Closing Bell - Closing Bell Overtime: Crypto Investing With Matt Ball; Dynasty Equity CEO On Closing Funding Round With Tiger Woods’ TMRW 6/25/24

Episode Date: June 25, 2024

Dynasty Equity co-led a Series A round for Tiger Woods’ TMRW; Dynasty co-founder K. Don Cornwell on what’s next for the venture and the boom in sports investing. Third Bridge’s Peter McNally reacts to FedEx’s strong quarter. Skylar Capital’s Bill Perkins gives top energy plays. Epyllion CEO Matt Ball on crypto and adding ether to his ETF. 

We've got a 180 from Monday's market as a rebound for NVIDIA lifts the NASDAQ and the Dow gives up yesterday's gains. That is a score caught on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, we are awaiting FedEx results. Those are due out in just moments. They could give clues on the health of the company and the economy at large. We will bring you the key numbers and analysis as soon as they cross. Plus, former Amazon executive Matt Ball tells us why his Metaverse ETF just made a big bet on Bitcoin and Ether as crypto rebounds from yesterday's pullback. And noted energy investor Bill Perkins joins us to break down his outlook for the energy markets in the second half of the year amid soaring AI power demand and a lingering heat wave. Bill's giving blue steel with that photo there. But first, let's begin with today's market action.

A rebound in NVIDIA shares, sending the NASDAQ sharply higher. S&P 500 and NASDAQ both finishing in the green for the first time in four days. Let's bring in our market panel. Joining us now is Vital Knowledge founder Adam Chris Fooley and Bespoke Investment Group co-founder Paul Hickey. Good afternoon, guys. Paul, so yesterday, today, which day do we learn the most from? A lot of noise signifying nothing, right? I think what we're seeing here is just a void of information and conflicting data on the economy.

And so we haven't seen much in the way of corporate earnings, which I think makes these FedEx earnings coming up shortly so important to see what are companies actually reporting versus data, which can be backward-looking and conflicting depending on whether it's a survey or hard data. I think as far as the broader market, I would stick more with yesterday rather than today. We think it's still too early to write off the rest of the market in favor of the large cap tech and NVIDIA especially. So we would look for the market to broaden out, but not necessarily. It's not like a binary choice

between mega caps and smaller caps, which is more biased going forward to looking at these, you know, other companies within the S&P 500. Okay. And as we look forward to those FedEx numbers, maybe the next 10, 15 minutes, Paul, the stock's been in a slump for the last quarter. I wonder whether now it's all about companies needing to deliver a big surprise, either in the guide or in even further cuts. They're already in cutting mode. Yeah, so, I mean, I think as far as FedEx is concerned, for the stock itself, we're going to be looking at margins. You know, they've improved margins three quarters in a row.

I mean, sales have just been abominable for the last two years. They've missed estimates eight quarters in a row. And sales have declined on a year-over-year missed estimates eight quarters in a row and sales have declined on a year over year basis for six quarters in a row. So this report is expected to show one percent growth. I mean, so that's that's a win based on what they've done in the past. But the key is for FedEx itself and the stock is how that earnings number comes in with the margins, because they have been in a major cost-cutting mode and that strive program to consolidate operations and eliminate redundancies. Yeah. In the meantime, Adam, we have had some underwhelming corporate updates from a number of

high-profile companies in the last, call it, 24 hours, whether it's Pool, which broke, that news broke in overtime yesterday, and it sent not only shares of that company, but peers and other types of companies that are tied to housing lower in trading today. Walmart with comments from the CFO there, which also put some retailer stocks under pressure today. How much do these types of pre-announcements matter as we do sort of sit on our hands here and maybe FedEx and a couple other big names this week, notwithstanding, await the next wave of earnings season? Yeah, I mean, I think there's definitely a rising sense of anxiety in the market about the state of the economy, about the state of

earnings in general. And you're not seeing a real safe haven bid in Treasuries for a variety of reasons, one of which is growing concern around the fiscal condition in this country and the lack of political will to address that, you know, at the end of this year and into 2025. And so you have this perverse setup where you have safe haven money pouring into these mega cap tech stocks. And, you know, the leadership in the market, you know, it's incredibly thin. It's almost absurdly thin. You saw it today, you know, a lot of heavy selling and cyclical groups. It was really just tech and cruise ships. And so there's an aversion

towards a lot of other areas of the market other than mega cap tech. And people are definitely very anxious. You've seen a lot of missed signals on the growth front and on the earnings front. And so we'll be watching very closely, not just FedEx. Micron tomorrow will be very important for technology in the broader market. And then Nike on Thursday. Yeah. Paul, I mean, the other piece of this, to go back to what Adam was just talking about, has been the torrid run we've seen in semiconductor stocks. Yes, we can point to NVIDIA as kind of the big elephant in the room. But in general, you've had such a move in ETFs like the SMH.

You've seen it with the Philly Semiconductor Index as well. Yes, those came off in recent days, but we did see that rebound again today. Is this still the trade to be in? You know, I think when you look at this rally that we've seen coming up to last week, you know, last Tuesday was the high there for the semis and NVIDIA. And what we said a week ago when we were talking is, the world is probably not big enough to sustain these growth rates for NVIDIA.

I mean, you're talking about a hundred billion dollar revenue run rate. You can't keep up that magnitude of growth that they've seen in the prior two years on this large of a base. So I think in that respect, what we saw over the last month, again, we saw a similar situation in March where the sector just rallied 15 percent over the course of a month on a nonstop rally, and it pulled back. Last March, we ended up seeing about a 15% pullback.

This in the SOX, over the last three days, we saw a much more muted pullback so far. So I think it's probably still too early to step in there and think that the worst is over for the sector after the last three days. We've just seen nonstop positive sentiment in the sector that things are just, this rate of growth is just going to continue forever. And I just don't think that's going to be the case. Got to mention FedEx results are out. You can see the stock there is moving quite a bit in overtime. It was up 8%, 9% at least initially.

Adam, close us out here. What's the next catalyst you think in this market going to keep us just from seesawing day to day? So some of these earnings reports coming up are going to be very important. So Micron tomorrow is going to be the next major, not just tech, but AI. You know, Micron has emerged as a critical component of the AI narrative. So investors will be listening very closely. Nike on Thursday. Adam, we're going to get to those FedEx earnings. Hold on one moment. Frank Collin has the results for us. Frank. Hey, thanks a lot, Morgan. You can see FedEx shares moving about 9% higher after beat on both the top and the bottom line. EPS six cents above estimates. Looking a bit deeper

in the report, guidance was a critical measure for this report. You can see the guidance, the full year revenue guidance was basically in line with estimates, EPS guidance also in line with estimates. Within this report, CEO Raj Ramanian also confirmed that the company still expects to save $2.2 billion during the next fiscal year, or let's just say the current fiscal year, through its drive cost-cutting program. The company also announced for the second straight year, it would have $5.2 billion in CapEx spending. That's down from fiscal year 2023, where it was $6.2 billion. We'll continue to look through the report. But again, beats on the top and the bottom

line, strong forward guidance. FedEx again confirming that it plans to save $2.2 billion through its drive initiative. We'll be looking through the report and also on the call for more about its transformation, where it's going to combine ground and express service. But again, she has a FedEx moving higher after this report. OK, Frank Collins, thank you. Adam, I'm going to go back to you. You can finish your thought. We'll also get your reaction to FedEx, which we know the story there has been cost cutting. But perhaps what we're seeing here with this result is an inflection point in terms of a return to revenue growth. Yeah, I mean, the freight industry in general

has been in a recession. A lot of companies have used that word recession in the industry. And so if for no other reason than the comparisons are getting a lot easier on a year on your basis, that's going to help kind of create growth on the top line. And then they've been very aggressive in taking costs out of the business, cutting down on CapEx and returning capital to shareholders. So it looks like that's going to be an ongoing theme for the company. So definitely an encouraging data point. You know, like I said, Micron tomorrow, Nike Thursday, and then inflation on Friday are going to be some of the big catalysts for the week, along with, you know, you have three potential major political events this week.

The debate, definitely Thursday night. Also, a potential Supreme Court decision on Trump's immunity claim and then possibly a Trump vice presidential announcement. So those are going to be important as well for this week. Indeed. Adam, thank you. Paul, thank you as well for joining us. We've got breaking news on Rivian. Massive move in overtime here. Phil LeBeau, what's going on?

Huge move, John, and that's because Rivian announcing, along with Volkswagen, that Volkswagen will be investing $5 billion in Rivian. This will happen in three tranches, an immediate tranche of $1 billion in unsecured convertible notes, the bunch of conditions that are kicking in in terms of the ultimate stock price that it converts into later this year than a billion and 25 and a billion and 26. When it's all said and done by the end of 26, back of the envelope math, it looks like Volkswagen will probably own 10 to 15 percent of Rivian. But again, this is all dependent on where shares are when the investments take place over the next three years. The companies are also forming a joint venture that will be focused on EV and software architecture.

That focus will be applied to vehicles for both companies. So they still remain independent companies. This is not Volkswagen buying Rivian. They are independent companies who will benefit from the software joint venture. But again, the big news, the reason this stock is moving higher, a $5 billion investment by Volkswagen over the next three years through 26 from Volkswagen into Rivian. Guys, back to you.

All right, that's a big investment as Rivian continues to ramp its production. Stock's up 30% right now on that news. Philip Bo, thanks for bringing it to us. Let's now turn to Mike Santoli for a look at a possible cool down in retail trading activity. Mike. Yeah, Morgan, this last rip in the Nasdaq and other kind of high powered stocks into last week's highs was pretty fevered in terms of retail trading activity around it. And that's now just sort of broken a little bit here. Here you have Robinhood shares, of course, you know, coming off of, you know, pretty deep depths at the end of last year. I've been surging along with all that retail activity. I put Bitcoin up there because it really does travel along those same lines

in terms of magnitude of gains and volume of turnover. And it really has been very correlated with Robinhood. But the TQQQ is the triple levered Nasdaq 100 ETF. It replicates three times the daily move in the Nasdaq 100 ETF. And you see that's pretty close to these other two instruments. And what's interesting about that is it replicates the daily move. So if you get a 1 percent down day that sets you back 3 percent, it's not going to be three times the year to date move. But because the gains have been so persistent in the Nasdaq 100, it actually has accumulated into some pretty good gains. Another measure of that retail activity, especially in the NVIDIA related parts of this market, mega cap tech is the net call option buys a five day average of how many option contracts have traded on mega cap growth and tech stocks relative to the rest of the S&P 500. These are in thousands.

So it's basically up here around 5 million contracts. Each contract covers 100 shares. Remember, this is from Deutsche Bank. Massive divergence here in terms of concentrated speculative activity in those areas. Now, what does it mean? It means it's a bull market. It means people are excited about a bull market. It also means in the very short term, you have pockets of overheating that probably need some time to settle out before maybe either there's a rotation into other parts of the

market or those rallies can get refreshed. All right. Mike Santoli, thank you. We'll see a little bit later in the show. We're going to turn back to FedEx now surging after beating on both lines. Those shares are now up 13 percent. Let's dig into the numbers with Peter McNally, his global sector lead at Third Bridge, covering industrials, materials and energy. It's great to have you on. I mean, the cost cutting has been the story at FedEx that continues. You had another quarter of margin expansion year on year. You had operating income, adjusted operating income, up 6 percent year on year. But perhaps the biggest headline here is a return to revenue growth, top line growth, which is up 1 percent year over year and is now forecast in fiscal 2025 to continue to grow. Is that what's sending shares higher? Yeah, there's certainly a bit of that. I

mean, low to mid single digit growth forecast is arguably a little bit better than the 3% that the street had. But I really think the big picture here is the capital spending. You know, it's just going to be 5.2 billion next year. It was 6.8 just a couple of years ago. So the overcapacity situation that we've had, and this has been the drag on the business, is not going to be exacerbated. And FedEx has really shown commitments to shareholders with buybacks and dividend increases. So it all kind of rolls up into a pretty good outlook. And the earnings per share look in line for next year. And arguably, if more cuts come through with that kind of revenue growth, maybe a little bit of upside. Yeah. And of course, forecasting $2.2 billion more cost cuts come through with that kind of revenue growth, maybe a little bit of upside.

Yeah. And of course, forecasting two point two billion in cost cuts now through this next year is basically in line with what had been laid out by the CEO in realizing four billion dollars total cost cuts. So that certainly trends with expectations. Is FedEx now poised to be, at least coming into this new fiscal year, poised to be right-sized, especially when you think about how soft the freight market has been? Well, this has been an ongoing trend for, you know, FedEx in that, you know, during the pandemic, they went on the spending pitch. And there were a lot of things happening at FedEx at that time. The economy cooled and they had to scale back, like a lot of other players. Getting rid of unprofitable businesses, additional consolidation opportunities. And it's been a pretty good story so far, all without a macro tailwind, you know, of any kind.

And that's where, you know, some potential upside could occur. Peter, if we can put up a five year chart of FedEx, it looks like if this overtime move holds, we're going to be, you know, tomorrow we'd be at that 390 ish level toward the five year highs here dating back mid-2021, which is that period you were just talking about in the pandemic where they spent a lot. So what does a perfect end of the year, particularly holiday season, look like for FedEx and how likely are they to achieve that, you think? If the overcapacity situation in the market gets resolved in the next six months, and according to our experts, that's probably the best case scenario. Then you're looking at a lot of upside through the holiday season and pricing into calendar 2025. In a worst case scenario where the economy

just muddles along, that excess capacity could take 18 months to absorb. But as we've been talking about, cost cutting is a big part of this story at FedEx, and that's where the upside is coming from. So you get a quicker turnaround, you know, in the in the transportation market that absorbs this capacity in the next six months. That's where your upside comes from. All right. Investors know what to noodle on. Peter, thank you. Yeah, this is it's always interesting. UPS is trading higher in sympathy as well. And one of the things we typically get historically on the call for FedEx is their economic outlook as well,

since they move so many goods across so many different parts of the globe, hence them being seen as an economic barometer as well. So something to watch. All right, for sure. Well, when we come back, energy trader Bill Perkins is going to join us with his outlook for prices in the second half, how the heat wave and AI-driven power demands are impacting the energy market. And later, Tiger Woods and Rory McIlroy's venture, Tomorrow Sports, just closed a Series A investment round at a reported $500 million valuation. We're going to talk to the head of Dynasty Equity, which co-led that capital raise, about the big money flowing into sports. Overtime is back in two. Welcome back.

We have a news alert out of the IRS. Eamon Jabbers has the details. Hi, Eamon. Hey there, Morgan. I don't think I've ever seen anything exactly like this before. The IRS has just issued a press release in which they are apologizing to billionaire Ken Griffin for a leak involving his personal taxpayer data. The IRS press release issued this afternoon says the Internal Revenue Service sincerely apologizes to Mr. Kenneth Griffin and the thousands of other

Americans whose personal information was leaked to the press. The IRS goes on to say that Charles Littlejohn was a government contractor providing services to the IRS. At the time, he made the illegal disclosures. He violated the terms of his contract and betrayed the trust that the American people place in the IRS to safeguard their sensitive information. Now, Charles Littlejohn, we know, was sentenced to five years for his role in all of this as an IRS contractor. Remember, the details around tax information for Ken Griffin and other very prominent billionaires were leaked to ProPublica, the media outlet, and published around the world. We have a statement now from Ken Griffin reacting to the IRS apology to him him saying, I am grateful to my team for securing an outcome that will better protect American taxpayers

and that will ultimately benefit all Americans. So the IRS here, guys, apologizing to Ken Griffin and Ken Griffin accepting that apology. Back over to you. All right. Eamon Javers, thank you. Meantime, natural gas prices pulling back today, even as a lingering heat wave in the U.S. boosts demand for cooling. Meantime, energy is the top performing sector so far this week, up nearly 3 percent. Joining us now is longtime energy trader and Skylar Capital management founder Bill Perkins. Bill, stationary this time, not on the water. We never know where we're going to find you. Not on the boat.

But tell me. Greetings from Lisbon. Okay, great. Well, you were on a boat to get there, perhaps. Tell me what you expect in the back half of this year, even as we find ourselves in this demand situation that, I guess, aside from data centers, is arguably muddled. Yeah, and also we've seen competition from coal. Coal is ramping up quite a lot to compete with natural gas. But producers such as Equitrans and Chesapeake have decided, hey, prices aren't so great right now when they were trading a dollar

sixty dollar seventy. We're going to delay turning these new wells online until the winter, October, November, December. And the market is going to be a little skittish because they want to see that supply come back as we go into the winter. So if it doesn't come back, this market might take off like white lightning in the winter. But otherwise, it's going to be fairly muted. We're going to get pretty close to full and things look healthy, depending on supply coming back. Okay. Is there a way that you see, I mentioned data centers, to play data center demand and this cooling demand in data centers and the impact on energy? Or is, even though it's an interesting micro trend, is it too small to affect things at the scale where you play? I think at the natural gas level, it's too small. I think at the local utility level,

where these data centers are being located, I think at the local utility level, where these data centers are being located, I think there's an interesting play looking at which independent system operators, where they are going and what utilities are going to benefit from that additional load growth. And those tend to be in the Midwest and the Northeast. I think as a, you know, buy natural gas or buy energy, I think there's too many other factors that'll muddle that. But I think for the equity guys, which I'm not one of them, I would look into the utilities that are going to really benefit from this massive infrastructure that needs to go in. Remember, they don't care how much it costs. They make a return on whatever the cost is. So I think that's the play. Bill, it's good to see you. What's interesting to me is that if you

look at the S&P 500 energy stocks that have performed the best so far this year, it's actually it's Target Resources, it's Williams Companies, it's One Oak. It's these midstream players that are focused on infrastructure around natural gas. So even as we've seen gas prices softer this year and we do have these supply levels, the fact that the infrastructure players here, at least from a public equity standpoint, seem to be benefiting tells us what about the situation here with production versus how it meets the end user. Well, I have a lot to say about that, but I'll try and keep it short. These guys have a virtual

monopoly provided by the government. It is impossible to build a new interstate pipeline or to add infrastructure as a new competitor or upstart. So whoever exists now, as we grow our energy supply, as we grow energy demand, they are essentially a tax on every molecule that moves, whether it be oil or natural gas. And so I think these guys are the house and they're here to stay and they will be profitable for quite some time. It's interesting. You talked about it a little bit earlier, but this shift from nat gas to coal, why are we seeing that? Is it sustainable? And is there a point at which I guess price wise for natural gas, we see that shift back or we see more production begin to come online?

Well, the long term trend has been less and less coal usage. And then coal piles basically exploded. And coal power plants started deferring deliveries, reducing coal supplies. So now that the demand has showed up, they're able to burn off some of these coal supplies, take advantage of the higher prices in natural gas and power prices, and essentially run profitably. I don't expect that to last for a long time. Coal is on a multi-year way out in the United States of America, whether you agree with it or not. And this is a short-term blip in order to balance the market. Okay. Bill Perkins, thanks for joining us. Thanks for having me. Well, before AI, the big buzz in tech was the metaverse back in 2021.

Former Amazon executive Matt Ball launched a metaverse ETF. It was the same year Facebook changed its name to Meta. Top holdings include NVIDIA, Microsoft and, well, Meta. Names that have been riding the AI wave in a very big way. Now the fund is making a big bet on crypto. Joining us now to explain is Matthew Ball, CEO of Epillion and founder of Ball Metaverse Research Partners. Matt, it's great to have you on the show. And that's exactly where I want to start with you. Why is why is this the moment when it makes sense to invest in Bitcoin and ETF for your fund? I mean, we have Bitcoin spot ETFs trading now. There's an

expectation that Ethereum spot ETFs could start trading as soon or get the green light to start trading as soon as next week. Is that what this timing hinges on or is it something else? No, it's a much broader basket than that. We established this index about three years ago or 13 quarters ago. At the time, it was establishing a passive index methodology. We've been rebalancing it every quarter since based on an accumulated number of factors, including increased regulatory clarity, not just on spot ETFs, also NFTs, the increased adoption of stable coins, and more broadly, regulations in particular in Europe, which are now for the first time allowing developers to produce and release crypto-based experiences, apps, and games through

app stores and major gaming consoles. Those collectively drove the inclusion. Interesting. I mean, there's a lot of talk out there, particularly in the trader community, about the role that Bitcoin, for example, plays in terms of indicating broader liquidity in the market, in terms of the momentum trade and which direction that's trending in as well. But it sounds like you're looking at this from how do you take the technologies behind something like Ether, blockchain, for example, and how does that apply out to the metaverse? Is that the way to think of it? That's quite right. These two topics, crypto and the metaverse, or whichever term you prefer for this overall shift to 3D immersive spatial experiences, have long been associated with

one another. You'll find that many of the pioneers, be it at Coinbase or Binance thereon, have talked about the criticality of this information system for building a persistent experience. Neil Stevenson, who in fact coined the term, now has his own layer one blockchain startup co-created with one of the creators of Magically and one of the chairmen of the Bitcoin Foundation. Their belief is that these systems are essential, not identical, but intertwined when it comes to building a next version of the internet. Matt, pardon my frankness here, but is this even a metaverse ETF anymore? I mean, if it were, arguably it should be in the toilet. But because it looks more like an AI ETF, it's doing pretty well.

Now you're buying crypto, which seems to have divorced entirely from the metaverse narrative. It's doing its own thing. If they were connected, crypto would be in the toilet too. So is this a metaverse ETF anymore? Well, I wouldn't agree with the argument that the metaverse is in the toilet. I would tell you that the term itself is. Roblox on its IPO day

declared themselves a metaverse company, the first company in 15 years to use the term in an SEC filing 16 times in their initial public offering document alone. Today, Roblox has more than 350 million monthly active users. That's more than the entire ecosystems of PlayStation, of Xbox, and of the Nintendo Switch combined. Most of these platforms now, in aggregate, are approaching 1 billion monthly users. Again, the term has changed, but the underlying trends remain as durable as possible. You're certainly right to say that many

of these companies are focused on other themes, but you can take it from Mark Zuckerberg himself, who has said he can no longer explain more clearly the company's continued interest in the metaverse and indeed the ways in which AI is accelerating the vision. Well, as much as I'd love to argue with you about the metaverse, I'm going to try not to, because anytime you're using Roblox as the example and like Zuckerberg's talking about AI, everybody's talking about AI instead. But back to the driving thesis behind this ETF and the investments that you're making, what is it at this point? Has it shifted from the time when Microsoft was talking about, you know, augmented reality headsets, which they're disinvesting in right now? Has the theme changed? No. Has the thesis changed? No. I think if there's

one area in which I've been surprised, it has been the relative lack of metaverse oriented companies having an IPO over the last few years. It has been the relative lack of metaverse-oriented companies having an IPO over the last few years. We've certainly seen a number of different companies targeting that opportunity, whether that's Arm or Unity, Snapchat a little bit farther back, as well as Roblox in early 2021. In that regard, I would tell you that the composition overall is less concentrated than I expected. But even when you talk about names like NVIDIA, you'll find that throughout 2021, 2022, less recently, Jensen Huang was the single largest proponent of this economic opportunity, consistently telling on CNBC, no doubt,

that close to half of the world economy would eventually consist in the metaverse. More recently, he uses Omniverse, their own trademarked platform, perhaps to drive distance from the term. But that thesis remains essential to what they're doing, as it is at Microsoft, even as they pull back from headsets. All right, Matt Ball, thank you. Well, it's time for a CNBC News update with Kate Rogers. Kate. Hey there, John. Hunter Biden's law license has been suspended in Washington, D.C. after his conviction on gun-related federal charges earlier this month. The D.C. Appellate Court's Attorney Disciplinary Board warned that it could recommend he be

disbarred and give the president's son until August to file a response. The president's son was convicted on all three federal felony gun charges earlier this month for lying about his illegal drug use when he purchased a gun in 2018. Self-driving car company Cruise has appointed former Amazon and Xbox executive Mark Witten as CEO. Witten will start the new job in July as the company tries to recover from a series of incidents last year. And China's lunar probe returning to Earth today with the world's first samples from the far side of the moon. Scientists anticipate the samples will include 2.5 million year old volcanic rock that they hope will answer questions about the differences of the two sides

of the moon. Very cool, guys. Back over to you. All right. That was a historic moment, that happening. And it speaks to the space race that we're in, this U.S. versus China space race that I talk about so much on Manifest Space. Indeed. Well, after the break, another crack in the consumer story. Walmart pulling back after the company's CFO flagged difficult comps in the second quarter. But one demographic still has plenty of cash to spend. And Mike Santoli is going to return and explain. And another check on two big overtime

movers fedex it's jumping on results that topped wall street estimates those shares are up almost 15 percent now and rivian surging on news that volkswagen will invest a billion dollars into the company with the intention to establish a joint venture that could bring total investments up to $5 billion, those shares of 35%. Stay with us. Welcome back. FedEx is surging on results, and we have some more details from the report. Let's get back to Frank Holland for them. Frank. Hey, Morgan. As promised, we continue to dig through this report. As you mentioned earlier, FedEx shares up over 14 percent. This may be a reason for this big spike after earnings. The company's saying in just one line in the report that they're

conducting an assessment of the role of FedEx Freight and value creation plans. FedEx Freight is a trucking company within FedEx. It's an LTL trucker playing in the same space as Old Dominion Freight Lines and also XPO, also in the now defunct yellow. The company goes on to say with the recent completion of fiscal year 2025 planning, FedEx has turned its focus to the next phase of its long-term stockholder value creation plans. As part of this work, FedEx management and board of directors are conducting an assessment of the role of FedEx Freight in the company's portfolio. At the same time, you look at the quarter, FedEx Freight saw its revenue grow by 2%, but its pricing power just dipped very slightly, about 3 cents per shipment that

it's carrying. So looking right now at FedEx shares moving higher now, up 15.5% on news that they may possibly either sell, maybe even possibly spin off their LTL business, which is called FedEx Freight. Again, competes in the same space as XPO and also Old Dominion Freight Lines. Both of those companies moving higher in the after hours on this news as well. Back over to you. All right. Frank Holland, thank you. It's certainly interesting to hear this. We know freight has been largely in a recession and that it's a very cyclical part of the business.

Look no further than UPS and its sale of Coyote Logistics just yesterday to RXO to sort of have a sense of, and we're seeing this across the industrial space, but not just transportation companies, but the broader sector, this portfolio simplification that we've been talking about again and again. So perhaps another example of where we could see it with this company specifically. Yeah, more efficiency drives certainly helping FedEx now, as we said, up 15.5% on those results. Well, new data shows consumer confidence dipped in June, but there's one cohort that's staying afloat. Mike Santoli's back to tell us more. Hey, Mike. Yeah, John, so much has been said in the last few years about this sort of cash cushion that consumers were enjoying

and this sort of excess savings, some have put it. This measures the growth of cash balances for the broad middle of the income spectrum. It's from the economist Ernie Tedeschi, formerly the Council of Economic Advisors. It just shows the growth over time. So it's set to have 100 or the baseline level be 2019 before the pandemic. And that's where that line right is across above that 100 level. And so obviously surge from there with a lot of the stimulus payments and obviously wage growth and things like that. It has come down, but the cushion remains higher. And very, very crucially, this is inflation adjusted. So essentially it's saying if you discount by the inflation rate all

the way back here, it's still coming out ahead in terms of that cash cushion. Obviously, upper income, you want to kind of exclude them because they're kind of less propensity to consume and more investors and lower below the 20 percent income threshold. Really not a lot of cash balances. So this includes cash deposits and money market assets, as noted, John. So, Mike, should we look at this as potential spending power to continue fueling the economy or hesitancy on the part of the consumer to spend? Because I guess it's good news, bad news. Well, you see, the balances have been worked down to some degree. I would view it as potential spending power, not so much that it's going to be rushed into the economy, but more that if we're talking about deceleration of growth, we're talking about, oh, we're in the late cycle. Normally in late cycle, consumer finances are eroding a lot more quickly.

The financial obligations ratio, which is sort of debt service relative to disposable personal income, remains way below where it's ever been right before a recession. So even if growth does slow and falter and sputter, it seems as if consumers may not have to retrench quite as much as they have in past cycles. All right. Extra gas in the tank. Mike Santoli, thanks. Well, up next, we will discuss the future of sports investing with the CEO of Dynasty Equity, who just took in a stake in Tomorrow's Sports, which was founded by Tiger Woods and Rory McIlroy. And check out shares of Norfolk Southern falling after the NTSB faulted the rail

company for conducting a vent and burn of toxic chemicals following the East Palestine-Ohio derailment last year. The agency saying Norfolk misinterpreted and disregarded evidence when making the decision to conduct that controlled burn. Norfolk saying in a statement in part, quote, Norfolk Southern and its expert contractors only motivation in recommending the vent and burn to the unified command was the health and safety of the community and first responders. We should get the full report in coming weeks. Shares of Norfolk Southern finished down two and a half percent. Welcome back to Overtime. Sports investment firm Dynasty Equity co-leading an investment round in Tomorrow Sports, a firm co-founded by golf heavyweights Tiger Woods and Rory McIlroy that aims to create new ventures across sports, tech, and culture.

Now, this is just the latest example of the growing clout of sports as an asset class for investors. The annual value of announced M&A and investment deals in sports has jumped eight times to nearly $37 billion in the last four years. That's according to a recent Deutsche Bank note. Joining us now, Dynasty Equity co-founder and CEO Don Cornwell. Don, it's so great to have you on the show. And I'm going to start right here with Tomorrow Sports. Yes, you have some star studded co-founders and co-investors in this entity, but it's very much focused on golf and specifically a tech enabled future of golf that revolves around golf simulators is expected to launch the beginning of next year. Why was this a compelling investment? We couldn't be. First of all, good to see you. We couldn't be more excited about this.

If you think about what tomorrow's doing, is they're taking existing sports properties that have a big following, and the PGA Tour and Tiger Woods and Roy are a great example of that, and applying technology to create a format that's appealing to new fans. And we're not trying to disrupt traditional golf. The PGA Tour will exist as is. What we're doing is taking all the things that people know and love about golf

and presenting something in prime time in an action-packed arena that's going to be a ton of fun. And we love the fact that we're doing it with a management team that has been there before around the media landscape. And then two of the biggest stars in the sport. And of course, this TGL League has a media deal with Disney's ESPN as well to that point. I mean, we know sports investing has become hot.

It's been hot for a while, but it just continues to ramp up. You see that reflected in valuations. You see that reflected in more investor groups, including Dynasty, which is a relatively new firm out there, getting into the mix. Why is it so compelling to invest in sports, professional sports right now? I mean, there's a few things going on. I mean, you look at the asset class as overall, it's clear to people that as content, it is the best content in the world. And if you're old like myself and you think back to the days of must-see TV on Thursday nights with Seinfeld and Friends, it used to be that you had ratings and you'd have the Seinfeld show, the Friends show, and the Super Bowl all kind of mixed up, or the NFL game on a Sunday or Saturday

night, all mixed up. Now, sports dominates. It is the thing that people watch. The only thing that really competes with it is news. And I think investors are taking note of that. And the thing that we are excited about, as we sit here today, is we're seeing technology come into sport in a way that we've never seen before. Historically, there was not. It was very analog. You watched sports games on cable networks, you had a paper ticket, and maybe you bought a baseball hat. Now, because you've got the streamers coming in and Amazon and Apple and Google and Netflix, you've got companies like Fanatics that are crushing it on the merchandise side. And now in North America, you have regulated sports betting online.

There's lots of technology coming in. And what does that mean? That means that we know who our fans are. And for years and years and years, teams and leagues did not know who their fans are. We all knew there was passion. You sat around as a kid, you flip baseball cards, you listen to 24-hour sports radio. Now it's social media. If you go on X or Instagram or TikTok, you see tons of sports content.

We all knew the passion was there. And now finally, because of this influx in technology, we can monetize that passion. So, Don, help me understand the thesis then. Is that data and knowing the audience the power here? For example, I think about that three-point competition between Steph Curry and Sabrina Ionescu from a few months ago. And that was captivating, but it wasn't a game. I didn't even watch it on traditional TV. If you're able to capture that data, get a sense of people's interests, and then whether it's sell the merchandise or other experiences, is that at the

core of what it is you're trying to do here? That's a big part of it, right? So you create viral moments also. And understanding that social media is a great marketing tool is something that the leagues have figured out. And so even if you weren't watching that event on that Saturday night, clips of that went wild on X on Instagram. And so all of a sudden you had people noticing, oh, wait a minute, who's this person playing for the New York Liberty that is a better shooter maybe than Steph Curry? Maybe I should tune into a WNBA game. You've seen that with the WNBA this year with Kaitlyn Clark, that all of a sudden during their college days with Reese and others, there's this narrative that gets created.

That narrative plays out both on live broadcast, but also on social media, and it brings new fans in. And so what we have is this fantastic virtuous circle of fans being monetized, being marketed to in an efficient way, and then actually engaging with the content. So how do investors win here? I think I saw that you've got people like Justin Timberlake, like Serena Williams, who have jumped in here as well. What's the opportunity for them? Yeah, look, I think it goes back to what I was talking about celebrity. I think you see celebrities coming in and saying,

I've got marketing tools. I've got following. I want to get in. I also think a lot of celebrities just want to make money. And it's a place where they feel very comfortable plugging in. They understand the entertainment ecosystem. And so maybe they're first to see that there's a fantastic opportunity here. I think for general investors, it doesn't necessarily have to be about celebrity. It's just about finding the right deals. And that's what's going on right now. And there's, as you've said, a lot of activity from all parts

of the globe coming into sports. Yeah, there certainly seems to be a lot more money. The Saudis, what's going on in the Middle East and of course, private equity would even get to the NFL and what that could potentially look like in the future. So you have to come back and talk to us more about all of it. Don Cornwell, thanks for being with us. Thanks for having me. Well, JFrog shares hopping higher after making a deal to help speed up development of AI-powered applications. We're going to hear from JFrog's CEO about that acquisition next. And Boeing reportedly switching its offer to buy Spirit Aerosystems from an all-cash offer to a mostly stock deal. The new offer values Spirit at $35 per share. That's roughly 6% premium to its closing stock deal. The new offer value spirit at $35 per share.

That's roughly 6% premium to its closing price yesterday. You can see both of those companies' stocks under pressure today. Welcome back to Overtime. Software DevOps company JFrog ended 3% higher today after announcing this morning it's acquiring machine learning startup Quack for $230 million. I spoke with JFrog CEO Shlomi Ben-Haim about consolidation in small software and why M&A is attractive here. The IPO pipeline, we know that it's kind of dry. It's tough to recover, but it's kind of dry. And although great companies always find a way to fund themselves. Sometimes it's easier and right move to do,

to go with a public company and to join a bigger company and then double down on the potential. So there are a lot of targets. In JFrog, we are more focused on the technology and the culture of the company. But when it comes together, obviously it's a good outcome for the founders and for us. Now, the goal of this company. But when it comes together, obviously it's a good outcome for the founders and for us.

Now, the goal of this combination is to make it easier for developers to make AI-powered apps, including making sure machine learning models are secure. And it touches on a theme we've been hearing a lot here on Overtime, including from the SecureWorks CEO on Friday.

Customers are in a phase of wanting simplicity in security, and that is driving buyouts. All right. Look at that. Shares of JFrog finishing up 3%. Up next, find out what's at stake for the financial sector and investors when the Fed releases its annual bank stress test results tomorrow. That's going to happen during overtime. And two names that aren't stressing out, investors. FedEx, that's surging on earnings. Management also saying it's exploring steps to unlock shareholder value in FedEx freight. And Rivian,

revving higher on a new investment from Volkswagen. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. Welcome back to Overtime. NVIDIA will be front and center again on Wall Street tomorrow when it hosts its annual shareholder meeting. Also on Wall Street's radar will be the weekly mortgage applications data and May new home sales, which are expected to increase by 2.5%. And that's just the appetizer to the main course here in overtime when the Federal Reserve will release its annual bank stress test results. Those are going to be closely watched because those results

will determine how much money banks can return to shareholders in the form of dividends and stock buybacks. But there's even more. We're also going to get earnings from Micron, Levi Strauss, and BlackBerry after the bell. Jeans for the consumer, chips from Micron.

That's a lot. Yeah. And as as Adam Christofoli noted earlier in the hour, Micron will be sort of the next gauge of how this AI trade is playing out for investors, knowing that that has been such a red hot part of the market. We will have to see. Meantime, Union Pacific saying that Q2 is going to be more of a challenge than Q1. We had similar commentary from Walmart's CFO saying that Q2 comparison will be the most challenging this year. There's a lot baked into the second half of this year in terms of earnings growth and what investors want to see. It's going to be very interesting to see whether companies are going

to deliver on those expectations. Certainly FedEx seems to be doing that here today. And I take it they're talking calendar Q3, fiscal Q2 for them. Just one trading day before we also get core PCE prices, which, you know, the Fed likes to watch some new GDP data as well. So some macro stuff, durable goods, too, in the works just a little bit. Yeah. And of course, new home sales is always an indicator for what's going on with the home builders as well. We've seen the bifurcation of that trade against the semis, which Santoli's talked about as well. That's going to do it for us here at Overtime. Fast Money starts now.