Closing Bell - Closing Bell Overtime: Dow record close, Intel/Qualcomm Merger Talks and iPhone 16 on sale 9/20/24

Episode Date: September 20, 2024

The Dow closing at a record high again following Wednesday's interest rate cut by the Fed. Dow component Intel rallying into the close after sources say rival Qualcomm approached the chipmaker about a possible merger. Moor Insights & Strategy CEO Patrick Moorhead says a deal makes a lot of sense for both companies and could get approval by regulators. Apple's iPhone 16 officially going on sale today amid concerns about demand. Tony Fadell, the co-creator of the iPhone and iPod, discusses what's at stake for Apple and weighs in on the importance of AI. Constellation Energy announcing it is reopening the Three Mile Island nuclear plant and selling that power to Microsoft for its AI data center needs. And Veriten's Michael Bradley discusses where the opportunities are for investors in nuclear power. 

That's the end of regulation. Harmony Gold Mining ringing the closing bell. New York Stock Exchange and Nanox Imaging doing the honors at the Nasdaq. Well, looks like we got another record close for the Dow, albeit just barely, following Wednesday's Fed rate cut. Though the S&P and Nasdaq both closing slightly lower. That's the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Yeah, the Dow and S&P now up for five of the last six weeks while the Nasdaq is on a two-week win streak. Intel rallying into the close on a report Qualcomm has approached the company about a takeover. Qualcomm lower on the same headline. A top tech analyst reacts to that. And the iPhone 16 making its debut in stores today.

Coming up, the father of the iPod, one of the fathers, the co-creator of the iPhone. Tony Fidel is going to tell us what's at stake for the industry, including Apple, in a rare exclusive interview. Can't wait for that. But first, let's break down today's action with our market panel, Tracy McMillian of Wells Fargo Investment Institute and Kevin Gordon of Charles Schwab. Great to have you both here. Kevin, I'm going to kick it off with you. We have a mixed picture here for major averages on this Friday afternoon. However, everything's finishing the week higher. We did get a record close from the Dow. What do you buy into now, especially if you

have a Fed that has finally pivoted into this easing cycle? Well, I think what's interesting is that, you know, all the talk this week is how the Fed has taken a different approach relative to prior cycles, where they start with a 50 basis point rate cut, which in and of itself might start to signal or at least look and appear like it signals panic. But of course, you look at an array of economic data, certainly not the case. So I think you have to sort of look at where we're at in economic terms, which is still pretty solid. And that sort of is consistent with a market that already looks relatively strong heading into it. I mean, as we were coming out of the Fed decision yesterday, you had 80 percent of members in the S&P 500 above their 200-day moving average. That breadth picture alone is much stronger than what you saw in the prior two cycles

that started with 50 basis point cuts being in 2007 and 2001. So I think the underlying breadth statistics within large caps in particular, to some extent down the cap spectrum, because you have started to see more of an improvement in the reaction in the Russell. I think that should be taken into account more so than a 50 basis point cut itself being some sort of negative economic signal. And certainly small caps are in focus as this catch up trade plays out right now. And we do start to see some technical levels. Tracy, want to get your thoughts on what we've heard, because we had some Fed speak today, including Governor Waller on CNBC. Take a listen.

The data starts coming in soft and continues to come in soft. I would be much more willing to be aggressive on rate cuts to get inflation closer to our target of 2 percent. This was interesting because he really broke down, Tracy, how they've been calculating inflation and and presented this thesis that perhaps it is trending softer than than the data is actually showing right now. And that if that's the case, he'd be open potentially to more jumbo sized Fed actually was playing catch up this week when they cut by 50 basis points, because we think that they actually probably should have started in July with 25 basis points and then had another rate cut here in September of 25 basis points. And then they could have continued on through the rest of this year with the 25 basis points rather than going so strong right out of the gate. But what Waller was referring to is that the PCE, which is the Fed's preferred method of measuring inflation, is now at 1.7 percent on average for the last three months. It started the year really strong, but it has come down pretty significantly. So if they continue to see

inflation trending down like that, they're probably going to continue to come in with these higher than expected rate cuts. That's not our forecast. We think that inflation is going to continue to trend down, but probably not quite as rapidly. And that we'll see another 50 basis points in cuts in total for this year. So probably 25 in November, 25 in December. OK. So, Kevin, is the S&P 500 now, though, priced for perfection with the overall multiple being where it is? Do earnings just have to continue to be that good? And if so, do you need to look at either smaller stocks or fixed income or somewhere else to feel good about where you're putting money to work? I mean, I think we're, well, in terms of price, if you want to equate price to perfection being priced for some sort of soft landing,

you know, you could argue we're sort of living the soft landing now. With the trajectory of inflation, certainly, yes, you've seen some softness in labor, but the rise in the unemployment rate is not yet corroborated by some sort of massive decline in GDP or an uptick in claims. So I think you're sort of priced for it and priced for perfection in that sense now, yes. It tends to be the case, though, when you look at the start of a cutting cycle, it's harder to determine what the trend is for the market in terms of what it's telling you for recession versus non recession So I think you sort of have to let the data come in and sort of tell us where we're at and where the cycles

Going in particular for this unique cycle It's a little bit harder admittedly to do that on the small cap angle, you know somewhat ironically or maybe counterintuitively Small caps really outperform large caps to a significant degree after a cutting cycle happens in an instance of recession. Because you think about, you go through that really large reset and washout for both the economy and the market. That's when you have the companies that are more sort of leveraged to the economy and benefit from after an aggressive rate cutting cycle takes place. That's when you start to see small caps outperform meaningfully. So I think actually this environment where we're sort of muddling through in a growth sense, not going into recession, not full on boom expansion, it's probably not the best environment for small

caps. But I do think that the prospect of lower rates, the fact that they're now actually coming down, which matters a lot more for small businesses, is ultimately probably stimulus in the future, more so taking away the restrictiveness now. Great frame to keep in mind. Kevin Gordon, Tracy McMillian, thank you. Well, Intel shares getting a pop on a report that chip giant Qualcomm approached its rival about a takeover, perhaps in recent days. Joining us now is Patrick Moorhead of More Insights and Strategy. Pat, we're just on the phone about this. You know, you're the first guy I called to see what you think. I mean, maybe a deal could get done here, but Intel is such a big domestic manufacturer, particularly of chips right now. It's not like just anybody would be allowed to come in and buy it. Yeah, John, there are so many ways to look at this in the last 30 minutes, right? You have to ask,

you know, so first of all, why does this come out now? When you have board of directors, investors, you get churn like this. You get strategic options on the table, and then you have to say, hey, is it real or fake? Is it, you know, created to just disrupt Intel? What's the synergy between the companies? What would the regulators say? And would it be a full sale or would it be carve it up? I'm not going to scenario plan it right now, but when you lay up Intel next to Qualcomm, right, you've got Intel that's big in data centers,

PCs, big fab manufacturing capabilities, small and auto, no smartphones, and relatively large in what I'll call the industrial edge. And they've got Qualcomm, big in smartphones, big in connectivity IP, big in auto, no foundry. They're paying TSMC all the margin to make it small in data center, smaller in industrial edge. So I see synergies in this. When you look at the whole, the two companies completely coming together. How about Motiv though? I did reach out to Qualcomm, by the way, folks, Qualcomm said no comment. It doesn't make sense potentially for Qualcomm to buy Intel, even if it doesn't want every single piece? Intel itself doesn't seem to need every single piece right now. Is there a way that that pencils out?

I think it does. I mean, if you look at Qualcomm's desire to get in the data center, right now they have about 1% PC market share and Intel has closer to 80%. But if you look at what could happen with the foundry, John, and if Qualcomm had access to a foundry and it was the combined entities actually generated and saw that profit in 26 or 27, it would put Qualcomm in a tremendously advantaged position just in their own markets that they're in right now. So, Patrick, I mean, Intel was actually a big winner this week. It was up 11 percent on the week and obviously finished higher into the close here on these reports. It's still down 56 percent since the start of the year. And we actually started the week on overtime with Pat Gelsinger

from Intel coming on this show to outline the plans he had for standing up this internal subsidiary for the foundry business, the fact that the board still had a lot of confidence in him, curtailing some of the build-out that was expected in Europe on down the road. What do you think came first, that announcement and those plans, or the fact that the stock just can't seem to get out of its own way and thus looks like an attractive takeover target now? I think this all came out in parallel. And I

don't think Qualcomm would be waiting for a market reaction. I don't think there are anybody who looked at what Intel brought out wouldn't think that it would increase the stock 50%. Investors really are only looking 18 months out and the data center is not going to look fundamentally different. What I do think, though, is if this is real, Qualcomm sees the opportunity, likely is talking to some disgruntled investors, potentially even aligning itself with ex-board member Lipu Tan, who exited Intel board a short while ago.

But when you have opportunities like this, Morgan, you just have to go for it. And how many years would you have to wait for something like this? I mean, you had to wait decades for something like this and have the position for it to work, potentially. All right, Patrick Moorhead, more insights and strategy. Appreciate you joining us here in Overtime on that breaking headline. We've literally gone round trip on talking about Intel here this week on Overtime. It's fascinating.

All right, well, let's turn now to FedEx, because it was the worst stock on the S&P 500 today after missing estimates, lowering its full-year revenue forecast in last night's earnings report. Let's bring in Senior Markets Commentator Mike Santoli for a macro take on FedEx. Mike, we're not asking you about the Fed. We're asking you about FedEx for a change.

Yes. Yeah, moved on to two more letters. That's all we needed. Look, the question with FedEx is always exactly how much of a macro bellwether is the stock, is the company's results and how much of it is company specific. Obviously, challenges and overall volumes. Take a look at the very broad backdrop here, which is spending on services versus goods over the last few years. Goods is really the value of goods. Personal consumption expenditures really flattish over the last couple of years after the comeback from the pandemic. And services obviously continues to climb. That's super big picture. And then you see the freight index. Cast freight is really squishy. It's muddling around these levels of

very muted operating levels. And you see here, it's not really recessionary. These faded areas are the shaded areas are recessions. But you also see it doesn't give you a whole lot of warning before it trips into recession. It's really a coincident indicator and way off the highs of a couple of years ago. So that's the general backdrop. Now, the question is, what does it mean for the overall industrial economy? Remember, the transports, FedEx, UPS, they are in the industrial sector. Well, it doesn't really reflect the overall fortunes of industrial stocks and other dynamics within the CapEx driven industrial sector. You see here the XLI industrials ETF over the last three years really taking flight and separating from FedEx and UPS. See, FedEx basically

round tripping. It had a good run and now it's about flat both on a year to date basis and on a three year basis. So I think you can take some comfort there that, yes, there are challenges, but it's not necessarily saying that, you know, the overall economy, therefore, is about to buckle, Morgan. I love this chart. And it also sort of speaks to what we've seen as this bifurcation in industrials, too, because those names that are, excuse me, levered toward infrastructure spending and build out and AI, et cetera, have really been benefiting this year. But I do want to go back to FedEx here for a moment from the macro, because on the conference call, they did say they expect the demand environment to moderately improve as they move through the year, driven by slight recovery in the industrial economy, e-commerce growth and low inventory levels. Also adding that they expect modest improvement in the U.S. domestic ground parcel volumes. To me,

what was perhaps most notable, and we heard something similar from UPS over the summer, is that, well, here volumes are overall, we're actually ticking higher. Yields are lower, though. And that's because we've talked about belt tightening with consumers, but we're seeing belt tightening with businesses, too, deferring to cheaper options to ship their goods. And I do wonder how long that lasts and how much now peak season is going to matter. Well, exactly. I mean, I do think that there are indications, certainly with low inventory levels and other dynamics where you still do have decent growth in overall consumption on the on the personal side, on the household side. I think arguably one of the big reasons that the Fed was emboldened to go half a percentage point with its cut this week is the small and medium sized business world operates on, you know, rates borrowing dictated by the Fed funds rate. It's prime rate economy. And that's something that we're very worried about, that smaller businesses, ones that don't have access to global capital markets, maybe have been squeezed here.

And that probably does line up a little bit with the overall customer base of those freight companies as well. We went back to the Fed. It all goes back to the Fed. I was determined to get there. Mike, thanks. See you again in just a bit. Up next, former Apple executive, one of the main creators of the iPod and the iPhone, Tony Fadell joins us exclusively to talk AI and opportunities as the new iPhone launches today. Plus, a top energy strategist on why the huge power needs for AI are creating a big opportunity for nuclear stocks. They're some of the biggest movers today.

Overtime, back in two. iPhone 16 officially going on sale today as concerns grow over demand. For more on what's next for Apple and the industry, let's bring in Tony Fadell, former executive at Apple, inventor, co-inventor of the iPod, co-inventor of the iPhone. Tony, great to have you back. Haven't seen you on air in a bit. I want to ask you about the sort of possibilities behind a Qualcomm Intel matchup, but let's start on AI. What's special, one of the things that's special to me about your career is the way you had to reimagine interfaces for new ways of working with digital devices, general magic, iPod, iPhone. What kind of moment, Nest, what kind of moment is AI right now? Well, John, thanks for having me. Well, right now, what AI is really about is we're going to

see a dramatic change in how we do many different things. It's not just we're seeing these chatbots, we're seeing about talking to chatbots and getting answers to them. But AI can do so much more and has done so much more in many of our applications for the last 10, even 15 years. At Nest, we had AI inside of our thermostat, still do, to actually change your temperature. So AI has been around a while. We just have had these chat bots over the last two years. But what's more important is that you're going to see AI, not just as chat, but you're going to see AI actually helping to change the applications you use to make them much more personalized for the features you use as opposed to just a whole wall of tools and you have to figure out what to do. So you're going to see the applications on

iPhone and other smartphones and your desktop computer start to change based on how you use them. And we've had AI-type features in the software in these devices, as you mentioned, for years now, but it's significant to me. Now there's a button, right? Once you start building it into the interface that way, you're making a long-term bet, right? Like if you're Apple or if you're, you know, Alphabet, Google, Amazon, et cetera, once you start putting it in a button, you're really in competition to make it simplest, easiest to use for consumers. Absolutely. And, you know, those buttons have existed.

There was Siri before. There was Alexa. There was, you know, the different, hello, Google. Those things have been out for over, you know, eight years or so now, not 10 years. And so now, 10 years. And so now what you're going to see is a whole new level of capabilities that was always imagined but never been able to deliver until now. And we're just about there. Obviously, Apple hasn't been shipping those features yet.

They're going to, they say, sometime next year, early next year. But there is the promise. And you can see if you actually create products around AI and chatbots, you can actually do some really novel and innovative things. And those buttons are going to be very powerful. I realize that the actual software for Apple intelligence isn't going to push out a little bit later this year. I was in Manhattan. I walked past the Apple Fifth Avenue store earlier today. I saw some of the lines. People are excited about the new iPhone 16. It would seem on day one. But do you think,

what do you think it's going to take for consumers to really understand, get excited and wrap their arms around all of these capabilities as they do push out to their phones? Well, great question. How it always happens is that you're going to have a trusted friend. You know, that person in your family

or in your community who you always go to and you say, that person in your family or in your community who you always go to and you say, hey, what do you think about this? And those tastemakers, those influencers, those are the ones who are going to really get you, you know, going when they can show you it right on their phone and go, check this out. This is so cool. That's the thing that's going to spread the waves. We're going to see lots of ads. We're going to see a lot of things. But when you see people around you that you trust using it and using it for everyday things, that's when that fire is going to light and it's going to spread. So I'm really curious to see what's going to happen earlier next year,

because Apple has really wrapped the AI technology, chatbot technology and other technologies, AI diffusion models and things in something that's really a product. A lot of things like ChatGPT and the other things, they're not products. They're general technologies, but not wrapped as a product. Apple has done a really good job of messaging that they're going to have it as such. And so let's see what happens early next year. Okay. So what do you think the lessons learned have been for Apple as it does push out the software through its new iPhones?

When you think about Huawei and what we're seeing with that rollout in China right now with its newest devices, and you think about the lead that Google-enabled devices have as well. Well, look, Apple has an incredible market power. They have a consumer base that keeps coming back and back and back year after year. I don't think you're going to see a real dramatic change in that, as long as Apple is able to deliver as they say they can, and I believe they can, and the others will deliver. So I think it's still everyone's, it's the same arms race that we've had

for the last 15 years in smartphones. And so it's just going to continue. But I don't think anyone has any more advantage than anyone else. And so, and Apple's always really good at making products out of technology. So let's see what happens. But I don't think there's going to be a huge market shift because people who are already in each of platforms are going to stay that way. Okay, let's talk a little bit about suppliers, which you have dealt with quite a bit in your career. Qualcomm Intel reports out, including from our own CNBC reporting, that Qualcomm

has approached Intel about a possible transaction. Back in the early days of iPhone, if I recall, there was talk about using an Intel chip in it. That turned out not to be the direction. It turned out to be ARM chips. Qualcomm, over time time became a big, the big player in ARM chips with Snapdragon. What do you think of the possibility of these two companies getting together? Well, you know, there's a huge antitrust and what have you there. But, you know, it makes a lot of sense that Intel needs to find a new direction in product. Intel hasn't been a product company for a long time. It was a manufacturing company. And now it has stumbled year after year in the manufacturing domain. So it does need to go to product. So Cristiano at Qualcomm is making a bold move if that is

really exactly the case. And, you know, bringing in those products both on the server side and the PC side into Qualcomm would be tremendous. The, you know, the albatross really is the manufacturing and it costs a lot to build and to maintain and to fill those fabs more importantly. And so I don't know whether they're going to take apart or they're going to take the whole thing because IDF Intel foundries was going to spin out anyways. So I think it could be a really strong bet and could help Intel because we do need that American technology to continue as x86. And it could be something really big for Qualcomm if they can if they can complete such a transaction. And some would say we need that

domestic manufacturing, though it's a bit of an albatross. That albatross looks an awful lot like a bald eagle. Tony, it can be in the right hands. It can be in the right hands. I might borrow that. Okay. Open source. Thank you. Good to see you, Tony. Now, from a former Apple executive to an executive at another company that took on Apple over infringing on its patented blood oxygen monitoring technology in the Apple Watch, also out today. Massimo founder and CEO Joe Chiani, along with another director, have been ousted from the medical technology company's board by activist InvestorPolitan Capital,

which just won two more board seats as part of its ongoing proxy fight. It is unclear whether Chiani, who has been on this show several times discussing the Apple lawsuit and proxy fight, will remain CEO, but he has previously said he would leave the company if he lost his spot on the board market. All right. We'll continue to monitor that one. Uranium stocks meantime have been red hot after Constellation Energy announcing it will restart the nuclear plant at Three Mile Island and sell that energy to Microsoft to power its AI data centers. Well, up next, a top energy strategist on what this could mean

for other nuclear energy stocks. Plus, we will discuss whether Lennar's disappointing fourth quarter guidance is a red flag for the homebuilders. That's later on Overtime. Welcome back. Shares of Constellation Energy soaring today after the company announced plans to reopen a nuclear power plant on Three Mile Island. Microsoft is going to be buying the electricity from the plant as part of a 20-year deal to help power its data centers. Other energy and uranium names like Vistra and Camco and NextGen Energy all popping on the news as well. So joining us now to discuss is Veriton Energy's market strategy partner, Michael Bradley. Michael, it's great to have popping on the news as well. So joining us now to discuss is Veritan Energy's market strategy partner, Michael Bradley. Michael, it's great to have you on the show. And that's exactly where I want to start, because after many, many years of a lot of negative coverage and a lot

of negative sentiment toward nuclear, it is truly having a renaissance here. And while we're talking about this deal today, it's certainly not the first, particularly where tech companies and data centers are concerned. Yeah, you're right. I mean, we've had a lot of news. I mean, yesterday we had news with Vistra basically buying in 15% of their minority interest

in their Vistra Vision business. Oracle, I think this last week or the week before, they talked about a thousand megawatt data center that might be powered by SMRs and so if you look at Constellation NRG Vistra Talon energy those stocks this year on average are up a hundred and twenty percent and over the last year or upper on average a hundred and fifty percent so that compares to some of these AI and tech stocks, you know, the magnificent seven that everyone talks about.

These are truly growth stocks. This is a growth industry, and this is why we've been saying for a while at our company that the utility industry is going to be seeing substantial growth from here out, probably over the next five or six years, and it is a growth industry. And so I think investors are reacting to that.

That's why utilities are one of the best performing sectors in the market this year. I get the impetus to ink these deals and to announce these partnerships, especially given the power and energy needs of these companies that are looking to build out all of this AI infrastructure. But Three Mile Island closed for a reason. You have a lot of regulatory red tape when it comes to nuclear. So how real are looking to build out all of this AI infrastructure, but Three Mile Island closed for a reason. You have a lot of regulatory red tape when it comes to nuclear. So how realistic is it to think that all because a deal has been struck that nuclear is going to come online and become a reality? Well, yeah. Well, we saw Vogel. Those plans for years basically had been on the boards, but you saw those plans start to open up this year and last year.

And so it's doable. You're seeing right now Palisades in Michigan. A Holtec International is looking to bring that facility that was closed, they're reopening that towards the end of 2025. And so, you know, and there's only really one power plant left, nuclear power plant that's left that has not been reopened. And that's Dwayne Arnold. And that's the next stairs. And it's in Iowa. It's about 600 megawatts. And so there is some momentum here. Things can get done. And so I think the difference is today is that these things were uneconomic.

And you just mentioned it. They've got a-year contract from Microsoft for this facility. My guess is it's probably above market rates too. And so it's going to be substantially accretive to this company. And that's why the stock was up 20%, put $15 billion of market cap value on just today. And so I think there is political momentum in Washington, D.C. to get this done. There's momentum for SMRs as well. So I think the interesting thing we've got to be asking ourselves in the next 12 months, are we going to see, perhaps, for nuclear. We've had plants reopening, but it's 45 years ago this year that the Three Mile Island accident happened and nuclear went into extended decline. At what point do we see, is it the new construction, whether the sort of renaming and Microsoft and the AI demand and clean energy

actually propels nuclear and new development forward from here? Well, I think the reality is that the growth that we've seen over the last 20 years has been very minimal for electricity. It's going to grow substantially over the next five, six, seven years, be it data centers, reshoring of U.S. manufacturing, and just electrifying everything. And so the difference between now and the last 20 years is it's not only about political, it's about economic reality, right? We are going to need every form of energy. And I think what you're seeing is that nuclear is something that a lot of these AI and technology companies, frankly, two or three or four years ago, they fought this and now they're on board. And I think the reality is, is we're

going to need it all. And that's why we're striking deals. And I think what we're going to see is we're going to see new build announcements potentially over the next 12 to 18 months. And I think what you're also going to see is if you look at the PGM auction here, you know, earlier this year, I mean, prices were up tenfold. So the reality is that prices are up. You know, there's just not enough generation. There's not enough transmission. So this is a growth industry right now. And that's the difference. All right. Michael Bradley, appreciate you joining us. You bet. Let's get a CNBC News update with Pippa Stevens. Pippa. Hey, John. Almost two dozen local Teamsters unions and joint councils representing nearly one million members

have endorsed Vice President Kamala Harris according to her campaign. It comes just days after the National Teamsters Union declined to endorse a presidential candidate for the election. Johnson & Johnson announced this afternoon that its Talc subsidiary filed for bankruptcy again today in an effort to resolve all current and future claims related to litigation linking Talc to ovarian and other cancers, and raised its bid to settle thousands of lawsuits to approximately $8 billion. A judge will still have to approve the plan. The company is currently facing more than 60,000 lawsuits. And Travis King, the Army private who fled to North Korea just over a year ago, pleaded guilty today to desertion and assault charges.

King crossed into North Korea in July 2023 after he escaped from his Army escort at the airport in South Korea just before his return flight to the U.S. The judge has yet to sentence him. John and Morgan, back to you. Pippa Stevens, thank you. Up next, Mike Santoli looks at the big gains that Warren Buffett's Berkshire Hathaway has been delivering for investors and whether the stock is starting to look expensive. Plus, we'll try to get some answers to the question of whether the future

of health care will be done through digital technology rather than in-person care. We'll be right back. Welcome back to Overtime. Mike Santoli returns with a look at Berkshire Hathaway's latest portfolio moves. Mike? Yeah, John, a lot of attention on the fact Berkshire Hathaway has been pretty actively selling its Bank of America stake. It's coming from a position of considerable strength, though, for Berkshire Hathaway as a stock. It's coming from a position of considerable strength, though, for Berkshire Hathaway as a stock. It's just come off the boil, and I always view it through the prism of the market's preference for high-quality stocks, obviously great balance sheets

and reliable profitability. You see, that's about as close as it comes since the bear market low in October of 2022. The quality ETF right up against Berkshire Hathaway, outperforming the S&P 500. Now, the two biggest public stakes that Berkshire Hathaway has been selling, Apple and Bank of America, have done very, very well for Buffett's company. You go back over some 12 years or so. That's basically when he started to buy Apple.

And, of course, around the time of the financial crisis when he got involved with Bank of America. They're all in the money relative to the S&P 500. So he's peeling away profits and trying, I think, to flatten out some of the concentrated positions within this portfolio. Now, take a look, though, at how quality stocks in general are valued relative to the S&P, because to me, that's a little bit of a question mark as to whether the market's overpaying for this factor in there. And you see it's about an 11% premium to the market. That's pretty high historically

because it tends to look a lot like the S&P 500. And by the way, this is when the portfolio rebalances, and so it changes the composition. But in general, it's a little bit pricey. If the market itself is going to get more confidence in the soft landing, the Fed's cutting, you might actually see lower-quality stocks start to outperform just a little bit pricey. If the market itself is going to get more confidence in the soft landing, the Fed's cutting, you might actually see lower quality stocks start to outperform just a little bit, Morgan. All right. We'll be watching for it. Mike Santoli, thank you. Will digital technology replace in-person health checks? Well, today, John takes time out with a

CEO who says it's more complicated than that. Yeah. Daniel Perez is co-founder and CEO of Hinge Health. It's a 10-year-old private company that uses wearable technology and software to help patients address musculoskeletal pain. Now, Perez comes from humble beginnings. His parents immigrated from Cuba and worked to provide a better life for Daniel and his twin brother. That meant focusing on education. But yeah, my parents would always push us very hard in school because my mom was a substitute school teacher. She would bring home like little worksheets and stuff and have me and my twin, I had a twin brother, work on them. And she'd give us little stickers and stuff and

we were competitive. And so, you know, we didn't spend our summers just lazing about. I mean, don't get me wrong, we were lazy in summers, but as any kid were, but we would have three to four worksheets that we would have to do before my mom came home from work. And that was just like reinforced multiplication tables, history, you know, reading, writing. And so it was it was really fortuitous that we had a that we had a mom that was a substitute teacher and bring home a couple of worksheets for us. Perez initially wanted to be a doctor, went to medical school, but left for a PhD program in biochemistry. That wasn't the right fit either, but he did found three companies during the program, and the last one, Hinge Health, ended up working out. Now, Perez had been interested in the area in part because when he was a kid, he was hit by a car in a biking accident and broke both an arm

and a leg. Co-founder Gabriel Mecklenburg was doing his PhD in musculoskeletal health, and the company is in growth mode now. They raised $400 million in the series E-Round three years ago at a $6.2 billion valuation. And we do this by combining digital physical therapy with a full care team of PTs, doctors, nurses, coaches, along with advanced neurostimulation technology, which you just referenced, and I'll share more about that. And we've also been able to publish, since last time we spoke, several more research papers showing the impact of our technology. We've already published a paper with Stanford, Vanderbilt. One of our papers showed about a 68% reduction in pain for people going through our program while avoiding about two and three surgeries.

And I think last time we spoke, we had just under 1,000 customers. We're now at about 2,000 enterprise customers. So the timeout takeaway, Cyborg, not Android. So there are questions about whether digital technologies, including AI, will replace in-person care. What we're actually seeing is the relative success of companies that augment human efforts with data. So not computers pretending to be human, but making us stronger. Hinge this month is out with a wearable device called Enso 3 that uses electrical nerve stimulation to ease pain instead of drugs. Morgan. That's super fascinating. It also makes me feel better about the fact that I signed my daughter up for math class this summer.

All right. Our next guest thinks home price growth will be cut by more than half by the end of the year. What that could mean for home builder stocks, that's straight ahead. And check out shares of Echo Star. Those are popping here in overtime after the FCC granted the company's 5G network build-out framework or Boost Mobile's network. Echo Star, of course, is the company formerly known as DISH. Shares are up almost 5% right now. Stay with us.

We did a simple calculation, my team and I, that if housing inflation grew at 2% annualized and you plug that into the monthly numbers, core PCE would be running under 1% for the last four months. So that is what put me back a bit to say, wow, inflation is softening much faster than I thought it was going to. And that is what put me over the edge to say, look, I think 50 is the right thing to do. That was Fed Governor Christopher Waller telling our Steve Leisman earlier today how housing inflation played into his vote to cut rates by 50 basis points this week. Joining us now to discuss what's next for housing prices is Jim Egan of Morgan Stanley.

Jim, happy Friday. So we've got high rents, low home inventory. Does a 50 basis point rate cut help? So when we think about the impact of that rate cut from a housing market perspective, we're largely going to be talking about affordability. And when we think about affordability, we're thinking more about the mortgage rate. And that's tied more to the 10-year part of the Treasury curve. I think to put this into context, from the fourth quarter of last year until Wednesday morning of this week, 30-year mortgage rates were down 180 basis points, and the Fed hadn't

cut a basis point yet. So I think instead of talking about the 50-bip cut specifically, what we're going to think about is how the affordability improvement that we've already seen is going to work its way through the housing market in the months ahead. And how does it? So I think first order, you see that affordability improvement. You've seen rates come down. One of the big talking points over the past year plus has been the lock-in effect. And that lock-in effect is really still going to be in place here. A majority of mortgages still have a rate below 5%. We're talking about 6% 30-year mortgage rates right now.

So we think you're going to start to see inventories increase on the margins, which should allow for a little bit of growth from a sales perspective and potentially weigh on the pace of home price growth a little bit here. Interesting. So perspective and potentially weigh on the pace of home price growth a little bit here. Interesting. So does that mean that the onus is still outsizedly on the home builders to keep adding more new supply to the mix? When we look at the supply of homes available for sale, I do think that those new inventories are playing a much larger role than they have historically. Put that into context a little bit. Prior to the great financial crisis, new inventories were about 10 to 20 percent of that monthly figure. Right now, they're at about 30 to 35 percent of the number of homes available for sale. We think that as rates

come down, you're going to start to see a little bit more of those existing homes come on the market, but it's going to be slow. And when we look at the total inventories from an existing perspective, they're still much lower than they've been really at any point for which we have data. So we would say, yes, that the share of that inventory is going to have to be a little bit more skewed towards new homes, at least for the foreseeable future. Perhaps why investors have so much focus on the home builder stocks. Jim Egan, thanks for joining us. Thank you for having me. Well, up next, billionaire astronaut and Shift4 CEO Jared Isaacman on his historic spacewalk and why space is not as peaceful as you may think.

Welcome back. We have some breaking news on Boeing. Ted Colbert, who is the president and CEO of Boeing Defense, Space and Security, is leaving the company, according to an internal memo that has been reported on and secured by CNBC.com's own Leslie Josephs. Memo from CEO of broader Boeing, Kelly Ortberg, saying that he is leaving and that Steve Parker is going to temporarily oversee that defense and space book of business effective immediately until a replacement can be named at a later date. In

this memo, Ortberg saying, quote, at this critical juncture, our priority is to restore the trust of our customers and meet the high standards they expect of us to enable their critical missions around the world. Working together, we can and will improve our performance and ensure we deliver on our commitments. John, I have interviewed Colbert and his predecessor at BDS, Leanne Corrett, before that over the years. This is a piece of the business that I follow very closely. We talk a lot about the commercial business and the commercial jets and all the issues that we've seen playing out there over the recent years. But the defense and space business has been very challenged as well, has taken a number of charges over the last couple of years across a number of programs

and certainly fresh off the saga that was Starliner, in which NASA astronauts ended up at the International Space Station for a much longer mission. That capsule returned to Earth empty, and SpaceX has stepped in to bring them home in February. So perhaps not surprising to see these leadership changes happening under a new CEO in this part of the business after that situation. All right. I know you'll continue to follow it. Well, up next, Shift 4 CEO Jared Isaacman on the biggest takeaway from his historic spacewalk. Back at home, we all have a lot of work to do, but from here, Earth sure looks like a perfect world. Now back on Earth after making history, again, with the all-private Polaris Dawn mission,

Shift 4 founder and CEO Jared Isaacman spoke with me about the five-day spaceflight and this first-ever private spacewalk as Isaacman and then SpaceX engineer Sarah Gillis stepped into space testing SpaceX's new suits. When you look at Earth, it's extraordinary, especially from that altitude. I think the EVA was almost at the apogee of that orbit, so about 730 kilometers. It was gorgeous. But I will also say, like, a lot of the tests that we did were faced away from Earth, where you're just looking into the darkness of space, and it's not peaceful. Like, you get that very, like, threatening, you know, vibe from it that this is a hostile place to be. And if you want to be here in this new, you know, frontier, you're going to have to work for it and it won't be easy. And that's no different than

sailing across the oceans in the 1400s when people thought they'd fall off the end of the world. Well, Polaris Dawn also flew its crew, which also included Kid Poteet and another SpaceX engineer, Anna Menon, into the highest Earth orbit for humans ever, where they passed through the Van Allen radiation belts. And during high radiation levels that Isaacman said caused a quote, caused a quote, meteor shower of blue and white lights that to streak across his eyes. These were necessary tests to support human exploration of deep space. We all want to see this world where people are able to, you know, venture off to Mars and explore even beyond that in our solar system. And you want to be able to come back home and be

healthy enough to tell people about it. So it's a pretty important obligation from our mission. They're going to be tracking that radiation for the rest of their lives. Well, Isaacman telling me they barely slept as the crew conducted 40 experiments. Polaristan is the first in a program of three missions that will culminate in Isaacman on the maiden crewed flight of SpaceX's Starship. Starships are on the horizon. We will have the technical means for the first time to really open up this last frontier. And it's just so damn exciting to think about what we might learn out there. So this is a great time to live. We are absolutely going into the second great age of exploration. And I know all of us that were part of Polaris just feel really fortunate to, you know, have some front row seats for everything

that's happening around us. So the first thing Isaacman and the crew did once they splashed down and got through those initial tests, they ate cheeseburgers. They wanted cheeseburgers because they didn't eat a lot either. Well, for more of this interview, check out Manifest Space. You can click on the QR code right there and listen wherever you get your podcasts. Astronauts are just like us. I also eat cheeseburgers. Well, you're making me hungry here. Next week, we got FedSpeak, P pce other central bank decisions and micron which will be interesting given the ai trade oh given all the action and chips as well we talked a lot about qualcomm and intel i suspect they'll be talking a little bit about that on fast

money as well yeah palantir dell start trading too in the s&p that does it for us here at overtime fast money starts now