Closing Bell - Closing Bell Overtime: Eli Manning Talks Business Since Retirement, Private Equity; UMW CEO Mat Ishbia On Mortgage Market and Phoenix Suns 11/25/24

Episode Date: November 25, 2024

Former Cleveland Fed President Loretta Mester on Trump’s Treasury nominee Scott Bessent and what it means for the markets. She also talks next move from the Fed. Jersey Mike’s CEO Peter Cancro and 2x Super Bowl winning quarterback Eli Manning discuss their charitable efforts with the Meridian Health system. Peter also talks his company’s sale to Blackstone while Eli talks his business investments since retirement and the NFL’s recent approval of private equity investments in teams. Plus, UWM CEO Mat Ishbia on mortgage rates, the Fed and the Phoenix Suns.

Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Fork. Coming up on today's show, former Cleveland Fed President Loretta Mester weighs in on President-elect Trump's Treasury pick and what she's expecting out of a Trump 2.0 economy. Plus, a can't-miss interview with Jersey Mike's CEO, Peter Cancro, just days after selling the sub-business to Blackstone for $8 billion. That was the valuation. He's going to join us with two-time Super Bowl champion Eli Manning to talk about how they're giving back this holiday season. And we've got earnings on the way from Zoom, video, and Agilent Technologies,

and we'll bring you those as soon as they cross. But let's get straight to the market action with Bespoke Investment Group co-founder Paul Hickey and Unlimited CEO Bob Elliott. Bob, you're sitting here with me on set. I'm going to kick this conversation off with you after another day higher for all the major averages. The Russell 2000 playing a mighty game of catch up. We're up 11 percent, more than 11 percent a month today, and we get a record high. What does that tell us? Well, I think it's another indication of the over easy monetary policy and fiscal policy that's sort of juicing the markets. And in particular, what's happening is all those areas of the market that have been left behind up until the last month, it's catch-up time.

And so hedge fund managers are trying to catch up with, you know, close short positions in the catch-up names. They're getting caught on the wrong side of that trade, and it's helping fuel that to drive higher, fuel things like the Russell 2K to drive higher. The Russell, the Dow, we talk about this rotation, this broadening out of the rally. Paul, I want to get your thoughts on what we're seeing here, especially on a day where you had the bond market, you had Treasury yields move lower, but you also had that yield curve re-invert as well as investors digest Besant for Treasury pick. Yeah. So, I mean, I think today is just another example of, you know, anything that could have gone wrong in the market over the last few months seems to be going right. And so Bob was just talking about the easier monetary policy that helps things go right that

could go wrong. But I mean, you have the economy, which less than three months ago, we were worried about the economy falling off a cliff so much so that the Fed had to cut rates 50 basis points. Now we're talking about the Fed dialing back the pace of rate cuts and the economy is the U.S. economy is the envy of the world. So things have really changed as far as the economy, the election, and even earnings season that just came by was very good. So everything that could have gone right has gone right.

And now investors are feeling very confident. So now what you have to talk about here is let's not get too excited. Markets climb a wall of worry. So let's think of things that we should be worried about here and just to keep us on our toes. And one of the things is, despite the Russell 2000 doing very well and hitting a new high today, breadth in the S&P 500, the cumulative AD line hasn't hit a new high yet with the S&P 500. It's close, so it's not a major divergence, but it's something to be aware

of. And then the semis have just been a complete disaster. We've always looked at them as a leading indicator of the broader economy in the market. And the relative strength of the semis is at a six-month low, while the S&P is at a 52-week higher right near it. And over the last 25 years, to find those types of scenarios, you go back to 2007, 2015, and 2018. And all four of those periods, three and six months later, the S&P was lower. So again, it's one indicator things look very good, but let's just be aware of things that could go wrong. So Bob, note of caution in your voice around what stocks have done recently. And you think the Fed is wrong in its assessment that the job market is weakening in any meaningful way. So how much risk is there, you think, to the stock market with inflation perhaps reawakening based on policy and immigration or tariffs starting in 25?

Well, I think we're in a perfect sweet spot for stocks here, where we have pretty strong growth. We have very strong income growth from household sector. And the Fed, despite indications from the data that the job market remains very strong, is very committed to delivering interest rate cuts. And they're probably not going to get stopped until there is overwhelming evidence that inflation is elevated relative to their mandate enough to change their minds. That's probably going to take three, six, nine months before we get enough data where they would start to call into question. And so a perfect sweet spot for stocks where you've got a commitment to easing monetary policy

at the same time that growth remains pretty good. Okay. So, Paul, we're going to have the holiday season results in by the time Bob thinks we get any indication on what inflation might be doing or not again. So with Black Friday at the end of this week, how much do you expect the overall market to react to fresh data on how the consumer feels about spending? So I think the Black Friday numbers that come out this week are very, you know, the market has started to not focus too much on those numbers. They tend to be maybe like a one day event. But I think the overall numbers are going to come in good. We're starting to see confidence numbers pick up as far as the sentiment surveys are concerned. And so I think that's going to create some strength. Retail sales have been coming in better than expected. And I mean, just look at the retailers today. They've

just been on fire. So you have the consumer discretionary sector up over 1 percent, even as like Tesla, one of its largest components, was down pretty sharply on the day. So that's some broad-based strength within the retailers going on right now. All right. We'll watch that as well. Paul, Bob, thanks both of you for joining us. Zoom and Agilent, both out. We're going through those numbers, by the way, bring them to you in just a moment.

But until then, let's turn to Mike Santoli. He's got a look at the sharp rotation into small caps as the Russell 2000 hits new highs. Mike. Yeah, John, I had to frame that up. Take a look at the last six months of Russell 2000 relative to the S&P 500. You see that real acceleration higher. The reprieve really started to come, by the way, in July. We got a very benign CPI report.

That's when it seemed like the Fed was going to be able to ease into a stronger economy. That was your soft landing celebration. Sideways from there, and then post-election, we launch along with other cyclical parts of this market. Now, there's a lot of hope that there's room to go for this mean reversion outperformance of the Russell 2000. Take a look at a very long-term chart here going back into the late 90s. This is the Russell 2000 divided by the S&P 500. So it's the relative performance of small versus large. So here were the depths of the tech bubble right around 1999, 2000. We didn't quite get back down there, but pretty close and a pretty steep drop, too. Now, this is the dream if you love

small caps, right? Well, what did the Russell 2000 do from their relative low here four years later to 2003 when the next bull market started? They're about flat. They're up like 6%. But large caps fell 33% over that period. Therefore, relative basis, small caps look great. So I'm not saying you have to have something like that happen. But usually you don't have, you know, small caps up a ton and gaining a whole lot of ground on the best stocks in the world for very long periods of time without having some giveback in those very large outperforming mega cap names, John.

What an important point. What are the conditions under which small caps at least tend not to fall as much? I mean, honestly, the fact that they were super cheap to begin with was part of the help back here. And there was a growth into value rotation. So that actually helped as well. Now, keep in mind, I don't want to map too closely to that period of time, but you did get a recession and you did get the Fed cutting rates and a lot of other things happening that was much more about the deflation of the Internet bubble than it was about some renaissance in in Russell 2000. It was really more to the fact that the old economy had not participated into the highs of that market. I don't think that's quite the case today. So you have to take that into account as well. All right. Important historical context.

Mike Santoli, thank you. Meantime, Agilent earnings are out. Julia Boorstin has them. Julia. John Agilent beating on the top and bottom lines. Agilent reporting adjusted earnings per share of $1.46. That's five cents better than estimates. Revenues of $1.7 billion, just ahead of the estimates of $1.67 billion. The company guiding to first quarter adjusted EPS in a range of $1.25 to $1.28. So that's lower than the estimate of $1.37. The company also guiding to first quarter revenues lower than the estimate and guiding to a range of $1.65 billion to $1.68 billion, which is lower than the $1.7 billion estimate. We see shares down about 1.5% on this. The company also guiding to full year adjusted EPS in a range below the estimate and

full year revenues in a range right around the estimate guiding to full year revenues of six point seven nine billion to six point eight seven billion. The estimate is six point eight three billion. But the shares are down despite the top and bottom line beat because the first quarter guidance falling short of expectations. Back over to you. All right. Duly noted, Julia Borsten. Thank you. Well, after the break, former Cleveland Fed President Loretta Mester weighs in on President-elect Trump's pick for Treasury secretary and what she's expecting from the Fed at the December meeting. And later, Jersey Mike's CEO, Peter Cancro, and football megastar Eli Manning will be with us to talk about how they're teaming up for charity following the $8 billion sale of Jersey Mike's to Blackstone. Overtime is back in two. Welcome back.

Zoom video earnings are out, and Julia Borson has those numbers. Julia. Zoom beating on the top and bottom line with adjusted EPS of $1.38. That's higher than estimates of $1.31. Revenues of $1.8 billion, just a hair ahead of expectations of $1.16 billion. The company's revenues, enterprise customer revenues ahead of 1.8 billion, just a hair ahead of expectations of 1.16 billion. The company's revenues, enterprise customer revenues ahead of estimates, an operating margin of 38.9%, also ahead of estimates. Now, in terms of Q4 guidance, the company's adjusted,

because what I just reported was the fiscal Q3. In terms of Q4 guidance, the company guiding to EPS in a range of $1.29 to $1.30. That's just ahead of the $1.29 estimate and revenues of $1.18 billion versus $1.17 billion estimated. Now, in terms of a couple other details here, the company did increase its common stock repurchase authorization by an additional $1.2 billion. They have an approximately $2 billion left in stock to be repurchased. They're also renaming the company, going from Zoom Video Communications. Now they're just going to be called Zoom Communications. Shares are up fractionally. Back over to you. Quite a turnaround from the lows, Julia. Thank you. Well, the Dow, S&P 500 and Russell 2000

hitting record intraday highs while yields pulled back after President-elect Trump named Scott Bessant as his nominee for Treasury Secretary. Joining us now is Loretta Mester. She is the former Cleveland Fed president and a CNBC contributor. Loretta, great to have you. So, Scott Bessant, this pick, mainstream, I guess, for Treasury, but for a president with some very different ideas about tariffs and immigration. How should investors watch the way Besson, assuming he is successfully confirmed, navigates that? Yeah. So, John, thanks for having me. You know, I don't know Scott Besson personally. I'm actually very glad they went with the business as usual choice, as he was called. You know, this Treasury

Secretary is extremely important position. I mean, it affects not only the U.S. economy, but the world economy, because it has responsibility over so much, including the public debt in the U.S., the U.S. economy, overseeing, you know, the U.S. Treasury market, the IRS, taxation policy, international, you know, economic diplomacy, financial market functioning and regulation. And so I'm really hoping that Scott will really surround himself with people knowledgeable in those areas rather than idle. Also pick people who are going to think through things rather than being capricious and keep

their focus on what's best for the U.S. economy and the stability of the financial markets. I'm also hoping that he educates himself on the importance of the Fed having independence when it comes to setting monetary policy. As you know, that was sort of discussed before during the campaigning. But I think people have been explaining why it's very important to have an independent Fed in terms of its monetary policy setting. You know, I think they're going to, you know, we don't know. There's a big uncertainty around where fiscal policy is going. But we know sort of the pillars that they're looking at in terms of immigration, deregulation, taxation and spending policy. And, of course, tariffs and trade policy.

So they have different cross currents, you know. But even before you think in terms of fiscal policy, if you think about the U.S. economy and where it's been going since the Fed began easing interest rates, you know, there's just a lot of positive momentum in the U.S. economy. You know, if you look at the data, growth is very strong. It's well above trend now. The labor market is solid. Inflation is, yes, it's down from its peak, but the improvements have slowed. You know, we were worried about risks to the employment side of the mandate.

And I think there's lower risks now on that side that things will deteriorate significantly. OK, how would you higher risk to inflation? So all those all those movements and the balance of risks and changes in the balance of risks suggests that, you know, the Fed wants to continue to bring interest rates closer to neutral, but they're going to have to get slower than they anticipated. You mentioned Fed independence. How would you expect a Treasury secretary to influence the direction of that and communicate about it so investors would be able to tell whether he's having an influence on the president-elect where that's concerned? Look, all presidents have been on monetary policy, some more than others, and that's perfectly within their purview. But things that could disrupt the Fed in terms of trying to influence policies and more than just discussing it, and I think the Treasury Secretary can actually talk to the administration and make sure that they understand that, yeah, it's okay for you to say things every once in a while about Fed policy. But there's a demarcation with which you can say something, but then actually try to enact things that will diminish the Fed independence. And so I think

that's important for people to realize that there is a reason that, and this is not just in the U.S., there's study after study after study, and the trend is towards more independent central banking because you really don't want short-run considerations to influence monetary policy, which, as you know, affects the economy over the medium and long run. So the Treasury Secretary can be that adult in the room, if you will, who can really talk about that importance, the importance of the Fed setting monetary policy. And, you know, yes, administrations can comment on it, but it's different than trying to control it. I wonder what you think the bond market and specifically

the yield curve is signaling right now, because you saw the 210 spread re-invert today. It seems like the Treasury secretary pick is what is pushing the long end of the curve lower right now. And we've got this 3-3-3 policy that Besant has talked about, which is cutting the budget deficit to 3%, driving 3% of GDP growth through deregulation, and then producing an additional 3 million barrels of oil. And so that seems to be factoring into the long end of the curve. But the shorter end of the curve and particularly the two year really seems to be driven by Fed

policy and this expectation that December is a coin flip and you could see the Fed, depending on data and the growth outlook, drop down to quarterly rate cuts. How do you see it? Well, I think the Fed, you know, well, yes, I mean, on the long end of the bond mark, and I think you're right in the sense that, you know, some of the concern there earlier was maybe that we would see some deterioration in the economy and that was fed in and in particular in the inflation part of the mandate that may be in there as well. But I think they're reading into it as being sort of maybe the growth aspect of the economy. And I don't mean the cyclical part of it, but I think the potential growth rate could be higher.

That remains to be seen. We'll have to see what the mix of fiscal policy is. You know, if you increase spending, but it's all on the consumption side and not on the investment side, that doesn't necessarily mean you're going to have higher potential growth. So I think it's a mix of things influencing the long end of the bond market. In terms of the short end, you're right. I think it's about Fed policy. And I think the idea is that, you know, given the developments in the economy and given where fiscal policy is likely to go, at least in the short run, right, that's going to add more to growth, short run growth, independent of what you think it may do in the long run. And that means the Fed will have to go a little bit slower than it was thinking about.

I think the basic idea is that you can still move interest rates into a more toward a more neutral stance, but you're going to have to go slower than you will. And I think the key thing here, you know how in real estate they say location, location, location? I think here it's going to be scenario, scenario, scenario, because there's a lot of uncertainty. You're going to have to really make sure your policy, monetary policy, is well calibrated to different scenarios that could happen on the fiscal side. All right. And I'm hoping that that's the analysis going on right now. All right. Yeah, perhaps so. We've got to leave it there. Loretta Mester, former Cleveland Fed president. Thank you.

Well, after the break, what do you get when you mix the CEO of a multibillion-dollar sub-brand with a two-time Super Bowl-winning quarterback? Well, hopefully a whole lot of money for charity. Up next, Jersey Mike CEO Peter Kankro and Eli Manning join us exclusively. Plus, United Wholesale Mortgage CEO Matt Ishbia, who also owns the Phoenix Suns, weighs in on today's drop in yields and the massive jumps for Fannie Mae and Freddie Mac since the election.

Stay with us. Welcome back. Private equity is showing more interest in franchise operators and their stable cash flow. Just last week, Blackstone announcing it will require, it will acquire a majority ownership stake in sandwich chain Jersey Mike's reported eight billion dollars. Joining us now exclusively are Jersey Mike CEO Peter Cancro and two time Super Bowl champion Eli Manning.

They are co-chairing Hackensack Meridian Health Foundation's one billion dollar be the difference campaign ahead of Giving Tuesday. Gentlemen, welcome to you both. I'm going to call this a combo special. Perfect. Peter, I'll kick this off with you. How did this campaign come into being and what are you hoping to realize through it? Well, we started with a local hospital, believe it or not, down in Point Pleasant, then Brick and then Jersey Shore and now Hackensack Meridian. The billion dollar campaign they keep adding to the best facilities, research, technology, so important in our community. So we're trying to raise a billion dollars to upgrade all facilities and to add all of that. And so, Eli, I'll ask you how you got involved in this, too, especially since I know you're very busy and have quite a portfolio of investments,

whether it's on the sports side, recent investment in golf, whether it's Omaha Productions and everything you're doing on the media side or even representing Caesars with the betting app. I could keep on going down the list. So how does this fit into everything you're doing in retirement from the Giants? Well, I've been working with Hackensack Meridian Health for a number of years into everything you're doing in retirement from the Giants? Well, I've been working with Hackensack Meridian Health for a number of years through a campaign called Tackle Kids Cancer. So we've been doing that for eight years and joined the board a few years ago.

And when this idea to do a campaign and be the difference for a billion dollars, and I knew Peter Cancro was jumping on board. I knew this was something that was going to make such a big difference for all the people in New Jersey. And just for my family, my friends, my neighbors in the community, giving back and make sure we all have access to the best health care. And so it's been unbelievable so far. We've already raised $630 billion and ahead of ahead of schedule. But this is a crucial time. We've got to keep working and know that, you know, if we keep keep doing what we're doing and keep the hard work up, we can we can reach our goal. Peter, I want to talk the subs business for a moment. Big move here with the investment.

You could have gone public with this company, would have made a big splash. Why didn't you? Ah, there he goes again. He's asking about that last time. So, yeah. So we, again, really trying to hope to talk about Hackensack Meridian, trying to raise those funds. Boy, the press, it was a little bit of press the last week or so, right? Oh, for sure. And we did talk about that, but also, you know, being CNBC, want to talk about the business that has helped you be able to be so charitable and just how you're thinking about the business environment, including this transaction. Sure. so i am working diligently close by mid-january and uh... again

you know i'm staying on as part owner and uh... will continue to run the company so look forward to that and kind of going out all around the country uh... the visit with the owners all right and you like to to the business uh... that helped put you in position to be charitable, you know, two-time Super Bowl winning quarterback with the New York Giants.

Giants now are two and nine, three winning seasons since you won the Super Bowl. But even your teams weren't invincible. What's the difference in being able to make those wins happen when they count? And what's your outlook on the team at this point? Well, it's all about putting a great squad together and everybody working together towards a common goal. And unfortunately, with sports, nothing is guaranteed. You could all work extremely hard and put in a great commitment, but there's still the last part of just the execution and having the right players, having everybody working hard. So I know that the Giants are committed to putting a great squad out there,

a great team. There's great ownership, and they have a history of success. Unfortunately, you can go through some tough times, and that's what they're dealing with. But I know they're doing everything possible to fix that that to change that to get back to the winning culture uh and i know you know you see that commitment every day and that's what keeps you confident that they'll they'll make the changes they'll make the adjustments and get back on track so eli i'd be remiss if i didn't ask for your thoughts on tommy devito aka tommy cutlets

well you know tommy tomm know, Tommy played great last year. He had the opportunity. Yesterday was a tough one with Tampa. But, you know, I think he's a good kid. He's trying hard. And, you know, I root for all the quarterbacks. This is a tough league. I root for Daniel Jones.

I talk to him often and root for him and his next stage, where he's going. But I'm rooting for Tommy DeVito and rooting for the Giants always to go out there and play well. And Peter. Oh, go ahead. Yeah, we're looking for Danny DeVito maybe to step in with that DeVito name and do a little commercial. There you go. We have to get that going. Let's get it going, Peter.

I like it. So, Peter, I am going to ask you one more business question as you do join us to talk about philanthropic efforts, and that is what does this now enable you to do to scale the business, to grow the business not only across the U.S., but maybe beyond the U.S. and continue to get that brand name and awareness out there? Yeah, the international markets are really the ones that are expanding, And we're hoping to announce a Europe expansion soon. We have a great expansion right now up in Toronto. So other countries are looking at. So the brand is growing and that's so important to get it out into Europe and hopefully advertise on the sidelines for some of the NFL games that come out there.

More and more games, right? And Eli, I mean, you've invested in a number of different sports here recently. Just your thoughts more generally on investing in pro sports, but also as we have seen the NFL finally greenlight some private equity to come into the league and invest in teams. Want to get your thoughts on that, whether it's a good thing, whether it's a bad thing, whether you yourself would consider getting involved as an owner. Yeah, I mean, I think it's a wonderful thing. And I think, you know, the NFL is very healthy right now.

It is leading the charge in live TV and live entertainment. And so there's always going to be, you know, the TV rights and people watching games and for Peter to do endorsements with Jersey Mike's for football games. And so there's all these opportunities that come in. So it's a healthy business. And I think the prices of these companies have gone up so high that some families want to take a little money off the table. They want to plan for their estate planning for keeping the family down the line. To be able to take a little off the table but not change a whole lot with the ownership or who's making the decisions is a great thing for them. It gives

people access to possibly invest in their favorite team. It can become a passion project or passion investment. For people to have that capabilities is exciting. And I think it'll just give opportunities for teams to continue to grow, help with their facilities, help around the stadiums, build a great environment around NFL games. It's already wonderful, but there's different ways they can expand it. And I think this gives these owners a capability and a possibility of doing that. All right. Eli Manning and Peter Cancro, co-chairing Hackensack Meridian Health Foundation's Billion Dollars Be

the Difference campaign. Thanks for joining us here on Overtime. It's a special time of year. We hope you consider Hackensack Meridian to give during this time of year. Thank you. Indeed. All right. We've got some breaking news on Kohl's. Courtney Reagan has the details. Courtney. Yeah. Hi, John. So Kohl's just announcing a CEO transition. Current CEO Tom Kingsbury will be stepping down from his role effective January 15th. Ashley Buchanan, who is the current CEO of Michaels, the craft store, will be taking over that position effective January 15th. Ashley Buchanan, who is the current CEO of Michaels, the craft store, will be taking over that position effective January 15th. He previously, Buchanan, held roles at Walmart and Sam's Club, including chief merchandising officer for Walmart e-commerce. So a well-known name in the space. Of course, Kohl's has suffered over the last several years and failed to resonate with

shoppers. It's had negative comparable sales for 10 straight quarters. Kingsbury wasn't able to turn them around. He will be remaining on the company as an advisor to Buchanan until May. And then at that point, he will also be stepping down from the board and the board will just be one less seat. Interestingly, Ashy Buchanan is on the board of Macy's right now. So he's going to have to vacate that seat to take this new role as CEO of Kohl's. John Morgan, back over to you.

I'll say. Court, thanks. Thanks. Well, time for a CNBC News update with Seema Modi. Seema. Hey, John. Senior White House officials tell NBC News a ceasefire deal between Israel and Lebanon is moving closer to an agreement. While at a briefing earlier this afternoon, White House National Security Spokesman John Kirby said the talks were productive, but said, quote, nothing is done until it's all done. The developments come as the Israeli prime minister's office said earlier today the cabinet will discuss the proposal tomorrow. The Democrat National Committee will elect a new party chair in the beginning of February, which would allow the

Democrats to have a new chair in place just after President-elect Trump takes office. And the contest is expected to attract several high-profile candidates, including two already declared their candidacy, former Maryland Governor Martin O'Malley and Minnesota's Democratic Chair Ken Martin. New York City hotel rates rising to an average of $417 per night in September. That is the highest monthly rate ever recorded in the city by analytics company CoStar since it began tracking in 1987. The only place more expensive with hotels in September was Maui. Guys. All right, Seema, thank you. Well, fortunately, I don't have to stay in a hotel in New York. Well, after the break, the U.S. versus the rest.

We will discuss the three factors that have been weighing heavily on stocks outside of the U.S. and if they show any signs of abating. And later, T. Rowe tech portfolio manager Dom Rizzo gets you ready for a big day of technology earnings. That's coming tomorrow, including workday, Dell and analog devices. Over time, we'll be right back. Welcome back. The rally in the U.S. is gaining more steam today with the Dow closing at a fresh record. But the picture is different abroad.

Mike Santoli returns with a look at what's dragging overseas stocks lower. Mike. Yeah, Morgan, the U.S. definitely has pulled away again from the rest of the world. This is the ACWX ETF that follows all stocks in the world, excluding the United States indexes. You see, it's kind of testing its uptrend in the form of its 200 day moving average. Now, there actually had been a pretty good comeback for rest of the world stocks, along with the broadening of the U.S. market and some life in small caps and other value sectors. But that has been succumbed to, I guess, fears, not just that things like Europe are very weak and China's kind of comeback plans

have left a lot to be desired, but obviously the threat of tariffs and the idea that the Fed might not cut as much and therefore the dollar is much higher. Take a look at the dollar on a three-year basis. It really did rush right back up to what I would basically call the top end of a two-year range. It has curled a little bit lower from here, along with Treasury yields. So maybe we could get some relief on this score. But in general, the deck seems stacked against non-U.S. stocks, if people are correct in their outlook for how policy is going to play out in the macro economy, John.

All right, Mike, thank you. I wonder what's going to happen to U.S. stocks, too, from these lofty heights. Well, up next, United Wholesale Mortgage CEO and Phoenix Suns owner Matt Ishbia on whether the pullback in Treasury yields could spark a comeback in home sales. We'll be right back. Welcome back. Let's check on some overtime movers. Agilent pulling back despite beating on earnings and revenue, though full-year guidance was a bit light. Zoom beating on both lines and giving solid guidance. And Kohl's is lower on news of a CEO transition.

CEO Tom Kingsbury is going to step down in January to be replaced by Michaels CEO Ashley Buchanan. Up next, United Wholesale Mortgage CEO, Matt Ishbia, on his read on real estate under a second Trump administration. And if he sees any relief from a high mortgage rate, stay with us. Welcome back. A lot of tech earnings on the calendar tomorrow, including analog devices before the bell and Dell CrowdStrike and HP after the close.

Now let's bring in T. Rowe Price Portfolio Manager, Dom Rizzo. Dom, welcome. Software I want to talk about. You point out that since the beginning of June, the IGV, that's the software ETF, up 35%. A lot of smaller software was struggling for a long time and really just started to pick up maybe middle end of summer. What does that mean and could it run for longer yeah first off thanks for having me guys really really great to see you again we we talked back in june about how we could see this kind of software reversion trade happen especially relative to semis and that's what we've seen happen like like you said, up over 30% since June.

And what's happened, the software index has kind of re-rated from roughly seven times sales to nine and a half times sales, kind of a function of a few things. Number one, we're starting to see real AI use cases driving accelerating revenue at the likes of HubSpot, ServiceNow, SAP. We're seeing Microsoft Azure growing 31% with AI, 21% XAI, and AI being the fastest business to over $10 billion in Microsoft history. Now, if I look at those valuations, though, relative to history for software, they're starting to get a little frothy. If we go back to 2021, the software index kind of peaked at roughly 11 times sales. But that was at a vastly different interest rate environment. Interest rates were 0% back then, and now we're closer to 4.5%. So I think we could continue to see some momentum, but we're certainly at the higher end of that valuation range. Even for some of the smaller software names that really, I mean, ServiceNow has been running for a long time, but there are a lot of names, you know, Bill, formerly Bill.com comes to mind that wasn't.

I mean, because they're coming off some low levels. Yeah, they are coming off some low levels. I think the question really in software is how much is AI going to accelerate your revenue growth, right? And I think the dichotomy that we've seen between the large caps and the small caps is that AI is really proving to be a sustaining innovation for those large cap companies. It's making those businesses better because the enterprise softwares are the conduits in which AI will flow into the enterprise. So yeah, I kind of am actually more attracted to semis now and particularly the industrial semis relative to those software names. I'm glad you brought that up because we saw the industrial sector and the S&P trading at a record

high today. We're seeing, and I'm having a lot of conversations with folks about the possibility of an inflection in manufacturing and industrial activity here in the U.S. that maybe as the Fed continues to cut and the Trump administration comes into power, that you could see that part of the economy begin to reignite. So to hear you talking about industrial semis, they've obviously been beaten down for quite a while. Why is now the moment? Well, I still think we may have a quarter or two of some squishiness because this inventory correction that we've seen post-COVID has really just been brutal, right? Lead times expanded so much during COVID, everyone double ordered,

and then now we've seen all those orders getting canceled. So we could see a couple squishy quarters still ahead. All that being said, the valuations are really reasonable. Look at a name like NXPI or Infineon, trading at kind of mid to high teens earnings multiples. Inventory, though there's a ton in the system today, I think we're kind of coming to the end of that inventory cycle and like you said I think we have an accommodative fed fiscal policy to support and actually potential more manufacturing in the U.S. which can drive some of these auto and industrial semis higher. Okay.

Dom Rizzo thanks for joining us. Thanks for having me guys. Great to see you again. Up next, an inside look at the mortgage market with United Wholesale Mortgage CEO and Phoenix Suns owner Matt Ishbia. Stay with us. Overtime, we'll be right back. Welcome back. The 30-year fixed mortgage rate falling below 7% today. These are the lowest levels since the election. Meantime, Fannie Mae and Freddie Mac have been soaring since Trump's victory, both up more than 150%. as investors bet on a potential privatization push from the new Trump administration. Well, joining us now is Matt Ishbia, United Wholesale

Mortgage Chairman and CEO and owner of the Phoenix Suns. And Matt, it is great to have you back on the program. I'm glad to be here with you. So I do want to talk about what you are seeing in the mortgage market, because the last time you joined us was back in September, right before the Fed began this cutting cycle. And you said you expect to see a surge that you were already seeing a surge in refinancing activity. I mean, you've come through your third quarter, biggest production quarter in three years. What are you seeing now, especially as rates? Yes, they're back below seven percent, but still stubbornly high here. Yeah, no, absolutely. So we talked before, you know, when the election happened, we expected some things to happen after the election. We talked even before Fed cut rates

the first time, but rates were actually lower than they are today. But with what's happening now, some certainty after the election, where we're seeing the Feds going, we expect rates to come back down. Rates were 30 or fixing the fives for a little while. I think last time we talked. And so they've went up. They're coming back down a little bit. We expect them to come down 2025. We think will be a great year. But there is refinance activity, but it's definitely not as as robust as it was back when we talked last. It's interesting. Glenn Kelman from Redfin was on. I was speaking to him last week on the network, and he was saying that looking at the housing data, he is seeing green shoots for housing activity and sales, even as rates have been at these elevated

levels. Is that what you're seeing, too? What does it take to unlock that when you do look to 2025? We do talk about a strong growth outlook and a new administration coming in. Yeah, well, definitely the new administration, I think, is definitely a strong economy. A lot of great things that are going to come from it, you know, from home inventory. Inventory is up, you know, significantly higher than it was a couple of years ago. So more houses for sale. Rates are a little bit lower, not as low as we all like, but we're seeing it trend in the right direction. And so I think with certainty now knowing who the president is going to be, a lot of the cabinets being picked,

like we see that 2025 rates will come down. Do we come down to the fours? Absolutely not. Do they come down to the high fives, low sixes? We think so, which I think will create a lot of refinance activity, but also a lot of purchases, which is good for everybody. Okay. What's the nature you expect of that refi activity if we hit the level that you expect? What kinds of products are people refinancing into? It's going to be simple. Government and conventional loans. Fannie Mae, Freddie Mac, FHA, VA loans, you know, rate and term refinances. Don't forget, you know, a lot of people say, well, why would people refinance it? The rates are 3% when they are. Well, the last three years, people have been doing loans at 7%, 7.5%, and 8%.

And so if you get the rates at 6.5%, 6.25%, or 5.99%, all of a sudden there's three years of inventory, three years of people doing a couple trillion dollar a year mortgage industry, four, five, six trillion dollars that could refinance. And so we're seeing a lot of that, you know, start to shake loose right now. Not as much as we saw a couple months ago, but we feel it will come back in 2025. Fannie Mae has over $4.3 trillion in assets. It's the largest company in the U.S. It's the fifth largest company in the world by assets. I mean, Fannie and Freddie are such a big part of the backbone of the U.S. mortgage

market. We've seen those stocks rip higher and expectations that we see reform, maybe even privatization of the GSEs. What are you expecting? You know, it's going to be interesting to see what President Trump thinks and what the new FHFA director thinks. And when they make those changes, you know, I think it was a big part of Trump's administration last time. Will it happen? Who knows? You know, it's a it creates a lot of money for the government right now. But I think the most important, whether it becomes private or not, the most important thing is it actually has to create some competition. Because when Fannie Mae and Freddie Mac are competing, they're innovating. They're coming up with new products, which helps the American homeowner.

If they do that, that's even better than them being private. Now, they'll probably be private and that. But either way, them innovating, them coming up with new technology, new products, new rates, new ideas, new things, that stuff really wins and it helps a lot of consumers. And, of course, you yourself are doing things like deploying AI into your business as well when it comes to the mortgage industry. I do want to shift gears a little bit here, Matt, because as we mentioned, you do own the Suns.

Kevin Durant, Bradley Beal, both expected to return to the lineup come Tuesday. What can you tell us about it, and how are you thinking about these players long-term? Yeah, I mean, those are two of our best players, obviously. It's much better when you're healthy and you've got your players playing. I think when we had all of our guys out there, we were 8-1, and the thing is, it's the 82-game season. We feel great about our team.

We love being out there in Phoenix. The fans are great for the Suns and our women's team, the Mercury, and we've got to compete. But, you know, winning a championship is hard, but we're going to try to do our best and compete at the highest level. And those guys make it easier. I always ask you a media question. I'm going to do it again here.

And that is, we've seen NBA TV ratings down. Are you concerned? Not at all. NBA TV, NBA players, like, it's the best basketball in the world. People are watching it throughout the world, honestly. And so a little tick down, a little tick up. I don't get too excited either way, but I definitely feel great about the NBA this year and what's happening going forward, and I'm proud to be part of it.

Matt Eshbia, great to have you on the show. Thanks for your insights. Thank you. Of course, John, it will be interesting to see. We talk about animal spirits in the market and having this conversation and what it means for housing, what it means for the mortgage market. I mean, it does remind me of what Glenn Kelman from Redfin did say last week about animal spirits, even with rates as high as they have been. But the GSEs is going to be one to watch, I think.

We had, you know, we've had some folks on who have been pretty skeptical about just how much can be done on that front. Nonetheless, the markets are reading everything, It seems glass half full right now. Yeah. For the people at home, we're looking to buy a home. They just want to, I guess, be sure that they continue to have access to the capital that they need to do that at a time when, boy, I mean, if you don't own a home, the prices are so high. We end up talking about inflation in one form or another all day long here. But speaking of, we'll see how much money consumers have left to spend on discretionary items a little later this week. Ooh, holiday shopping. Here we come here, Black Friday. You know, record close for the Dow. We got a record intraday high for the Russell 2000, first time we've seen that in about three years.

So we'll continue to watch how this rally continues to broaden out as we do get more tech earnings right here in overtime tomorrow. And start getting those Christmas lists and holiday lists together. Yeah, Dell will be a key one with this AI read. So we will be watching that here 24 hours from now. That does it for us here at Overtime.