Back before the global financial crisis, people were kind of using home equity cash outs and things like that to bolster their income. So clearly, some consumers are definitely stretched. It's consistent with what we've seen with an uptick in credit card delinquencies, just a little bit less of an income cushion, even though income growth is now running ahead of inflation. We've kind of worn down that pandemic surplus of savings

at this point. However, in aggregate, the financial condition of households is not necessarily as worrisome as you sometimes see before a recession. Take a look at the household obligations ratio. This is debt service plus some other payments, things like property taxes, auto leases, sort of aggregate household obligations as a percentage of disposable income. This goes way back. The shaded areas are recessions. And you see it's very low. A lot of that's because all those locked in low rate mortgages and the fact that you did have a lot of debt pay down when people got pandemic stimulus. So this shows you that, again, in aggregate for the overall economy, there's still spending power.

There's still even room to leverage up if people wanted to. But you definitely have to be very much aware of the recent trends and how perhaps people are losing a little bit of that cushion, Morgan. All right. Mike Santoli, thank you. Coming up next, the co-founder of renewable power company Iron, which is up more than 50 percent in a year, and how the company is moving from powering Bitcoin mining operations to fueling the AI revolution. Plus, we'll hear from the CEO of a company looking to use AI to solve one of the most time-consuming problems in the medical world when overtime returns. Welcome back.

This week, investors have asked lots of questions about whether companies are getting a return on their spending on artificial intelligence investments, including NVIDIA chips. Well, today, John takes time out with a CEO whose AI software company is helping doctors save time. Yeah, Morgan, Dr. Shiv Rao is founder and CEO of Abridge. It's a company whose software doctors use to listen in on appointments and take notes. That helps keep care providers, patients, and their families informed about care. And Shiv Rao is still a practicing cardiologist. A bridge earlier this month inked a deal with Kaiser Permanente, the nation's largest integrated health provider, making its AI clinical documentation

tool available to 40 hospitals, 600 medical offices. Now, when I first spoke with Shiv a year ago, he told me how he originally went to college as a history major and religious studies minor. Then he heard a story from an architecture professor about designing your own impact. One of the stories he told was about this ophthalmologist in India named Bengt Aswami, I think. And this ophthalmologist would sit on a revolving platform and have patients come in at three, six, nine, and around him. And he would sit there, and he would do a cataract procedure, and then he would ask his staff to spin him, and he would do another cataract at 3, spin, another at 6, spin, another at 9, spin, and he would just spin the whole day long

doing these 5- to 10-minute procedures. And it was pay-as-you-can, so essentially free. And by the time I had heard about this lecture, he had given eyesight to over a million people, and his daughter, who we'd taught the procedure to, had given eyesight to over 400,000 people. And I remember leaving that lecture mind blown. And this was junior year of college until a lifetime ago for me. But I remember thinking, okay, I'm going to make my parents happy. I'm going to pivot. I'm going to be a pre-med. And so that was the moment where I started to take those classes and think about what the future could look like as a doctor. A bridge, he says, about using AI to scale the

impact doctors can have, maybe a digital version of that rotating chair. The win at Kaiser is a big deal, not just because of the customer size. He says a bridge has been beating Microsoft's Nuance brand in bake-offs as a startup wins major customers. Remember, Microsoft bought Nuance for $20 billion during the pandemic. Nuance is our only consistent competition. And I'd say that on a weekly basis, we're announcing a new hull system that we're partnering with. And certainly, we frequently get into these head-to-head competitions with them, and we actually, at this point, welcome it. In fact, we sometimes ask health systems to do a head-to-head because we want to make sure that they understand, that they get the

best sense of what's out there and also what's going to be the best fit for them. So the timeout takeaway, show and tell. We were hearing this from Google Cloud and Accenture CEOs just yesterday. We're at the stage Google Cloud and Accenture CEOs just yesterday. We're at the stage where AI software providers are beginning to separate from the pack by showing how their technology outperforms lower tech methods and high tech rivals. And the bar itself is high because the costs, NVIDIA chips, can be too, Morgan. Great stuff, John. Well, sticking with AI, here's the under-the-radar play you may not have heard of before. Iron is a data center company powered by renewable energy that houses GPUs for power-dense computing like Bitcoin mining.

And it's the latest name in the crypto ecosystem to make a move into AI. And the company reported Q4 results this week, recently hired Morgan Stanley to evaluate the monetization opportunity in the AI data center market. Shares are up 50% over the past 12 months. And joining us now in an exclusive interview is Iron co-founder and co-CEO Dan Roberts. Dan, welcome to the show. Logan, thanks for having me. So you started life as a Bitcoin miner. I realize that that's your main business here. But this AI opportunity, how are you thinking about it, especially at a time where your data center capacity, at least some of it as it comes online, is up for grabs? Yeah, look, absolutely. The majority of our revenues to date have been through Bitcoin mining,

but Iron was founded with my brother Will in 2018. And fundamentally, we set it up to solve the challenge around power in the digital world, which grows at an exponential rate. You've got all these exponential demand drivers, whether it's Bitcoin, whether it's AI, whether it's some future technology tomorrow. So our vision was to build a power dense next generation data center platform to monetize it. So today, we're operating Bitcoin mining machines right next to latest generation NVIDIA chips training AI models. So we just mentioned that you're working with Morgan Stanley.

Are you in talks with hyperscalers or with other prospective customers to bring on some of that AI compute in your facilities? Yeah, look, we are, absolutely. I can't go into details. We're live in a process at the moment, but one of the features of our business is we have 2,300 megawatts of power and land secured.

To put that in perspective, that is more than three times the aggregate capacity of all the data centers in Silicon Valley and San Jose combined. So it's a lot of power. It's a lot of land. It's got a lot of future applications. So the opportunity to explore partners and alternative ways to monetize that is something we're really excited about. I'm seeing this 100% renewable energy approach. How's it possible to do that in scale?

Yeah, that's been fundamental to our business since day one, and it actually goes a step further. Not only do we only use 100% renewable energy, we will only enter energy markets where the introduction of our demand for energy is solving public market problems. So in Texas, where the majority of our power is, we're able to respond live time to high power prices and curtail our compute so we're almost a demand side battery so when the wind stops blowing the sun stops shining there's a network outage some other weather event and power prices peak and demand for energy goes up we're able to automatically put our computers to sleep give that energy back to the grid for the benefit of the consumers. And as I mentioned, the Bitcoin mining, we've had Bitcoin pretty range bound, especially after the halving we saw earlier this year. Your outlook for Bitcoin and how should we be thinking about the state of the mining ecosystem right now, especially as you do see more of the infrastructure

that's out there starting to shift gears and dedicate towards things like AI? Yeah, look, ultimately, we're building the picks and shovels. We own the land, the data capacity, access to all this renewable energy. The ability to monetize this in various different computing applications is really exciting. But fundamentally, we are very positive on the future of Bitcoin. We wouldn't be expanding to become one of the largest listed miners in the world if we didn't have a constructive look. We have gone 8x in capacity since the start of last year, 2.5x since the start of this year, and we're going to double again in the next 120 days. So we're very constructive on it.

And I think when we look at Bitcoin, yes, it's volatile. But in order to grow from zero to over a trillion dollars of value in the space of 15 years, you need volatility. And if you think about Bitcoin as gold 2.0, scarcity, durability, transferability, all those objective characteristics that give gold value, Bitcoin is better. It's just building its track record. And if one day Bitcoin happens to catch up to gold in terms of the overall value and market capitalization, we're looking at around $1 million per Bitcoin. When that happens, who knows? But it's a really good asset. We're really positive on it. Okay. Dan Roberts, co-CEO of Iron. Thanks for joining us.

Thanks, Morgan. Well, it's been a big week for news about human spaceflight, from Boeing's stranding of the astronauts on the International Space Station to Blue Origin's latest launch to an FAA move to ground SpaceX's Falcon 9 rockets. Well, up next, we'll hear from one of the architects of NASA's commercial crew program about this week's developments. Stay with us. Up next, one of the architects of NASA's commercial spaceflight program weighs in on the government's decision to use both Boeing and SpaceX

spacecraft. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. It's been a big week for human spaceflight news. Yesterday, Jeff Bezos Blue Origin sent its eighth crew of paying customers to suborbital space. That's what you're seeing on your screen right there. And after several attempts, the all-private Polaris Dawn mission with SpaceX is poised to launch, perhaps as soon as next week now, with a crew commanded by Shift Force Jared Isaacman gearing up to conduct the first private spacewalk. Now, despite reports of an FAA grounding of Falcon 9 thanks to a botched booster

re-landing after a Starlink mission earlier this week, Polaris Dawn is awaiting a new launch date due largely to weather. Well, Lori Garver, former deputy administrator of NASA under the Obama administration and now an operating advisor at Bessemer Venture Partners, sees Polaris Dawn as a critical milestone for commercial space. We have a need to be able to take some risks, honestly, that the government has become more reticent to do. So it's a moment for sure. Well, Garver was also a key architect of NASA's commercial crew program, which

also recently made news after the agency said it would use SpaceX's Dragon to send its astronauts home instead of Boeing's Starliner, a capsule that will now return to Earth empty as soon as next Friday due to technical issues. It's a big reversal from commercial crews' early days, which were just over a decade ago, when Boeing was seen as a clear frontrunner over SpaceX. We were really receiving a lot of pressure to go down to one competitor. And the competitor that people wanted was Boeing. They wanted Boeing because they felt Boeing needed the lion's share of the money. And they thought Boeing had a better chance of being successful.

Frankly, it was really hard for NASA to grasp a company like SpaceX, you know, new to human spaceflight, new to spaceflight generally, that for the amounts of money they proposed that they could do this was not fathomable for many people. To bring this full circle, Claris Dun Don will represent the 14th human spaceflight mission for SpaceX when that happens. For more on all of this, as well as what the November election outcomes could mean for space policy, check out my podcast. Scan the QR code right here. Listen to Manifest Space wherever you get your podcasts. Well, we had quite a week. We had those NVIDIA earnings that we've been looking for. People in bars across the nation were watching Overtime trying to figure out what was going to happen.

Shout out to them. Yeah, I mean, and it's not just on NVIDIA days. There's always market action after the close. Winners stay late. That's right. We got more earnings next week. We also have the jobs report next week. In the meantime, a higher close for the S&P for the week and for the month. That does it for us here at Overtime.