Closing Bell - Closing Bell Overtime: Black Friday Edition 11/24/23

Episode Date: November 24, 2023

Stocks logged their fourth-straight week of gains in a holiday-shortened session on Wall Street. Barry Knapp from Ironsides Macroeconomics and David Bahnsen of The Bahnsen Group weigh in on the rally and how long it can last. Analysts Brian Nagel and Olivia Tong share their retail shopping lists with top picks heading into the holiday season. Evercore's Amit Daryanani talks about reports that Apple's iPhone sales dropped during China's Singles Day sales event, and what that could mean for the holidays in the U.S. Plus the latest on the drama at OpenAI, the top transports to watch, the CSX derailment, and new developments in weight loss drugs.

How do you top Santa? Well, stocks mixed in this shortened trading session, but the major averages locking in their fourth straight week of gains. This is the longest weekly winning streak for the S&P and Nasdaq since June. That's the scorecard on Wall Street, but the action is just getting started. Welcome to a special edition of Closing Bell Overtime. I am Morgan Brennan. John Fort is off today, ahead on today's show. Apple dipping in this shortened session after reports said iPhone sales dropped during China's recent Singles Day event. We'll talk to an analyst and a shareholder about what that portends for the holiday season here in the U.S. Plus, we've got your holiday stock shopping

list from retail picks to beauty bets and the transports that stand to benefit the most in this crucial period for the consumer. Let's begin with the market, though, as we wrap up yet another winning week. Healthcare staples and communication services leading the gains this week for the S&P while utilities and energy lagged. Joining us now is Barry Knapp of Ironside's Macroeconomics and David Bonson of the Bonson Group. Good afternoon to you both.

I will start, David, with you and the fact that we have seen this recent rally. Does it continue? Well, my view is always the same, that anybody trying to predict what will happen in the next day, week or even month probably shouldn't be listened to. And since I want people to listen to me, I'll avoid trying to speculate. It's a coin flip. The idea of a Santa Claus rally of some big move up near the end of the year, that's exactly what has just happened. And to get forward momentum from here without another earning season and without any particular fundamental news to drive it, I guess the bond yields could go lower, in which case you may get more multiple expansion. But people just have to understand that that's really what's driving the market right now is nothing more than the

inverse of bond yields, just getting a little bit more boost in valuation to what's already a pretty expensive market. So stocks continue to take their cue from bonds. And of course, you know, the Santa Claus rally actually covers the last five trading days of the year, the first two trading days of January. But overall, seasonally, this is historically a strong time for stocks. November to January, it's the year's best consecutive three-month span, historically speaking. Barry, whether it's this year or perhaps more importantly, looking to 2024, where do we go from here? And I ask that knowing that you do believe that stocks are going

to struggle early next year. Correct. At the expense of David now suggesting that people shouldn't listen to me, I am going to try and put a little more details around this. The favorable seasonality and the rally that we've had is a consequence of what I've been describing as a Fed policy put. When 10-year treasuries went to 5%, that tightening of financial conditions really got the Fed to stop the rate hikes and essentially confirm, although they're still threatening it, that they've now are into a full on pause. To get to an actual policy pivot, there's three different ways to think about things that could happen to get them to actually cut rates in the first half of the year.

And I think they do need to cut rates in the first half of the year. We all know the household sector is pretty insensitive to rate hikes because of terming out mortgage rates. Large non-financial corporates are similar. But the banking system, small banks in particular, small businesses, real estate, particularly multifamily real estate, and even the banking system being able to fund the federal government, these are points of vulnerability that require a normally shaped yield curve. So assuming that the Fed will do what I think they'll do, which is to start to cut rates in the first half of the year, you have to think about, well, what's likely to cause that? Sure, inflation could continue to go lower,

but they have a 2.6 percent forecast for the end of next year. To me, that might even be a little low. I don't think we're going to get that much more disinflation so that the Fed can cut because they can, not because they have to. The most likely cause for them to actually start cutting rates is the unemployment rate to go through four percent. I think that's likely. I think the labor market is weaker than the headline payroll gains indicate. But that it's hard to imagine that that happens. The unemployment rate goes up and we don't get concerned about the earnings David was talking about. So that's the transition in the beginning of the year that I think is going to be pretty

bumpy. Yeah, David, it does raise the question, when does bad news actually become bad news for the market? And I listen, I asked that in a week where it's been really rough for crude oil. And yeah, energy stocks squeaked out again, albeit barely this week. But it raises concerns about the macroeconomic picture. That's right. When oil prices are very volatile around geopolitical issues, it's harder for macroeconomic concerns to factor in. But when they weaken because of eroding demand, that can be a leading indicator to something more macroeconomic. I think that the earnings picture of the last couple of quarters were very clear that earnings probably troughed six, nine months ago, and the decline was about four or five percent

from the peak. That wasn't that bad. And right now, margins are very healthy. We're going to go into the first quarter looking at fourth quarter earnings, and I think it'll be more of the same. So ultimately, your point is a good one. Will bad news actually become bad? Because right now, people have liked any data point that indicates the Fed may be pausing or weakening.

The main reason, by the way, for the Fed to begin cutting is because there's no reason to be this tight. They got way too tight for no reason. Inflation is at a two handle right now, if it weren't for the ridiculous shelter lag that everybody knows. Shelter is not up 8% year over year. So real headline inflation is a two handle now. And I also want to remind people we're going into an election year. And that is a good reminder because, you know, there's some very specific patterns that tend to play out in election years. Gentlemen, thanks for kicking off the top of the hour with me, David and Barry.

Just taking a look. The Nasdaq finishing the day fractionally lower. The S&P basically flat, 45, 59. and the Dow finishing up a third of one percent. But let's turn now to semiconductors. NVIDIA pulling back after reports said the company was delaying the launch of new China focused AI chips. Christina Partsenevelis is here on set. She joins me with the details. Yeah, well, so NVIDIA has been working on this workaround AI compliant chip

destined for China for quite some time. And these chips were rumored to be launched on November 16th. Clearly, we're past that date. And Reuters today saying those chips are delayed until Q1 of next year. Shares dropped about 2% this morning. Coming back, they closed, you know, still close to 2%. But it shouldn't come as a surprise. And the reason why I say that is just on Wednesday,

I reported that NVIDIA management had warned that these U.S. compliant chips for China would be coming in the next few months. And they said that on the earnings call. NVIDIA's CFO, Colette Kress, saying, quote, these products, they may become available in the next coming months. However, we don't expect their contribution to be material or meaningful as a percentage of the revenue in Q4. That was said Tuesday night. Investors sold off shares earlier this week on concerns that NVIDIA wouldn't be able to keep up this pace of growth without a huge customer like China. And Wedbush's Matt Bryson writing today that it's not impactful in the near term if there's delays, but over the intermediate term, China delays could be meaningful when figuring out when or if there is a peak in revenue for NVIDIA.

And we do know China is still such a big market in terms of revenue for NVIDIA. I love that you put some context around this. One of the other things that came out of that earnings call, though, was the fact that they're going to see lower sales this current quarter in China, but they're going to make that up elsewhere. Any kind of context around what that elsewhere looks like or where it is? Well, they're just, the assumption is that there's so much demand for their GPU chips, which we know the backlog is anywhere between 29 to 36 weeks, some even a year longer. So they weren't specific in saying, hey, it's the United States. Hey, it's going to be Europe. It's just overall a lot of these companies, including hyperscalers that are trying to get their hands on it. The United States,

so in terms of growth, only grew 4 percent quarter over quarter. China grew 47 percent. So it is a big deal. And I'm not saying justified, but why it was a concern for a lot of these investors when you say, hey, China is going to meaningfully impact our Q4 revenue. I mean, we're largely through the earnings season now. Semiconductors, we know, are generally an early indicator of where the economy globally is headed. What have we heard? If we break it down, because you can't lump them all together, right? So AI is a separate ballgame.

NVIDIA falls in there. AMD had some weakness when it came to auto, had some weakness in gaming, which we didn't see from NVIDIA. In terms of this cycle returning for PCs and smartphones, we're starting to see that, you know, hit that bottom. Intel and Qualcomm pretty much showed us that. But then you have on Semi that warned of some industrial weakness, some auto weakness, and then that stems into the whole EV sales, because everything's connected, right? You need these semiconductors and every single electronic thing in the entire world. The concern is that EV demand is slowing down, and so that's affecting

certain silicon carbide producers. And then also there's some weakness on the semi-cap equipment side. So that would be more of like the KLA, LAM. But when you factor in China stockpiling, rushing to get all of that equipment in just in case it gets blocked by the United States, it kind of offsets any demand weakness elsewhere. It's a really interesting time. It's this normalization coming out of the pandemic, but then also layer on the geopolitics on top of it. It's a great time to be a semiconductor reporter. Like who would have thought this four or five years ago? Not me, that's for sure.

Christina, thank you. Thanks. When we come back, it's retail's biggest day of the year. We'll discuss the names that stand to benefit the most today and throughout this holiday season. And speaking of retail, one in four Americans say they are still paying off their holiday debt from last year. That's according to a new survey from WalletHub. Overtime is back in two. Welcome back. It is the busiest day of the year for retail. This holiday shopping officially kicking off today with Black Friday. Courtney Reagan is tracking the data and the foot traffic

at the Palisades Mall in West Nyack, New York. Court, what are you seeing? Hi, Morgan. So traffic is definitely peaking now, at least so far since we've been here. We got here two hours before the mall opened. We did see a couple people in line at the Best Buy outside right before doors open and then went in in a very orderly way. But right now, definitely getting heavier as the day here goes on, which I would expect. And what we've seen, frankly, over the last several years, the cadence of the day really shift to traffic coming later in the day. I spoke with analyst Eddie Ruma from Piper Sandler. He says he and his team have observed some slower in-store traffic at Target and Walmart, but better shopper counts at the malls they've been to as well. Black Friday's in-person frenzy is certainly calming down, I think, this year and in recent years past because of the identical deals that are now offered online. And frankly, great deals offered before and after this Thanksgiving and Black Friday sort of 24-hour stretch. Right now, the top search for doorbuster deals online, Amazon number one, then Target, Kohl's and Walmart in that order, all seeing higher search interest year over year compared to that same search on Black Friday last year, according to Captify. Cashback company Rakuten, they're seeing a 4% increase in overall trips today online. That is slowing a little over the last couple hours, but also possibly because most of

their business is done online. We're seeing in-store traffic sort of pick up here. Rakuten says health and beauty retailers are seeing the biggest trip boost, followed by travel and then department stores. And here's a live look at retail traffic for Shopify merchants around the world, even though we look at this largely as a U.S. holiday. Others certainly are shopping for the holidays around the world here. The average U.S. holiday. Others certainly are shopping for the holidays around the world here. The average U.S. order, $119 and change on Thanksgiving Day, at least in the U.S., slightly lower for that global average. Now, Adobe predicts that online sales will grow by 5.7% today over last Black Friday to $9.6 billion, Morgan. But we know this is a really important five-day stretch for retailers between Thanksgiving and Cyber Monday.

Shoppers are expected to spend a little more than $130 billion in-store and online. Back over to you. I mean, it's still a very big number, Court. What's curious to me is, and we've seen this at malls across the country, the mall specifically you're at is not that far from CNBC's Global HQ. There's a lot of retail space in that mall, for example, that's experiential. It's not about buying goods. And it raises the question when we talk about all of this spending across this key holiday period, how much of it is actually

going to goods versus services? Absolutely. Such a good point, Morgan. You can't see it on camera, but I'm literally watching people climb on this obstacle course that is like levels high in the middle of the mall. There's ax throwing, there's gun shooting here, there's an ice skating rink, there's a Dave and Buster's, there's all sorts of experiential things here at this mall. And on a day when children are off school and families are together, that is a big reason why you see people come to the mall. They do say that deals are the number one reason, but tradition is number two. And I'm seeing a lot of folks walking around, not all of them have bags, some of them do. And so at least the retailers are potentially getting some overflow foot traffic from those that might not have initially come with that intention,

but might see a deal too good to pass up. All right, Courtney Reagan, thank you. Thanks, Morgan. Let's talk more about the potential retail winners and losers with Oppenheimer Senior Analyst Brian Nagel and Raymond James Managing Director Olivia Tong. Good afternoon to you both. Brian, I'll start with you because Courtney just teed it up really well. Your expectations for not only this weekend, but for the holiday season at a time where everybody's so focused on the consumer and seeing something like Black Friday activity as, I don't know, a statement on whether we're headed towards a recession or whether the economy is still strong. Yeah, well, good luck. Happy Thanksgiving. I think Courtney summed it up quite well. So my daughter and I were at the Roosevelt Field Mall in Long Island just a short while ago. We spent

a couple hours there. You know, from what I can see now, I was early. I was early at the mall. I thought traffic was a bit light. Now, again, that's by no means a perfect science. I go there essentially every year, but it did seem a bit light. I saw more promotions, you know, nothing really dramatic, but, you know, a lot of 25 to 50 percent off. You know, so, you know, but to answer your question, look, Black Friday is not as significant as it once was. You know, the holiday spending season is now spread over a much larger period of time. And like everyone talks about, we're shopping online. So, again, Black Friday's lost some of its relevance.

But in the whole discussion of a potential forthcoming recession, the health of the U.S. consumer, we're all going to be watching this. And I think at the end of the day, I think what we're going to see is basically an okay holiday selling season. Okay. Olivia, do you see it the same way, especially given the fact that you're focused on

an area of retail that has been very, very resilient, which is self-care and it's things like beauty products when we know people are really grooming themselves and going out to experience life post-pandemic?

Absolutely. Well, thank you again for having me and happy Thanksgiving. I would agree with a couple of things from our conversation so far, and we've been out since Wednesday and this morning. It seems like the consumer is looking for more value. They are being a little bit more budget conscious than they were last year. There's a wider range of price points. There also seems to be more in stock. Of course, a lot will sell out on day one, but there are different promotions on different days, which people are keeping an eye on.

And then, of course, the other thing to think about is last year, China was still in lockdown. Right. So there were some supply chain challenges and what have you. So there was a bit of a sense of urgency. Make sure that you get your product because it might not be there when you come back. Whereas this year, it does feel like their supply chains are more open. So there is not that same level of urgency. Whereas this year, it does feel like their supply chains are more open. So there is not that same level of urgency. You're correct in thinking as far as in-store, in-person shopping. It isn't as important as it used to be.

A lot of deals happen starting Tuesday night, went into Wednesday. They take a little bit of a pause on Thursday for about half a day. And then now you see minute after minute, all the emails coming in of all the deals that are out there. Last one I want to make with respect to beauty, you're right. Beauty has been very, very resilient. And this aspect of self-care, of taking care of yourself, of taking care of your family and friends as well, has really resonated on top of obviously social media as well. So Brian, this raises the question, who's winning, who's losing in terms of where consumers are putting their value conscious dollars to work right now? What does that mean in terms of your stock picks? Well, I'll make a few really quick comments on what I saw in the mall.

So Lululemon, very crowded today. Now, I did see, I thought, more promotionally priced product at Lululemon. But again, that was one of the busiest stores i went to and then just to you know discuss my colleagues comments there i don't follow the beauty category but sephora that's where my daughter shopped today was very very crowded as well but as far as we think about you know really the picks coming out of here again once we get through the holiday season and we're looking to 24 i still think the athleisure category is positioned very well. So I just mentioned Lululemon.

I think Nike is priced on sale here as a stock. And I think retailers like Dick's Sporting Goods are positioned very well as well. Okay. Olivia, I'll put the same question to you, knowing that we get earnings from Ulta next week. What stocks do you stuff in your stocking? Yeah, a couple. We really like Ulta.

They're 25% off their highs, trading at about 15 times PE, 11 times EV, which is really inexpensive for a leader in their category with a wide range of price points and arguably one of the best sets of consumer data out there because of its loyalty program. We were out there this morning. Lots of great deals there across a range of price points and across a lot of categories. And the deals are very different depending on the brand. So some cases you get points, some cases you just get a percentage off. Obviously, gift sets as well. Another stock that we like that is not necessarily as quality dependent is Elf.

That stock is starting to move higher now, but still down 18 percent from its highs. And we rate them strong buy. We have them on our analyst's current favorite list. Like I said, Holiday isn't as big of a needle mover. But as you think about a value conscious consumer, that's really going to matter because this is a stock that has value price points and a lot of innovation as well. Olivia Tong and Brian Nagel, thanks for joining me on this Black Friday. Thank you very much. Apple pulling back on this Black Friday after a new report said iPhone sales in China fell during Singles Day.

We'll talk about what that means for the company's prospects during the holiday season with an analyst and a shareholder. And check out the move in robotic vacuum maker iRobot today, making a clean break higher after Reuters said Amazon is on the verge of winning regulatory approval in Europe for its $1.4 billion acquisition of that company. It's been a long time coming. Shares finished the day up 39 percent. Today, we'll be right back. Welcome back. Competition is taking a bite out of Apple and China. Smartphone sales for the company fell 4% during China's Singles Day event, according to new data from Counterpoint Research. Meanwhile, Huawei sales were up 66%.

Could this be a sign of a ho-hum holiday season for Apple? Well, joining us is analyst Amit Daryanani from Evercore ISI. Amit, it's great to have you back on, and I'm going to start right there. How much should we read into data from a third-party resource about China's Singles Day event? Listen, it's a data point that certainly should be looked at. And I would say that the biggest worry on Apple's software, my investor base right now, is what happens in China, especially with Huawei starting to do incrementally better, right? So I do think this is relevant to focus on. The one thing I would say is Huawei did have extremely aggressive promotions through the Singles Day in China.

They're offering their version of AirPods for free with the 860 purchases, for example. Apple did not have any incremental aggressive discounting or promotions going on. So I wonder if that was an element at play as well. But certainly with Huawei having a product in market in China, there's some debate on what percent of the 35 million iPhone units, if you may, that Apple captured in China over the pandemic will start to reverse back to Huawei. So I do think there's a bit of a concern there. Certainly worth monitoring, but I do think the promotional activity by Huawei was a lot higher on Singles Day than by Apple. And of course, the competitive landscape is very different in the U.S. with Apple versus in China. We don't have this smart device, this device from Huawei to contend

with here. But how much, especially if Apple wasn't necessarily as promotional as its competitors, how much is that a harbinger of potential demand and activity we'll see for the company here this holiday season? Yeah. So if you look at the U.S., right, I mean, actually one thing I should say, and this is true across iPhone sales, ASPs, we think, you know, with the iPhone 15 cycle versus 14 should be up about three points. So you do have a nice little ASP bump as you go forward. And, you know, to your point, in the U.S., I mean, demand has held up from what we can see stable to maybe slightly better versus iPhone 14 cycle. So call it flat to up modestly, up low single-digit units in North America. And ASP is doing a little bit better than that, right?

So 5%, 6% revenue growth for Apple in iPhones in North America. And to your point, if you look at the promotional activity through Black Friday, I think the best deals on Apple right now are really on the last gen phones, iPhone 14s. iPhone 15s seem to be holding a really, really good price. There's no real discounting across the different continents on the phone right now. OK, so what does this mean in terms of buying the stock right now? Is it still a buyer? Do you wait for a more meaningful pullback? You know, I feel there's way too many people waiting on the sidelines for Apple to pull back for the last three years now. So I'm not sure if I would kind of sit and wait for that.

My gut on Apple would be this, which is, listen, it's not about iPhone units as much as it used to be anymore. iPhone units will grow two, three, four percent maybe. It's really about how well can services do, which are going up double digits, mid-teens right now. How well can wearables penetration do? And gross margins keep going up, right? My take, our take is, listen, it's a 750-plus EPS story. This should be treated like a consumer staple stock, which means in the 30 times PE zone is fair. And the stock should work into the 210, 220 kind of price points. So at 190, we think it's a very attractive name to own over the long run for investors. Okay. Now, if I go a little more broad with you here,

for the sake of the holiday season, the fact that we are focused on where consumers are putting money to work right now, you do cover a number of names that are very involved in, for example, the PC market. Expectations for electronics. Can we say that we have seen a bottom and signs of stabilization after the huge pull forward during the pandemic? You know, on PCs, I would say yes, you have. Right. I almost want to say PCs might be following, you know, FIFO from an accounting perspective. Right. They were forced into the correction of the post-pandemic and they should be the ones that are post-out. Channel inventory, the best we can see in PCs is fairly at the lower end of the ranges.

So I do think, as you think about PC units, right, they used to be at 250 million units pre-pandemic. They went to 350 at the peak of the pandemic, and they're back to 250. Our take, PCs will start to recover over the next six to 12 months. Consumers will obviously lead the way right now. But in the next six, nine months, we think as Microsoft will end up like Windows 10,

you should get a nice little enterprise upgrade cycle. I do think names like Dell, names like HP will benefit from a slow and steady PC recovery over the next 12 months. Okay. And we get results from Dell next week. Amit Dharianani, thanks for joining me. Thank you. It's time now for a CNBC News update with Contessa Brewer. Hi, Contessa. Hi, Morgan. 24 hostages held by Hamas are now free, including 13 Israelis and Thai citizens. And according to Israeli officials, 39 Palestinian women and teenagers were also released as part of the ceasefire deal.

A senior administration official tells NBC News no Americans are expected to be released today. That includes a little girl who turns four today. Amazon workers at multiple locations across Europe walked off the job protesting the company's work practices. Organizers say the strikes and the protests are part of a campaign called Make Amazon Pay. They'll take place in more than 30 countries from Black Friday until Monday. And the largest iceberg in the world is now on the move. The Antarctic iceberg is nearly 1,500 square miles. That's roughly three times the size of New York City. According to scientists, it broke free after being stuck on the seafloor for more than 30 years. Got to get out of the way of that. And also,

Morgan, just saying, our mother really needs to stop dressing us alike. What you owe for this? Which just means we both have really great taste. Contessa Brewer, thank you. We do. Yet another twist in the Sam Altman story, as reports say the turmoil at OpenAI may have started because of a big warning from researchers about a breakthrough in super intelligent AI. Up next, the CEO of a startup that's using the company's tech to bring AI to Wall Street and whether his confidence in the firm has been shaken. Stay with us. Welcome back to Overtime. Some new reporting on the turmoil going on at OpenAI.

Reuters now saying several staff researchers at the startup sent a letter to the board ahead of Sam Altman's ouster, warning of a major AI breakthrough from a project known as QSTAR. Joining us now is Jan Szilagyi, co-founder and CEO of Toggle AI. Toggle has a partnership with Microsoft to train AI and finance, and it's also in talks to bring this technology to some of the top banks on Wall Street. Jan, it's great to have you here. Now, you work with Microsoft. You also, maybe through this partnership, break it down for me, work with OpenAI as well. So if that's the case, I just want to get your reaction to all of the drama we have seen over the past week. Yeah, so first, thank you for having me. We do, yeah, we work amongst others.

We work with GPT foundational models. And so that is definitely something that everything that's been happening with OpenAI is very relevant to us. In terms of the drama, just what we've seen this past week, I think we see it in the conversations with prospective clients,

and those range from the likes of UBS and Fidelity and so on. There's a lot of uncertainty in this space, and I think that pertains also to those who are developing these models. So I understand that when a letter like this comes out, there is obviously concern, okay, have we gone too far? Are we going and moving error, and so on. I mean, this has been sort of how this entire, at least in the media, how this entire back and forth at OpenAI has been framed as ethics versus profits. When you start hearing reports about AGI, artificial general intelligence, and maybe the fact that we're on the cusp of it sooner than folks had potentially realized, at least outside of the tech community, does this change your approach or just add more certainty to your approach in the sense of it's uncertain, have to move with care?

Yes. So move with care, absolutely, particularly because we work with financial institutions. There is, in addition to the ethics consideration, also a regulatory consideration. So, for example, when your client is, for example, Fidelity or a large investment bank, there is also that aspect to think about. What can we allow to be processed by a system that we don't necessarily fully understand. The way we have approached it so far is focus on things that the system can do immediately that are easy to understand. So one of them has been just the intermediation between the user and the analytics software that the investing co-pilot that we at Toggle have built really is.

So when you have certain questions, can you rely on a language model to take what you would like to get done and interpret that for the machine to do it on your behalf? So almost like an analyst would. But those are, to an extent, very small applications of what the greater fear is that this at some point becomes an investor, an advisor, a mentor, a tutor, and so on, which I think is quite a bit further off, even when you look at the letter that you were mentioning. You know, I think a lot of it is about projecting the fear into the future versus the capabilities today. But given how fast it's moving, it's not unreasonable to have that discussion now,

if that makes sense. Is that, though, where Toggle is working towards this idea of basically being able to use AI to supplant analysis in a more meaningful way and other activities that we see on Wall Street? I think ultimately the hope is that we can increasingly get in that direction. I think there's obviously a lot of ambivalence about it, particularly by those who are currently doing those jobs. Nonetheless, I would say that there are a lot of steps between where we are today and kind of that artificial general intelligence situation. The fear is that we will be unable to control it once it reaches that state, right? So if machines become so good that they start to surpass us in the ability to think creatively and so on, is that going to be too late to have this discussion because we'll have moved past the point where we can do much about this?

I just worry sometimes that this fear will cripple the development in the short term that I think is genuinely actually helping us without necessarily jeopardizing the overall welfare of the human race, if you will. It does raise the question, though, and, you know, as you see markets, and we've already seen it to a certain extent, right? But, like, as you see markets become more electronic, as you see machine learning or now generative AI, you know, become more prevalent within the financial community, does it raise the risk that you could see an AI-led market crash or so-called fat finger,

if you will? The short answer is yes, of course. As we incorporate these technologies, I think the risks of something like that happening are absolutely higher than if we had completely shunned that technology. However, I think it's also the case that over the years and decades, we have incorporated novel approaches into markets and trading. And, you know, we had high-frequency trading and algo trading and so on. From time to time, all of these have led to a mini or a large disaster. And ultimately, humans can do that, too. I mean, fat finger ultimately is really an error

by a human. And we don't say, oh, we should no longer have human traders in charge of this. So it's a question of the scale of the problem that we think AI will ultimately cause. And I would say that here is where the concern goes, because we think that we think AI will ultimately cause. And I would say that here is where the concern goes because we think that we can understand algo trading and human error far better than the capabilities of some kind like a general AI machine. Okay, I'm going to bring this full circle. As someone who is building out a company that is using Microsoft and some of the capabilities through chat GPT, everything we've seen over the past week, does it accelerate the need for a more diversified supply chain, for lack of a better term? So this is an interesting point. Yes, I've been thinking quite a lot about this because

as you were highlighting, the concerns that people now have surrounding open AI is that they have clearly been a pioneer in the field. So if there's turmoil there, does that stop progress? And I would say that even before this happened, there was definitely a push towards decentralization to an extent, people relying on a range of foundational models, including ourselves. So, you know, when we work with the hedge funds like Diamond, Millennium, Exodus Point, any of these really, really large clients, their concern always will be, insofar as technology goes, that you're not overly reliant on any one source or that you're not, you have to be robust when it comes to your infrastructure. And so here too, I think for financial services, there has already been a push to make sure that

your platform would not be dependent just on a single one, even if it's developed by what is currently the best one. Nonetheless, I think that their momentum has been really good because it's pulled everybody else along. Okay. Jan Szilagyi, it's great to have you here on set of Toggle AI. Thank you. Thank you very much. Really good to be here. Well, up next, a top transports analyst on why shipping data could mean consumer slowdown concerns are overblown. And check out the names hitting new 52-week highs today. Chipotle at record levels, dating back to its 2006 IPO. Visa also setting a new record. Lows hitting highs dating back to 1972 and progressive touching all time high levels as well.

Overtime. We'll be right back. Welcome back. CSX in focus after a train derailed, spilling molten sulfur on Wednesday outside of the small Kentucky city of Livingston. At least 16 rail cars were involved and local residents were encouraged to evacuate. They've since been allowed to return to their homes. CSX saying with a fire extinguished, teams verified that two molten sulfur cars were breached and lost a portion of their contents. No other hazardous materials were released.

Cleanup efforts are underway and rail cars are being removed with continuous monitoring of air and surface water quality to be performed until crews complete the removal of all of those rail cars and materials from the site. The railroad saying, quote, CSX is committed to recovering all product released and mitigating environmental impacts before rebuilding our track. Shares of CSX finished the day up slightly, about one quarter of one percent, but it comes in a year where rail safety has been

under heightened regulatory scrutiny after a high-profile Norfolk Southern derailment in Ohio that happened earlier this year. For more on this story and the broader transports, and of course the logistics backdrop as we enter the holidays and the peak shipping season, let's bring in Donald Broughton, Managing Partner at Broughton Capital. Donald, it's great to have you on. I do want to start with the rails. You brought us some really great charts, but I do want to start with the rails, given what we saw with CSX and the fact that there have been focuses on and concerns around rails and regulating them even more so. Well, deregulating rails saved the industry back in 1980. And I would argue that if you look at the operations of every railroad, they're trying their best to be ever more safe.

Yeah. OK, so I mentioned it. You brought us some charts on a day where we're talking about retail and whether consumers are to go out and spend and spend in a meaningful way on goods this holiday season. What is your data showing us? Well, this is showing a number of things. First of all, let's just step back a few moments and say, you know, remember that everybody calling for a recession so far has been waiting for Godot. And we've really gotten to the sequel. You know, the sequel of waiting for Godot is, guess what? They're still waiting for Godot. But if you look at the data, what the data says is that we've over tripled what we're spending on domestic manufacturing facilities. So we're doing everything from gas liquefaction plants so that we can replace Russia as a supplier of BTUs aquifers, aquifers, aquifers, aquifers, aquifers, aquifers, aquifers, aquifers put up a chart that shows private manufacturing, manufacturing, construction spending really going almost parabolic here in the last couple of years, as we've continued to see, to your point, the spending, the fiscal spending and the. So that changes things. But what it does over the long term

is it means there's more tonnage here because if you import a car, as the example I always use, if you import a car, you're moving it from the port to the dealership, you just give one freight move. But if you're making the car, all that's raw materials is componentry here, you're moving metallurgical coal and iron ore from the mines to the steel plant,

steel from the steel plant to the parts plant, parts from the from the mines the steel plants deal from steel plant the parts plant parts of our plant to the to the to the assembly plant and then finally to the dealership you get it you get a multiplication of domestic tonpahs so that's that's one of the factors that's happening the other factors happening is is that the economy is continuing to grow despite all those that are waiting for the recession it's still growing and if you look at I like one of our favorite things to look at is consists per capita does consumer disposable income now if it continues to grow and it's been growing every single month this year at six and a half to eight point six percent then they're going they're gonna continue to spend and so far this

year they've spent mostly on experiences there was a record number of of US tourists in Italy this summer okay fine that makes sense especially the relationship to the dollar to the euro but eventually you know you get back from Costa Rica yeah you don't go to Costa Rica again the next month. At some point, you begin to spend on goods. And if you look at right now, inventory sales ratios are very low. Container flow, after being import container flow of goods to buy at stores, while being

disappointed through the first six months, has actually really started to pick up in the last couple of months. Okay. It's going to be interesting to see how that plays out when we know we've had a year of inventory de-stocking for the retailers. Donald Broughton, it's great to have you. Great to be here. And we'll keep our eyes on UPS and FedEx as well for the holiday season. Those parcel carriers always tend to be a big focus. If you're not hitting the mall today, there's a good chance you're turning to social media for the holiday season. Those parcel carriers always tend to be a big focus. If you're not hitting the mall today, there's a good chance you're turning to social media for your holiday shopping. We'll find out why that could be a huge win for Amazon next. And check out Bitcoin hitting new highs for the year today at one point topping thirty eight thousand bucks. We'll be right back.

Well, in case you're just tuning in, this could be the biggest holiday shopping season ever. But for social media companies, and Amazon could get a lot of credit for it. Julia Borson has those details. Hi, Julia. Hi, Morgan. Well, social media advertising is projected to drive 10 times more online shopping visits this holiday season than traditional marketing. That's according to Insider Intelligence. And it's thanks not just to influencers and AI-targeted ads, but also to Amazon. Amazon is now partnered with Pinterest, Meta, and Snap, so shoppers can

buy directly from Amazon ads within those apps by logging into your Amazon Prime account. Now, Amazon is tapping into the fact that this year, nearly half of Gen Z say they plan to shop on platforms like TikTok or Instagram. That's according to a Shopify Gallup poll. Citi writing that this Amazon partnership will, quote, help Meta to, quote, better analyze which products, creative and ad units generate the most clicks, creating more personalized ad experiences. Now, Meta is also offering other advertisers its new AI tools to optimize ad buying and ad targeting, while it's also testing some new generative AI tools, which it can roll out next year. Now, meanwhile, we have to point out that TikTok is taking a totally different approach. It launched TikTok Shop back in September with 200,000 merchants selling directly on the platform. So while Meta is focused on ads

and partnering with Amazon and the like for selling, TikTok wants to own its own e-commerce shop in competition with Amazon. Morgan? I mean, it's really fascinating. You got to wonder what the Pinterest of the world and also X as that looks to become its own one-stop shop, how all of this is going to continue to evolve. But while we're on the topic of Amazon, Julia, I did need to get your thoughts on this first ever Black Friday football game that's going to stream on Prime Video. The way I've seen this discussed is content to commerce, a push to convert prime video viewers to advertising, and of course, the retail businesses on Amazon. How groundbreaking is this, or does it really fit into the conversation we're having right now already? You know, I think this is all part of the evolution and really the part of the strategy that Amazon has set out here.

What's so interesting about this game is they're going to have scannable with your QR code in your phone. You'll be able to scan the game on your TV. If you can, if you can cast onto your TV and then buy directly from that. So they're really want to make it very easy to buy things. Amazon is all about removing the friction, making sure they don't slow down anyone in that process of purchasing things. And the game is a perfect way to do that. You know, Black Friday, we joke that Black Friday is like the Super Bowl for Amazon. So now they're actually bringing the football onto their platform as well.

So it should be a win-win for Amazon as well as the NFL. All right, Julia Borsten, thanks. NovoNordisk is taking a big step to increase production of weight loss drugs, Ozempic and Wegovi, and moving into a new market. We've got those details on the other side of this break. Welcome back to Overtime. Novo Nordisk hired today after a big investment to increase production of its popular weight loss drugs in France and the launch of Wegovy in Japan, the drug's first foray into Asia. Let's bring in Angelica Peoples, who's here on set for more.

Japan, huh? Yeah, Japan. This will be Novo's first market in Asia where they're bringing Mugobi and its sixth market overall. And remember, this is still a pretty new drug. And it's interesting they chose Japan because only about four and a half percent of adults have obesity there. And that compares to about 42 percent here in the U.S. but it could give them an opportunity to expand into a new market while the supplies are still pretty tight worldwide. Okay. So then in terms of this announcement, we know the supply-demand picture, to your point, has been very lopsided. How quickly can they bring more supply online? Yeah, it's really challenging because this does not change overnight. They're investing about

$2.3 billion in expanding a facility in France, but that facility won't be up and running until about 2026 or 2028. And I was speaking to Eli Lilly last week about their own investment in Germany, and they were saying that it takes about four years to get these facilities up and running. So it's going to be more of a long-term build here. OK, Angelica Peebles, thanks for joining me here on set. Next picture for stocks today. Next week, we get FedSpeak, we get BeigeBook, PCE Inflation, ISM Manufacturing,

and more tech and retail earnings. That's going to do it for us here at Overtime. We'll see you Monday.