Closing Bell - Closing Bell Overtime: Breaking: Sam Altman Out At OpenAI 11/17/23

Episode Date: November 17, 2023

A shocking Friday news dump in to the tech world as OpenAI announces Sam Altman is out as CEO, effective immediately. We have reaction from the VC world with Madrona Managing Director Matt McIlwain and the equities side with Jefferies analyst Brent Thill. Averages notched their third straight weekly gains; Truist’s Keith Lerner and Annandale Capital’s George Seay talk the market action. Unlimited CEO Bob Elliott on why Wall Street may be overestimating the chance for a Fed cut soon. Plus, Jon breaks down the ideological pattern of Elon Musk’s posts on X. 

Well, there's your scorecard on Wall Street, but winners stay late, especially on Friday. Welcome to Closing Bell Overtime. I'm John Ford. Morgan Brennan is off today. Coming up this hour, a massive shakeup in the artificial intelligence community. OpenAI says Sam Altman is out as CEO, effective immediately after the board said it no longer has

confidence in his ability to lead. OpenAI partner Microsoft taking a dip after that news hit. We will discuss with longtime AI investor Matt McElwain. Plus, Bob Elliott from Unlimited Funds says the market is getting the Fed wrong. And a reckoning could be coming for those who think a rate cut is in the cards. He's going to join us to explain why. And the major averages making minor moves today, but still logging solid gains for the week, building on November's rally.

Let's see. Mike Santoli is with us to talk about what we saw today and for the week. Mike. Yeah, John. I mean, today was really more of the same of the broadening out of the rally. The fact that the overall large cap indexes, like the&P held the gains that we built up going through that CPI day on Tuesday. You're obviously seeing a little bit of sort of upside, you know, breaking through some of these resistance levels. Forty five hundred on the S&P. And if you think about what was causing that three month decline,

that that correction that we went through from August 1st through the end of October, it was this sense out there that Treasury yields were blasting off to the upside and were going to go through 5 percent. Oil might get to 100. Obviously, the geopolitical effect there as well. The Fed was going to remain hostile or at least very vigilant. Most of those things. And then the economy wasn't going to be able to handle any of that. Most of those things, those concerns have been assuaged, if not, you know, gotten rid of altogether because we have had relief on yields. The Fed seems like it is likely done, even if it's not in a hurry to cut. We have seen oil really come back a lot. And we're

at a 2 percent GDP pace tracking for this quarter after 4 percent last time. So for now, we're in a window where the market is able to treat good news on the economy as good news for the markets. We'll see how long that lasts. Mike, I feel like breaking out the Merlot, not because it's a Friday, because it's like we're in the movie sideways. But in the S&P, again, you pointed out this range that we've been in for the past several weeks, really months toward the end of the year in this period that we're heading into, especially Black Friday coming up at the end of next week, a week from today, what tends to influence the market? Is it data coming out about consumer spend,

or does that effect not really come until we get earnings at the beginning of next year? It's interesting. The consumer discretionary stocks, the retail-related stocks stocks that are most directly impacted by the holiday shopping season, they do have seasonally strong tendencies like through Thanksgiving into early December, and then they usually underperform. So there's this anticipation effect. I don't think that's really a market wide driver, though. What it mostly is, is year end seasonality. There's a little bit less of a proclivity to sell and take profits before year end than there is to get exposures higher and let winners run. So there is a slight upside bias. I would say we, of course,

care about the data. We, of course, care how jobs are coming through and how rates respond to all that. But for the most part, you've got companies buying back more stock. We're through earnings season. So it's a little bit more of the market reacting to itself and investors' agendas on portfolio rejiggering into year end than it is about the headlines. Okay. Well, we'll weigh the headlines, but maybe not too much. Mike, thanks. We'll see you in just a bit. Breaking news, meanwhile, on more fallout around Elon Musk's comments on X.

That's formerly Twitter. Steve Kovach has some details. Steve? Hey, John. Yeah, we got confirmation of another advertiser pausing its ads on X. This time it's the film studio Lionsgate confirming to us by a spokesperson that they are no longer putting ads on X. This is, of course, after Elon Musk sort of endorsed an anti-Semitic thread just a couple of days ago on the platform. I'll also note there's a report in Axios today that Apple has

also pulled its ads. I've asked Apple several times this afternoon for comment on that. No word from or confirmation from Apple. But the two companies have had a little tit for tat. You might remember several months ago that Apple did pull advertising from X, went back after Elon Musk kind of complained and even visited with Tim Cook over in Cupertino. But now they've reportedly pulled their ads again. And this is also after that report yesterday that several ads were appearing next to anti-Semitic comment, not just Elon Musk's own behavior on the platform, John. All right, Steve Kovach, thanks. We Musk's own behavior on the platform, John. All right, Steve

Kovach, thanks. We'll see you in a little bit as well. As we mentioned earlier, major news in the AI world. OpenAI says Sam Altman is departing as CEO, effective immediately, and that the firm's chief technology officer, Meera Maradi, is going to serve as interim CEO. OpenAI writing in a statement, Mr. Altman's departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI. Microsoft shares falling when that news crossed about an hour ago. It ended down a little less than 2%. Joining us now is Matt McElwain, AI investor, managing director at VC

firm Madrona. Matt, how big a deal is losing Sam Altman at OpenAI? Well, this is breaking news, of course, and there's a lot to digest. I think it's a big deal. He is a co-founder, the visionary behind OpenAI in many respects. And so you've really got to disaggregate. Is this a personal issue? Is this a corporate as in OpenAI issue? Or was there something going on in the broader strategic landscape as to why this happened? You know, you just had that quote from the board. And I think the other thing that's notable here is, you know, Mira, very, very talented person, CTO, but why not Greg Brockman? Greg is the president. And if you note, the other detail in there is that Greg has lost his role as chair of the board. So that suggests to me that at a minimum, this is a corporate level issue of some corporate intrigue that's going on at OpenAI.

Really? Or could it be? Which maybe has some strategic. Or Matt, could it be that he will be considered? And so being chairman wouldn't be appropriate if the board's going to be considering that. And on Mira, a brilliant young engineer in her mid thirties has been at OpenAI for five years. It seems to me like maybe there's not as much continuity or operational concern because you do have experienced leadership in place besides Altman himself. Yeah, but my experience on boards, if you've got a president and co-founder who is also chairman of your board and you remove them from that role and you don't make them CEO when you let go of

your co-founder and CEO, that suggests that there's more going on here. I do not have inside knowledge on what that is, but I'm just, you know, from having been on many boards over many years, that combination of data that we already have is intriguing, to say the least, at a corporate level. And maybe that's that whatever things that Sam was not being transparent with his board about, you know, Greg had some knowledge of, and so there was some issue around, you know, kind of transparency, even if it was a Sam-specific issue. But it is very notable that they made mirror the interim CEO. What do we need to hear from OpenAI, from the board, while they figure

this leadership piece out to perhaps give the ecosystem confidence that they should continue to strategically rely on the software that OpenAI is putting out? Well, I think that what we need to hear is that they are confident in their core business and their core strategy, notwithstanding this leadership change. I think what will be interesting to see is what we hear from other people. So what will Microsoft, who is a nearly 50% owner of OpenAI, what will they have to say? Satya just appeared on stage at OpenAI's conference two weeks ago. And then you've got a whole series of other events. Satya spoke at length about co-pilots at Microsoft's Ignite Summit this week. Those co-pilots are frequently heavily powered by

OpenAI. So I think what we're going to not only need to hear is from OpenAI in terms of what this means from a strategy perspective for them, but Microsoft first and foremost, who's their most important partner. And then it'll be interesting to see what we hear from others like Amazon, who's only a week away from Amazon reInvent, as well as Google, possibly even NVIDIA. Does this, Matt, potentially give Microsoft more leverage when it comes to open AI? I mean, right now, the company is trading near all-time highs. Satya Nadella is coming up on 10 years since he was named as CEO. It has done some impressive things in cloud, certainly leading up to this point of fighting for the future of AI. Arguably, they probably want more leverage and

probably a larger stake than they've got. Does this drive OpenAI perhaps more into the arms of Microsoft? Well, I don't think they actually want to be a majority owner. That's my estimation. I think they prefer it to be a minority stake. From a leverage point, though, I think you're right. This does give Microsoft more leverage. I mean, keep in mind, Microsoft is on a path to, in the next couple of years, generate tens of billions of incremental dollars, both from their OpenAI service on Azure, as well as all these co-pilots that we just talked about. And so I think their leverage will be less from ownership and more from, hey, we cannot screw this up. We are partners together. And even though Microsoft has

been expanding the aperture of the types of models, and I think this makes strategic sense for them with using Lama 2, you know, having Cohere and others that they're planning to work with, I think that the real thing they need to do is make sure that their OpenAI partnership is sustainable for a long, long period of time, even though there's this leadership change. And Matt, finally, this comes just, what, two weeks before we get reInvent from AWS, the leader in the cloud, trying to be heard above the volume of Microsoft and OpenAI kind of kicking off this latest AI interest cycle earlier this year. Is there a strategic opening here for Amazon to say more or gain some voice and mindshare with OpenAI perhaps having a stumble? I think there absolutely

is a strategic opening. And just to highlight how strategically important this is to Amazon and AWS, you know, Andy Jassy said 14 times the word bedrock, which is a core AWS AI service on their earnings call a couple of weeks ago. And I think that AWS reInvent this year is going to be all about applied AI. And so now having this moment of uncertainty between, you know, not just OpenAI itself, but OpenAI and its largest investor and core partner, Microsoft, I think it's going to highlight a real opportunity for Amazon in the months ahead. And I think they'll position, you know, thoughtfully about it when they come to reinvent. All right, Matt. Thank you, Matt McElwain. And continuing on this, let's get back to Steve Kovach, who's got a statement from Microsoft. Steve?

Yeah, this is Microsoft's response, John, to that ouster of Sam Altman. I'll just read directly Microsoft saying in a statement, quote, we have a long-term partnership with OpenAI, and Microsoft remains committed to Mira and their team as we bring this next era of AI to customers, end quote. So not much there, not much detail, but still backing the new interim CEO of OpenAI, John. By name, which I thought was interesting. Yes. Steve Kovach, thank you.

Thanks. We're going to keep following this story throughout the hour. And don't forget, speaking of Microsoft and AI, there's going to be a lot more on that during my special extended conversation with Microsoft CEO Satya Nadella. That's going to be Monday, 8 p.m. Eastern. It's part of the CNBC Leaders Series. Now let's get back to the broader market action. After another big week for stocks, joining us now is Truist Advisory Services co-CIO Keith Lerner and Annandale Capital founder George C. Guys, happy Friday.

Keith, you think we're near some resistance levels on the S&P here. What's going to determine whether we break through? Yeah, well, first, great to close out the week with you, John. We've moved about 10% off the lows. At the end of October, our view was that the pullback was a buying opportunity because we thought yields were peaking. And we've seen that sharp move down in yields, which has provided a lot of energy to this market. So as you mentioned, we're in this 45 to 4,600 range where we think the market is more likely to digest some of those gains. We ultimately think that we break through that, but markets don't move in a straight line. And what ultimately gets us through there, I think, is that we are in a seasonal positive period. Forward earning estimates are

at a 52-week high. And I do think there's a lot of investors that have underperformed this year. And going into the end of the year, I think there will be more of a chase in it. But again, a little bit of a consolidation after such a strong run and really only about two weeks. OK, and George, you're looking at value stocks versus chasing the big folks. Hey, John, I thought the reaction to the inflation number earlier this week was just hyperbolic. I mean, it was really, really euphoric and fun to watch, fun to experience if you're along the market like we are. And I think the rest of the year should be a lot of fun, too. I think we'll get a Santa Claus rally going into Christmas and post-Thanksgiving and things will continue to move upward. But I think that, you know, all the people predicting

a hard landing in a recession two years ago, which never happened, they may actually prove clairvoyant next year. I think next year is going to be tough. And I think we've seized a lot of gains from next year into this year. And I think that it's very likely that we get a significant slowdown, if not a recession next year. And that's going to make it really hard for President Biden to get reelected. I think people should enjoy this while it lasts, but I think next year is going to be more difficult. When, George, do you think we're going to get that sense next year? Do you have a quarter or a particular catalyst in mind? You know, John,

I really don't. I'd say the latter half if I had to guess, but that's all it would be, would be a guess. But I've been calling for a soft landing for two years, and I think we got that. But I think the Fed has overshot on interest rates, and I think you're seeing some significant signs of slowdown now, whether it was Cisco this week or Walmart or other companies. I think we're starting to see telltale signs that we're going to slow down next year. And how much, I really don't know. But if I had to guess, I'd guess we have either a one-quarter retraction or maybe two-quarter retraction. If I had to bet, I'd bet the latter half of next year. Okay. And finally, Keith, you favor large caps in tech. Any particular opportunities here with the open AI news that we saw ding Microsoft a little bit for some other companies to prove their AI chops,

or is that not what you have in mind? Yeah, well, we've moved 14% off the lows as of the end of October. Semiconductors are up about 17%. So I also think you're going to see a bit of a pause there. But I would say any kind of chop that we're looking for over the next week or two, I would be still leaning on tech, semiconductor software. Because I will say this, John, tech was the last to go down, and they came back among the strongest. And they are still leadership. They have not relinquished the baton from other sectors. And at this point, they just made a five-month relative high to the overall market and an all-time high for the tech sector this week. So we still think that's a good place to be, but again, a little bit patient over the next week or two. Yeah, there's a lot going on

in tech. As you say, Keith, George, thanks for joining us. After the break, the pivotal week for the consumer. The discretionary sector is near the top of the pack after some big moves for retail stocks, including a 30% pop for Gap today. We're going to discuss the biggest movers and why next week could be just as important. And later, stocks have soared on hopes for a Fed rate cut, but is the rally getting ahead of itself? An expert joins with his warning for the bulls. And we're going to keep you posted on the big breaking news of the afternoon, the ouster of Sam Altman from OpenAI. You'll get more reaction and updates. Over time, we'll be right back. We've had a week of huge moves for retail stocks from Target's surge to Walmart's

slump. Today, Gap is in the spotlight, jumping 30 percent, 30 and a half after a big bottom line beat. Courtney Reagan is here with more on Gap, the outlook for retailers as we approach Black Friday and the holidays. This takes Gap back to where it was trading at the beginning of 2022. Yeah, and I think it's best it's best day on a percentage basis since its IPO in 1976. This is actually also the first quarter under new CEO Richard Dixon Gap Inc. reporting, as you mentioned, John, a big beat for profit thanks to what Dixon calls, quote, financial and operational rigor. Revenue and sales, though, were also stronger than expected. Margins improved for the third straight quarter and its biggest brand, Old Navy,

posted a surprise comparable sales number, 1 percent, still, its smallest brand, Athletosol, comps dropped 19%. Investors, though, don't seem worried about that one. Gap and many other big retailers reporting right before retail's biggest week. We've got a big day on Tuesday. And by the way, Black Friday is a week from today. So even as so much commerce has moved online, John, Black Friday is still predicted to be the biggest in-store shopping day of the year. This is according to Sensormatic, which tracks in-store shopping. NRF estimates 182 million Americans will shop in stores and online between the five-day stretch Thanksgiving to Cyber Monday. That's almost 16

million more than last year and the highest number since NRF has been tracking it this way. Now, most shoppers do it for the doorbusters, right? And with consumers under numerous macro pressures, deals are really key. Walmart CFO told me yesterday shoppers are waiting to buy until there are promotions. And then he sees noticeable drop-offs in sales before and after those events. So deals really important right now for the consumer. Wow. Courtney, how much discounting and is really the questioning how long the consumer is going to spend throughout the season? Yeah, exactly. And so for years we've seen this creep, right, where the discounting or these big events happen earlier and earlier.

And that did happen again this year. There were a number of big sales in October. Surprisingly, the retailers are pretty mum about at least the details of what happened or any holiday trends when I asked many of them directly about it in the last couple days. I don't know how much early shopping has been done because of some of the trends they're talking about with shoppers waiting closer to need. Apparel is almost always a top gift. It's supposed to be again this year, and Walmart CFO gave the example of how apparel has been weak until it hit the beginning of November when temperatures turned and when that need kicked in, and then apparel sales kind of really started to become key. So I think that's also why this weekend is important to grab the sales when you can get them, because the timing of when people will buy this year is

pretty unpredictable. Yeah, we'll see what what gap can get from here after this 30 and a half percent. I know what it is. Yeah. Let's bring back Michael Santoli for today's market dashboard. Mike, you know, John, it's been so much talk about, you know, the few stocks that seem to Yeah. Let's bring back Michael Santoli for today's market dashboard. Mike. You know, John, it's been so much talk about, you know, the few stocks that seem to be leading the market versus the many that have lagged behind. And with good reason, because there have been these divergences. But probably a good time to look at the total stock market, the VTIs, the Vanguard Total Stock Market Index. If you own a target date retirement fund, you probably own this fund or something very much like it. And what you see over a two year basis, you know, obviously the big decline into September 30th, I think it was of last year. And then we fell out of this uptrend with the correction this year and now just trying to regain it. Right. So small cap stocks have outperformed this week.

They've been a big part of the underperformance. They've dragged this down some degree, although still even here, the big caps do have a lot of sway with the total stock market. So trying to get back on the beam. It looks like a decent run so far after this week's push higher. Take a look, too, at energy versus consumer cyclicals. Obviously, they sometimes go together, often inversely and discretionary. The equal weight consumer discretionary ETF of the S&P on a year-to-date basis has now overtaken energy. So it's been considered to be a nice little boost to consumer health with this decline in gasoline prices. It wouldn't last forever. You wouldn't want to see oil really start to make deep new lows because it might have a more negative macro message. But for now, it's sort of refreshing the idea that the consumer can hang in there, John.

OK, Mike, so we're in the end game now. Based on everything you've just looked at and everything you've seen, what kind of repositioning should investors expect others in the market to do heading into year end? You know, I would say that there's going to be a reluctance to really exit the big winners of the year in terms of mega cap. It feels as if every time people have sold out of those, it's been kind of seemed like the wrong thing to do in retrospect. And also because people don't want to book tax liabilities ahead of year end. So I do think you might have the chance for some more catch up by some of the smaller stocks in terms of stocks versus bonds, I'm not sure that we're set up for a really radical repositioning because both were on the downside for most of this year. I think it's usually what's worked for most of the year continues to work with one exception, which is small caps often get a little relief toward December.

The January effect is because a lot of beaten up small caps that were sold for tax purposes get revived. I wonder if we're seeing a little bit of a front loading of that activity this year with the recent pop in small caps. All right. Not expecting love for bonds reminds me what Paula from KKR told us yesterday. Mike, thanks. After the break, is the rally getting ahead of itself? Stocks have been off to the races on hopes that the Fed's done raising. For our next guest says long-only investors might be in for a surprise, not a good one. We'll hear that cautionary case when Overtime comes right back.

This year's rally was jump-started by a tamer-than-expected inflation report, which gave investors confidence that the Fed's done hiking, might even have a cut in the cards. But our next guest says, not so fast. Joining us now is Bob Elliott from Unlimited. And Bob, you might not be alone in saying not so fast. I us now is Bob Elliott from Unlimited. And Bob, you might not be alone in saying not so fast. I want to play this for you. Here's Boston Fed President Susan Collins on inflation. Three month core is still at 3.4 percent, Steve. That's that's higher than we

want. And so in order to get back down to 2 percent in a reasonable amount of time, we need to be patient and resolute. And I wouldn't take additional firming off the table. We need to look holistically at the data. So is that bad news, you think, for people who are long now or just reason not to get longer? Well, I think if you look at what's driven the market rally on the stock side over the course, really since October 31st, it's been that move in bonds, right? Long-end bonds are up about 8%.

Stocks are up about 8%. And there's a reason why that is, is because the Treasury effectively indicated easing through the QRA announcement. And then on top of it, we got a bit softer inflation prints than expected. You put those two things together, I think people are thinking there's a very quick shift to easing by the Fed. And now we're starting to see what cuts priced into March even, right, the initial cuts in 2024. And I think there's an appropriate amount of temperance being conveyed there, which is, you know, the road is long to bring inflation durably back down to 2 percent, durably being that key point. And I think the Fed recognizes that a few prints aren't necessarily going to say, hey, mission accomplished, everything's over,

particularly when the labor markets are still pretty tight and wage pressures are still elevated relative to where they were before COVID started. I guess the counter to that is we've already got the brakes on with rates having risen so high as quickly as they have. And even if we don't get cuts in March, if inflation continues to come down to a surprising degree, like we've seen up to this point, maybe the market doesn't care if we don't get cuts in March. Well, I think that that's certainly a possibility. The challenge is if the Fed doesn't deliver the cuts, then you're going to start to see that move up in bond yields, right? Because the Fed needs to deliver the cuts in order to meet the market's expectations of between four and five cuts next year.

No cuts, bond yields move up. And that's the exact thing that is detrimental to the stock market that's been so beneficial over the course of the last couple of weeks. Well, that's why we saw bond yields fall so much this week, not because the Fed cut, but because inflation was lighter than expected. So in a way, doesn't lighter inflation reads, cooler reads, doesn't that substitute for a Fed cut sooner? Well, I think the basic question is what's going to cause the Fed to cut? Will softer inflation cause them to move to ease monetary policy?

Or are they looking at the overall picture of the economy and saying, hey, look, the economy's still pretty strong. Why waste your ammo today? Why juice asset returns today, when instead, as long as the economy's doing OK, hold policy the way that it is and wait until you have to engage in that easing, wait until there is actually a downturn before you start to implement. That's where the ordering is very important. First conditions are going to deteriorate and then the Fed is going to ease. And I think people are getting ahead of themselves, you know,

starting to position for the backside before the first couple of steps happen. Yeah, I just wonder whether we have to actually get the cuts to experience in the equity market the effect of cuts, but I'll leave that alone. So got to talk gold because you're a big gold fan pointing out how much, if you've been holding it in your portfolio since 2020, it would have reduced volatility for you. But given where we are now, can we count on gold continuing to have that effect over the next three years? Well, I think the main thing to remember about gold is gold is non-interest-bearing money. And it's been impressive how much gold has held up in the context of long-term real interest rates rising 300 basis points. Now, they might rise a bit further.

That might be a bit of a drag on gold from there. But eventually, you're going to have a situation where the Fed is going to have to deliver easier monetary policy. And holding gold in your portfolio may prove to be even better than holding treasuries because of that sensitivity and benefit when real rates start to fall on the backside. So from a strategic asset allocation, gold is really beneficial because it basically operates in a way that's very opposite to what stocks do. What do you make of the impact of the drop in oil prices? Well, it's hard to suggest that there's been a big macroeconomic driver causing the oil price market to move so swiftly downwards. And so what it's looking like is more a paper sell-off, where I think in some ways people are inferring from the bond market and the yield moves that are

happening in the bond market that we're having a negative growth environment. And then that's translating somewhat mechanistically into the oil market in futures positioning and paper positioning. I think the challenge with that is that the reason why we're getting the move down in the bond yields is because people are expecting easier monetary policy, right, which should actually be beneficial to growth over time. And so I think people are looking at sort of a traditional intermarket action dynamic and not recognizing the actual fundamental cause of that bond yield move is actually supportive to oil rather than detrimental to it.

So you don't think oil goes down much further, it sounds like. No, I think there's a real opportunity here in terms of from a skew perspective. As we know, OPEC Plus is meeting shortly. They've already taken a million barrels a day off the market. If this oil sell-off gets any further, you have a combination of OPEC pulling more supply off the market. Plus, eventually, we might have the SPR come back online and start filling it back up, both of which basically put a floor on where you are on oil prices. So I think from a skew perspective, still looks good. If you're going to buy a cheap growth asset in your portfolio, better to buy oil than to buy stocks at these levels.

All right. Oil and gold. Bob, good to have you on a Friday. Thanks. Love the Friday, Bob. All right. Time for a CNBC news update with, again, Courtney Reagan. Courtney. Hi, John. Well, convicted killer Alex Murdaugh pleaded guilty to financial crimes today as part of a plea deal that will avoid another heavily publicized trial for the former South Carolina lawyer. The state's case included some 101 charges and alleged loss of $8.8 million to those affected by his schemes. Murda will be sentenced later this month. Prosecutors are recommending a 27-year prison sentence. Well, the judge in Donald Trump's civil fraud trial rejected the former president's motion for a mistrial today, saying it was, quote,

utterly without merit. The defense team claimed that the judge and his principal law clerk were biased against him. Trump's Georgia election interference trial is also moving forward. D.A. Fannie Willis requested the trial start August 5th. And Rosalyn Carter's family announced today that the former first lady has entered hospice care. Former President Jimmy Carter is also receiving hospice care at their home in Georgia. The Carter Center said in a statement that the couple of 77 years is spending time together and with family. Hopefully we can all be that lucky to live a life that long. John, back over to you. Indeed. Courtney Reagan, thank you. After the break, more brands are suspending advertising on X, formerly Twitter, including Lionsgate

and Apple, reportedly, as fallout grows from Elon Musk's post on the platform, widely considered to be anti-Semitic. We'll take a look at Musk's pattern of provocative commentary and the business repercussions when Overtime comes right back. Welcome back. Elon Musk, a lightning rod again this week after he posted a tweet many have interpreted as supporting anti-Semitism. Musk himself has denied that was his intent. And over the past 24 hours, has tweeted replies criticizing First Media Matters,

a watchdog organization that yesterday showed ads for major brands were running next to Twitter content that defended Hitler and the Nazi party, and also content hashtagged Keep Europe White, White Pride, and WLM, which stands for White Lives Matter. Musk has also been supporting tweets that bash IBM, which yesterday was the first to pause advertising on Twitter after that Media Matters report. Those anti-IBM tweets point out that 90 years ago, IBM willingly did business with the Nazis. A mistake, I'll note that it appears that IBM, at least, is trying to avoid repeating. Much of the debate over the last 48 hours has been whether Musk's conduct amounts to anti-Semitism. The team at Overtime reached out to many of Musk's friends and business partners, and none was able to join us to discuss. We also looked at his pattern of communication over the last months and years,

and what seems clearest is that whatever Musk might be against, he's consistently pro-white. The tweet that ignited this latest controversy, the one Musk supported as the truth, accused some Jewish groups, including the Anti-Defamation League, of being anti-white and pro-non-white immigrant when they should have been against non-white immigrants all along, that tweet contended. Here's another tweet Musk supported this week from Eva Vlardingbrek. Everyone is allowed to be proud of their race, except for white people, because we've been brainwashed into believing that our history was somehow worse than that of other races.

That false narrative needs to die. And if we really want to do the comparing game, white people have also done a lot of good for the world. Musk replied, yeah, this is super messed up. Time for this nonsense to end and shame anyone who perpetuates these lies. Yesterday, Musk also tweeted in part, The truth is that we are all descended from slaves because throughout history, the vast majority of people have been slaves in one form or another. The end of the global slave trade was primarily driven by Britain in the 18th and 19th centuries. I'll add here, we all know that most of the people in Britain are white, so credit, I suppose, to the white people in Britain

for ending the global slave trade for everyone since we're all descended from slaves, Musk says. Pro-white. So perhaps an alternate perspective on Elon Musk's many tweets of the past 48 hours, a defender of Elon Musk might say he's not anti-Semitic, he's anti-anti-white. So the antis cancel out. Pro-white. Joining me on set, CNBC's Steve Kovach, who's exploring the fallout or lack of fallout from these tweets or

Xs, depending on whether people view them as anti-Semitic or pro-white. Yeah, I mean, look, here's my take on this. We can talk about anti-Semitism, we can talk or pro-white. Yeah. I mean, look, here's my take on this. We can talk about anti-Semitism. We can talk about pro-white, anti-white, whatever. The bottom line is this kind of stuff drives away advertisers. It's reportedly driven away Apple, who, by the way, did pause ads last year after Musk first took over, came back. He went to Cupertino, hat in hand. Tim Cook said, OK, fine, we'll start advertising again. Not happening this time. Also, they talked about a lot. Linda Iaccarino, his CEO, that they had this new technology that enables them to put tweets or sorry, put ads next to good tweets, not the bad stuff. The bad stuff is a lot

to happen, but we're not going to amplify it. And boy, we're not going to put advertising next to it. Well, that promise failed to deliver as well as this reported out. So look, Musk can, and boy, we're not going to put advertising next to it. Well, that promise failed to deliver as well, as this reported out. So look, Musk can bash IBM all he wants. He can bash the ADL all he wants. He can bash Media Matters all they want. But they are pointing out very real inconsistencies with the stated policy and the actions that are actually happening at Twitter. That is why we're seeing a pullout. Another thing I'll mention, we've seen that it's not a Twitter problem or an X problem. It's not just a TikTok problem.

It's a Facebook problem as well. Facebook has gone through this too, right? And every time they go through it, we'll hear from advertisers saying, oh, we're going to withdraw our ads for a while, see what happens. They come slithering back right away. Why is that? They come slithering back

because Facebook and Instagram ads are effective. They work. They have actual ROI. Twitter doesn't have the advanced technology that Facebook has through Instagram and Facebook to give you the ads that you want to, encourage you to buy, to deliver that ROI. So it's no big loss for IBM, for Apple, for anyone to pull their ads from Twitter because there is no big advantage at the beginning. And I'll just note Tim Cook, since we're talking about Apple, he told CBS a couple months ago, you know, they're there because he likes the idea of it being a town square. He's aware of the bad stuff. He's aware of the anti-Semitism. And they're constantly evaluating it. Well, it sounds like they evaluated again. No more.

Depends on the kind of town, I suppose. You mentioned Facebook and Instagram. How much does it matter? You think that it's not Mark Zuckerberg himself that's hosting the questionable. That's you. And look, it doesn't matter. It's his platform. He can do what every Musk wants and Zuckerberg can do the same on his platform. But and Musk has told us, he told our own David Faber back in May, he doesn't care if his actions lose him money, if it loses Twitter money. That's fine. But look at what's happening at Tesla. Look what's happening at SpaceX. He's the head of these companies as well. And my colleague, Laura

Kolodny from CNBC.com, one of the first people we reached out to, we started reaching out to his investors. What do you think of this? Ron Barron, big investor in Tesla, big promoter of Elon Musk, big defender of Elon Musk's commentary and sendary comments, declined to comment this time. And so that's telling as well. But at the same time, you can't defend this stuff until, I don't know, unless Tesla stock starts going down. We're not going to see any repercussions. Any other CEO would be fired. Or maybe staying silent is a defense in the case.

That can be, yeah. Steve Kovacs, thank you. Now, Sunday marks the two-year anniversary of the Nasdaq's peak in 2021. Up next, Mike Santoli looks at what's happened since then and if the index is poised to make a run to new highs. 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. Welcome back. Sam Altman has been a major face of AI from Washington hearings to conference appearances as recently as yesterday. But now he's suddenly out as CEO of chat GPT parent OpenAI. CNBC's Kate Rooney, you got more on the story?

Yeah, John. So not even 24 hours ago, we heard from Sam Altman. The world was really hanging on his every word at the APEC summit. He was the headline speaker at the APEC CEO summit here in San Francisco. AI was the topic du jour. PresidentPEC CEO Summit here in San Francisco. AI was the topic du jour. President Biden got up there, spoke about the importance of the technology. It really was all we heard about on stage. Sam Altman was seen as really the face of this industry, especially on regulation, testified in front of Congress. Here's what he said yesterday on stage about global cooperation at APEC.

We don't need heavy regulation here, probably not even for the next couple of generations. But at some point when the model can do like the equivalent output of a whole company and then a whole country and then the whole world, like maybe we do want some collective global supervision of that and some collective decision making. So he sat up there, he was with Chris Cox of Meta, the chief product officer over there, James Bonica of Google. At the end, guys, he sort of hustled off of this stage after the panel ended, now knowing what we do know today, was he rushing off to talk to the board? He could have also been a coincidence, but sort of interesting color. And he didn't have many fireworks on stage. He was sort of soft-spoken and thoughtful, but was very forward-looking in terms of the future of the industry. So no indication at that point that he was going to be out of the company, his $80

billion company that he started. That's after the board said that they no longer had confidence in his ability to continue leading OpenAI. But really, the face of the industry no longer had confidence in his ability to continue leading open AI, but really the face of the industry no longer at his company, John. Big implications there for artificial intelligence. All right. Kate Rooney, thank you. And joining us now on the news line, Brent Phil of Jefferies. Brent, how much does this matter to Microsoft stock? Hey, John.

I don't believe it's going to have any impact. You know, I was at the recent user conference, and I think the excitement around the product strategy continues to drive a big uplift for Microsoft, but I don't believe this is going to have any bearing in the near term on Microsoft. Clearly, you know, the news is just out. We're trying to figure out the trickle-down effect, but I don't anticipate, given the deep partnership that they have on the technical level, that this is going to have a dramatic departure and anything changing for Microsoft.

Brent, I thought it was interesting that Meera Maradi, the interim CEO, chief technology officer, was doing a decent amount of press since the spring, some major pieces, fortune in time. So people have been getting to know her. She's been speaking publicly, and she's been there for five years. How important is that? I think the durability of having someone at a company like this is really important. And clearly, you know, you've seen a lot of situations like this in the past

where you have a founder who gets to a point and effectively outgrows their capability. And it feels like this is what happened. Ultimately, what drove that is still to be determined. But I think that they're in good hands. The technology is sound. The leadership that's in it, OpenAI. I don't expect Microsoft to have any hiccups from their perspective. It'll be yet to be seen in terms of what happens when the leadership shake up and how that

trickles down to the developer community. But I don't see at this point really any dramatic departure from a partnership or any implications to Microsoft at this point. All right. Thanks for joining us on the phone. Brent Thill from Jefferies. The NASDAQ gaining 2% this week, but it's still well below the highs it reached almost exactly two years ago.

Up next, Mike Santoli's back. He's going to talk about what the path back to those record levels might look like. Welcome back. Check out shares of CRISPR Therapeutics. Closed up more than 14.5%. One of the biggest winners on Wall Street today after the company, along with partner Vertex Pharmaceuticals, won approval to treat two blood diseases in the UK. The announcement is historic because this is the first ever CRISPR-based gene editing drug to be approved. And, you know, we talked about that big mover today. I mean, I'm also reminded Gap was up pretty big next week.

It's really consumer time. We've had some retailers report this week, and we'll see if that continues. I mentioned Gap up enormously, most pretty much since I was born. That's going to do it for now for overtime. Fast Money starts now.