Closing Bell - Closing Bell Overtime: Databricks CEO on Key Milestones, Fresh Fundraising; What to Expect from Apple 9/8/25

Episode Date: September 8, 2025

Partners Group CIO Anastasia Amoroso joins for comprehensive market analysis. Databricks CEO Ali Ghodsi joins after the company announced some key revenue and AI milestones. Evercore Partners Chairman Emeritus Ralph Schlosstein discusses the heating M&A and IPO landscape. Eunice Yoon provides the latest China market perspective while Morningstar Analyst William Kerwin previews Apple's upcoming event and what it means for investors. 

That bell marks the end of regulation. Maximus ringing the closing bell at the New York Stock Exchange, listed funds trust, doing the honors at the NASDAQ, and stocks closing higher today. The NASDAQ closing at a record high, optimism in tech flowing from expectations of a Fed rate cut next week. In the S&P sectors outside of tech, consumer discretionary leading, real estate and utilities lagged, a bullish day for commodities, gold hitting an all-time high, crossing the 3,600 level, now up nearly 40% for the year. miners' ETF, GDX, and new highs as well. Oil in the green after the output hike from OPEC Plus was seen as modest. Treasury is also on the move with yields falling, more on that

ahead, and the crypto space higher today, Bitcoin and Ether, seeing gains of 1% or more. Well, that's the scorecard on Wall Street. Welcome to Closing Bell Overtime. I'm Morgan Brennan, along with John Fort. Coming up on Overtime, the CEO of Databricks, the company's latest capital raise putting its valuation over $100 billion. Could an IPO be in its future? We're going to ask the company's CEO co-founder. And speaking of IPOs, we're going to talk to Black Rock co-founder Ralph Schlaustin about the flow of IPOs, M&A activity, and more. And we are getting you ready for Apple's big events tomorrow. The iPhone 17 expected to be unveiled in what Apple is calling a quote, awe-dropping event. But we will begin with another record high for the NASDA.

Christina Parts-Nevilus is looking at the names that are leading the way. in this first day of trade for this new week, Christina. Markets did trade within a narrow range, but the NASDAQ, like you said, touching new all-time highs and fueled by potential Fed rate cuts, just adding to that big tech optimism. Broadcom extended its post-earnings rally

up almost three, closing almost 3% higher among the top S&P 500 gainers after beating Q3 estimates, announcing a $10 billion in new orders from what analysts believe is opening eye. And let's switch over to a video, you know, a closing almost 2% higher despite being down about 7% just over the past month.

Oh, and you can see Broadcom, 3% switching Nvidia, now almost closing 1% higher. After earnings showed decelerating growth, competition concerns mounted as city cut. Its price target by $10 to $200 on fears that Broadcom's custom chip deals could mean lost sales for Nvidia, but bullish sentiment persists, hence you can see today's gains. Google, closing ever so slightly 3 tenths of a percent in the red after Philip's security downgraded alphabet to accumulate from buy with a higher price target of $265. While the firm

views recent antitrust rulings positively, it cited valuation concerns following the stock's strong rally. And I've got to end on this sector. Chinese technology really surging higher today, Alibaba jumping almost or closing over 4% higher after unveiling new AI models, showing its intent to really play

a key role in the AI boom. This excitement is spilling over to other Chinese tech names like PDD and then the crane shares China K-Web You can see the ETF up closing over 1.5% higher. Bottom line for today, though, rate cuts really fueling that big tech optimism and AI innovation really continues to drive these markets further. All right. Christina, thank you. Now let's turn to the bond markets. Yields falling once again, the 10-year barely hanging on to 4%. Rick Santelli is in Chicago. Rick.

Yeah, John, 10 years down about 4.4.5 base points from the most recent close. Two years down about half. of that. But you hit on a key point. It seems as though the 10-year is surrendered. The yield curve is flattening and there's many who think, wow, there's probably going to be a downside surprise on PPI or CPI. I don't think that. I think that the sticky last mile remains. CPI, year-over-year-over-year-over- your number is sticky. I think the bet is that traders think the Fed's going to pay less intention to that sticky last mile and be most concerned with the labor market will have to see. But look at the 210 spread. Notice on the right side, all those 64s, those were basically the highest yield close going all the way back to Jan of 2022. But if you look at a five-day

chart, what you'll see is after we hit those 64 levels on the 210 spread, we've been giving up ground. That's the surrender. And I think it's important to realize that this curve flattening, it's all predicated on a big violation of, well, look at a year today chart. What's a low close for the year. Basically 4%. Traders think we're going to go through that like a hot knife through butter on one of those inflation numbers. We'll have to wait and see. What's really interesting is we really haven't spent a significant amount of time under 4% on a closing basis since the fall of last year, basically a year plus. And finally, the dollar index. This is a very important chart there. It starts with the July lows that were multi-year lows on the left side.

And since then, we haven't quite challenged them. But right now, the dollar on pace for a two and a half month low close. It'll be very important to see if it holds that 97 level after we get PPI in front of CPI. John, back to you. All right, Rick, thank you. Well, markets are bracing for a week full of inflation data ahead of next week's Fed decision. A September cut is just about fully priced in. Our next guest says the Fed should not only cut this month, but two more times this year.

That could trigger more gains for the market. Joining us now is Anastasia Amaroso. She's the chief investment strategist for private wealth. group. Anastasia, you think next week's Fed rate cut is in the bag because of labor market weakness. I'd also like to point out the New York Fed's survey today that showed the lowest ever confidence from workers they could find another job if they lose this one. Does that outweigh any potentially bad inflation numbers this week? I think it does. I think it does because inflation in a way is backwards looking. And when you think about what a consumer is likely to do if they

don't have the confidence and whether they have a job or not, they're going to pull back. So whatever inflation pressure we may see that happened last month. If the labor market is not there, you can't pass through those cost increases. You don't have any pricing power. So that's why I think the Fed, rightfully so, is really prioritizing the labor market. John, and you mentioned one data point. We can cite so many more that tell us that the labor market weakness is really sort of becoming pervasive. You know, we saw it in payrolls report. We saw it in the breadth or the lack of breadth in terms of job creation. We see that people look at the number of job openings and there are now fewer job openings and the people unemployed.

So it's really sort of everywhere. So that's why I think it's so critical for the Fed to deliver not just one rate cut, but several. Because 25 basis points is not going to put a floor into this labor market. 75 or 100? That's another story. What about that arguably deflationary scenario where consumer demand slacks off quickly heading into Q4, though? Wholesale price is paid, still high from tariffs. Retailers have to sacrifice profit margins and discount.

Why is that good for stocks heading into 26? Right. I mean, I do think if the Fed is successful at sort of putting a floor under this economy, and you still have corporate earnings that are coming off really robust levels. We just had, I think, third or fourth consecutive double-digit earnings growth for corporations. You know, and actually profit margins have not pulled back all that much. So I think corporates are able to maybe shift the supply chains, pass through some of the increases. They're able to sort of maneuver.

And so if on top of that, you preserve the consumer by ensuring that the rate cuts in the market, I think all of that puts us into a positive space for your end. So just to go back to what Rick Santelli was saying, especially with some of the data we're getting later this month, or later this week, do you think near-term sub-4% on the 10-year treasury possible? Yes, if the economy continues to weaken, right? I mean, there's really two things that the market really worried about. The first, they worried about the fiscal debt and the unsustainability of the debt. What the market has really come to realize is the tariff revenue, which is, you know, hundreds of billions of dollars that we're likely to collect in tariff revenue, that's really an offset to the increase in budget deficit that we've seen, for example, from the tax bill.

So that's the one thing that's sort of helping keep the lid on a 10-year treasury. The other one, a couple of weeks ago, maybe even last week, the market's worried about Fed independence. But even there, I will say that maybe there's executive pressure that's going to continue to be put on the Fed, but there are also checks and balances. And just because a president may say he wants to remove somebody, it doesn't mean it's a done deal that day. There is a court process, and that takes time to play out. So I think the checks and balances prevails, and that sort of prevents from sacrificing the Fed independence. So the market seems to have come around to that, and that's why you see the 10-year pullback. And then, Morgan, to your point, if the labor market continues to weaken, and if the economy is sort of in between space where you see the slowdown from 10,

tariffs, and we don't have the tax cuts kick in yet because that's going to happen in 2026. That's soft spot. That's where we drive the yields lower. Goldman out today saying small caps are going to play catch-up here. Do you buy there? Do you buy somewhere else? Especially if you think the Fed is going to start cutting and cutting on a regular basis? Yeah, look, of course it makes sense that small caps would be the trade that is most levered to rate cuts because they do have quite a lot of floating rate leverage. And of course, that makes sense. But it's not the highest quality trade. And so that's why as private market investors, for example, we do look to middle market companies, but private equity back, you know, if you look at the

small cap index, about 46% of that index today is about unprofitable companies. And that's up from about 27% some years ago. So that's why it is not the preferred trade. But if you are looking for a trade that's levered to rate cuts, it certainly would be one. Okay. Anastasia Amoroso. Thanks for joining us. Thanks so much. With major averages up higher today, the NASDAQ at a record high. All right. Coming up, we've got the CEO and co-founder of Databricks. They've just announced a new valuation number, impressive revenue growth as the company continues to bring in money thanks to AI. And Robin Hood finally gets to saddle up. It's joining the S&P 500. Stock is soaring up nearly 16% today as a result.

It's not the only big name being added. We're going to have that story when overtime's back in two. Welcome back to overtime. Some big changes to the S&P 500. Robin Hood finally added to the index after being passed over several times. App Loven also getting the nod along with M-Corps, where the stock didn't get the Lovin, the other two are. And if you look over the past year, App Lovin and Robin Hood, both up more than 500%.

There are also additions to the S&P's mid-cap and small indexes, Nutanics, TransUnion, and Q2 also big gainers. Well, meantime, startup Dada Bricks, announcing some key milestones today, including a $4 billion revenue run rate in Q2. That's up 50% year-over-year. It's AI products crossing above a billion dollars in revenue run rate as well. plus the company closing a fresh round of funding, a billion dollars worth of funding at a valuation of more than $100 billion. But some investors are beginning to question some of the AI adoption thesis.

Apollo's Torres and Slocke pointing out that AI adoption among large firms is actually declining. That's according to U.S. Census Bureau data. Joining us now in a first on CNBC interview is Databrook's co-founder and CEO, Ali Godsey. Ali, it's great to have you on the show. Welcome. Thank you. Glad to be here. So let's start right there with the fact that you've got. a $4 billion run rate for revenue in Q2. It's up 50% year over year. What's driving it? Can it continue? Yeah. So we're seeing lots of lots of momentum behind two of our products.

The first one is called Agent Bricks. And that product really helps you build agents that are helping out in the workplace to automate sort of work that you have to do everyday tasks. And what's different here is a lot of the AI labs have been really focused on super intelligence, you know, math Olympiads and programming contests. We're more focused on just everyday tasks that you need to do. And we're seeing a huge uptick in the adoption of this. So it's actually accelerating our revenue. And the second one is a database that we built called Lake Base, which supports these agents because these agents all need a database to store things in. And they use these databases differently from humans.

So, yeah, we're actually seeing, I've actually a long time been saying that, you know, there's a bubble that AI is maybe, you know, overheated, but actually we're finally seeing the green shoots and some of these use cases actually taking off. So we just talked about the research by Torson Slocke looking at the decline among major companies in terms of that investment into AI. It doesn't sound like you're seeing it. We also have been talking quite a bit about cash burn. Most recently, the disclosures from OpenAI and how much they're spending. You achieved positive free cash flow. Can that continue? And I guess to go back to this bubble question,

do you think that we're starting to see this formulation of winners and losers and normalization as AI becomes more prevalent? Yeah, I mean, so we were very careful with this. You know, should we also invest? Should we get insane number of GPUs and so on? And that's when we decided, no, we're going to run this like a public company

but in private markets. So that's why 12 last months we were cash flow positive. And I've for a long time I have been saying, we should be careful. Let's not get over-excited about AI. And, you know, I think there was an over-promise, and people over-invested. And now it's kind of coming back down. But actually, the thing that's so interesting is that just now the actual use cases are starting to work, and they're actually starting to get deployed. So it's interesting to see what happens with these expectations.

You know, can we catch up with these production use cases of AI that are just starting to catch up? Or is it just there was too much excitement and people overseas? spent. Hey. It's going to be a correction. On that, Ali, first of all, good to see you. It's been a while. But it seems before customers can get the benefit of AI, agentic AI, they have to have their data organized, tagged, managed. I'm hearing that is especially a challenge for larger and older enterprises that have lots of data silos from acquisitions, lots of unstructured data. How much of a bottleneck is that to AI adoption and monetization? How do you clear it? Yeah, that's actually great point, John. It's actually the governance of the data that's the problem. It's not like

we can't access that data. That data is there. So why are we just not using it then for AI? It's because of privacy. Because at the other side of this, corporations are super worried about their most sensitive data. They want to be really careful who gets access to it. You know, is it going to get hacked? Are we going to have a leak? So that's also hampering access. So then how do you govern that data in a secure, safe way, in a privacy preserving way? This is why we focus a lot on that at Databricks. You know, we built a whole solution called the Unity Catalog that just does that. And it's actually the number one sort of prerequisite before you can use AI.

So that's the other side of this. That's not holding back to AI because people are nervous about their data. So let me get to this lake base product as well. Help me understand this conundrum that I see potentially with large customer adoption. There's some of your highest potential customers, but they're also likely to have databases they've been working with for a long time, like Oracle, which reports tomorrow, maybe MongoDB for some uses. Can you give an example with Lake Base of how the adoption cycle with large customers plays out, how you expect to gain share?

Yeah, that's an excellent question. For the last 40 years, this database market hasn't changed that much. The thing that has actually changed is in the last three years, we're now seeing it in our data. We looked at, we tracked who's creating these databases inside Databricks, and for the first time, over 80% of the databases are being created by AI agents. So for the first time in the history of mankind, it's no longer humans. They used to be called the database administrators, DBAs. They're not the ones creating the databases.

It's a new customer. It's the agent. So we're really focused on helping them, and we think that's the way you can actually disrupt that whole database market. What's really happening in the market, John, is that previously enterprises were buying SaaS applications, and these SaaS applications could do all kinds of things with a system system of record data that they had. But more and more what's happening now is that enterprises are saying,

you know, we'll just vibe code using AI, our own software, ourselves. And that vibe coded software needs a database behind it, and it needs to be really good for the vibe coded agents that they're building. That's where Lake Base comes in. So I think you're going to see this trend more and more, not just about our Lake Base, but that in the industry as a whole, enterprises are building their own software in-house using vibe coding,

because the cost of building software has just come down, down dramatically now thanks to AI. Ali, before we let you go, you said you've been running a company like a public company. Any plans to IPO? Well, you know, as I said, you know, if we were planning on long term being private, we would have been burning $10 billion a year or something. So we're not doing that. So the fact that we're cash-for-break-even means that, you know, we want to run it like a public company.

We have public company financial audits that happen, but we're not in a hurry also at the same time. We just have, there's so much demand for our software, just keeping up in the Gen. space is that, you know, we're not super focused on filing or going public or something like that right in the present moment. Okay. Alligodzzi of Databricks. Thanks for joining us. Thank you. Coming up, the NASDAQ hitting a new record with the S&P near its all-time highs with the big story of the past month, the Russell 2000, the index outperforming both of the others. Mike Santoli is going to join us with a closer look at what's happening outside of the major averages. And Canada Goose. That stock is heating up as we have.

head into winter. We're going to tell you why one analyst is bullish on the name. Stay with us. Welcome back to overtime. Checkout shares of Canada Goose soaring today after TD Cowan upgraded the stock to buy, raise the price target to $18 a share. TD says Goose is reinventing itself a year as a year-round lifestyle brand, which could boost margins. The firm also saying the company is an attractive takeover target. The company management last week knocked down reports about a potential deal to take it private. You can see those shares finished up almost 13%. Yeah. Well, as we mentioned earlier, a lot of attention on the new S&P 500 entrance, but is the S&P where you want to be as a non-mega-cap public company? CNBC senior markets commentator Mike Santoli here to look at it. Mike?

All those companies and investors tend to think, yes, that's where you want to be, because obviously you immediately access this pool of indexed buyers, but you also have to be. You also have to have to, I guess, understand that the index is sometimes buying high, right? It's buying after these companies have soared in value. And that's the case with Robin Hood. And it's certainly, you know, the case with pretty much most of these companies like Apploving that get in there. There is an index and an ETF for all the companies not in the S&P 500. I like to point out this a lot. The Vanguard extended market ETF, VXF, it's got 3,500 stocks in it. But if you look at the top holdings, Robin Hood would have been among them just until recently.

it's a lot of these very aggressively valued somewhat up-and-coming type names, like Cloudflare is in there, Roblox is in there. A lot of these companies would probably be in the index if they passed the profitability test, multiple years of net income and things like that. But they're not. And what we see here is that actually that non-SMP 500 index is just nosed ahead of the actual S&P over the last year. So obviously it's a ton of small caps, a lot of lower quality.

But also, at the upper end of it, it is driven by a lot of these sort of story speculative names. How do people think about using VXF versus the Russell or versus the equal weight S&P, given how much of a role the mega caps having the S&P? I think people think of it as if we're going to go into a regime where we have some retracement of mega cap dominance. It's an easy and cheap way of not really making an outright bet. It's kind of like a catch-all for the rest of the market. I think in years past, it was a little more like it was going to move with the cycle, like we talk about the Russell 2000, being more cynical, responding more to Fed rate cuts and things like that. So it is kind of fascinating that it's sort of doesn't act the way the textbook

would suggest it should be used. Okay. Mike Santoy, we'll see you later this hour. Thank you. Good to have you here on set. Well, it's time now for a CNBC News update with McKenzie Segalo's. Hi, Mack. Hey, Morgan. So jury selection is underway in the trial of the man accused of attempting to assassinate President Trump on the golf course when he was a candidate. Ryan Wesley Ruth is representing himself in the federal trial. But Ruth, who is not a lawyer, had most of his proposed questions for jurors tossed by the judge, who called them politically charged and irrelevant. A federal appeals court this afternoon ruled that 19, mostly Democrat-led states and Washington, D.C.,

cannot keep pursuing their legal challenge to the mass firings of 25,000 recently hired federal workers. The court ruled the states don't have legal standing to sue because they couldn't show they would be harmed directly by the move. And House Democrats this afternoon released an image of a birthday message that the president allegedly sent Jeffrey Epstein in 2003. President Trump is denied having anything to do with the card and a White House spokesman said it is not Trump's signature. The card and the birthday book it is part of were among documents

the House subpoenaed from Epstein's estate. Back to you, Morgan. All right, McKenzie, thank you. This year I've seen a lot of big IPOs, and we've got even more coming this week, including the headliner Klarna. Coming up, investing legend Ralph Schla Stein on what all this IPO activity says about the markets. And every week, Eunice Yunnan gives us a window into China's economy and culture with her China lens stories. Wait until you see what she's serving up this week. Over time, we'll be right back.

Welcome back to overtime. Let's check on the markets. Small gains for the averages, but still gains the NASDAQ closing adder record after notching an intraday record today as well. InVIDIA helping boost the index. It had been lower in six of the previous seven sessions. Broadcom continuing its rally, up 15% since reporting results last week. And another record high for gold. It's 31st this year. Meanwhile, shares of Dell slightly lower in overtime, the company's CFO resigning effective tomorrow, but will serve in. in an advisory role, Dell also reaffirming third quarter guidance. Meantime, it's expected to be the busiest week of the year for IPOs, the busiest week for big IPOs in four years. Six firms are set to begin trading, and if they all price at the top of their ranges, the more than $3 billion raised would be the highest of the year. So what is this telling us about the capital markets and investor appetite for risk? Joining us now is Ralph Schlossstein, Evercore founder, and senior chairman,

and Ralph, it's great to have you back on the show. Great to be back. So the fact that it's September, seasonally, Typically, this is a week month of the year for stocks, and yet IPO market is rocking and rolling here. Signals what? Signals that the market is very well bid, that there's funds flowing into the equity market. And then investors are looking for new stories in which to invest, particularly now that, you know, valuations are, you know, pretty high. And so for the first time, for example, you're starting to see private equity firms

and venture firms looking at the public markets as a legitimate vehicle for capitalizing the value that's been created. How does it speak more broadly to the deal-making activity and environment right now? It was just a couple months ago where we were talking about uncertainty. It seems like corporate America is moving past that or at least investors are. Yeah, I think the, I think corporate America particularly is, you know, obviously at Evercore, we spend a lot of time in corporate boardrooms. And first of all, if you look at the M&A statistics this year, the dollar volume of activity is up about 30% globally. But the number of transactions is actually down 15%, mostly transactions under $100 million. So substantial, large deals are back, big strategic deals.

are back. And certainly the conversations we're having in corporate boardrooms and our backlogs reflect that. I think the same is true for institutional investors. I think the last time I was on your show, we talked a little bit about the Fed and whether the Fed would cut in September. And I said that to me, the expected case is two cuts. And if you asked me, you ask me, which is more probable three or one, I would have picked three. That seems to be becoming more of an emerging consensus. And I think we're at a world right now where you've got supportive monetary policy coming down the road. You have a pretty stimulative fiscal policy with the bill that was just passed.

And so it's hard to see that the economy isn't going to do reasonably well, and therefore, the stock market, which is normally a leading indicator, is probably indicative of that. So, Ralph, M&A had been hung up for a while, it seems, with private companies holding out for higher valuations, big companies, potential acquirers, waiting for the smaller ones to adjust to reality. how would you put into context what happened and whether the MNA that we're seeing now, how it affects whether that's going to continue? Well, you have, in the private equity world, you have 12,000 companies that are in private equity portfolios that are looking to have their value realized. A modest number of those, that will happen through the public markets, through IPO, But private equity firms have come to the realization that the surest and fastest way to capitalize on the value that they've created is to sell, either to a strategic or, in many cases, to another private equity firm or through a continuation vehicle.

So there's a huge backlog of companies to be sold. And if you're in one of the reasonably sized or larger private equity firms, returning capital is fundamental to your ability to continue to be in businesses. So I would say the motivation there is extraordinarily high. And given the amount of capital on the sidelines and the valuations in the public markets today, I think there's going to be a pretty significant deconstipation of private equity. Okay. Wow.

That's quite the visual. Ralph Schlastein, thank you. Sorry about that. No, it's fine. We got a news alert. Financial Termo, Mark. Julia Borsden has that for us. Julia.

Hi, John. Well, there's been resolution of the lawsuit over the Murdoch Family Trust, which was in litigation in Nevada. And Lockland Murdoch has secured voting control in both News Corp and Fox and Rupert Murdoch will continue in his role as Chairman Emeritus. Now, this deal reportedly buys out Lockland's three older siblings, James Prudence, and Elizabeth for $1.1 billion each, ensuring that Fox News, the New York Post and the Wall Street Journal will retain their political bent. This all comes after Rupert and Lachlan at Murdoch push to change the terms of the Murdoch family trust and to disenfranchise those three siblings, James, Elizabeth, and Prudence from influencing the future of the organization. Now, that legal battle prompted a negotiation, and that resulted in this settlement. Back over to you.

All right, Julia, thank you. It's like an alternate ending to succession. Well, Elon Musk's SpaceX, scoring a $17 billion win in the Wireless Spectrum Wars, detailed. are straight ahead. Plus, find out why these fired pigeon meals are warning signs about slumping consumer demand and about deflation in China right now. Welcome back to overtime. Check out shares of Echo Star. That stock soaring today after announcing it is selling some wireless spectrum licenses to Elon Musk's SpaceX for $17 billion in cash and stock.

You can see shares of Echo Star finishing up 20% today. SpaceX is planning to use part of that spectrum for its Starlink direct-to-sell service. The big wireless carriers all falling on that news today. But speaking of telecom and speaking of spectrum deals with Echo Star, AT&T, CEO, John Stanky, will join me tomorrow live from Goldman Sachs Communcopia and Technology Conference in San Francisco. That's in the 11 a.m. Eastern hour. They did their own deal with Echo Star a couple weeks ago. Also sit down tomorrow with Goldman Sachs Global Institute, co-head George Lee,

with Chimes Chris Britt, Corweaves, Mike and Trader, all right here on overtime. And on Wednesday, Service Now CEO Bill McDermott joins me in the 2 p.m. Eastern Hour. And after that, again, right here on overtime, Goldman Sachs CEO David Solomon, for a wide-ranging discussion. Don't want to miss it. That is a great lineup, Morgan. Well, while U.S. companies battle inflation, those in China are up again. against something very different. Deflation from luxury hotels slinging street food

to e-commerce giants locked in price wars. Our Eunice Yunn shows us how companies in Beijing are adapting to a cautious consumer. Chef Wong is cooking up his specialty fried pigeon, not in his restaurant, but out on the sidewalk. Hotels across the country have started selling food from their restaurants on the street. This is a way to drum up business,

a consumer spending slump. Eat your goza. High-end Beijing Hotel, Bayon Grand, sets up stalls to serve dishes to passers-by, as Chinese consumers and companies cut back on travel, banquets, and events. When we sold fried pigeons inside the hotel restaurant, we used to sell only 60 to 70 a day, Wang says. Now we sell around 200, but it cut prices. each cost $8.00. Today, $5.30. Falling prices is a problem across China's economy. Consumers like

Wan Chiang, uncertain about the future, hunt for value. He picked up his gourmet dinner here for just over $4.00. The economy isn't doing so well, he says. The food is very clean and the quality is good. Also pressuring Chinese prices, excess capacity across industries. Drivers from all the food delivery apps with Maitwan, Alibaba, JD, drop off meals at smart lockers like this one. Food delivery is one of the most fiercely competitive battlefields. All are offering coupon discounts, bringing prices down. The government worried about deflation has stepped in, revising rules to control pricing. But consumer patterns are changing.

With tiny so price sensitive, secondhand goods are now in vote. This superstore of second-hand luxury products opened just this summer in the heart of Beijing. For well-off Chinese, like Hao Wen Li, it was once socially unacceptable not to buy new, no longer. We hardly go to the luxury stores anymore, she says. It's a hard time now to make money, so why not shop at places like this and save? China releases this inflation data for August on Wednesday, and Goldman's Senate. Max predicts that because of the government policy, those numbers could improve, but that overall, the deflationary pressures will remain.

Guys? It's a lot of pressure, units. You've told us about homes, like apartments, about cars, now about food and more. What's the talk about what it takes for the Chinese economy to digest this capacity and maybe for demand to get sparked again? Yeah. Well, that's the big problem here, because you are. seeing that for a lot of the Chinese consumers that they're battered with a lot of

different factors I mean they are benefiting in the in the fact that people are aware that there are issues with the economy but the economy isn't really in crisis in the way that you might see like large-scale job losses or something like that so because of that the mindset here has been you know I'm worried about my income I'm worried about my job I'm worried about what's the direction of economy, but I'm still going to spend. And so I'm just going to be much more careful about my spending. And that's kind of how you see other trends here, such as the blind box craze. But in terms of the overcapacity, that in some way does weigh on people's minds and in the fact that

they know that larger scale, the economy is having some issues. But at the same time, they could benefit from that because a lot of companies are trying to survive themselves and cutting those prices. Okay, Eunice June with great reporting. As always, I'm going to add fried pigeon to my list of foods to try. Well, up next, Mike Santoli looks at whether the market is set to get more easy money from the Fed, even though risks of recession do appear to be lower than a few months ago. Plus, with Apple expected to unveil a new iPhone model tomorrow, we will discuss whether that could end up being a sell-the-news event for the stock, which is up nearly 40 percent since early April. Welcome back to overtime.

Shares of Summit Therapeutics losing a quarter of their value today after disappointing late-stage trial results from its experimental lung cancer treatment. The news raising questions about whether the FDA will approve what was potentially a blockbuster drug. Well, markets are expecting rate cuts, but recession risk doesn't seem to be rising, as you might think. So what's the bond market really telling us? Let's bring back Mike Santoli, who's digging into this discreet. connect. We're talking a little bit about this with Ralph Schlossstein a little bit earlier in the show. Or is it a disconnect? I guess that's one of the questions. I think one of the most

useful frameworks over the last month or so in terms of reading the market has been the market expects and wants a rate cut. It doesn't want to need it because it doesn't seem as if the economy is in peril. So here's what we're looking at here. The number of rate cuts priced into the market is that blue line. And so when it's going down, it means more rate cuts priced in. The other line is recession risk or market-based perceived recession risk, and that is an inverted scale. So when it's down, it means we really expect a recession. When it's up, it means you have lower odds of recession. And so is the question here, why do we expect so many rate cuts because the odds of recession have fallen?

Or is it, why didn't we expect more rate cuts back in April and May when it seemed as if the recession risk was very, very high in the immediate. aftermath of the tariffs and the spill through. So by this lights, it's from J.P. Morgan, they're kind of saying they're almost back in sync. Now, whether that's true or not given where inflation is and where it might sit for a while is a legitimate question. But right now, the market is priced for more than one percentage point of cuts. We're at four and a quarter percent to four and a half right now, keep in mind. So we're getting the three percent as far as the market can tell. And that is somewhat neutral or appropriate when you have basically neutral recession risk or average, long-term average, or something.

That's exactly where I was going to go with you, this idea of normalization versus cutting for recession and this idea that you have a neutral rate right now that is very restrictive. That's the basic premise of what we're talking about here. And the only tricky part of that is whether you felt as if you needed to, you know, say that neutral isn't as far down as we thought because inflation is higher or because potential growth is higher, whatever it might be. Market has kind of moved beyond that. And they're kind of saying we don't think that's relevant in the moment. We think the market in the Fed is going to be more sensitive to risk to the downside in the labor market.

And, you know, they're not shrugging at three percent-ish inflation for a little while. What a year. Yeah. Mike, thanks. Well, Apple promising an awe-dropping product event tomorrow. Up next, we'll discuss what to expect besides new iPhone 17s, what it could mean for the stock. We'll be right back. Well, let's get you set up with tomorrow's trade today.

Oracle will be the big name on Tuesday's overtime earnings calendar, but we will also get results from synopsis, rubric, air environment, and GameStop. Plus, we will speak exclusively with Rubik's CEO right here on overtime about all those results before he speaks with analysts on the call. And one more thing investors will be closely watching is Apple's event. The company expected to announce new products, including iPhone 17. Joining us now to discuss is Morning Start analyst William Kerwin. William, does the 17 launch matter any more or less to investors since there's this overhang of Apple intelligence

and when the AI promises actually come true from Apple? Ultimately, we don't think this is going to create a significant inflection in the stock or in our expectations for what growth looks like for Apple. Now, we're expecting the full iPhone 17 lineup to be unveiled, highlighted by potentially a new form factor in an ultra-thin iPhone, which we expect to be dubbed the iPhone Air. So this new form factor is exciting, but it does not change our longer-term thesis that we're observing iPhone unit sales growth slowing over time versus historical levels. We think AI is really going to be that lever that Apple needs to pull to accelerate that growth into the future, but we don't see that happening tomorrow. Do you expect Apple to mess with pricing in this tariffed environment, even if it's a stealth thing having to do with costs of storage or things like that?

We think the latter may be what's happening here. We think that Apple may do away with some of those entry-level storage price points. So whatever the base version may be, even if it's higher storage than last year, might be $100 more expensive. But also, I think it's important to put into context that Apple has, not raised prices across the base levels of its lineup in five years. And so in real costs against inflation, these phones have gotten cheaper every year since 2020. So we think consumers won't necessarily blink too hard at a price rise of about $100 like that. And we think it would

come with higher storage, as you said. I mean, I feel like every year, especially with the advent of Apple intelligence, the conversation has been, now we're going to get the super cycle, the iPhone super cycle. So now I'm going to ask you, are we going to get the iPhone super cycle? So cycle? We don't think so. We thought there might have been a stronger growth cycle last year with the iPhone 16 lineup, but ultimately the best and greatest features that Apple promised over a year ago in June of 2024 with its Apple intelligence feature set still have not shipped in software. It announced software updates this prior June. And so we think this event is going to be focused on hardware, how those AI software updates announced a few months ago will play into this lineup. But we

don't see a huge sea change in what that offering looks like announced tomorrow. So what does this mean for Apple stock, which has seen a very sizable rebound off the April lows? Well, we've seen some positive catalyst to the stock, namely the Google antitrust case, where it appears that Google's payments to Apple for being a search provider in Safari and spotlight search, et cetera, will maintain the probable, in our view, exception that Apple will earn to tariffs in response to $600 billion in cumulative investment in the U.S. So these are all great, but it doesn't change that the biggest driver of Apple really is iPhone growth. And again, we think that is slowing versus historical levels.

And that leads to our conservative fair value estimate of about $210 a share versus where the stock is trading today. William, I might argue that Apple's platform is the most valuable in AI because it's vertically integrated. They designed the OS. They designed the chip. If they were to give another third party more access to how to tune to that specifically, they could gain potentially a lot of share. So I know we talk about Apple as being a laggard, but might they also be a big revenue and profit gainer from doing the right kind of deal? I think I agree with you that they're very well positioned here from a platform standpoint. You know, we think of AI as software, but ultimately

we believe that this software is going to be consumed on hardware, on devices for the foreseeable future. And Apple is really the preeminent device provider with the iPhone ecosystem and auxiliary products like the Mac and iPad. So what this means for me is that they have time to get the strategy right. It's been a bit of a protracted rollout, not as many features as they initially promised. But we think they have time to do so in potentially partnering with a third party, whether that's Google Gemini, whether that might be anthropic in the future. could be a way to really start to make amends in this lagged approach to AI. Okay. William Kerwin, thank you for joining us ahead of Apple's big event. Tomorrow with that stock starting the week off, fractionally lower.

Other thing to watch is this BLS, preliminary annual payrolls benchmark revision. We get that release tomorrow morning, too. And then, of course, I'm getting on a plane heading to San Francisco for Goldman Sachs Communico. So more of the AI return on investment, spending, future, et cetera, conversation happening over the next two days. That's a huge lineup. You got also Oracle with its results. Does it get to lay claim to being the fourth hyperscaler that these results could help? Speaking of AI.

All right. Well, that's going to do it for us here at overtime. For sure. With a big lineup coming tomorrow, Fast Money starts now.