Closing Bell - Closing Bell Overtime: Commerce Secretary On AI Executive Order; What Apple Means This For The Market 10/30/23

Episode Date: October 30, 2023

Major rally in stocks today as well S&P sector closed higher. iCapital’s Anastasia Amoroso and Wells Fargo’s Sameer Samana break down the market action and the week ahead. Morgan sits down with Commerce Secretary Gina Raimondo in an exclusive interview after President Biden signed the first AI executive order. Earnings from Pinterest, Wolfspeed, Chegg, VFC and Simon Property Group. Apple is hosting a special event this week and reporting earnings on Thursday; Melius analyst Ben Reitzes breaks down what is riding on the tech giant this week. Our Phil LeBeau breaks down the UAW’s deals with automakers and eToro U.S. CEO Lule Demmissie on retail investors positioning.

500 on the Dow, that's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, coming up on today's show, an exclusive interview with Commerce Secretary Gina Raimondo as the Biden administration issues the country's first executive order on artificial intelligence. Plus, we're exactly halfway through earnings season and we'll get a wide range of results this hour from names like Pinterest, Chegg, Wolfspeed, VF Corp, and Silent Property. And we'll bring you all the after hours action as the numbers roll in. And we're looking ahead to a crucial week for Apple, which was higher in

today's rally, but is sitting about 15% below its 52 week highs. We'll talk about tonight's product event as well, which is just hours away and preview Thursday's earnings. We begin though with the market and a big rally to kick off a key week of catalysts, including those Apple earnings, a Fed meeting, and the October jobs report. The Dow and S&P 500 logging their first positive day in four. Communication services and financials leading the gains today, which were pretty broad-based. Let's bring in CNBC's senior markets commentator, Mike Santoli. Mike, there's lots of point to here, including the fact that you did have this Treasury quarterly borrowing estimate that came in a bit lighter than feared.

I realize that's going to be a big focus in addition to the Fed. You guys were just talking about it in the last hour on Wednesday as well. But we've seen in general this trend over the last couple weeks where we started the week stronger and then the gains have faded. Is there any reason to think this could play out differently again? Except for the fact that the market is that much more oversold coming into this week. So it has been stretching the downside. Yeah, I think this makes 18 straight weeks. The Nasdaq 100 has been up on a Monday. And over the course of that 18 weeks, markets down a fair bit for several percentage points. So clearly, Monday doesn't determine what happens longer term. That Treasury announcement at 3 o'clock definitely allowed the market to hang

on to the gains. The Treasury market was able to basically be steady today. Yeah, yields up, but not that much and not breaking out. And to me, coming into the weekend, it's all about event risk, yes, but also this idea that we had some kind of very slippery footing in the capital markets. Banks way too weak. When banks are making new lows, nobody can get comfortable. It seemed like there was urgent selling in treasuries that let up last week. So I think we're trying to gain some traction across all those fronts, enabled us to bounce at least from a pretty oversold spot.

And Mike, even after today's rally, we're still below 4,200 on the S&P. It took a while to get below that level, which was viewed as key, I believe. So how much faith in the technicals is there in this rally now? It's definitely a show-me market when it comes to any rally at this point. So you've had, you know, the bulls sort of lost some of the benefit of the doubt. If you want to look at it tactically, you would have expected a bounce today, almost, not just today, but soon coming into this week, almost if you were bullish or bearish. $42.75 is one level people are pointing to to say, okay, if it clears that hurdle,

maybe this is more than just kind of an automatic snapback relief rally. All right, Mike, see you in just a moment. For now, let's talk more about today's rally with our market panel. Joining us now is Anastasia Amoroso of iCapital and Samir Saman of Wells Fargo Investment Institute. Guys, welcome. Anastasia, do you trust today's rally? You feel better about tech and energy than about consumer discretionary. Why? I don't quite trust it, John, because I do think some of the fundamentals are starting to change. But let's talk about different time horizons. Let's just talk about this week and maybe into year end. And then 2024 is a separate story. I do think, as Mike pointed out, coming into this week, we did hit some

oversold levels. We've got a lot of the community, systematic community, hedge fund community that did do risk coming into this week. So the positioning slate is a lot cleaner. And of course, as you also mentioned, we are now sort of in the back half of the earnings season, which means more corporate buybacks are likely to come back. So I think mechanically, we can justify a case for some sort of a bounce back here. The other thing that I'm looking for this week is the Fed. And I actually expect that that might be a bullish development because Petra Powell sort of alluded to the case that, you know, the fact that Treasury yields rose across the curve means they might

be done tightening. I think you might reiterate that. I mean, how much the treasury yield curve has steepened out and how much the back end of the curve has risen, that is a lot of tightening that the economy has to digest. So I think that doesn't count for only one, but possibly three rate hikes. So I think if the Fed delivers that sort of message, that could be a near-term bullish catalyst for the markets. And, Samir, you still see downside risk in stocks. Think we're going to test the recent lows. What's going to trigger that test, you think?

Yeah, I mean, look, the tricky part for markets right now is you've got, you know, rates still kind of, you know, testing the upper limits of kind of the upside. The fact that we're all watching a Treasury announcement about whether they're going to issue bills, notes and bonds, I think is very telling. Not sure the last time that played such a big role. And so I think that bond volatility is probably still the biggest driver for stock market volatility. And then, look, a 10 percent pullback doesn't solve for the fact that we still see a recession unfolding very late this year and it'll probably occupy markets for much of next year. And so, you know, it's, I guess, good that valuations have maybe gotten a little bit less expensive, which is really where we were for much of the summer, but it still doesn't

change the macro. I just want to go back to something you said, Anastasia. If I heard you correctly, it sounded like you said what we've seen, the financial markets tightening we've seen, what we've seen in the bond market has been the equivalent of three additional Fed rate hikes. If that's the case, has the equity market fully digested that? And just as importantly, then, do you like bonds over stocks or are you suggesting something else entirely? Yeah, I think more in near term, the markets, the equity markets have repriced for the spike higher in yields. And we're seeing some stalling out in treasury yields as well as the sell off in equity markets. But I can't get I go back to a different time horizon.

If we think about 2024, if yields high for longer are here to stay, it is going to become even more incrementally difficult to refinance the debt that is coming due. In 2023, we had to worry about what's floating rate and how is it adjusting. And the reality is not that much of the U.S. economy is floating rate. You've got some leverage loans. You've got some pockets of consumer. But on balance, it's not that much. What we have to worry about next year is fixed rate debt that

has to be refinanced at much higher rates. And whether you look at corporates, whether you look at banks, whether you look at the U.S. Treasury, all of those stakeholders are going to be borrowing more and going to be borrowing at higher rates. So I do worry and I am sympathetic to the view of the other panelists that we might be heading closer to a hard landing scenario the longer the rates stay where they are. So with all of that in mind, you have to have a trading view and you have to have sort of a broader asset allocation view. And what I would tell you about how we're thinking about portfolios today, it's really going back to, well, first of all, cash now pays something. So money markets

is a viable option, is a viable alternative. It's short duration, fixed income. I wouldn't really take long duration risk. It is things like investment grade corporates. I don't love treasuries, but I think investment grade corporates and municipal bonds, that's a better risk to take. And then private credit, you know, where you can earn close to 12 percent yield right now. OK, we're going to put a pause on that because Pinterest earnings are out. Julia Borsten has the numbers. Julia. Morgan, Pinterest beating on the top and bottom line. Earnings per share of 28 cents, beating expectations by eight cents. Revenue growing faster than expected, 11 percent to 763 million dollars. That's ahead of the $744 million anticipated.

Take a look at shares now trading up about 6%. Now, looking at those monthly active user numbers, those also ahead of expectations at $482 million. That's $9 million more than anticipated. Now, as for fourth quarter guidance, the company gave a range of the midpoint of 12 percent revenue growth of that range that is ahead of the 11 percent growth that the street was estimating. So there's been no commentary, though, no commentary in the release on whether the company is seeing any uncertainty or potential pullback in ad spending in the fourth quarter, which is a warning we got from Snap and also from Meta. But we will be listening for more in the earnings call, which starts in about 20 minutes. CEO Bill Reddy saying in Pinterest's release, quote,

as we lean into Pinterest's unique differentiators as a visual search, discovery and shopping platform, we're finding our best product market fit in years. I will have an exclusive interview with Pinterest CEO Bill Reddy that's coming up tomorrow in the 11 a.m. hour of Squawk on the Street. John. All right, Julia. Thank you. In the meantime, VF Corp moving about 6 percent in the other direction down. Steve Kovac has the numbers there. Steve. Yeah, John shares tumbling a bit here on some mixed results from VF Corp.

EPS coming in at 63 cents adjusted. That's a miss on estimates of 65 cents adjusted. And then revenue is pretty much in line here, coming in at $3.03 billion. Street was looking for about $3 billion even. And you see shares down, John, about 5% now. I'll send things back over to you. All right. Thank you. Looks like a dividend cut here as well. Let's go back to the panel. Been a lot of activist investor pressure in this name. It's seen some pretty wild moves in recent weeks. There is.

The new CEO, Bracken Dower, who came in from Logitech just a few months ago, has quite a job on his hands. Samir, we've had a story this season where revenues have beaten for a long time. Hold on. Wolfspeed earnings are out. We'll be right back. Christina Partsenevelis has the numbers on that chip maker. Christina. Yeah, we're seeing revenues that are falling short of expectations at $197.4 million. Street was anticipating over $207 million. Adjusted loss per share came in at 53 cents, so that is a little bit better. For Q2 revenue guidance, we're getting a range about 192 to 222 million. So that is a little bit less.

If we go through the report, though, there was a section on the startup costs. Wolf Feed saying that they're incurring significant factory startup costs on construction of their facilities. Siler Lake in North Carolina is an example. And those facilities are not yet earning revenue. Those startup costs and underutilization costs come out to about $34.4 million. And yet the stock is popping 10%.

Still unsure why that's happening, so I'll have to come back to you and figure out what it is that's driving that name higher given the miss in revenues. I know you'll dig through it. Christina, thank you. Samir, back to you on this one. We've seen cost controls, earnings per share beating more often than

revenue has in this quarter. So when you look at VF Corp, the dividend cut, when you look at Wolfspeed popping after hours, some operational things that they appear to be trying to work out, what's your take? Yeah, I mean, look, it's not surprising to be trying to work out. What's your take? Yeah, I mean, look, it's not surprising to us at all, right? I mean, if we think that, you know, eventually the economy tips into a recession, that should pressure the top line. And although a lot of companies have heard about recession for some time, and so they're doing a pretty good job of managing costs, you know, at some point, you've got to be able to show growth, right? Especially when you reach the multiples that we saw earlier this year. Now, again, multiples are down a little bit, but you've still got to get to a place where earnings have to grow. And other than easy

comps in Q3, Q4, maybe even parts of Q1, you're just not seeing what's going to grow earnings from here. Some companies have been trying to get around it by raising prices, but I think that has a limit. And so I think as a whole, I think what you've got to say about this earnings season is when you've got the average company beating earnings season is, you know, when you've got the average company, you know, beating earnings by about 7 percent, but the average stock is down about 1 percent. I think you've reached kind of the end of the road with respect to better than feared. And it's really a showing story. Yeah. Anastasia, I want to get your thoughts on that, especially because it raises the question, is disinflation actually good for the market and good for stocks if it means less realized pricing power? Well, it's not great, especially if the bottom line is getting squeezed because of higher interest rate expenses. And I think what

the market is really honing in on is that it's been a great 2023. It's been a great third quarter of this year, especially in terms of economic growth. But one thing that's really catching my attention amidst this earnings season, yes, we've got the beats. Yes, we've got the positive earnings surprise. But if you look at the earnings revision ratio for the next year or for the next couple of years, just a few months ago, the earnings revisions were actually in positive territory. They flipped into positive territory after quarters of downgrades. Well, guess what? That's flipped back into that down territory once again. So I think there is more caution from companies on the outlook for 2024. And that is translating

into downside earnings revisions. That is typically not a bullish backdrop for stocks. So that's why in the very beginning, I said, you know, I'll take the tactical bounce. I'll take any sort of rally into year end, but I don't fully trust it as the trend that we can extrapolate into 2024. Okay. We just went full circle there on that conversation. Appreciate it. Anastasia Almaroso and Samir Samana, thanks for kicking off the hour with us on a day where all the major averages have rallied and rallied pretty dramatically with the S&P up 1.2%. Let's get back to Christina Parts Nevels for more on Wolf Speed's earnings. Christina. I promised you I'd have a little bit more detail.

We're seeing the stock initially pop 10%. Now it's coming down to 5%. Part of that could be not only the Q1 EPS that came in better than expected, but more so the Q2 loss guidance. So they're guiding a loss of $0.56 to $0.70 per share. That is much lower than the $0.69 adjusted that was estimated. So their losses won't be as bad in the second quarter. So that's good. But revenue still came in lower than expected.

Open the stock pop. Yeah. Thanks for the update, Christina. Now, Simon Property Group earnings are out as well. Steve Kovac has those numbers. Steve. Hey, John. Yeah. So EPS coming in at $1.82, which we're not comparing just due to light coverage on this name. And revenues a slight beat here, $1.3 billion versus the $1.27 billion the street was looking for. You see shares up now 1%. John, I'll send things back over to you. All right, Steve Kovach, thank you. Let's bring back Mike Santoli with a look at the parts of the market that have been hit the hardest in the latest bout of volatility.

Mike. Yeah, Morgan, some bounce today in the economically sensitive groups, but it really has been a severe three months for these areas that are dependent on consumer spending, in particular, lower income household consumer spending, as well as any company sensitive to changes in debt costs. So this is out of J.P. Morgan. And you see the green line right there is those companies sensitive to lower income household spending. And you see everything here, the S&P 500 in these baskets were pretty much linked up near the highs of the year in late July. That is when the yield spike began. It really started to get rolling. And you see the damage done here. Obviously, worse for those companies that have to roll their debt and are exposed to higher interest costs.

So clearly the market has registered the potential pain that's going to come from what's gone on in the bond market. They're not really pricing stocks based on 4.9 percent GDP annual rate reported last week. Obviously, looking for a turn for the worse. Whether that's correct or not, we obviously have to wait to see because sometimes markets do overshoot to the downside in a growth scare like we're having right now. Now, take a look at a more traditional way to view it. Dow Jones, industrials, transports and utilities. And that move down in the transports has been exactly the same kind of trajectory as we saw in those other areas. Really strong move up into the July highs

and then retrenchment. And you've kind of lost most of what was gained earlier in the year. Now, the industrials also not really distinguishing themselves right here relative to the S&P 500 and utilities only recently getting a little bit of relief. So defensive stocks have in general not really provided much shelter during this period, although maybe a little bit of life to them there, Morgan. I'd be curious to see what a chart that includes the semis looks like. And I say this also raising the question, and I realize a lot of people poo-poo it as outdated, but at what point do you start to hear the invocation of Dow Theory again, looking at some of these moves?

The semis have obviously had it rough, but they're kind of still hanging on to a longer-term uptrend because they had so much upside. So I think the SMH just playing with its 200-day average. So weaker, but not necessarily game over. And, yeah, Dow Theory is not very helpful right now. I mean, these are below uptrend lines. I don't know that people adhere to it on a strict basis right now. A lot of times you want to just see the transports confirm the industrials if they get to a new high to really have confidence in a trend.

But basically, these are all in that category of, you know, things to give you reason to be cautious for the moment on the economy. All right. Mike Santoli, thank you. Morgan, quite a rush of earnings there. VF Corp turnaround is going to be interesting with all the apparel and whatnot that they've got in their portfolio. we just had with Mike, that there was a miss on the top line for guidance, but it was a smaller loss than expected. It kind of speaks to what's being prioritized and just how granular investors are getting with some of these reports right now. And nuts and bolts trying to get factories spun up as well. FAB spun up. Well, we got a lot more after hours action coming your way, including results from real estate investment trust,ornado and edtech company Chegg. Up next, the maker, their maker break week for Apple. The stock getting a lift today, but it's down double digits over the last three months.

We're going to ask an analyst what he's expecting from tonight's product event and from earnings later this week. Overtime, back in two. Breaking news on BlackBerry. The company announcing executive chair and CEO John Chen will retire from the company, effective this Saturday, November 4th. Board member Richard Lynch will succeed Chen as interim CEO while BlackBerry searches for a replacement. John Chen stayed at BlackBerry, Morgan, way longer than I expected. He came in from Sybase. He was this enterprise software guy going into this company, and it had a tough run post-iPhone, never recovered its previous glory. But John Chen

bowing out for now. Yeah, that's definitely surprising. It's going to be interesting to see who they're going to bring in now for this next chapter of BlackBerry, to your point, for a company that has had to reinvent itself or is still trying to reinvent itself. Yeah. All right. Well, Apple is set to host a product event tonight, its first since introducing the iPhone 15, the virtual event which Apple is calling Scary Fast. Kicks off at 8 p.m. Eastern. Apple is expected to unveil a new line of Macs, plus its next generation silicon chip M3. This all comes ahead of earnings on Thursday. Joining us now is Ben Reitzis of Melius Research. He has a buy rating and a $240 price target. Ben, I guess we'll start with tonight.

What do you expect to come out of this event? Is it going to be material for the stock? It's material in the way that the max, the max have been down this year about 25 percent, and we need them to start growing off of easier comps. So what really matters this next quarter in December is that they grow revenues and the max could be an important part for that. So we'll be watching tonight to see what the features are, how quickly they're shipping, and any other bells and whistles. But max could be important, actually, in the December quarter to help them grow. Okay. I mean, there is an expectation that we're going to get results, earnings results, later this week,

and this is a company that's going to show four consecutive quarters of revenue decline. How much does that matter here? How much of that is priced into the stock? Revenues are everything right now. Every meeting I have, it's how has Apple still got this valuation with revenue declining? What they have to do for the December quarter, which is their first fiscal quarter, is guide for revenue growth year over year reported. Currency is a little worse than when they reported last. They had an extra week in the quarter a year ago, but they

got to overcome that and put up some revenue growth in order for the stock to work, in our opinion. But I don't think it has to be much. Just give us some revenue growth and we can reaccelerate throughout the next year, that should be enough for investors. Ben, I'll make a different sort of argument on why tonight's Apple News matters. Tell me if you agree or not. And it's the Mac has become the central vehicle for Apple's chip driven vertical integration. I mean, this M series chip, the most powerful in its lineup shows up first in the Mac. It ends up in the iPad. It ends up in the vision pro. And not only that, others are sort of copying this idea of, oh, I can take arm based chips, tune them to a platform and get better performance, whether you're talking in the cloud or you're talking, you know, in the client, what AMD is

trying to do, what Qualcomm is trying to do. Am I off base? No, John. Apple's a huge silicon company. I mean, I've been very impressed with what they're doing. Not only is it really important in terms of, you know, their own innovation and standing out versus their peers. You know, we want creatives to want these things to upgrade, but it is a showcase for what they're capable of across their whole lineup. I've been really impressed with their silicon. I think it's going to have big ramifications in their AI strategy and how they process AI at the edge. And I think that this is a really good event for them to say, hey, we have the fastest chips on the market. Look at what we've done on our own and go from there.

But I agree with you, John. I think that it is important in that regard. And they're really standing out. And in a way, the rest of the PC industry is benchmarking versus Apple, maybe not the Macs, but particularly in mobility, Qualcomm even last week was talking about here's how our new Snapdragon chip for PCs is going to perform compared to Apple. Yeah, there's quite a few folks that potentially could get their hat in the ring. Obviously, we all know about Qualcomm because they had their big day. And then obviously the speculation around NVIDIA, AMD working on ARM chips. It's really exciting right now, and we'll see what happens. Obviously, at the same time, Intel is innovating, and they have Meteor Lake and Arrow Lake coming.

But a lot of companies are trying to use AI as a launching board to kind of increase their share in chips. Obviously, Apple's already there and we'll see how it goes. But I do think tonight is kind of good for the showcase of what they can do. But the key really is growing in December for this stock. It's really and they got to talk about AI and they're going to have to answer some questions on China as well. There's some folks very concerned about that. Ben Reitzis, thanks for joining us. Stock finished the day up more than 1 percent. Scary fast on this Halloween Eve. After the break, we'll talk exclusively with Commerce Secretary Gina Raimondo about today's first of its kind

executive order on artificial intelligence from the Biden administration. Plus, your thoughts on the UAW's deal with the big free automakers. Stay with us. Lattice Semiconductor earnings are out, and judging by the stock move, we've got some rotten Lattice. Christina Parks-Nevelis has the numbers. Christina. You don't make friends with salad. But what we're seeing with Lattice is, yes, Q3 earnings did beat by a penny, 53 cents. Revenue came in line. Reason why you're seeing the stock down 13.5% is the fact that the Q4 guidance is much lower than anticipated. Revenue's coming in at 166 to 186 million.

The street was anticipating 196 million. Why is this important? Lattice makes programmable chips. That competes with Intel as well as AMD Xilinx. Intel, I should say, warned as well that this sector was not doing as well. And so this bodes, it could set the bar lower for AMD Xilinx business tomorrow. So if the fact that two other names warned of weakness. So that's why you're seeing shares down 13.5%

on Q4 revenue weakness, guidance weakness. All right. We'll keep an eye on it. Christina, thank you. Chegg earnings also out. Steve Kovac has the numbers. Steve. Yeah, and the stock was bouncing out around quite a bit, John, as these earnings came in a bit later than expected. But it is a beat on the top and bottom lines. We're seeing shares go up about 3 percent on this. EPS was 18 cents adjusted versus the 17 cent street was looking for. And revenues a beat as well. One hundred fifty eight million dollars versus one fifty two million street was looking for. And revenues beat as well. $158 million versus $152 million Street was looking for. And also guidance for the current fourth quarter. They're giving guidance of revenue between $185 and $187 million. Street was looking for $185.7 million. Now we're watching shares go down about

6 percent, John. So all over the place, the call is just getting started. It was down. It was up. Now it's down just in the period of a few minutes. That's why you, thanks, Steve, don't want to miss a first on CNBC interview with Chegg's CEO tomorrow right here on Overtime, 4 p.m. Well, in the meantime, the Biden administration issuing the country's first artificial intelligence executive order today covering issues like safety and privacy and ordering a report on potential labor market impact the commerce department will play a central role in the wide-ranging order that touches various agencies i spoke with commerce commerce secretary gina ramondo today in an exclusive interview and i started by asking her about that key role in this rollout of regulation. Take a listen. So President Biden is really taking bold action

with this executive order because, fundamentally, he realizes that in order to harness the benefits of artificial intelligence, we need to mitigate the risks. And that's what this is all about, making sure that AI is safe and trusted. So the Commerce Department does play a very central role in this. We will continue to control artificial intelligence semiconductor chips. We will be setting all of the standards around what is safe, what is adequate watermarking,

what is adequate red teaming or testing. And then also the Bureau of Industry and Security, which reports up to me in the Commerce Department, will be collecting survey data from companies around the results of their safety testing. So it's, as we were talking before we got on, this is very comprehensive because it has to be in order to protect the American people.

And you mentioned harnessing the benefits and mitigating the risks. Do we yet know what all the benefits and risks are around this technology? I don't think we do. Here's what we do know. We do know that even in the past several months, the technology is developing at a more rapid pace than we thought. And so we're starting to see, you know, the full capability of these models. Having said that, we're still in the early innings. You know, a year from now, we'll be so much further along than we are now.

And that's why what President Biden is saying is the United States should lead the world in defining what safe AI is. And we should work with our allies around the world to define what safe AI is. And we should work with our allies around the world to define what safe AI is. In fact, tomorrow I'll be headed off to the UK for the UK AI Safety Summit. But we need to put these standards and precautions in place right now so that as this innovation continues at pace, people don't get hurt. So how quickly can you do that? And I think just as importantly, because so much of the space so far has been self-regulated, what is enforcement actually going to look like? So ultimately, Congress will have to act. And you hear senators working on it already.

And they will have to act in order to have something be enforceable with teeth, with the force of law. But already, you know, we, this spring, we've already convened in the White House leading AI company CEOs and they've already signed up for commitments and we intend to hold them accountable. So, for example, in this executive order, the president directs the Commerce Department to require companies to tell us what are the safety precautions they're putting in place and to allow us to judge whether that's

enough. And we plan to hold these companies accountable. Now, you've been in the room for some of these meetings with tech CEOs. How much of this EO is based on their feedback from those AI summits? We've certainly been listening to AI companies, by the way, not just the biggest, but a lot of small companies, a lot of startups. But we've also been talking to academics, civil society, privacy experts. So I would say very much informed by industry, but not just industry. It raises the questions or the debate around what implementation of rules of the road in the U.S. on this industry look like and how you balance that against being able to compete against a China on the world stage geopolitically and economically. How do you walk that tightrope? How do you ensure that innovation can still move forward? Well, that's exactly the right point, by the way.

Right now, the United States is the hands down leader in the world. We have the most sophisticated artificial intelligence semiconductor chips, the most sophisticated AI models. We lead the world in innovation, in AI. And of course we want to stay there. And we have to make sure that we don't allow our most sophisticated technology to get into the hands of the Chinese military or the Chinese government. That being said, it's in no one's interest for AI to develop in a way that leads to dangerous

outcomes. And I do hope that whether it's China or any other country takes the responsible measures to make sure that, as I said, we harness the benefits, but protect ourselves and the world, quite frankly, from the risk. Are we in an AI arms race with China? Do you see it that way? I do not see it that way. Like I said, the U.S. leads the world. This is a technology that is for good. You know, when you think about productivity enhancements, fraud protection, all of the biotechnology applications, finding cures for cancer, this is amazingly good stuff that should be done with AI. We just have to be certain that we, as I said, we harness the benefits but mitigate the risk. It is a week where Apple's reporting earnings, where the Chinese smartphone market is in focus. We had Huawei release a device recently that raised a lot of questions about its own technology,

where it was able to get the capability to manufacture the chip that powers that phone. How do you balance restrictions and enforcement of those restrictions versus the possibility of retaliation on U.S. companies that operate in a country like China? We cannot compromise as it relates to our national security. So what is very clear is we do not want to deny China technology, including semiconductor technology, that it wants and needs for its economy. Having said that, we cannot allow China to have our most sophisticated semiconductor chips for use in the Chinese military.

That's where we've drawn the cut line. I think we drew it in an excellent place. But with respect to the balance, that is the balance. We have no interest to hold down or hold back China's economy. We have clear interest to hold back their military capability. And there's no room for compromise in drawing that line. The UAW and GM just announced a tentative deal. This brings the last of the auto strikes to an end. It's really labor's moment right now. How are you factoring that into your own policy plans at Commerce as you do work to do all of this nearshoring and increase U.S. activity? that it is possible to manufacture in the United States competitively.

And by the way, AI will help with that. You know, incorporating artificial intelligence into the way we manufacture makes the U.S. even more competitive, whether that's cars or chips or EV batteries, et cetera. So we're very focused in the Commerce Department in reshoring manufacturing to the United States. This sort of sets the stage, John, for a week of AI policy on the world stage. You've got the G7 Code of Conduct.

She just talked about the fact that she's going to be traveling with Vice President Harris for this UK AI Safety Summit. And then just this afternoon, headlines from Senator Schumer saying that he hopes to have AI legislation ready in a matter of months. So. Opening shot, I would say, across the bow. Such an important growth category for the market and for economies around the world. Time now for a CNBC News update with Contessa Brewer. Contessa. John, President Biden has announced a one point.3 billion investment in new interstate power lines this afternoon. It's all part of an effort to upgrade the electrical grid and a transition to clean energy. The three electric transmission lines will cross Arizona, Nevada, New Hampshire,

New Mexico, Utah and Vermont. Construction is projected to create 13,000 new jobs and will supply energy to three million homes. Vacation home sales have plummeted in the U.S., dropping nearly 75 percent from their pace three years ago. Mortgage services firm Optimal Blue pointed to the housing supply shortage, saying sales have just dried up even as demand stays strong. Hilton Head Island and Lake Havasu City have seen the greatest drop in volume at more than 80%. And Magic Johnson just hit billionaire status, according to Forbes. The basketball legend is the fourth athlete to reach this benchmark, joining Michael Jordan, LeBron James, and Tiger Woods. Forbes estimates that Johnson has a net worth of about $1.2 billion,

earning most of that after he left the NBA. And you know, Taylor Swift is just like, hey, welcome to the club, John. As far as athletes go, the fact that he did it outside of the endorsement era is particularly impressive. Contessa, thank you. Sure. Fun fact, I used to work on some of those Forbes 400 files a decade ago. Boy, how they've gotten a lot bigger.

Coming up, should you bank on a comeback? Financials have fallen hard recently, but saw some gains today. Mike Santoli is going to come back with a look at just how oversold the sector has become and if more relief could be on the way. That's when Overtime comes right back. Welcome back to Overtime. Mike Santoli is back with a look at the financials. Mike? Yeah, John, kind of a modest bounce today in the financials, but almost nobody seems positioned for a lasting recovery. Deutsche Bank chronicles the aggregate investor positioning by sector,

and it shows that positioning in financials is down near the 10th percentile, the lowest 10% of readings, going back, let's say, almost 15 years. So you can see these clear periods when there was a lot of desperate, urgent negativity around financials, naturally the global financial crisis and the aftermath in 2011 and then a handful of times since. So getting to some extremes and you see the performance of the financial sector as well as the bank stocks within it. And you can kind of understand why there's been a loss of faith. Profound underperformance, especially since the spring. But it's almost all been within core banks, S&P banks, kind of challenging those post-SVB lows.

Now, the XLF, the broader financial sector, not as hard hit. Why? Well, 14% of the weighting in that sector is Berkshire Hathaway, not a bank and not really a pure financial. Visa and MasterCard were added to the financial sector seven months ago. They're helping to bolster things, too. But as you can see, banks, they trade under 90 percent of book value as a group. So maybe getting cheap. But of course, people are concerned about the economic effects on their balance sheets. All right. The financial case for financials, perhaps, maybe we'll see. Mike Santoli, thank you. Auto workers may soon be driving back to the job after GM reached a tentative deal with the UAW. Details when overtime

returns. Welcome back. The strikes against Detroit's big three automakers appear to be ending with GM becoming the latest company to reach a tentative deal with the UAW. Phil LeBeau has the details. Hi, Phil. Hey, Morgan. By any measure, this is the most lucrative contract the UAW has signed with the Big 3 in decades and maybe ever. Take a look at the raises that the members will be getting. 25% over the next four and a half years. Over 30% when you factor in cost of living adjustments and higher wages, much higher wages for new hires as well as temporary hires. So what happens now? Well, the workers get back to work.

It's going to take some time to fire up production, ratification votes in a few weeks. Stellantis, take a look at shares of Stellantis. The UAW says Stellantis essentially has agreed to add 5,000 UAW jobs over the life of this contract. And as you take a look at Ford and GM, keep in mind that now that they have these deals locked in, they will move forward with the ratification votes. And we just got a note from GM officially confirming the deal. CEO Mary Barr is saying she's looking forward to the workers getting back to work and glad that the contract has been finalized.

Guys, back to you. Staggering win for the unions there, Phil. Thanks. Up next, we'll run through all the after hours earnings movers that should be on your radar when overtime is right back. Welcome back. Some big moves here in overtime on earnings. Let's take a look. Pinterest jumping, what, about 11% after beating on the top and bottom lines.

Monthly active users topped estimates, too. Wolfspeed reporting a mixed quarter, missing on revenues. Second quarter guidance, though, was mostly ahead of estimates. You can see it's up there almost 9% at the moment. VF Corp sinking after missing on EPS, withdrawing its previous full year 2024 guidance and announcing a turnaround plan. And Chegg beating on both lines, though fourth quarter revenue guidance was a bit soft. You can see Chegg is off there about 5%. And we'll talk to the CEO, Dan Rosenzweig, tomorrow here on Overtime. Tune in for that.

Up next, the U.S. is CEO of social trading platform eToro on this spooky month for the bulls and whether retail investors have been buying the dip. Stay with us. Stocks closing in the green today, but it has been an ugly setup for investors lately. Mounting headwinds push the major averages toward another losing month. So how have retail investors been navigating all this? Let's bring in eToro U.S. CEO Lule Demise. Lule, with the market marching higher for most of the past 10 years, it paid to be tactical, buy the dip, diamond hands. But how strategic have investors been during this September, October correction? Good afternoon and good to be with you all. They have been, frankly,

a lot of the tone that you've also expressed in the markets as you guys report on it, which is a bit of caution. So you saw some leaning into things like ETF, the bill ETF, and trying to ensure that they locked in some of that yield. But again, seeing interest in both technology, which is where a lot of our investors have a bias towards technology, be it AI or other types of technology. And then you see health care and energy and sort of edge each other out in terms of what their options are. What we do see is that the majority of folks are still long-term investors. So there are 55 percent of them say, I'm still holding, I'm still looking for the long term. But there are folks that are keeping their powder dry, about 30 percent keeping their powder dry and seeing if there's further opportunity. But what I think is more important is that they're not getting spooked.

And the way my benchmark for not getting spooked is 08. Okay. So in technology in particular, how much are they buying what might be perceived as value versus buying trends like AI? It's a bit of both, right? So they hold for long term. So whether it's a little rich or not, you see a holding pattern. Where they see dips, they come in. So a good example might be Tesla has gotten beaten up a little bit. But as I said, there's also this sort of broader thinking of like sectors like health care that they're leaning into. Lule, I'm just looking at the eToro website. Investors can invest in crypto, they can invest in stocks, They can invest in ETFs.

Have you found that with yields as high as they are, that some of your customers are maybe not as active on the platform because fixed income is competing more than it has in the past? So yes and no. So we do also have options, which is, as you know, options have seen further growth even post-pandemic. What we do see is investors coming in when there's an opportunity to come in and being a little bit more cautious when the market feels a little jittery. But ultimately, you know, for us, yes, is the pandemic season out, sort of not in peak anymore? Absolutely.

But if you look at households in the U.S., what's happening is individuals are not coming out the way they did in 08. If you look in 08, about 10 percent dip in percentage of households in the U.S. in terms of investing. You do not see that post-pandemic right now. In fact, the resistance level has stayed at around 60 plus percent of households still investing. And we're seeing the same thing. OK. So I realize tech is a big area of interest right now and investor flows. What are some of the other sectors where you're seeing a lot of activity? So again, healthcare is one, real estate is another. What we do see now, because we have ETFs, and I would be remiss to not say we have a wonderful partnership now with iShares BlackRock

in which we want to highlight the importance of ETFs in a portfolio, be it a long-term holding, a sector play, or an instrument for speculation. And so we do see folks leaning into sectors, both in terms of specific holdings, like Eli Lilly's an example, as well as sector play through ETFs. Okay. Lilly Demise, thank you so much for joining us. Thanks for having me. It's interesting, John, because Bespoke had said if we closed above 1.19% on the S&P today, it would be the best Monday of the year. And we did that, 1.2% exactly for the S&P. Best Monday of a bunch of good Mondays.

So we'll see what that says. Tomorrow, an interesting crop of earnings. In the morning, there's Zebra Technologies. It's an interesting read on logistics, right, technology for tracking that. And then we've got AMD in the afternoon on the chip side. Yeah, that's going to be a big one. Of course, we're monitoring the Apple event tonight. And then we've got Apple earnings later in the week. We've got the Fed. We've got this Treasury refunding announcement that's going to come on Wednesday as well. And then, of course, jobs report on Friday. It's going to be a very big market moving week. It's been an earning season again where revenues haven't outperformed as much as as profits have.

We'll have to see if that continues, what it might mean. Yeah. OK, well, that's going to do it for us here at Overtime. Fast money starts now.