Closing Bell - Closing Bell Overtime: Dow Record Close; Black Eye For Boeing; Mohamed El-Erian On The Fed 8/26/24

Episode Date: August 26, 2024

The Dow posted its first record close in over a month after last week’s Jackson Hole conference. Allianz’s Mohamed El-Erian breaks down the key messages from Powell and the Fed. G Squared’s Victoria Greene and Carson Group’s Ryan Detrick on today’s tech laggards and the rest of the market. Boeing announced SpaceX will bring home its astronauts; Jefferies analyst Sheila Kahyaoglu on what it means for the stock. Plus, Payoneer CEO John Caplan on consumer spending.

A little excitement on this August Monday of the new record for the Dow, a new closing record high. That's the end of regulation. U.S. Physical Therapy ringing the closing bell. The New York Stock Exchange, Work Medical Technology Group doing the honors at the Nasdaq. Just said it, a record closing high for the Dow. This is the first time since mid-July and a slide for the Nasdaq. That's dragged down in part by NVIDIA ahead of Wednesday's results. That's the scorecard on Wall Street. But the action's just getting started.

Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Well, coming up, Allianz chief economic advisor Mohamed El-Aryan joins us with his first thoughts on Fed Chair Powell's Jackson Hole speech. And if the market is interpreting Powell's message the wrong way. Plus, another black eye for Boeing. Well, NASA says the stranded astronauts on the International Space Station will return to Earth on board a SpaceX spaceship. Rather than Boeing Starliner, we will talk about what that fallout could mean for Boeing shareholders.

But first, let's bring in our market panel. G-Squared private wealth CIO Victoria Green and Carson Group Chief Market Strategist Ryan Dietrich. Great to have you both here. Mixed day for the markets, to be sure. Not major moves in either directions, though. Ryan, you were on two weeks ago. You said you think the bottom's in. We got a record high for the Dow. In general, markets have rallied since then. Where do we go from here? That's right. Thanks for having me back. I mean, you mentioned all-time high on the Dow. The Dow started trading 1896. Okay. That's a long time ago. And congrats to investors just hitting all-time high. But we came on two weeks ago, we talked about the idea of August. For whatever reason, August seems more going to have these events that come out of nowhere. 1990, obviously Iraq invades Kuwait. We've had some debt issues with Europe in 2020, but I, I, or I'm sorry, in 2010,

I think this one was a lot like when China surprisingly devalued the yuan back in 2015. The last Monday of August, nine years ago, like right about now, was the first 1000 point Dow drop ever, right? There was some massive volatility. A lot of, I remember that day, the first 1000 point drop, people thought the end was near. We got through it, right. We're getting through this one again. We can get into all the weeds of it, but one final comment. Mike talked about breadth. On Friday, we saw 90% of all the stocks on NYC higher and 90% of all the volume higher. That's a geeky thing we call a 90-90 day. Keep this real simple. The last time we saw something like that was when the bear market ended in October of 22. Historically, when you have those rare days like we saw on Friday, you tend to get an upward bias.

We've been saying it's a bull market. There's no reason we're changing our tune now, especially after Friday. Okay. Victoria, how do you see this market, especially when the S&P 500 closed down about a third of 1% here? It looks like 56-16 as we settle. But the equal weight S&P has been flirting with new highs in recent sessions. And we saw that continue, that rotation continue to play out today with cyclicals and small caps and some of the other less loved until recently parts of the market outperforming.

Yeah, I think it's a fantastic thing. That was the big knock on this bull market with breadth is terrible. And now breadth has risen and come back again from the dead. And we love that. Equal weight is fantastic. We can't just be carried by seven stocks. We need everything to participate. And we're seeing that. I think one thing that surprised investors was the strength of the retail market. Staples have done quite well recently. A lot of the discretionary that reported last week had pretty solid numbers, especially some of the closing retailers. And so we look at this and say, yes, the consumer is hurting a little bit on the lower end, but the consumer is not dead yet. And we're still seeing some growth there. And we're seeing some upbeat commentary. We're about, I think, 95% of the way

through with the S&P 500 earnings, obviously a little bit of a big one on Wednesday. But it's been very positive. We've seen beats, we've seen raises, we've seen markets like that. And I think it's a great place to be. Now, we are shifting from a pause to a cut, which typically does favor things like value stocks and small caps. So we are saying we like to hold our core tech, but we are trimming a little bit. Remember, September is historically the weakest month of the year, hands down. It's an election year. October surprises happen. We should see some possible tactical near-term weakness, but absolutely this bull market's intact.

Fantastic that other things are working outside of seven stocks. I think that's a good thing for most investors. Okay. We got a lot of optimism on this panel today. Ryan, what sectors do you like right now, especially as we do see some profit taking, some de-risking in tech ahead of those key NVIDIA results on Wednesday that'll be the most recent pulse that we're taking on this AI trade? Well, similar to what Victoria just said, we like some of those cyclical areas. Come on for a while saying, look at financials, look at industrials, just last week closed at all-time highs. I know people are kind of worried about utilities, the strength we've seen out of utilities. If utilities were the only thing going higher,

I think that'd be the message of the market. Maybe something's off, but we're seeing a lot of other participation and we have like small caps. I mean, small caps are up 10% for the year. They're up 20% the last 12 months. Everybody seems to hate them, but they're historically cheap. There's more earnings growth coming. It's not like we're saying, put all your money in small caps. So we are overweight small caps and the S&P 500 equal weight. If you look at that, overlay that with mid caps, they look almost exactly the same. Mid caps have actually quietly, I think, done really well. And we like that area as well. One more thing, just quickly on market breadth, right? We hit all-time highs on NYSE advanced decline lines,

on the S&P 500 advanced decline line, and the Dow advanced decline line just last week. You can have volatility, and we're going to have some. Like we said, September, October, wouldn't be surprised at all if we saw some. But the underlying pinnings from a fundamental and technical point of view still say be overweight equities and expect a year-end rally once we get through the election.

Victor, I'll put the same question here. I mean, Wednesday is poised to be a bonkers day here for the overtime game, gang. You got NVIDIA, you got CrowdStrike, which everybody's going to be watching given what we saw happen a couple of weeks ago with that name. You got Salesforce, you got HPQ, you got Dell on Thursday, retail earnings, and then you also got a fair amount of macro data, including PCE. What matters most here? For me, I think honestly, I think the video video is a huge correlation with how the S&P 500 does the court. It's more than six percent of the index.

So obviously it matters. NVIDIA needs to come in and tell people we can beat and raise, which is the expectation that, hey, that Blackwell scare is really not a big deal. We'll be getting those ships out second half of this year, you know, and that that the China sanctions aren't going to be hurting us. So all in, NVIDIA needs to come and be the security blanket. The market needs to rally a little bit more. PCE is key, but it should be in line.

I think next Friday's employment is going to be a huge mover because obviously the Fed has shifted their focus from inflation to concerns on the labor market. You know, 4.3 percent unemployment. That's not great, but the average runs about 5 percent if you look back long term. So we're still pretty low average unemployment. So for me, I think tech on Wednesday is going to be the market mover this week. I think personally, I think CrowdStrike should kick off their earnings call with the blue screen of death. I think that would just be kind of funny. But, you know, kind of kind of make a little joke out of obvious thing. But everybody wants to know how bad is litigation? How bad is it going to be? You know, what were the details on how that went wrong? And has that affected any of their annual recurring revenue and their subscription? So I think you have a lot of tech movers on this

half that will either help validate what's been leading this market or put a little bit of a damper on it. And we could see the value in the small caps kind of continue to regain leadership if we see stumbles from the videos. Okay, I think Delta might say it's too soon, too soon for the blue screen of death joke so far. All right. Victoria Green, Ryan Dietrich, thanks for kicking off the hour with me. As we did see the Dow touch a new record closing high, but overall mixed picture for the major averages. Let's turn now to Apple just unveiling the date of its much anticipated hardware event. Steve Kovac joins us with a look at why the September gathering is so important for investors. More so than ever?

They're going to launch a new iPhone this year. Can you believe it? And September 9th is the date. It's going to be in Cupertino, as always. And the slogan this time is, it's glow time, which is probably a reference to the new design that Siri is going to look like. Before we get into what this all means, let me tell you what we're expecting. New iPhones, of course, and the other stuff you carry around with you all the time,

AirPods and new Apple Watch. By the way, it's the 10th anniversary of the Apple Watch reveal, and it's also the 10th anniversary when they stuffed that U2 album into everyone's phones that no one asked for. Look, as far as the iPhone goes, not expecting significant hardware updates because this is all about artificial intelligence and driving new iPhone sales. That's because you need an iPhone 15 Pro or better, one of these new phones coming in a few weeks in order to use it. And the street thinks this is going to spur a big upgrade cycle.

Moffitt Nathanson analysts last week initiating coverage and they said all that is already kind of baked into the stock already, though. And it's going to be a slow rollout for Apple's AI. It's going to be in U.S. English at first. And many of the futures that we showed, that we saw, rather, in June are only going to be rolling out over many months. By the way, chat GPT integration isn't coming until the end of the year. And all of this artificial intelligence is still going to be in a beta test version. It's also unclear when artificial intelligence on Apple devices is launching in China, the next most important market beyond the US. That's because of strict regulations there.

I talked to CEO Tim Cook a few weeks ago, and he said they are working with officials in China to get artificial intelligence cleared. But Morgan, the thing you need to know here is it's going to be a slow measured rollout of AI. We've seen Google kind of put it all out at once. We've seen Samsung put it all out at once. Apple's taking a different, more measured approach. And that is what people are looking at for this multi-year iPhone cycle. And we know Apple tends to be a little more cautious with how it approaches something new anyway. So are there

lessons to be learned about the other approaches that we've already seen hit the market? I think so. Google just had their Pixel phones that came out on a few days ago, and the reviewers are already noticing, for example, there's this feature on there with the photos that you can generate your own images and edit them with a prompt. And there are basically no guardrails on there. So you can, you know, people have been doing some really interesting things there. That's obviously something Apple would like to avoid. But I would also note that Apple is calling it beta. So if it does screw up, if there is a problem, they can always blame, whoa, it's early software. It's buggy. We're still working on it. It's just,

this isn't the final version yet. All right. Steve Kovac, we're looking forward to it. Yeah, I was going to say, we'll see you in Cupertino. Exactly. All right. Thank you. Let's bring in senior markets commentator Mike Santoli for a look at the ripple effects of the recent rally in treasuries. Mike. Yeah, Morgan, first of all, you know, really enriching bondholders, their portfolios, but also reducing corporate borrowing costs. Obviously, Fed rate cuts is going to flow through in terms of bank lending once it hits. But here you see the yield on investment grade treasuries or investment grade corporate debt, excuse me, has actually clicked back down below 5 percent in a nominal growth backdrop where we're close to 5 percent. That's a pretty undemanding level of debt cost. So clearly, you know, refreshing corporate balance sheets and things like that's one of the reasons the stock market likes it. Now, take a look at one proxy for the traditional 60-40 equity

fixed income portfolio. This ETF is roughly that, although has a global equity component as well. And I'm highlighting it because it finally clicked back to new record high in terms of price, in terms of the absolute stated value of it. On a total return basis, if you count accumulated dividends and interest payments, it actually hit a record high back in June, I believe. So clearly, you know, where you have this situation now where stock and bond correlations are high again because, you know, lower yields means dovish Fed maybe means soft landing means good for equities. You do have some relief there on the balanced portfolio front, Morgan. OK, so how much of this hinges on the pace of rate cuts, the anticipation of rate cuts? Are

we in a Goldilocks period right now? Well, we're definitely in a period where the market has gone pretty far down the path of dovishness, I would argue. I mean, when you have 10-year treasuries around 375, 380, it seems priced pretty aggressively, I would say, in terms of exactly how much you're going to get in the way of rate cuts. I think it's open to debate as to whether that's better or worse for stocks if the Fed ends up going more quickly traditionally, or at least based on most historical patterns. You actually would prefer if the Fed was taking its time as opposed to really rushing toward rate cuts. Although, you know, I'm not saying that 25 or 50 in September in terms of basis points cut is a real big swing factor, but you don't necessarily want it to gain a lot of downside momentum in terms of Fed rate cuts.

It probably means the economy slipping. Gotcha. I know we're going to talk a little bit more about that very topic later this hour. Mike Santoli, thank you. Well, record close for the Dow today, but up next, Allianz chief economic advisor Mohamed El-Aryan joins us in his first interview since Fed Chair Powell's Jackson Hole speech. He's going to explain why Powell's message could lead to more market volatility in the coming months. And later, shares of Taimou parent PDD Holdings getting wrecked. After the company warned about revenue growth, we will look at what that says about the outlook for global consumers. Shares finished down 28.5 percent over time. Back in two.

Welcome back. The Dow posting record closed today, but a mixed session under the surface. The Nasdaq 100 falling more than 1 percent%. That comes after a rally Friday following Fed Chair Powell's Jackson Hole speech. But could those remarks actually lead to more volatility in the coming months? Well, joining us now in his first interview since that Jackson Hole speech is Mohamed El-Aryan. He's chief economic advisor of Allianz. Mohamed, it's great to have you on Overtime. Welcome. Thank you for having me, Morgan. So that's exactly where I want to start, because you are arguing that we could see more volatility. You put this op-ed out over the weekend. Has Powell, was Powell as dovish as the market has interpreted him to be? So certainly he was very dovish. If you think of the three most

quoted phrases of his speech, one is the time has come for policy adjustment. I think everybody agreed with that and agreed with that. Second was the direction of travel is clear. People agreed with that and still agree with that. The third one is what surprised people, is that we do not seek or welcome further cooling in labor market conditions. We enforce that with the perception that he declared victory over inflation. And the view in the marketplace is that this is a single mandate Fed, that the only thing the Fed is worried about is higher unemployment. And that's why you've had this very aggressive pricing of cuts validated. And as Mike

Santoli just said, it is very aggressive pricing. And if that occurs, it's because something went wrong in the economy. So that is why there's an inherent inconsistency in how the market has interpreted that speech. So is it fair to think that part of this Powell pivot has been to a central bank that is more of a dual mandate central bank? Or is it just that the single mandate, so to speak, has shifted from inflation to labor? So certainly what they want is to shift from a single mandate that was focused on inflation being too high and we got to take it down to a dual mandate that has risks on either side. That's what they want. Where they've ended up because of

the way they've communicated is that now we still think of, we the marketplace, still think of the Fed as a single mandate, but we replaced higher inflation with higher unemployment. And that is critical, Morgan, because it means that the Fed is going to be incredibly dovish. And that's how the market has priced it. So we've been seeing this softening labor market and we've seen that unemployment rate move up and move up pretty quickly. But I realize we're still at very low levels, historically speaking. But labor also tends to be a lagging indicator and can change very quickly. So if we talk about the lagged effects of monetary policy when you're tightening. What does that mean when you're loosening? And what does that mean for the possibility of recession risk increasing here?

So there's lots of question marks. One, we don't know whether we felt the full effects of what was a very aggressive interest rate hiking cycle because they started late. So we don't know whether we felt the full effects. We also know that it's going to take time for the cuts to go all over the economy. Now, the market is doing some of the heavy lifting for the Fed. So there's lots of question marks. Also, the Fed is retaining maximum optionality. So Powell didn't talk about the destination, didn't even talk about what the first stop looks like. And yet the market feels very confident about the destination and how quickly we're going to get there. So that's why there's a lot priced in right now. And we don't know what the labor market is going to do. So look at PCE this Friday. Look at the jobs report the following Friday. But especially

look at the retail earnings we're going to get tomorrow, Wednesday, and Thursday. That's going to be really important to get a sense of the strength of the consumer. Okay. Have we ever seen a tightening cycle? And I realize we're at the end of it. We're coming out the other side now. And again, to use the word pivot. But have we ever seen a tightening cycle that was this aggressive that didn't result in a recession? No. In fact, we've only seen two soft landings, one in the 60s and one in 1995. They are not frequent events. And let's not forget that this hiking cycle had four consecutive 75 basis point hikes as they were catching up with what you haven't seen. Having said that, I am among the people who have been very impressed by the

resilience of the economy because of all the positive supply side shock we've had in the last two years. So this is a resilient economy. To be clear, soft landing is still the most probable outcome, but it's still only about 55 percent. So it is the most probable, but it's not the dominant outcome still. Excluding Japan, it would seem every major central bank or almost every major central bank is now in lockstep, in easing mode. What does that mean for the global economic outlook now? So it's a good thing. Ironically, the markets now view the Fed to be the most dovish of all of

all those central banks. And that's why the dollar has done what it has done. You wouldn't expect that because the U.S. is the strongest of the economies in the advanced economies. But let's not also forget that they're also doing QT. They're also reducing balance sheet in a correlated manner. So you've got them, one policy is pressing on the accelerator, the other policy is pressing on the brakes. And most central banks, as you pointed out, except Japan, that's what they're doing at the same time. It's an interesting dynamic and one we continue to monitor.

Mohamed El-Arian, thanks for joining me and sharing your insights. Thanks for having me. Coming up next, Boeing's space saga taking another turn. As NASA says it will not use the company's Starliner to return two stranded astronauts to Earth. We will talk about the billions at stake and what it all means for Boeing shareholders and more, next. Welcome back.

An eight-day mission will now span eight months. This is after NASA said it would send Boeing's Starliner capsule home empty and use SpaceX's Dragon to bring Butch Wilmore and Sonny Williams back from the International Space Station in February. The decision coming after weeks of extensive tests due to Starliner's technical issues in flight. B of A noting that with Boeing already facing financial and execution challenges across both commercial and military aircraft programs, that this is another negative, saying, quote, we would not be surprised if Boeing were to divest the manned spaceflight business. Well, Boeing has already spent upwards of $1.5 billion on Starliner over the years. That's on top of NASA's $4.5 billion through the commercial crew program, of which SpaceX is also a part. Now, according to Vertical Research, the issues with the Starliner mission have cost Boeing an extra $125 million so far,

and further charges, quote, now look likely. Boeing says it continues to, quote, focus first and foremost on the safety of the crew and spacecraft. As for SpaceX, President Gwen Shotwell posting on X, SpaceX stands ready to support NASA however we can. Now SpaceX is on track for its 14th human spaceflight tomorrow with Polaris Dawn, which will include the first private spacewalk, new spacesuits and two crew members who are actually SpaceX employees. It's a real juxtaposition between these two NASA-contracted companies. For more, let's bring in Jeffries Managing Director Sheila Cayalu. She has a buy rating on Boeing.

Sheila, it's great to have you back on Overtime. Thank you, Morgan. Thanks for having me. This is another black eye for Boeing. We can talk about the safety implications, the PR implications, but also the financial implications of this. $125 million and counting. Your expectations for Boeing's participation in this program from here? Yeah, I think, you know, let's put defense into perspective. It represents about $26 billion of $80 billion of Boeing sales. Commercial has taken the spotlight, but we think defense is one of the

biggest risks here. And we're going to hone in on 15% of programs within this $26 billion that are losing money, of which Commercial Crew is one of five. They've lost $14.5 billion in total defense losses since 2014. And Commercial Crew, where they've lost $1.5 billion, we agree that, you know, we're kind of taking that quarterly run rate of $125 million and expect more charges to come. So these five programs are going to lose about $2.6 billion this year and another $2 billion next year. So trimming our free cash flow estimates because of these defense losses. So you have a new CEO at the helm, Kelly Ortberg. I would assume he's stepping back and doing a portfolio review here, right? What does this mean for the defense and space business, if anything?

Yeah, I think Kelly will bring some perspective into capital deployment. At his time at Rockwell Collins, he purchased Air Inc. and B-Air Space. Then he sold the company to Raytheon Technologies. So he's clearly more active with the balance sheet. And I think we could see some defense programs being deployed out and potentially value creative and helping pay down debt for Boeing, which is at $57 billion. So I think defense portfolio changes will probably come. But the first and most important step for Kelly Ortberg is the IAM negotiations, which are set for September 12th with the union on the commercial side. Okay. If I just go back to the space piece of this for a minute, it's kind of amazing because NASA awarded the Commercial Crew Program awards to Boeing and to SpaceX literally a decade ago. And at the time, Boeing had gotten a bigger contract.

SpaceX was the underdog. It had actually underbid for its contract as well. And it was the one that was seen as the riskier option here. And yet, as I just mentioned, it's about to have its 14th human spaceflight as soon as early tomorrow morning. Boeing, we know, is having these issues with Starliner. Boeing had decades of legacy spaceflight experience. So how did we get here? How does it speak to perhaps the prevalence of some of these engineering and technical issues that we've been seeing across the company?

Yeah, I think you said it, Morgan. It's a legacy system, legacy platforms, and Boeing's been marginalized in the space arena and some of their other defense programs. And I think that's why a new management team might come in and look at it with a fresh set of eyes. But SpaceX has clearly excelled in a very challenging environment, and kudos to them and their management team for being able to do that across the board. OK, so given everything we've just talked about, do you buy Boeing at these levels? I do. I think it's very interesting here going into year end as we see some sort of uptick in quarter and monthly deliveries, which we'll get that. We have the IAM strike. If we could get those negotiations out of the way without a strike, that would be clearly

a very big positive event. And obviously these shares are down significantly this year and have been down over the last several years. So people are looking at this when the likes of GE, Heiko and all these other aerospace stocks are really soaring. Sheila, thank you. It's great to have you on. Thank you.

Well, SpaceX is expected to launch its Falcon 9 rocket and that Crew Dragon capsule for Polaristan early tomorrow morning. The Polaristan mission, which is backed by and commanded by billionaire Shift4 founder Jared Isaacman, will attempt the first private spacewalk. We're going to be covering it live tomorrow on CNBC. You can find my recent interview with Isaac Min and the crew, the full crew, on my Manifest Space podcast as well, or scan the QR code right there. Listen wherever you get your podcasts. Well, it's time now for a CNBC News Update with Kate Rogers. Kate.

Hi, Morgan. Special Counsel Jack Smith urged a federal appeals court to reinstate the classified documents case against former President Donald Trump after Judge Aileen Cannon threw out the case last month. She ruled Smith's appointment as special counsel was unconstitutional. Smith's team argued Judge Cannon's decision was at odds with the longstanding practices of the Justice Department. One American is dead and another seriously injured after an ice cave collapse in Iceland yesterday. That's according to police there today,

who also called off a search for two tourists who were initially believed missing, but were later determined to be safe. The names of the American killed and injured have not been released publicly. And the Army Corps of Engineers has agreed to re-examine a permit for Hyundai's $6 billion electric vehicle plant in Georgia after conservationists complained that

regulators did not properly assess the factory's impacts on local water supply. The agency said the permit never mentioned the automaker wanted to withdraw over 6 million gallons per day from a major source of drinking water in the region. Morgan, back over to you. Kate Rogers, thank you. Well, up next, the start of a Fed easing cycle doesn't always mean stock market gains will follow. Mike Santoli has the macro chart you need to see. And later, we will look at what Teemu Parent PDD's warning could mean for the global consumer when we're joined by the CEO of e-commerce payments company, Payoneer.

Stay with us. Welcome back to Overtime. As Wall Street awaits a rate cut next month, Mike Santoli returns with a look at S&P 500 returns after the start of a Fed easing cycle. Mike, what'd you find? Well, there's some contrasting stories around an initial rate cut in a cycle. First of all, don't fight the Fed suggests it's a generally bullish scenario for equities. And then the other side is people say, you know what, you're supposed to sell the first Fed rate cut because that often means

the economy is weakening. Well, here's a little bit of the nuanced view based on historical precedent. This is S&P performance one year after the initial rate cut in a cycle. And what you see, up more than down. The two times we were down one year later in recent history, that was 01. That was nine months after a major stock market peak and only a few months before the onset of a recession. The other one, of course, was September of 07. That's as the stock market was peaking and just a couple of months. Really, you're basically in the recession at that point for the great financial crisis. But there's nuance here. So here we go. June of 89. One year later, stock markets up 13 percent. You didn't have a recession. However,

a recession did start in 1990, 13 months later, and the stock market was actually lower a year and a half after that first cut. So it wasn't like you were completely out of the woods. This is the magic soft landing everyone's shooting for. That's 1995. Market went up five years in a row. This was 98. That was kind of insurance cuts when we had the kind of upset in the financial markets. Final one, 2019. We all remember that, right? August of 2019, you got rates trimmed. And then, of course, we did have a flash recession and COVID and then a 30 percent decline in the stock market. But then it went up so much that by August of 2020, we were higher than we were a year earlier, Morgan. This is a fascinating chart to me, especially because we're

just talking to Mohamed El-Aryan. And I asked him, given the aggressive Fed tightening cycle we've just come off of, whether we've ever seen a Fed move like that to hike rates and have it not result in recession. He said no. But he also said there's reason to think this time might be different. Well, he did say that there were two soft landings. And so those two times he said in the 60s and the 90s. So it's a minority of the instances. I would also say people sometimes say 1984 also counts there. You also had a peak and rates came down, didn't have a recession for several years. So it's not necessarily, you know, in the bag that you're going to be able to avert things. But so many things about the current cycle have been a little bit unusual.

I'm not exactly sure if we should just reach for the, you know, the almanac and figure out how it's going to play. I love that you two have been listening to each other on CNBC's air for the past hour. All right. Mike Santoli, thank you. Yep. Well, breaking news on Apple. Steve Kovac is here with that. Steve. Hey there, Morgan. Yeah. Apple CFO Luca Maestri is going to be stepping down from his role. That's going to be effective on January 1st, 2025. In the meantime, he'll be serving in a transition period. And Kevin Perrick is going to be taking over from him. He's currently Apple's vice president of financial planning and analysis.

Now, Maestri is staying at Apple, even though he's stepping down from that role. After January 20, January 1st, it says he's going to be leading corporate services teams. That means, you know, office space and things like that. But this is a big move here. He's been CFO for many years now and really well respected in the industry. You see Apple shares. It doesn't seem like they're reacting too much here down about eight tenths of a percent, Morgan. All right, Steve Kovach, thank you. A double header on Apple today with you. Okay. Okay, coming up next, the CEO of payments company and Amazon partner Payoneer joins us with a look at what the huge pullback for Taimou parent PDD today says about the global consumer. And check out oil

prices as we head to break. We're getting a big bounce on headline risk out of the Middle East and after Libya announced a production halt. Overtime. We'll be right back. Well, breaking news just moments ago, Apple's Luca Maestri is stepping down from his CFO role. Effective January 1st, he will continue to lead the corporate services team. We will bring you more on that story as we get more details. You can see shares of Apple are down a little less than 1% right now. Meantime, Chinese online retailer PDD, owner of Taimou, had its worst day ever after reporting a revenue miss following a pullback in consumer spending.

Now, that follows a number of other retail firms warning about a slowdown in the past few weeks. But joining us now is Payoneer CEO John Kaplan. Payoneer is a fintech company that is focused on small and medium-sized businesses. You join me here on set. It's great to have you. Welcome back. Lovely to be here. Happy summer. I do want to start right there because we keep hearing about how hot and how fast-growing an entity like Taimu is and some of these Chinese e-commerce players, including into the U.S. market, to see a warning like this and shares plummet as much as they did. What does it say about the global marketplace right now? I think the first thing is that context is important.

You know, PDD has run up 20 percent since July. So the company is actually doing really well, and it's innovative. Disrupting Amazon is not easy. So I think they have their work cut out for them. At Payoneer, the world's best sellers use a Payoneer account, whether they sell on Walmart or Etsy or Amazon or on a Taimou platform. So from our perspective, competition in the global marketplace is good for U.S. consumers. Are these Chinese e-tailers disrupting Amazon? Well, they're certainly bringing creativity and a new way of selling, lots of discounting, all of the kinds of things that cash-strapped consumers like.

Okay. So what does that mean for the strength and health and robustness of the Amazons of the world? We saw in the first half of the year, we had 15% growth in our marketplace payouts business. I think that's because consumers know they can rely on Amazon and Walmart, Etsy, and other platforms for great value and good products. I think that's because consumers know they can rely on Amazon and Walmart, Etsy, and other platforms for great value and good products. I think the consumer in the U.S. is pretty healthy. Okay. So in light of that, I mean, we get some more retail earnings later this week. So far, we've been getting glimpses into what's hot, what's not, what consumers are spending money on. What are you seeing across your data? Yeah. So we have a lot of data because the world's best

e-commerce merchants use Payoneer to sell their products to the world. What we see is consumers increasingly looking for quality and value. So it's, you know, Amazon, you can find lots of quality and lots of value doing well. The discretionary spending, we saw Wayfair struggle a little bit more. Maybe people, you know, don't need another patio set. The patio set they have is just fine for now. Amazon, I think, is going to do just fine. How about apparel? Yeah, I think, you know, if it's in style, people are wearing it. I don't know about you, but my kids are constantly asking

for cool new things. Oh, my gosh. We're in back to school shopping. Indeed we are. Right now. OK, so the U.S. consumer seems to be doing well, seems to be healthy. How much of a read do you have across some of the other key markets, especially as we do see much more cross-border selling and buying? Yeah. So our company, a Payoneer, we have a business account for global cross-border sellers. So 50% of our business is goods, consumer goods primarily. 50% is services. We just acquired a business called Squad to really move into the cross-border payroll space. Workforce management, global. After the pandemic, people are looking for access to quality talent all over the globe.

So we think the service economy is really set for accelerated growth. And of course, we're seeing that in some of your numbers, and you are reinvesting a lot of that back into the business. Inventory buildup, are we starting to see that play out as well? I don't have a read on that particularly. I don't see that from our data. OK. Anything else we should be keeping in mind? Yeah, I think right now cross-border trade and confidence of the S&B. Our data suggests that the small businesses are very focused on finding new markets to sell into and new markets to source from, whether they're sourcing talent, labor, goods, or services. I think I looked at U.S. government

data before coming on the show. I think we've seen 8% increase in service imports into the United States this year versus 3% growth in goods. So service imports a real opportunity for entrepreneurs here in the U.S. looking to globalize their reach, globalize their access to talent. That feels like where the economy's headed. Okay. Panier CEO John Kaplan, thanks for joining me here on set. Nice to be here. Well, up next, much more on Apple's big news as the company announces a change of its longstanding CFO. Stay with us. Welcome back.

We've been watching shares of Apple. CFO Luca Maestri leaving his role on January 1st, the company announcing just minutes ago. Joining us now on the CNBC Newsline is Gil Luria, senior software analyst with D.A. Davidson. Gil, it's good to have you on. I realize that Apple is saying in its press release that this is part of a planned succession. We've got Kevin Parekh is going to be taking over the CFO spot as well. How meaningful is this to see this change right now, 10 years after Maestri became CFO? It's early to tell, but the good news is Mr. Maestri will be staying in the role through the end of the year and will be staying with Apple, leading the corporate services team. So this isn't a situation where the CFO is leaving and we have to ask questions about what

they're leaving behind. Mr. Maestri will be there and will stay within Apple. What's interesting, though, is to ask ourselves, why now? Why do we need a new CFO in the seat now? What is different about the environment that we're heading into as opposed to the environment we've been in? And one possibility is that Apple may become a little bit more open to acquisitions going forward. If there's a change in administration, a change in the approach of the Federal Trade Commission, Apple may be again in a position to make acquisitions, which requires a different skill set from the CFO. That's speculation, but that's one possibility of why they would be making the change now. I feel like we've had these conversations about Apple for years, though, about the possibility of it being acquisitive, its giant cash pile that it has to work with.

What would it be looking to potentially buy now? I mean, is this going to be tied to an AI rollout, something else? Well, that's where the opportunity is right now. As we've talked about, the big opportunity right now for Apple is to roll out AI products that will drive an iPhone upgrade cycle. That's one big opportunity. The other big opportunity that we don't talk about often is the one around Vision Pro and the new platform for delivering AI capabilities in a different type of form factor. So there could be hardware acquisitions along those lines, and there could be fill-in acquisitions around the software required to make those capabilities available. And then the other one we also have to think about is

the fact that Apple is not directly aligned with any of the big foundational AI models. Microsoft's aligned with OpenAI. Amazon and Google have aligned themselves with Anthropic and Mistral. And Apple right now is talking about using those in an open source manner. It's unclear that that's long-term sustainable. They may want to own their own foundational models. So those are just some off the top of my head that they could look at going forward. Okay. What do we need to know about Kevin Parekh, who's going to be taking over as CFO? He is Apple's vice president of financial planning and analysis currently. Yes, he's been around at Apple for a while. Again, that's a very good sign. They're hiring from within. That does go with the narrative of this being a planned transition. He's also an EE. He's an electrical engineer. So again, if we're looking externally

to supplement Apple's technology and we need somebody to help make those decisions about what the technology is, it's helpful to have someone who's not only been in finance for a long time, been at Apple for a long time, and understands technology well. All right, Gil Luria, thanks for joining me on the Newsline. Thank you. We've got shares of Apple down about half a percent now. Well, coming up, NVIDIA's X Factor, a retail investor who saw huge gains in the chipmaker, outlines the one thing that made him bet on the stock all the way back in 2017. Plus, we will look ahead to what the street is expecting from NVIDIA's earnings report in less than 48 hours.

Well, I've been following NVIDIA and Jensen really since the founding, but I didn't start buying the stock until maybe about eight or nine years ago. I was surprised when they pivoted into crypto and some of the AI applications. And I was pretty impressed that Jensen could navigate this company from graphics into a much broader market. I really want managers that I believe in, that I know will be able to navigate the ups and downs of the markets. So I bought stock when Jeff Bezos was running Amazon,

when Steve Jobs was running Apple. And I thought, especially in 2019, during the crypto winter, when NVIDIA was getting not any credit for what they were doing, I wasn't going to give up on Jensen at that point. And that's when I bought more. This is mostly about a good leader who understands how to build a business over the long term.

I don't think he's done yet. I think he's got more room to run. Well, that was Brian Jacobs, a retail investor who bought into NVIDIA in 2017 at $4.75 per share. CNBC is highlighting a number of retail investors like Brian ahead of NVIDIA's earnings on Wednesday. And the street is weighing in ahead of the main event as well. Morgan Stanley reiterating the stock as its top pick, while Evercore's analyst says he's a buyer into the print. Meanwhile, UBS writing the whisper number on revenue has, quote, crept up to $33 to $34 billion. And Blackwell commentary might matter more than guidance to investors. Well, Mike Santoli is back with us. And Mike,

just want to get your thoughts on this, because overall, consensus seems to be beat and raised for NVIDIA, which is certainly what we've seen from them in the past, call it, I don't know, eight, ten quarters. But the expectations do seem pretty high here. Yeah, I would say that the threshold for really wowing people to the upside probably is pretty high at this point. But, you know, analysts are in the business of identifying and riding fundamental momentum. And, you know, demand still outstripping supply. All the inputs I see make the street bullish and they are very bullish. I think the question is really much more

about the durability. How many quarters rolling forward can you really count on this dynamic to stay in place with insatiable demand? We'll see if they have anything to say about that, because, you know, it's very common to say, oh, the P.E. on NVIDIA is lower now than it was a year ago. But that's all that's not really true, because a year ago, the forward estimates were like half what they should have been or half what the earnings eventually were. So unless you think numbers right now are radically too low, the stock is more expensive than it was a year ago. OK, we'll keep watching hyperscaler CapEx guidance, too. We're watching other other earnings as well this week. Tomorrow, we're going to hear from retailers Nordstrom PVH, also tech companies Box and Central One,

plus key data from the Case-Shiller Home Price Index and the August Consumer Confidence Reading, that estimate being revised upwards today. It's a busy week, Mike, because we do have all this macro data and we continue to watch the consumer and the retailers are going to give us some more details on that. For sure. I mean, what Powell had to say on Friday probably provides a little bit of a buffer when you get these numbers coming in and you can sort of take it as not being make or break based on the fact that the Fed is looking to get easier along the way. But I do still think that, you know, we're at this point where you really want to see economic resilience. You don't want to see the economy weakened from here because the Fed's going to cut no matter what happens. So I think that comes in when it comes to the retail numbers and later the PCE income and spending numbers even more, perhaps, than the inflation reading within the PCE report. OK, we'll be watching all of this with you,

Mike Santoli. thank you. Just getting a final check on the markets and where we close the day today. The Dow actually finished higher at a new record close and the S&P and the Nasdaq both finished lower as tech sold off. That's going to do it for us here at Overtime. Fast money begins right now.