Closing Bell - Closing Bell Overtime: CAVA CEO On Labor & Consumer Spending; Rashaun Williams On VC Bounceback & Sports Valuations 7/3/24

Episode Date: July 3, 2024

After a weaker-than-expected ADP jobs report, CAVA CEO Brett Schulman breaks down hiring from his view and if the consumer is still spending. Value Investment Group's Rashaun Williams on VC's funding bounceback and sports valuations. Plus, reaction to the latest Fed minutes and what it means for your portfolio.

Fireworks indeed. Record closes on the shortened trading day with the S&P 500 and the NASDAQ both climbing throughout the session, boosted by solid gains for Tesla and Nvidia. That is the scorecard on Wall Street, but the action is just getting started. Welcome to a special edition of Closing Bell Overtime. I'm Morgan Brennan with John Ford. Yeah, call it double overtime. We're with you for the next hour and a half as we get you set for the release of the Fed Minutes at 2 p.m. Eastern. We've got a panel of experts ready to break down the latest messaging from the Fed. Plus, the CEO of Mediterranean restaurant chain Kava joins us exclusively with his read on consumer spending with Kava stock more than doubling so far just this year. And AI drove venture capital funding to its highest level in two years last quarter. That's according to new

data out today. We're going to talk to venture capitalist Rashawn Williams about the names he's most excited about right now. But let's begin with our market panel as we set fresh record closes for both the S&P 500 and the Nasdaq. Joining us now, Barbara Duran of BD8 Capital Partners and Tim Urbanowicz of Innovation ETFs. It's great to have you both here. Barb, I'm going to start with you. I mean, it almost seems like I realize lower volumes today, holiday shortened session, not necessarily a lot to propel the market in a bigger way, perhaps until Friday when we get jobs report. But nonetheless, it seems like the momentum in general lately has been higher. Well, I think that's because you're seeing that investors are even more convinced, particularly after Powell spoke yesterday, that the economy is strong but

weakening. And you saw that in the ADP numbers this morning, continuing jobless claims up more than expected, probably the fourth time in a row in four weeks that it's been above 1.8 million. So we're softening and we know the Fed is concerned about not going too far because it is a restrictive policy. So but I think we also think that the Fed is going to cut. And yesterday indicated they're just waiting for a bit more confidence. And before the September meeting, we've got six inflation data points to go through in July and August, the PPI two times, CPI two times, the PCE. So you've got declining inflation, strong growth, and the unemployment number on Friday will be important. So I think the market is just taking a rest, earning start

in earnest next week, next Friday with the banks, JP Morgan, Bank of America, which are making new highs. So I think we're just taking a little bit of a breather. I think a lot of it is holiday induced and we're constructive on the market here. There's more to come. OK, Tim, how do you see this market, especially with the fact that we do have July seasonality factoring in here? First half of the month tends to be very strong in general. Each year you have those somewhat dovish comments from Powell on disinflation traction. You have a mixed macro narrative, but certainly no signs that the floor is falling out of this economy, at least not right now. And then, of course, big tech strength continues to power the day. Well, Morgan, I think this disinflation narrative that we've seen carrying the market really since October 2022 has a little bit of gas left in the tank.

And that is what investors are going to be laser focused on for the next couple of months. So we expect equities to tick higher. But I think what's more important to be thinking about right now, Morgan, is really what does the future look like beyond that? And when that music stops, when investors start thinking about the election risk that is in play or when bad news actually becomes bad news. And as you know, we have been adamant and one of our top strategies has been maintaining market exposure with downside protection in place. We think that is critical right now. And just to highlight how advisors and investors are really thinking about this and how important it is, if you look earlier this week on Monday, we expanded our suite of 100% buffer ETFs, including options like a six-month JAJL, where you have 100% buffer against losses,

5% upside on U.S. equities. Outside of the Bitcoin ETF launches that we've seen this year, that was the most popular launch that we've seen thus far in 2024 in the ETF market, which I think really highlights how important risk management is to investors right now. All right, Tim, Barb, hold tight. We're going to get to Megan Casella now for a look at what to expect from the June Fed Minutes, which will be released at 2 p.m. Eastern. Megan. Hey, John.

So we're here at the Federal Reserve awaiting the release of those Fed Minutes, which will help us peel back a curtain a little bit on the June meeting and give us a sense of when those rate cuts might be coming. A couple of things that we'll be watching for in these minutes. One is the inflation outlook. The committee continues to require further confidence that inflation is moving down and not sideways. Although those latest core PCE reports coming in at 2.653, really quite good. So worth noting that this meeting was before those inflation numbers. And we've seen the weaker economic data since then

as well, like this morning's ISM report. Another thing, job market concerns. Powell warned of expected weakness that could warrant a Fed response. We'll be watching to see how much of a debate was there around that. How big are those concerns? How broadly are they shared? The third is just the push for patience. The committee is likely to suggest they need more time before cutting. They say they want that confidence, but they're still likely to do it before the election. Powell promised yesterday to maintain Fed independence on that front, to not be swayed by politics, but we'll be watching for any signs of those outlooks or those projections of what comes next. Now Morgan Stanley wrote in a note this morning that the minutes may quote shine more light on what to what

extent FOMC members are considering the policy trade-offs between inflation and growth. Again in Portugal yesterday we heard Chair Powell talking about this, talking about the balance of risks, saying that he knows that they are in better balance now. They're well aware of the risk of going too late, but they also don't want to go too early and let inflation reinflate. So from here, we would say that it's important to note that the CME FedRoss minutes is 9% chances. They're pricing it a 9% chance of a July rate cut, but something like a 74% chance of a September rate cut and then a greater chance for November.

So there is still a very large chance that we're going to see that this year. Back to you guys. All right. Megan Casella will wait for that information on Minutes coming up in just a few. Barb, just keying right off of that, we're going to get the Fed Minutes, which is more color, and then we're going to get a jobs report, which is brand new data. So how do you use one to sort of prepare for the next one? And we've got this unusual no trading tomorrow because it's the 4th of July.

So set us up for Friday. Well, it's interesting because the one point that Megan just made that I thought was interesting was to call attention to Powell saying that the inflation data is going to be dependent on, you know, watching whatever they're doing there. And so I think the Fed is saying they're going to maintain their independence, meaning that if they think a rate cut in September, you know, is good, they will do it. And that means that the number on Friday is weaker than expected. Certainly, the ADP sets up the expectation that it will be. And if unemployment goes up even higher than 4 percent, I think the Fed is really going to be thinking about, are we too restrictive?

And that's going to mean if the inflation data in July and August comes in and continue in the downward trend, I think they might very well cut in September. So I think that's something important for the markets to be aware of. And I think they will respond accordingly. And I think they have been. That's why I think we've been making new highs practically daily this last few days. So, Tim, what kind of downside protection should you have in place if you're concerned about a weaker number on Friday? Well, John, I think we have to be thinking about when bad news actually becomes bad news again. You know, it's going to happen soon. Disinflation will be in the background and it's going to be

about, you know, job market and the economy as a whole. And our clients continue to gravitate toward buffering ETFs on the S&P 500, on the NASDAQ 100. Right now, as I mentioned, the 100% strategies are extremely popular. I think a lot of that, John, has to do with the election season that we're heading into. Elections bring uncertainty. I think this election is going to bring a lot more uncertainty than we've seen really over the last several cycles. At this point, do we even know if Biden is going to be the Democratic nominee? If not, who is the nominee going to be? What are the policies look like? A lot of unknowns. And we're seeing a lot of our advisors really gravitating toward those 100 percent buffered strategies like J.A.J.L. to really hedge those unknowns, hedge that election risk and really

just lock in some of the gains that we've seen thus far this year in the S&P and the NASDAQ. Yeah, a lot of uncertainty, but you wouldn't know it looking at the S&P, the NASDAQ and the VIX. Tim, Barbara, thank you both. Well, concerns over a weakening U.S. economy growing after this morning's less than stellar economic data, private payroll growth slowed in June and ISM services missed expectations at lows not seen since May 2020. Let's bring in senior markets commentator Mike Santoli for his take. Mike. Yeah, John, pretty sharply disappointing ISM services number. This is the non-manufacturing part of the economy, of course, bigger than the manufacturing segment.

Here's a long term look at how it has actually shaped up recently. And then into the more distant past, the dotted lines, the 50 mark. So that divides in the expansionary data from contractionary. What I want to point out is you did actually have a dip below 50 in the last few months. It ended up being kind of a head fake. This is survey based data and it just shows you directionally how was this month versus last month. It doesn't really show you the volume growth or anything that's really more quantitative than that. But it definitely got the market's attention. So I do think you have to be alert to it.

It comes along with some other, as you mentioned, softer data points. So look at the bond market reaction. The 10-year Treasury yield gave up that little pop we got starting in the end of last week. And then there's also this kind of downtrend in place. We could argue as to whether that really matters. But from the spring, you've definitely seen a series of kind of lower highs, an inability of the 10-year to get above 4.5. Every time you get this data that says the Fed's going to be cutting or inflation is coming into line,

you do have some bids in bonds. Now, others would say, yeah, but what about that? So maybe there's a little bit of an indecisive market, and we're sort of caught in this range, which is OK for stocks for now. But I happen to agree that you only want to see the data soften to an extent to suggest a slow growth economy and not a stalling one. And that's still what we're looking at, right, is the kind of slowing, not pain that Powell Warren might be coming, but the slowdown that they feel like they need to see.

Based on what we can observe, yes, that remains the case. I know you'll have some people come out there and say, well, it always looks like that on the way to something worse. You know, you transition through the comfortably slower phase before you get to something that looks like it's going to be a harder landing. You know, the continuing jobless claims were a little uncomfortably high this morning, too. So I think we are in that zone where it's in the eye of the beholder. And I think the key thing is, and we'll see with the minutes how they characterize this, but the Fed now seems to have most of what it would need to act if, in fact, the economy weakened more. So that's why I think it sort of buffers the psychology of investors for now.

And of course, this is why it adds so much more onus to all of the labor market data that we get, including that jobs report on Friday. Mike Santoli, we'll see a little bit later. Thank you. The special edition of Overtime, it's just getting started. After the break, an exclusive interview with the CEO of red hot restaurant chain Kava. The stock is up more than 120 percent so far this year. We'll get his read on whether or not he's seeing any sort of consumer slowdown. Also, what he's seeing with the jobs market. Yeah, and much more on the Fed as we await the release of the minutes from the June meeting at the top of the hour. Overtime is back in two.

Welcome back to Overtime. Some weaker than expected jobs data this morning from ADP. Though leisure and hospitality sector did see growth. And speaking of hospitality growth, one name that's been on a tear lately is restaurant chain Kava. Just a year after going public, shares are up more than 300 percent. Joining us now in an exclusive interview is Kava co-founder and CEO Brett Shulman. Brett, welcome to Overtime. It's great to have you. Morgan, thanks for having me.

I do want to start right there because just a couple of weeks ago, I was speaking to the chief executive of a restaurant chain who said to me, hey, look, we see better balance in the jobs market. We can get not only the workers we need, but the workers we want now. And given what we saw with jobless claims this morning, ADP, as we do have these conversations about things getting more imbalanced or normalizing with the labor market, are you finding the same experience? We are, Morgan. And we've seen this over the last couple of years where each month we've seen the labor market loosen up and the ability to attract and retain talent get better and better. And so our turnover rates have continued to go down. And we've obviously had

a lot of growth over the past couple of years. And we've been able to staff those restaurants and staff them with highly qualified candidates as we've increased wages over those last few years pretty significantly. And even in the past year, we've made further investments in labor. So eight percent year over year, which allows us not only to attract new team members, but attract highly qualified, talented team members. So, of course, I'm going to ask you the question we ask everybody who comes on with a consumer-facing company, and that is at a time where we're seeing this bifurcation between folks that have a little more money in their wallets and those that are maybe at the lower end of the income spectrum. What are you seeing in consumer behavior? Yeah, we talked about this on our last earnings call that we're seeing

strength across all income segments. And I think it really goes to our value proposition. And I've heard a lot of talk about the value wars in fast food, but we really think about value a little bit differently. You know, we think about there's price, which is the cost, but then there's value that's the worth of something. And we think about value in terms of a number of factors. When you think about the quality of the food, the relevance of the cuisine, our differentiated Mediterranean cuisine where taste and health unite, the convenience in how you're able to access that cuisine, and then the experience that you have with us when you engage with us as a brand and that Mediterranean hospitality we're able to deliver. And that's created a compelling

value proposition for consumers, whether they're at the high end or the low end of the income strat. And then when you look at the price increases that have happened below us in traditional QSR fast food, if you take the end of 2019 to the end of 2023, we raised prices about 12 percent during that time period. CPI grew at about 18 percent. And according to the Labor Department, fast food grew at upwards of 30 percent. So our relative value proposition has only been enhanced with those price changes. Hey, Brett, I'm really curious about your expansion, right? Part of what makes Kava

special is that you're a pretty young company. You're in about 25 states, I believe, right now, about half the country growing fast. And a month ago, your CFO was talking about how new restaurants are performing better out of the gate in the first two years than even your model expects. But then what do you do when you're entering into whatever period we are right now where broadly the consumer seems to be under pressure? Do you put your foot on the accelerator and open more stores more quickly because they're outperforming right now? Or do you look at certain signals in the economy to moderate that? John, we stay steadfast on what we've been doing

over the course of our journey and stay focused on our long-term strategy and not only our expansion strategy, but reinvesting in our team members. I talked about the 8% year-over-year wage increase and reinvesting in our guests. Talk about how we've tried to mitigate price increases. And in fact, you look at an example like in California, the legislation AB 1228 that increased minimum wage there. We were the only limited service restaurant company that did not increase incremental costs as a result of AB 1228. So that's our way of reinvesting in our guests. And so we believe that when we reinvest in our team members, we reinvest in our guests, that creates long-term sustainable growth and ultimately long-term shareholder value.

What's the most important kind of reinvestment in your team members, especially at that restaurant level? Are you trying to keep them over a longer period of time to reduce onboarding costs and make sure that your efficiency is higher? And what sorts of methods are most effective there, if so? Yeah, it's reinvesting in whether it's headline wages, giving them an opportunity to achieve bonus stretch income or benefits outside the four walls of our restaurant. But most importantly, it's giving them an opportunity to have a career, not just employment.

So with our growth gives our team members real near-term visibility that they can join us. And if they have the will and develop the skill, within 24 to 36 months can be running a multimillion-dollar business and making six figures plus in income. in our sense, our farm system to develop high performing team members into those future general managers to open those restaurants successfully. That's a tremendous incentive and line of sight for folks to grow a career at Kava, not just have employment. So you're a little over a year as a publicly traded company. We know it was a super strong IPO out of the gate last June. And performance has been you've tripled what, tripled, quadrupled, quadrupled share prices since then, I believe. Lessons learned and how this sets you up now that you're a year public for the next chapter. Yeah, it's a great question. I think it's what

I told the team the night before the IPO. It is that this is not the destination. It's the being of the next chapter in our journey. And stay focused on that long-term growth and the day-to-day movements in the stock price will take care of themselves. And that we have a tremendous white space opportunity creating and defining what we believe to be the next large-scale cultural cuisine category in Mediterranean.

And so let's stay focused on what we need to do to execute on that growth sustainably and deliver that great value to our team members and our guests. All right. Brett Shulman, Kava CEO. Thanks for joining us. Happy 4th of July. Thank you. Happy 4th. Up next, venture capitalist and Atlanta Falcons limited partner, Rashawn Williams, going to join us to talk about how AI is supercharging venture funding. Plus, we'll get his take on some major sports valuation news crossing this week. And later, technical expert Jeff DeGraff brings the most important charts he's watching right now

as the S&P 500 sits at record highs. Stay with us. Venture capital market is roaring back, at least for AI startups. Funding for the second quarter came in at just over $55 billion. That is according to fresh data from PitchBook. That is a 47% jump versus last year and the highest quarterly total in two years. Nearly half of that number went into AI startups specifically. Joining us now is Rashaun Williams, Value Investment Group founder and Atlanta Falcons limited partner. Rashaun, happy pre-4th. Good to see you. So I'm curious about

how software is playing in here specifically. It's one thing if you're a Databricks, and I know that's software, but it's also like data and very, very AI focused and already at scale, publicly traded software companies, the smaller ones, the ones that IPO'd more recently, are not performing well at all. So how does that affect the outlook for a VC? Yeah, I think it's the tale of two IPOs, right? So you have the Databricks of the world, just like you mentioned, who are trading around at 18 times type of multiple, but very in line with a Snowflake and a Palantir, which is trading around 17 times. And then you have all of the rest of the crew, like the Toros and the Clarnas, even as Fintech

coming through, and they're trading at a fraction of that. I mean, literally like anywhere between three and five times revenue. So you're getting very different treatment and very different value on really big companies like Databricks that are trading at really high multiples that have that AI type of spin to it versus everyone else. And by the way, you think Databricks is expensive now at 17 times, literally like three or four years ago. I think 2020 and 2021, I'm looking at my sheets here. I mean, these things were trading at 50 to 60 times revenue,

the public comps and the private comps. And that makes me wonder, I mean, maybe, I don't know what you're doing earlier stage at this point, but because some of the smaller, maybe less visible software names in the public markets, those comps aren't doing well now. Maybe that's a great deal for investors because eventually in a different market, when some of these other companies that are now at lower valuations come public, they'll actually lift the ones that survive that are in the market now. No, you look, you're spot on. There are two things that I would tell any investors in this marketplace, specifically with companies like Klarna and Toro that are a little smaller versus the Databricks.

One, with the smaller ones, it's the best relative value play right now. Literally, Klarna is bigger than its public competitor, is growing faster, is more profitable, but it's trading at a lower revenue multiple than a firm, 3.8 versus 6.9, right? So great relative value for those fundamental investors looking to upgrade in that space but then you got companies like toro that are just completely mispriced right now toro is mispriced because it should be trading at airbnb type multiples around eight or nine or whatever but it's being dragged down by its public comp get around which is having so many troubles financially and and it's much, much, much smaller.

So I think you'll get the multiple expansion once they change it from being priced to something like Getaround to something like Airbnb. But Databricks is about one story, multiple expansion if multiples get back to 2020 and 2021 levels. Currently, you're looking at a company that's trading, like I mentioned, 17 times, but it was trading at around 50 times just a few years ago. So if you think about the multiple expansion there, you've got a company whose valuation is $43 billion in the private market that could be worth $120 just by multiple expansion if multiples get back to where they were in 2020. But are multiples really going to go back to 2020, 20, 21? I asked that because we had interest rates at zero. You had just record amounts of liquidity

squashing around in both the public and private markets. It was a very atypical time period. So does that actually make sense to see us go back to that in terms of those multiples and those valuations? Look, I think it's possible. You mentioned a couple of factors that are kind of leading the path for that to happen. But I think ultimately, if you look at the multiples of big tech, those haven't changed at all. Right. Interest rates have literally done crazy things over the last couple of years. But if you look at the Apples and Googles and Amaz type of technology company in an industry that's growing really fast, like AI, I do think AI has the opportunity to go back to those multiples. The other industries, I'm not so sure.

OK, so I see the shirt you're wearing. Got to call that out. Atlanta Falcons, your limited partner. I'm not going to ask you about that team or the NFL specifically, but I am going to ask you about investing in sports because we've seen the reports about the Celtics potentially selling for a record valuation. We see the news even just today, Disney CEO Bob Iger and his wife looking to buy a women's soccer team. It all speaks to how much money, not just from individuals, but also from private equity, from investor groups, et cetera, is going into sports. I mean, how do you approach this? Are you thinking about it similarly to how you invest in the startup landscape as a VC? Yeah, so this is not a game

for retail investors. These are long-term illiquid assets that bring three main things to ultra high net worth people and private equity funds. The first thing is it's non-correlated to the stock market. The second thing is very similar to how software companies have annual reoccurring revenue. If you look at the NBA media rights deal, which is due to be renewed around this year, they're going to sign another 10 to 12 year deal. I mean, literally up to three quarters of their revenue could be pre-paid out for 10 years. So that's a highly valuable asset

that you can underwrite, just like you can do a stream of cash flow from bonds or any private equity opportunity. So that's very important. And then last but not least, these things are rare. It's literally like buying a mansion in Malibu, right? You're going to pay higher because it's Malibu versus something down the street.

So the scarcity associated with these assets is 32 teams in one league. It's 30 in another. It's just not that many, right? I'm not going to talk about the bragging rights. That's all obvious. But that's driving the valuations. And I know a lot of people keep thinking about the valuations and how bloated they are. I heard the same thing with late stage tech seven years ago.

But what people aren't seeing is what is the revenue growth from 10 to 20 years ago to today? These companies are valued at a multiple. These teams are valued at a multiple of revenue. So you're only seeing half the picture if you only look at valuation, but you don't know what the revenue is. I can tell you right now that the valuations are substantiated and that they will continue to grow based on how popular these leagues are and how valuable the media rights are for each league. Rashawn Williams, thanks for joining us. Thank you for having me.

The other real assets. Well, time now for a CNBC News update with Julia Borsten. Julia. Thanks, Morgan. Abortion rights advocates in Arizona have enough signatures to put the issue on November's ballot. If voters approve the measure, it would add an amendment to the state's constitution that would make abortion a fundamental right. County election officials have until late August to review the signatures and formally certify the measure for the ballot. The National Black Farmers Association is calling for the CEO of Tractor Supply to step

down. This comes days after the retailer announced it was ending its diversity programs and environmental efforts after an online backlash. And fans packed the stands to watch the Las Vegas Aces beat the Indiana Fever 88-69 Tuesday night, drawing the fifth largest crowd in WNBA history. The two-time defending champions won their fifth straight game in front of over 20,000 fans. Morgan, back over to you. All right, Julia Borsten, thank you. Speaking of sports. Up next with the S&P at record highs, is the market overvalued?

Mike Santoli looks at whether the mega caps are skewing the picture or if indexes more broadly are starting to look pricier. And check out two big winners today. Paramount jumping on news that David Ellison's Skydance has reached a preliminary deal again to merge with Paramount parent National Amusements. And Tesla getting another big boost, now just fractionally negative for the year.

Overtime, we'll be right back. Welcome back. The S&P 500 closing at a record today, but are stocks starting to look overvalued? Mike Santoli is taking a look. Mike. Yeah, Morgan, there's so many angles you could take a look at this. First of all, you have to say that you could have argued that the stock market, as measured by the S&P 500, has looked overvalued for most of the last few years.

Right now, the aggregate forward P.E. is about 21.2 times. Now, a lot of folks would say, yeah, sure, sure, sure. But that's mostly because of the expensive mega cap sector, which trades closer to 30 times. If you look at the equal weighted S&P, it's around 16. Maybe that's not so bad. All true. What we have here, though, is a measure of the median stock in the S&P. What is its P.E.? And this is on a trailing basis, not a forward basis.

And it goes all the way back 60 years from Ned Davis research. And it's up in the mid 20s. So it really is higher than we've seen in all but a couple of phases. There you go. That's the tech bubble. And that's the pandemic. So what does it mean? Does it mean that stocks have to go down a lot? Not really. It's a bad timing tool. When

the Fed is easing, inflation is going down, earnings are rising. It's really hard to get sharp valuation adjustments. But it does say something about longer term expected returns, which are probably lower than they were back here. You know, if you entered equities in the late 70s or early 80s. Final point I want to make is there is a trend longer term here of generally higher valuations over an extended period of time. Look how little time since 1995 we spent under the 60 year median. Almost none except for the global financial crisis. So, you know, we can argue about it. I definitely say the market's not cheap, but it might not be the thing that dictates how the next year or two go.

This is really fascinating. I'm going to ask kind of a wonky question here. And that is, when we know that the markets are forward-looking instruments, why does using a trailing basis to measure this make the most sense? I wouldn't say it makes the most sense, but it actually is just more clear on what we actually know. So what we know is the reported earnings. And if you want to put a little bit of a premium on that and say we're going to grow it, you know, eight or 10 percent a year on that, you can say that the market is is pricing that in. I guess the counter argument to the market being prescient is things like that. Right. You know, it was sort of priced for super rapid long-term earnings gains in the

year 2000. And what we got was a collapse and the index got cut in half over the course of a couple of years. Don't think we should expect anything like that either from this level. But I do think you have to keep in context that we can expect anything we want out of profit growth. But what we know is the earnings base currently. All right. Very cool. A great chart, as always. Mike Santoli. Yep. We'll see. If we don't see you again, happy Fourth of July.

I think I will see you. Oh, yeah. We're going to see you for sure. Okay. Stay right there. Up next, RBC's Halima Croft on the multi-month highs for oil and how a strong hurricane season could impact the energy complex. Plus, don't look now. or better yet, do look,

because Manhattan is now a buyer's market when it comes to real estate. Coming up, we're going to discuss whether a potential Fed rate cut could spark a buying boom across the nation. And owning a home used to be one of the keys to the American dream. So there's the QR code. It leads in perfectly to the latest installment of my on the other hand newsletter. This week's debate appropriate to the holiday is the American dream dying because of the high cost of living and growing economic inequality. Scan that code on your screen now

to joinvertime. Oil is sitting near two-month highs with expectations for heavy demand this summer. And as investors keep an eye on Middle East tensions and a major Atlantic hurricane, joining us now here on set is Halima Croft from RBC Capital Market. She is also a CNBC contributor. Halima, there's also this unexpectedly large drawdown in crude barrels. What was the surprise here? I mean, I think the number exceeded expectations in terms of the crude draw.

But in terms of like where does the price go from here, I think we'd have to see repeated draws. There had been some question about whether demand was going to hold up this summer. And this is the first monster draw we've seen. So the question is, is this going to be a repeated strong third quarter? That I think would be the kind of tailwind for oil scenario. And what's the state of Mideast kind of geopolitical concerns and its effect on oil? Well, this is the story that we're watching. If you ask me, like, what would catch the market by surprise?

Because I think there have been an anticipation that we would see a tightening market in the third quarter. But since we had that tit-for-tat exchange of fire between Israel and Iran in April, the market has really faded geopolitical risk coming out of the war in the Middle East. But we're now watching very closely as Israel potentially winds down the Rafah operations. Do they turn their sights on Lebanon? We've seen a surge in cross-border attacks since mid-May. Real issues about will Israel go into southern Lebanon to move Hezbollah off the border? And why we care about this for oil is that Iran basically sees Hezbollah

as their most important armed proxy. We've had Iranian leaders come out and say if Israel goes to war against Hezbollah, they will enter the conflict in earnest. So we are watching this carefully because Iran is not only such a big producer in the Middle East, but they've shown capacity to hit energy infrastructure like in 2019. And this is an election year. And you do see those geopolitical risks tend to rise in an election year ahead of a presidential election. We also know that inflation, a lot of people here in the U.S. are going to be voting with their pocketbooks. So when you look at something like gas prices, how do some of the policies now potentially materialize and affect what we're seeing in the energy markets? Well, I think what's really important to watch is do we see a reaction function from the White

House? I mean, remember, we've had very large petrolium releases from this administration. When you had the Russian invasion of Ukraine, they announced that million barrel a day release for six months, like the largest SPR drawdowns. The question is now, if we do start to see prices move higher from here, if we have more unrest in the Middle East that gives market participants concern about prices, do they start releasing from the SPR again? So what matters more, the fact that you have the U.S. at record production levels, even as we've seen the rig count begin to come down here in recent weeks. Is it geopolitics or is it something like China economic data when it comes to oil prices through the coming months?

I think what's going to be important to keep prices at the current levels would be seeing this trend continue in terms of inventory draws. Again, there had been this expectation that we would see draws in the third quarter. We got a big draw this week. Does the trend line continue? So from barrels of oil to hurricane barrels, it was a very strong start to hurricane season. How much of an impact might weather have considering all those other factors that are also weighing in now? Pre-shale boom, hurricanes would be seen as unquestionably bullish. We'd be thinking about would we see major supply disruptions, particularly offshore.

Now the hurricane picture becomes more mixed. I mean, it's still an incredible humanitarian story that we are deeply concerned about. But it's a question about what is really in the path of a hurricane. Are they going to be hitting potentially refineries? Well, if you have hurricanes hitting refineries, what does that mean for demand? It's something that could be actually bullish for product prices, but actually negative for crude prices. So it's a question about what really gets impacted, but it's not as material for U.S. production as it was pre-shale. Interesting detail there. Halima, thank you.

Thank you for having me. Well, buyers are back in the New York groove when it comes to real estate. Up next, how a potential Fed rate cut could impact sliding prices in the largest housing market in the nation and beyond. Plus, we're just minutes away from the latest Fed Minutes. Our all-star panel will have instant reaction on the impact that it could have on the economy and your money. Welcome back to Overtime. New York City, the nation's largest housing market, is showing signs of a slowdown. Prices sliding, inventory rising. Robert Frank joins us for a look at this new buyer's market and how a Fed rate could impact housing.

And you join us on set. It's good to have you. Yes, great to be here. Buyer's market is all relative when you're talking about a market where the average price, it did fall 3% in the second quarter. It now only costs you $2 million to buy an apartment in Manhattan. Medium prices also fell. One reason, the big reason, is rising inventory. Now, unlike the rest of the country where inventory remains very tight,

unsold apartments are piling up rapidly in New York. There are 8,000 for sale. At the current rate, it would take about 10 months to sell all of that. Brokers saying anything over six months basically is a buyer's market. And right now they are buying. The number of sales closed in the quarter jumped 12 percent over last year. That's the first increase in two years. Brokers say sellers are listing their properties and dropping prices just to get deals done. And more buyers are biting the bullet because prices are down and the rents remain very high, still at $5,000 a month on average. Brokers say they expect the rest of the year to

be stronger, especially if the rates fall. Mortgage rates, by the way, are not as much of a factor in Manhattan because 62% of the deals in the quarter were all cash. That is near the all-time record. So it's not a highly sensitive market when it comes to rates. It certainly is sensitive, but because most of the deals are cash, especially at the high end, this is all about confidence and where sellers expect the market to go. And the sellers think inventory is just going to grow, and so they want to get ahead of it now and get those apartments sold. Is this effectively a return to normal, though? It's a return to normal in sales activity. Finally, there are deals. We

had two years where there just weren't any deals happening. So the brokers were not getting much business. So we're back to having deals. But we're still higher on inventory than we were pre-pandemic. And we were about 17 percent more inventory than we usually have. Usually it's around 7,000. Now we're around 8,000. So that's where we're sort of above where we were pre-pandemic. And that indicates prices could go even lower the rest of the year. All right. I mean, when I think of New York City, I think of a very big rental market as well. And we know rent prices tend to funnel into things like CPI and the shelter

inflation component of that. So how much of this inventory is specifically co-ops or condos that can't be converted to rentals? Is there some crossover? And what does it say about the rental market? Yeah, you're absolutely right. Most of the housing in New York is rentals. And so a lot of the people that would have bought are sort of hiding out in the rental market. And the rental market has just not come down. It's averaging five thousand dollars a month for over six months. And so a lot of those people are just saying enough. I'm sick of paying five thousand dollars a month or whatever it is for rent. I'm going to buy, especially because it doesn't look like rates are going to come down dramatically anytime soon.

And the rental market is now also showing some signs of weakness. So you have a lot of landlords which have empty apartments that have been sitting there for months. They can't get the rents that they've been asking for. And so when we get those numbers next week, which I will be sure to tell you about, they expect the rents will start to come down. Well, you don't want to rent anymore, I guess. I hope you got two, three, four hundred thousand dollars for a down payment. Exactly. Robert, thanks. Thank you. Well, the latest Fed Minutes about to be released, instant analysis and the impact on interest rates and your portfolio straight ahead. And do not 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 to the special edition of Overtime. If you're just joining us, the S&P 500 and the Nasdaq closing at record highs in this shortened trading day, driven by gains for the chip stocks and Tesla. We've got a bonus half hour of overtime straight ahead for you because we are just moments away from the Federal Reserve's release of its June FOMC meeting minutes. So let's bring in Victoria Green of G Squared Private Wealth, David Zervos of Jefferies, CNBC senior economics reporter Steve Leisman, and CNBC senior markets Commentator Mike Santoli. Victoria and David are CNBC contributors.

So we're three minutes away from the release of the minutes. Steve, I'm going to go to you first as our resident Fed whisperer. What are you looking for in these results, given the fact that in many ways it's really going to be a recap of what we heard from Powell et al. just a couple of weeks ago. Yeah, I mean, the minutes are always old by definition, but the reaction function is not necessarily. And I think what we look for is not necessarily the characterization of the economy, but how they would react under different situations. You remember in the prior minutes, we were all kind of the market was spooked a little bit by this idea

that they were thinking about tightening, that they thought they weren't restrictive. Since then, Fed officials, especially Powell yesterday, and I'm watching Morgan, look at the January 2025 contract. It really shows you what the market is reacting to. I thought Powell was modestly dovish yesterday, but you look at the contract, which tells you where the market thinks the Fed funds rate will be by the end of the year, barely reacted to Powell, but then look at the contract, which tells you where the market thinks the Fed funds rate will be by the end of the year. Barely reacted to Powell. But then look at how it reacted to the data today. The ISM services came in below expectation. And the probability for the end of the year for rates went down quite a bit, or at least a measurable way.

There's that contract right there. There it is a little bit. You can't quite see it there. But at 10 o'clock, it went down quite a measurable way. There's that contract right there. There it is a little bit. You can't quite see it there, but at 10 o'clock, it went down quite a bit there. Okay. So David Zervos, I'm going to get your thoughts.

What are you looking for, especially since we know that the dot plot was really what mattered in the latest FOMC minutes, the forecast for three rate cuts down to one. As Steve just mentioned,

you had a slightly more dovish Powell yesterday. We've seen some softer or mixed economic data between then and now as well. How does this position us? Well, Morgan, I think, you know, these economic data, as Steve said, are really the driver here. This is old news. But I think it's playing very much into the Fed's hand. They expected some weakness. They've expected weakness for a while. The market has surprised them. The economy has surprised them, more to the point, at being so resilient. And I think what I'll be looking for in the minutes is really a discussion around why over the last two dot plots, the March and June dot plots, we've seen a rise in the long-term

neutral rate by 30 basis points, 20 of that coming at the last meeting in June. I think that's a big change. It tells me that the Fed does not think it is that restrictive, or certainly not as restrictive as it was before. And then with the upper end of that band on expectations about the neutral rate moving up significantly, tells me there's at least a number of committee members, four or more, that really think the neutral rate might be closer to something like three and a half percent. So I'm going to be looking for a discussion of that and how that's been moving the thinking at the at the table and why that means maybe they don't need to move as much as the market had predicted earlier this year. And maybe if the market gets a little ahead of itself again,

we'll have some reasons to kind of fade that. OK. And of course, all of this, Morgan, interesting in light of the jobs number coming on Friday before we can trade any of this. And the Fed minutes are out. Megan Casella has the details for us. Megan. John, we've just gotten the minutes. We heard from the Fed that they did see modest further progress toward 2 percent inflation in June. They emphasize it would not be appropriate to lower the target rate until they had greater confidence that inflation was moving toward 2%. Some of that is what we saw in the statement. It's what we've heard from Chair Powell. Most see the policy rate as restrictive, but there was some debate and some uncertainty over just how restrictive rates are. Fed also

said employment and inflation goals are now in better balance, leaving monetary policy, quote, well positioned to deal with risks and uncertainties. They said they're prepared to adjust policy if risks emerge or in response to unexpected economic weakness. When we look at the outlook a little bit on the inflation outlook, several participants said if inflation persists or rises, the Fed may need to raise rates further. The Fed also observed longer-term inflation expectations remaining well anchored,

so they say that underpinned disinflation. They think that's still moving forward. On economic growth in the outlook, a majority viewed economic growth as gradually cooling. Many participants saw the rise in credit card use and delinquency rates as a, quote, significant concern. A few saw fragility in commercial real estate as a downside risk to economic activity. On the labor market, some interesting debate here. The Fed saw reduced tightness in the labor market. They listed decline in job openings, a lower quits rate, reduced hiring, and slower wage growth. Several participants emphasized that further weakening in the labor market could actually

lead to higher unemployment. And they say that that's in contrast to in the past when we've just seen reduced job openings over the past couple of years. Some participants said the labor market would need careful monitoring now that the dual mandate is back in better balance. But participants generally believed that further gradual labor market cooling may be required before they have that confidence to cut rates. John, back over to you. All right, Megan, thank you. Let's get back

to our panel for reactions. Steve Leisman, got to go back to you on this, especially those comments at the end that Megan gave from the minutes about the labor market needing careful monitoring, but that some weakness might be necessary. How does that set us up for Friday? Yeah, well, I mean, I guess I have a little bit of a disagreement with my good friend David Zervos about just how restrictive the majority of the of the committee thinks they are. They do think they're restrictive. And I think that John Williams, New York Fed president's comments today saying he doesn't think the neutral rate has moved very much, at least not the long term one. And then this comment here that Megan read us, most see the policy rate as restrictive.

And I think that's important. It sets us up to tell us that the Fed thinks and then you hear about the weakness and this idea that there's concern about labor market weakness tells you the Fed is beginning to believe that the risks are really two sided, that there are legitimate downside risks to this economy and is thinking about adjusting policy accordingly. Victoria Green, does this at all affect the way that you're prepared to trade stocks on Friday with the fact in mind that we got a jobs report in between here and there? Yeah, jobs is going to be interesting. I'm wondering if it's going to follow suit like last month where ADP came in weaker and then U.S. jobs came in stronger. You know, we're expecting 190,000 ads. That might come in a little bit higher up in the 200s is what we think. But overall right now, the markets had this very Goldilocks that bad news is good news,

like we saw today with the weak ISM. But then good news is also good news to stocks because then we're seeing continued economic growth and labor health. So right now, I think as long as it's kind of close to status quo, markets are pricing in two cuts. Everybody's happy that the economy is not slowing so much that we're concerned about EPS growth and margins. And so you're kind of hitting this eye of the needle right now for stocks which bad news can be a catalyst and good news can be a catalyst because it may be coming either with rate cuts or

we're seeing a softening and economy but still with a soft landing and I think that is key can we start having rate cuts- like we did in kind of ninety four ninety five and engineer a soft landing no landing situation without taking the

economy but bringing inflation down and that's what stocks I my opinion are pricing in right now so as long as labor does an engineer a soft landing, no landing situation without tanking the economy, but bringing inflation down. And that's what stocks, in my opinion, are pricing in right now. So as long as labor doesn't come out of whack too crazy where we're seeing unemployment rate rise at a rapid rate, I think stocks are going to be able to absorb basically anything the economy throws at them as long as it's out on the thesis of a softer, a no landing. Okay. Mike Santoli, want to get your thoughts on this, bring you into this conversation too, because some of the labor commentary got my attention. Reduced tightness, further weakening could lead to higher unemployment. And basically

that the dual mandate is back in better balance. We've talked about what we've seen in some of the recent jobs data. This does set us up and perhaps put more onus, as we talked about in the past hour, on that jobs report that we're going to get Friday. But as we are just a little over a week and a half out from earnings season getting underway, too, with some expectations very strong for the second half of the year for stocks, how much is that labor piece of the puzzle going to matter here? I think it matters a fair bit, Morgan, because there has been this run of negative economic surprises in the data releases. The market's been able to absorb it because it was coming from a strong level. It's not outright weakness in the economy. It's just deceleration. I do think that until certainly this meeting and maybe the latest little phase of Fed commentary, there has been a background concern that the Fed was very patient

and perhaps saw very little risk to waiting and waiting and waiting and wanting that clinching inflation data to come through before they can make a gesture to say it's time to start easing. What the stock market really wants is for any move toward a cut to be modest, incremental, orderly, deliberate, slow. Slow easing cycles are better for stocks than not. They don't want deep cuts down, you know, back toward whatever we think the neutral rate is. They want adjustments. And so therefore, starting earlier or maybe starting a little bit proactively before you get outright weakness might be preferred so long as, you know, we have the evidence we need on inflation. So I think this mostly fits in, as Powell's comments yesterday,

also fit into that general comfortable zone of where the market would like to see things. And on that note, David Zervos, I know you were listening for a commentary around the neutral rate. How did this strike you? I just like the idea that we're talking about, John. I mean, you know, the neutral rate, if you looked at the last five years, hasn't budged in the SEP. It's basically been two and a half percent with a range of something like two point four to two point six. Then all of a sudden, the top end of the range started to blow out a little a year ago and then really expanded over the last three months, top end of the range now being three

and a half. So I'm going to dig through these minutes. It's hard to read them while I'm on with you guys, but I'm casually looking at it and looking at the headlines. And I think it's a healthy discussion. Steve's right. John Williams is not going to be the guy that comes out and talks about a higher neutral rate. He has been a low neutral rate guy from the beginning. I really wonder who the others are, what their power base is and kind of where their arguments lie. Is this AI? Is this productivity? Is it something to do with the balance sheet? Is it other forces? That's what I want to dig into and understand where they're thinking going into 2025, because it matters a lot where you see this landing of slow methodical cuts that Mike

Santoli is talking about, which and Victoria is talking about kind of a la 1995. It matters where you think they're going to try to tell us they want to stop. Are we going back to something in the low twos or something in the mid threes? That's a big difference for valuation. Steve, I do want to get your thoughts on on. I mean, we're in the midst of the landing, right? I always think about, you know, an airplane like we're starting. The pilots are starting to try to land the plane. It could be a very bumpy landing. It could be a smooth landing. It could be a crash landing. When you start to hear about I keep going back to this, but the dual mandate back and better balance. I mean, we also know the flip side of this is we

also know that labor data tends to be, and when you start to see that stuff, that tends to be lagging when it comes to the economic picture. So how tenuous are we right now at this moment, if you have that balance in place, that the Fed really now has to stick this landing and get it right? So first, a quick comment on what David Zervos was talking about. It's not an academic debate. Every investor in their head has an idea of what the right rate of return is. You're playing the neutral rate game with that. That's what they're trying to figure out. What's the right return for the economy and where do you set policy relative to what that right level is? And so the one way to think about it is exactly what Morgan brought up,

this idea of what does a plane do? Well, it starts to bank and to turn and descend well before you make your landing. And so I think the Fed understands it's playing a long game here. Look, what are we talking about right now? This month, Morgan, is the one year anniversary of the Fed hitting this relatively historic rate of 540 on the Fed funds. What are we talking about now? We're talking about now how the increase in the Fed funds rate is starting to affect the economy.

It appears to have taken at least a year. So another way I like to think about the Federal Reserve right now, Morgan, is the Federal Reserve is like a Christmas retailer. They have to decide right now how much stuff to order for Christmas. They could blow it. They could order too much or too little. But now is the time for the Fed. It may be past time, according to some, for the Fed to decide what interest rates are right for the economy six months or a year from now. OK, Victoria, I want to get your thoughts on this, because it is going to dictate how you

invest over the longer term here. And when I see something like lumber prices plunging in recent weeks at a time where this is supposed to be a strong seasonal period for the demand for those types of products for home building, it signals what? Yeah. And so I think the concern is how healthy is the consumer? If we had to say what is the worst thing that we're worried about is the softening in consumer spending. And you had some retailers flag that over the last few weeks. But more importantly is how long are they going to hold up if labor starts to break? So I would argue that labor is all of a sudden going to be as important, if not more important, than PCE, CPI, assuming PCE, CPI continues to come down and we don't have any ugly surprises under the hood.

It is expected that we have GDP decelerate in the second half. That's kind of baked into expectations that we are going to have a deceleration, but still generally positive GDP. You know, overall, I think the neutral rate isn't going to rise. I know there's a lot of concern about that. Obviously, Williams and Powell making a pretty decent defense that the neutral rate stays where it is and will likely continue to come down in some of these expectations. But I think the wild card is the consumer and this lag effect we've seen because, yes, housing was supposed to roll over by now. Rents were supposed to be cheaper. Housing prices, you know, that sticky part of PCE was supposed to come down and we haven't seen it yet. But as you pointed out with lumber and new home construction and new home sales,

new home sales are very weak compared to where they're supposed to be seasonally. So are we seeing the consumer step back and take a break from spending? The flip side of that, if the home market is locked up, the consumer is spending so much more on travel, on entertainment, on eating out. So I think that is the hardest data point is how healthy is the consumer balance sheet and how much will they continue to spend in the second half? And that is what the market depends on. And we'll see about jobs as well. Victoria Green, David Zervos, thank you. And of course, our own Steve Leisman and Mike Santoli, thank you as well.

Up next, Renaissance Macros. Jeff DeGraff on the three most important charts to watch during the second half of the year. And as questions swirl about President Biden's political future. Past donors to VP Kamala Harris are strategizing. We have new details from CNBC's exclusive reporting that's coming up. Welcome back. Stocks kicking off the early innings of the second half in solid form with the S&P and the Nasdaq notching record closes again today. Here to share the top three charts he's watching is Renaissance macro chair Jeff DeGraff. Jeff, it's great to have you back on. What are you watching right now? Let's start with chart number one. Well, chart number one is a little more short term, but we just kind of pulled this one out

thinking of things to do for the summer. And we were shocked when we broke the months of the year down by first half, second half, it revealed pretty starkly that the first half of July is actually the strongest period of the year, followed by December, the last half of December. So I was pretty shocked by that. I knew it was firm, but to see it actually overtake the last two weeks of December is pretty telling. So we're in a pretty good spot here short term. We tend to get decent seasonality into earnings season, and then it starts to waffle a little bit on us. So from a very short term a very short-term perspective, I think things are in good shape. We'll probably have some seasonal tendencies and some softness in August, September, and then kick things back in at the last half of

the year. Okay. And then one of the other things you're watching very closely is credit spreads. We know they've performed very strongly, perhaps surprisingly so, given some of the mixed macro data we've talked about and what you'd expect to see in a high interest rate environment. What are the charts showing you here? Yeah, no, you're exactly right. It's one of those things where, you know, had you told me three years ago where the Fed would be today, I'd say credit spreads are going to be 300 basis points, and they're not, and they continue to look good. And this is just one example. We look at a lot of different ways to try to skin this cat. And they're all saying the same thing, which is there is ample amount of liquidity in the system for the economy and so

far for the markets. And it's stabilized, but it's stabilized at a low level. It hasn't turned higher. And I think that's good news. And this is one of the things that the bears really missed over the last 18 months was just how well credit was performing. And they kept these bearish arguments going. And the credit spreads were giving an awful lot of information. And I think they continue to give us bullish information today. We'll see where this stands in September, October. But that'll be one of the things that we watch for the back half to judge the duration of this rally and how long this bull market has to go. Now, what about the NASDAQ 100? You think Bitcoin is the canary in the coal mine for it? So this is a little more complex, but we look for symptoms of liquidity, right? And those

credit spreads are one example of that. And they tend to align themselves pretty well with the economy. But Bitcoin is what we call concept capital, right? There's no real use for it. There's a lot of philosophical arguments around it. But it takes ample liquidity to drive those things. And what we haven't seen out of Bitcoin over the last roughly month or so is a new high. It's been consolidating. It's just moved back to the 200-day moving average. So it's still in trend. But if it breaks down, there is a relationship between the performance of Bitcoin and that of the more speculative assets in the market. And we label that the NDX as an example. And so a breakdown in Bitcoin is certainly something that would be

unwelcome from our perspective in terms of what the implications are for the NDX going forward. So I think it's important. Fifty five thousand is a big, important number for for Bitcoin. Seventy two thousand would be a breakout and confirm the uptrend, which would be welcome news for the bulls and the back half of twenty twenty four. OK, of course, we're trading in Bitcoin at about $60,000 and change. Jeff DeGraff, thank you. Thank you. The takeaway there, we've got some liquidity in the markets. Well, up next, one publicly traded space company just received huge funding for a robotic arm designed for a space station orbiting the moon. We're going to hear from that company's CEO next. And later, CNBC has new reporting about previous donors to VP Kamala Harris strategizing in case President Biden drops out. Those details

when Overtime returns. MDA Space just received a contract from the Canadian Space Agency for a robotic arm it's developing for the Lunar Gateway. Gateway will be a space station that orbits the Moon and houses Artemis astronauts for the U.S. and partners including Canada. MDA CEO Mike Greenlee says the $1 billion Canadian dollar award covers the next phase of development and production, with Canada Arms 3 the next iteration of a robotic arms system first used on the space shuttle and currently in use on the International Space Station. The current space station, the International Space Station, is about 400 kilometers above the Earth.

But the new lunar gateway out at the moon will be 400,000 kilometers away. So much longer communication distances. And we don't want to be cluttering up networks with robotics control. So we will be using more autonomy in the robotic system. In addition, we built new mission control centers in their new offices in Toronto, Canada, to be able to support robotic operations out at the moon from our new facility. So that's a new evolution as well. So more autonomy and then more commercialization and industrial partnership in the operation of the robotics over time. So MDA, once known as McDonald,

Detweiler and Associates, was sold to private equity by Maxar back in 2020. It again went public on the Toronto Stock Exchange a year later. Today, MDA touts a $1.5 billion market cap. The stock's up more than 60 percent over the last year. And the company's tech is also being used in a variety of platforms. It's being used by one of the teams competing to build a lunar rover for NASA. And MDA recently joined the Starlab joint venture, taking an undisclosed equity stake to build the robotic arm for that commercial space station. If you look at the return to the moon, where you've got 42 countries with the U.S. looking at living and working on the moon,

and you've got 11 countries with China looking to live and work on the moon, that geopolitical tension in terms of making sure that everyone's keeping up with each other is very, very real. So the space agencies are focusing more on the deep space stuff, more than the moon stuff, because it requires a bit more heft and it definitely requires geopolitical collaboration. Whereas in low Earth orbit, as the International Space Station goes away, it's becoming much more purely commercial because it's affordable to do so. And the business opportunity is real. So for more on MDA space and on this new space race and what it means for commercial players, check out my podcast Manifest Space. It's available by scanning this QR code on your screen or downloading wherever you get your podcasts. Yes, indeed. And

up next, new details on the dilemma facing Democratic donors if President Biden does drop out of the White House race. Welcome back. The New York Times reporting today that President Biden told an ally he is weighing whether to continue in the race. The report is based on a conversation with a single anonymous source. NBC News has not confirmed the conversation. And the White House is denying it took place, saying in a briefing last hour that Biden is moving forward with his campaign. Nevertheless, more and more reports are questioning the president's future plans.

CNBC's Brian Schwartz reporting today that past donors to Vice President Kamala Harris are privately strategizing in case Biden drops out. Brian joins us now to discuss, OK, in that context, the White House denying this report that Biden is even talking about not continuing to run. How significant do you think this this rumbling in Vice President Harris's supporters is? Well, I think it's significant, guys, because, you know, what it shows is that for President Joe Biden post that debate on Thursday, there is continuing this high level of scrutiny and anxiety among the Democratic Party's top donors. And now the conversations we're learning about really focus on how the scenarios that are being played out on whether

Kamala Harris could be leading the ticket without Joe Biden if, in fact, he decided to step away and not run for re-election after that pretty tough debate performance last week. So how likely is that scenario to play out? What would it take for that to play out? Do we have precedent here to be already through primary season, to have had Americans vote on one possible candidate, and to have said party then replaced with another? Well, it's unprecedented for the current modern political decade, maybe decades, right? Because we're because we've never seen anything like this. And what it would really have to come down to for Joe Biden is he would have to feel that the polls have shown that there

is no path forward to beat Donald Trump. And he's going to have to feel some public, maybe if not that private pressure from leaders on Capitol Hill to get to that point, to step down. And Vice President Kamala Harris steps in. Yeah. The whole thing is wild. Brian Schwartz, thank you for great reporting, as always. Happy Fourth of July to everyone. That's going to do it for overtime.