Closing Bell - Closing Bell Overtime: Flexport CEO On A Shortened Holiday Sales Season; Mark Mobius On Global Investing 10/14/24

Episode Date: October 14, 2024

Nvidia notched a record close today, along with the S&P 500 and Dow. We break down what the next catalyst – or trap – could be for markets. Bernstein’s Stacy Rasgon on if Nvidia has more room to run. Famed emerging markets investor Mark Mobius breaks down the top opportunities he is seeing right now, along with the risks he sees around the globe. Sam Poser, Williams Trading retail analyst, on what lays ahead for new Nike CEO Elliott Hill as he takes the reins. Flexport CEO Ryan Petersen on a wild time right now for logistics and shipping companies: coming out of a major port strike and looking ahead to less time for shoppers between Thanksgiving and Christmas. 

Well, that bell marks the end of regulation. Snowflake ringing the closing bell at the New York Stock Exchange. Pizza to the polls and Slice doing the honors at the NASDAQ. And we got record closing highs for the Dow and the S&P 500 as the bull market officially turns two years old. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Fort in San Francisco today. And I'm Morgan Brennan at CNBC headquarters. We've got NVIDIA just setting a record closing high as well with other chip names also seeing big gains today. Semi's analyst Stacey

Raskin will join us to talk about if that group could power the next leg of this rally. Plus, another volatile session for Chinese stocks after comments this weekend from the country's minister of finance. We'll talk to global investor Mark Mobius about his thoughts on putting money to work in China. But let's begin with the market and these record closing highs for the Dow and the S&P 500. Let's bring in Kevin Mann of Hennion and Walsh. Kevin, good to see you. Wow. I mean, S&P now up like 24% year to date.

If your investment horizon is, say, five years or more, can you continue buying into the S&P, given that we've had maybe some concerns about it being top heavy, NVIDIA today a key example, for a long time now, but it's kept going higher. If you look at over the next one in two years, the markets do have history on their sides. We'll look over the next year. The Federal Reserve has cut interest rates 20 times historically when the market was trading at or near all time highs, as they did back in September. And in all 20 cases, the market was higher 12 months out by an average return of 14%. Then I look out over two years. If you look out over two years right now, we've done the research.

And going back to 1946, there have been 12 bull markets with an average duration of 5.3 years and total return of around 177%. We're two years into this bull market run and about 65% in in terms of the gains. So that suggests to me, John, that we may have at least another two years to run in this bull market if in fact we hit averages. Of course, this time could be different. Now, in the near term, given how Fed dependent the equity markets have been, is there any danger from how strong the data has been over the last week or two, given, you know, the 50 basis point cut that we just got? I wonder if there's any cutter's remorse. Sure. Over the shorter term, the picture is a lot more foggy to me. We have uncertainty over

the election. We have uncertainty about what's happening overseas militarily. We have uncertainty with what the Fed's going to do after their meeting in November and December. All that creates the potential for short-term bouts of volatility. However, I think those short-term bouts of volatility are going to be met by cash coming off the sidelines, helping to protel the markets even higher. And I mean, Kevin, it does seem like there's a little bit of a chase happening here with maybe some investors that were caught off sides with this market rally. You've got a Dow closing above 43,000 for the first time, but volatility still elevated. The VIX still just below 20 here.

I realize the bond market's been closed because of the holiday. What is the next sort of key catalyst, especially given the fact that valuations are stretched? Is it really just the focus purely on earnings now? A hundred percent. We have to look at valuation, the P.E. multiple. Price is one. We've seen prices grow dramatically since the beginning of 2023. Earnings have been pretty good. If you look at the blended earnings forecast for Q3, it's 4.1 percent right now. If that holds, that'll mark the fifth consecutive quarter of year-over-year gains in terms of earnings not knocking the cover off the ball but good for us to really get valuations more

attractive we need earnings to grow even more or prices come down most investors would prefer earnings going up than prices coming down fortunately that is what's forecasted over the balance of q4 into q1 because now we're going to see the other non-magnificent 493 stocks start to grow their earnings, whereas leading into this rally up to this point, it's really been the MAG7 driving earnings growth. And MAG7 definitely drove some of the gains we saw today with the S&P at 46th record high of the year, which is pretty amazing, and semis as well. But it was also utilities, real estate, financials that helped here. It looks like every S&P sector but energy actually finished in the green on this Monday afternoon. So what do you like here? Do you

continue to focus on tech? Do you continue to rotate to other sectors, do a little bit of all of the above? I don't think you abandon tech completely, but there are three areas of the market that we like, regardless of wins the election, given the outlook for lower interest rates over the next two years. One is utilities. Utilities are generally more defensive in nature. They can hold up with these short-term bouts

of volatility that we expect. They pay a good dividend to help offset lower yields in the future. And they're a backdoor play into the AI revolution. Beyond that, we also like small cap biotech from an M&A perspective. offset lower yields in the future, and they're a backdoor play into the AI revolution. Beyond that, we also like small cap biotech from an M&A perspective. And who can argue against aerospace and defense with all the money and investment that's going into that area? Definitely. And of course, again, maybe perhaps a hedge against geopolitical uncertainty that we're talking about.

Without a doubt. Kevin Maughan, thank you. Thank you, Morgan. All right. Well, NVIDIA also setting a record closing high today, up 2.5%, as hype around the company's AI chip demand continues to soar. Other names in the space also rallying, like Arm Holding, Marvell, ASML. Joining us now is Bernstein Senior Analyst Stacey Raskin. Stacey, of course, we're going to ask you yet again a question about NVIDIA here, but trading at record highs comments from jensen huang the ceo over the weekend about the strength of the moat specifically where

inferencing and software is concerned i imagine you still got a buy on this name right you do i think i think i've said this before i think at this point you still have to be there um demand is off the charts. Numbers are going up. I think that's pretty clear. And then when you got Jensen, I think on your channel talking about insane demand, I mean, they're gonna be selling everything

that they can make. Yeah, I think you have to be there. Okay, we've also got more proxies into, or bellwethers, I should say, into this AI semi-REID when we get ASML and Taiwan semi-earnings later this week? How much do those matter here? I think they'll matter. I mean, although I don't anticipate anything on the AI side as being unusual.

You know, the other proxies everybody watches for is like when the hyperscalers report, the CapEx outlooks and those sorts of things. So just general signs that demand is strong and that customers are continuing to adopt. And again, everything we can see, at least at this point, suggests that that's still a clear runway. It's clearly still happening. Stacey, anything catch your eye about the difference in the trajectories of AMD and NVIDIA? Just over the last few sessions, we just had Lisa Su on last week after we had Jensen on overtime the week before. And really, NVIDIA has continued

to surge since his insane demand comment. But really, it was kind of a sell the news-ish reaction to AMD's news. So AMD had their event last week, and they announced their next generation part. It's called the MI325. It's basically the MI300 with more memory, which is fine. And they showed some benchmarks on it versus NVIDIA's, what they call their Hopper, their H100 part, their current version. And, you know, AMD was sort of suggesting it was superior. You always have to be a little careful with those self-reported benchmarks, but fine.

The issue, though, is that Hopper was introduced, what, a year and a half, almost two years ago, and you got Blackwell, which is NVIDIA's next generation part, which is coming imminently. And, I mean, it's going to blow the doors off of anything that's out there. And by the time NVIDIA, or by the time that AMD has something out that you could even argue is even partially competitive with Blackwell, which is the MI350, it's probably the end of next year. By then, we'll all be getting ready for NVIDIA's next generation part. Long story short, the gap between when NVIDIA is introducing capabilities,

when AMD is introducing them, it's still pretty wide. It's at least a year, maybe longer. And that's just on the chip side. That ignores everything else around software and systems and ecosystem and everything else that you need to get broad adoption. And so I think that's why you saw the sell the news with the AMD event. It wasn't like it was a bad event. It was fine. It was good. It's good that they're putting it up. But compared to what they're fighting against, it's tough. It's NVIDIA's game to lose at this point. They're not showing any signs of losing it.

Now, at the same time, NVIDIA is trading more than 10 times the market cap of an AMD. So, you know, if AMD does pretty well, I wonder when's the last time we saw a moment like this where so many of the chip players are making more of a platform argument up front. You really have to think more about software. You have to think more about these systems. You know, Lisa Su, AMD just made this acquisition, you know, intending to make this acquisition of ZT about these systems. You know, Lisa Su, AMD, just made this acquisition, you know, intending to make this acquisition of ZT in that direction. You can't just think about what are the performance metrics on this newest chip, right? And that's absolutely true.

It's not like anybody can sort of cherry-pick specific examples where you're better or worse than anybody else. But it really does come down to ecosystem and adoption. And again, you can get given the uh the the capabilities that nvidia has put in place i mean you can buy their stuff and you're up and running in days and with a lot of their competitors stuff it could be weeks or months to get everything up and running properly and like time is money in this in this industry it absolutely matters and you ask like whether other companies have like about this. I'd say software and ecosystem have been increasingly important pieces of semiconductor sales for a long, long time. And I mean, everybody sort of looked back at the days with Intel and Microsoft.

They formed what was called the Wintel ecosystem that was pretty dominant in its days for a long time. It's starting to crack now. But these sorts of things, once they get established, they can last for a long, long time. And today, the ecosystem of choice is NVIDIA. So everybody else is talking about talking about Wintel. I guess it's a civil war making me feel like I got some, some miles on the Stacy Rasgan. Thank you. Let's turn now to Mike Santoli at the New York stock exchange with a look at where money is flowing under the surface as these major indices hit record highs. Mike? Yeah, John, I got a few more miles on you than you do,

but I felt that as well. Take a look here at industrials relative to tech. These are the S&P 500 sector group ETFs tracking each one of them. Very, very similar point to point. You see the wilder ride in tech. it's been fascinating to see how tech dominated the first half of this year uh it did take a reset lower kind of came back into balance with the rest of the pack but industrials have been very very resolutely to the upside most of them now there's an ai component here if you look at some of the winners year to date it's eaten it's trained technologies that have roles in the uh in the whole kind of power generation fueling the data center type of stories uh but it shows you that some core bellwether It's eaten its train technologies. They have roles in the whole kind of power generation,

fueling the data center type of stories. But it shows you that some core bellwether areas of this market continue to kind of click in the right direction and outperform the S&P 500. Now, take a look at the long-term Treasury ETF, the TLT. Yes, the cash bond market was closed today, but the ETFs did trade. And so what you see here is now when the price goes down of long-term treasuries, it means the yields are going up. So you've seen this uptrend in the price that we've had for a little while here going back to the end of last year. And what you'll basically see is maybe we've broken the uptrend a little bit.

So we're getting to a moment of truth level with yields, whether it's the 10-year and the 410, 420 range or longer-term yields a little higher. You're going to have to ask the question as to whether something has changed and if inflation expectations are rekindling or if it's just the economy is better than we thought it was going to be and the Fed's going to have to do less to preserve the soft landing. So I just want to put that on the radar, even as the bonds themselves did not trade today, John. Mike, back to that first chart. Correct me if I'm wrong, but it seems like in previous major technology cycles, if I'm talking PC adoption or the dot com boom, usually there's a trough of disillusionment even for the stock market before the benefits of this technology shift accrue outside of technology in an enduring way, right?

Or not necessarily? I think that's definitely the case typically. I just wonder how much is typical right here because in prior technology waves, it really was not about building, you know, literal buildings and filling them with big, heavy things. And it was, you know, so it seems as if there's a little more of a hardware machinery aspect to this boom. So I'm not saying that these things are just moving on the same dynamics in terms of AI investment. But I do think there's something about this current boom, which led by huge companies, not VC-funded startups, and also just sort of benefiting real-world, you know, earth movers and cooling systems,

that seems like it's a little bit of a wrinkle relative to software-led innovation in the past. Yeah. It does raise the question whether you're starting to see an inflection point in industrial activity as well. I mean, Fastenal last week talked about near-term demand inflection, speaking perhaps to what you're talking about here with this infrastructure build-out. Mike, thank you. We'll see you later this hour. Coming up next, global investor Mark Mobius on the big volatility in China's market and what he makes of Goldman's new call upgrading its forecast on the Chinese economy. And later, there's a new boss in Beaverton as Elliot Hill officially fills the shoes at Nike. Maybe we should say sneakers. But does that mean you should buy

the stock? We're going to talk to an analyst about the changes that could get the company back on track. Overtime is back in two. Welcome back to Overtime. The Dow and S&P closing out records and Chinese markets largely positive after the country's finance minister signaled stimulus is on the way, though the announcement did lack details. That was over the weekend. Those comments led Goldman Sachs to raise its Chinese GDP forecast to 4.9%, though. Joining us now is Mark Mobius.

He is chairman of Mobius Emerging Opportunities Fund. Mark, it's great to have you back on the show. I mean, you've been on in recent months and you've said you thought China was, again, investable. So I want to start with your thoughts and what we did get from the minister of finance over the weekend, because we really didn't get much in terms of details around fiscal stimulus, but we did get a promise that there will be more specificity at the end of the month. Meant, but we did get a promise that there will be more specificity at the end of the month. Meantime, we did get some economic data, including CPI, that was disappointing. So still investable? It definitely is still investable. And the reason is that the government is determined to push this market up and to push the economy up. So what they're doing is having a vast change in the way states and provinces can borrow.

So we're seeing a big increase in borrowing by the various entities all over China. And the Chinese government is giving them much more leeway. Probably the most significant thing that happened is when Xi Jinping said, look, we're not going to hold you officials responsible for your mistakes as long as you are trying your best to push the economy upwards. That's a big, big change in attitude by the government. So I believe this bullish sentiment is going to continue. We've already seen a correction, as you know. We've seen this big 40 plus increase in the index. Now it's come down by about a quarter. But I think we're still going to be in a very bullish environment in China. So maybe instead of using the term bazooka, which investors have been using for the better part of,

I don't know, two or three weeks, maybe we should be using something more, I don't know, a steady drip or a river of stimulus? Probably river is a better description. Yes, a river of stimulus by the government. And by the way, this is a sort of a self-feeding situation because what happens when the index goes up to the extent that it did is it draws in more and more investors uh remember that half of investors particularly in emerging markets are index investors they buy etfs they buy index funds so when the index goes up they're forced to put more money into China.

So you're going to see more foreign money going to China in addition to the local money. Of course, the local money is really what drives the market. Mark, I'm curious what this does, this move in China and change in sentiment around it to Asia funds in general? Because, yeah, they've got China in them, but they also very intentionally have stuff that's not China, often ex-Japan. Is that a way to hedge away from being too China-focused, given some of the governmental uncertainty there, but still lean into some of the follow-on effects of China getting that stimulus?

Well, you know, India has been doing so well. It continues on this incredible bull market, and we think that will continue. Of course, India is growing at 7%, 8% in incredible growth in the country. But as I mentioned, you know, when you have the China index going up the way it did, it impacts the emerging markets index. China represents something like 30 of the index that means more money has to go into the index which means more more money goes into places like thailand vietnam korea all these other emerging markets and of of course, India. So, yes, you have the rising water will rise all boats.

You're going to see an increase in money going into emerging markets generally. But what I mean specifically is on those Asia ETFs and some of those funds, do you end up with a little bit of a built-in hedge because they're not just focused on China? Or is it all going to get, you know, wagged by the dog in this case? No, I think it's a very good point. It's always good to be diversified. So if you're in an Asia fund, you're probably better off, you're safer than being in just China, because you're getting India, you're getting other countries in Asia that are going very well. Don't forget, if you consider Taiwan part of China, Taiwan is doing exceptionally well.

Even before the big downturn that we saw in China, Taiwan continued to do very well. So it's a good idea to be diversified in an Asia fund, which includes all these countries. Mark, meantime, looking to the Middle East, we had news over the weekend that the U.S. is preparing to send a THAAD missile defense system, which is made by Lockheed Martin, to Israel, as well as 100 American troops to operate it, which is a significant development in of itself. You have China war games near Taiwan right now, too. Geopolitical risk seems to be very heightened here. How do you couch for that as an investor, whether it is either invested in the Middle East or in other parts of the world or even potentially other asset classes?

Well, there's no question, you know, if you're diversified, let's say you're in Brazil, you're pretty far away from any big upheaval, military or otherwise. But interestingly enough, I'm here in Dubai, and Dubai is booming. Now, probably one of the reasons it's booming is because of the other things going on in the Middle East, so people are seeking a place, a haven of safety. But you're going to find these pockets in different parts of the world where you're going to get safety and growth as well. India is probably another good example of that. India is not really involved in any of these geopolitical situations. So you are going to find these various various very interesting, safe places to be.

All right. Mark Mobius, love having you with us. Thank you. Thank you. Well, Nike is the third worst performing stock in the Dow this year, but will newly installed CEO Elliot Hill usher in a new era for shareholders? We'll talk about three changes he could make to put the stock back in the winners column. We'll talk about three changes he could make to put the stock back in the winners column. Plus, Flexport CEO Ryan Peterson is going to join me here in San Francisco with a look at why the port strikes and Atlantic hurricanes have changed the game for retailers ahead of the holiday shopping season. Over time, we'll be right back. Big change for Nike today.

Elliott Hill officially taking the helm as CEO. Shares moved up when the announcement was made in September that he was coming, but Nike's still the third worst Dow performer this year. Joining us now, William Trading's Sam Poser. Sam, you say there's three things that elliot hill should do off the top install leaders you know the business products out of the workshop that might have been overlooked i could get things going quickly and get more a employees with uh... knowledge

back which was more important i don't think there's any one thing you need to do i mean i think that you know if you get your people motivated and with a plan i think you know you're gonna that's gonna get the ball rolling all of this is gonna take some time regardless but without you know the initial reaction we've heard from the nike folks and even from people that have left the left nike was exceptionally positive and i think that roll right over into uh... better results for quickly hook you know what quickly means is uh... right

sequestered remains to be determined so sam how soon before we know whether the wholesalers the partners that nike sorta uh... abandoned are just gonna to forgive Nike and whether that piece of things might turn around relatively quickly? Well, Nike is still everybody's potentially largest customer. So I don't think forgiving is the question.

The question is, is Nike going to put the necessary resources against their whole their the wholesale partners that remain which they didn't do even with those when those partners were um when when when many accounts were cancelled for all active better term now that they're potentially bringing some of those accounts back on board. Now, you know, how are they going to manage that with product and resources? And the recent announcement that Tom Petty is going to be the GM of North America, you know, and based on our checks, you know, the conversations that are occurring all have already improved pretty much across the board the problem is there's still not enough good product to get everything to work and remember that even with Nike

struggling at a lot of these accounts it's still their largest vendor and they still have lots of leverage with both existing and those accounts that would love to have them back yeah Sam you just you just hit on my question for you, and that is how much hinges now on the product pipeline and perhaps with it, the talent pipeline as well, especially when you do see a lot of Nike veterans who are potentially going to be coming to the table here. Oh, I mean, I believe this. I've written about it. I cannot prove it, but I believe that given Nike's focus on Air Force Ones, Dunks, and Jordan Ones, there was probably a good than the previous administration gave it credit for, and we can potentially commercialize that more quickly.

Now, that range is probably 12 to 18 months. The 12 months would mean something that's in the sample room. They can get made show it to people and then have it six months later but they've already written orders through or not sober now so through march of next year that puts you probably you know into hot into fall next year

you know on the short run in six months from now the of the retail to start to see that product, get a first look at it, and then we'll start getting feedback on that. So we'll sort of know changes in the air probably within the next six to nine months. But how that shows up in the numbers will take a little bit longer than that. Okay. The takeaway, it's going to take time. Sam Poser, thanks for joining us with a buy rating and a $97 price target on the stock. Well, it's time for a CNBC News update with Julia Boorstin. Julia. Morgan, irresponsible, disproportionate and destabilizing.

That's what the Pentagon is calling Chinese military exercises today around Taiwan. China used an aircraft carrier, several ships and 125 aircraft as it simulated sealing off key ports around the island. The drills came four days after the Taiwanese president said in a speech that China had no right to represent Taiwan. China made clear that the exercises were punishment for that claim. IV supplier Baxter International, which makes an estimated 60 percent of the U.S. supply, said today it started to import IV fluids from two international 60 percent of the U.S. supply, said today it started to import IV fluids from two international plants. As the U.S. faces an IV shortage following the Hurricane Helene flooding of Baxter's North Carolina plant. Baxter said last week it was

working to bring the plant back online in stages. And earlier this afternoon, NASA's Europa Clipper launched from Cape Canaveral atop a SpaceX Falcon Heavy rocket on a mission to see if a hidden ocean on one of Jupiter's moons can sustain life. It's the largest robotic space probe ever built by NASA, and the probe will take five and a half years to reach Jupiter. Back over to you. Yeah, this is a big mission. Julia Boorstin, thank you. Well, Jupiter and Mars, we're going to go closer to home here. SpaceX pulling off a feat once considered impossible, catching and re-landing Starship's booster rocket, bringing the company a major step closer to fully

reusable rocket system. Now, SpaceX launched Starship on its fifth test flight early Sunday morning from South Texas, recapturing that 232-foot-tall super-heavy booster using launch site's chopstick arms. You're seeing that right there on your screen on the tower to catch the vehicle. This was a feat that was met with SpaceX employees' roar. Now, Starship is the most powerful rocket system ever built. It is Elon Musk's solution to bringing humanity to Mars, and it's contracted with NASA to carry astronauts to the moon's surface in the coming years. Starship is designed to be fully and rapidly reusable. This is the holy grail of rocketry, which will bring launch costs down exponentially and open up the cosmos to commerce.

Meantime, SpaceX not dodging political controversy in this election cycle either. This is after the U.S. Space Force requested more frequent launches from California's Vandenberg Space Force Base, and the state's Coastal Commission just a couple days ago denied it, with some commissioners bluntly expressing concern about Musk's politics. John? Wow. Yeah. What an amazing thing achieved over this weekend. We all were transfixed by the video. Well, after the break, don't buy the hype on buybacks. Mike Santoli is going to return with a surprising chart on the underperformance of companies that repurchase their shares. And check out the big moves in crypto today. Bitcoin up about 5 percent, Ether up even more, and crypto related equities like Coinbase and Block getting a boost as well. We'll be right back.

Welcome back. Mike Santoli returns to lay out why you shouldn't believe the hype around buybacks. Mike. Yeah, Morgan. I mean, there's been a lot of oohing and aahing over the fact that S&P 500 companies have announced close to a trillion dollars in buyback authorization so far this year. That would basically be the most ever exceeding 2018. But you have to consider what that means in terms of how big the stock market is. Right. So a trillion dollars isn't what it used to be, right? Now, this shows through the middle of this year, quarterly buyback activity as a percentage of S&P 500 market cap is from Standard & Poor's. And you see we're actually kind of low on this scale as things go here.

You see 2018 or so, that's when the stock market was about half as large as it is right now, and you had a similar amount of buyback activity. This pre-financial crisis was the heyday of companies borrowing very, very heavily and buying back big loads of their stock. And that sort of propped up the market going into that. So I'm not saying it's not a positive in aggregate. Certain companies certainly make a lot of hay out of it by reducing their share count and still have earnings grow. But in general, to me, it's just a diminishing influence on the overall stock market. Now, take a look at the performance of stocks of companies that are buyback achievers, the ones that have very, very consistent long

records of buying back a lot of their shares. And it's done fine at 50 percent over two years, but trailed the S&P 500. So there's no magic in companies in general that simply repurchased a lot of their shares. There's probably also a little bit of nuance here, too, because a lot of the companies that throw out hefty amounts of cash and are therefore doing things like issuing buybacks. I think about defense companies, for example, or some of the other industrial players that are that are seen as blue chip. They're also seen because of that as being very defensive. And we know this is a market that has not been particularly defensive. To a degree, yeah. So I would argue it's also part of the quality trade. So sometimes that's in favor, sometimes it's out of favor. And yeah, there is a lot of nuance here

because, as I say, individual companies that if they're growing cash flow, they're severely reducing the share count, you know, and everybody knows that they're willing to sort of give them credit for continuing to do that in the future. You know, you look at a Home Depot over the prior 15 years or something like that. That's a good example of when the market's going to reward it. But in general, if people say a trillion dollars of buyback authorizations, sure, it's a lot of money. It's net demand. It's not a bad thing. But companies on the other end are also issuing a lot of stock through compensation and all the rest. All right. Mike Santoli, thank you. Well, we've got a news alert on Cody. Steve Kovac has the details. Steve. Hey there, John. Yeah, shares dipping here. Cody putting out its preliminary first quarter results for its

fiscal year or first quarter fiscal year of 2025. What seems to be sending shares down about 3% is this commentary here saying, quote, U.S. market growth has slowed in the second half of Q1. That's dragging on shares a little bit. Also talking about some cost control measures they're doing here. You see shares, they were down about 7%, now down about 3%, John. All right. I appreciate it, Steve Kovach. Well, up next, the CEO of supply chain logistics company Flexport on how the recent port strike and destructive hurricane season is impacting freight and inventory ahead of the holiday shopping season. And check out shares of Canada Goose flying south today. Wells Fargo downgrading the luxury outerwear stock from equal weight to underweight,

signing an overexposure to China's market, waning brand momentum's down 5%. Overtime, we'll be right back. Welcome back to Overtime. Retailers have nearly a week less time between Thanksgiving and Christmas versus last year. And coming out of port strikes and hurricanes that snarled supply chains, the holiday sales season is starting earlier, well, at least than usual. Joining us now, Flexport founder and CEO Ryan Peterson. Ryan, great to be here with you.

So already had this short shopping season. We've got a lot of inventory in there. It seems like retailers sort of need to discount, but not so much that consumers hold off on buying. It could be a tricky situation. Definitely a strange season. You know, we've known about this potential port strike all year. That contract everyone knew was up for renegotiation. We did have a short strikes, but people plan for what might have been a much longer strike. And there's a lot of inventory in stock. We surveyed Flexports customers. We're one of the largest providers of international freight solutions in the country. We surveyed our customers. Almost 80 percent of them say they have either enough inventory or too much inventory on hand because they were planning

for potentially a longer strike. And so you may see a lot of discounts and other offers here to try to clear out this inventory backlog. And maybe they won't need to bring over as much, which I guess could affect your business. Another part of your business that we want to talk about some more is the last mile logistics biz that you bought from Shopify a little more than a year. I guess it's been almost a year and a half now ago. You made some cuts initially when you came back as CEO. You've recently made some more cuts. What's tough about that business right now? What are you trying to get done? Yeah, well, actually, that business is doing great. We recently kind of brought it closer together with our international business, and we were able to find some savings there as we did

that. But, you know, that's always a very competitive market going in. And people sign long-term deals here, and it's very sticky. Like, you sign up a customer. This is the core of your e-commerce operation. It's not something people just swap around where your international freight, hey, you can use a new container provider every day, and, you know, your business is probably okay. Your fulfillment, you really want to get it dialed. So longer sales cycle than we're maybe used to on the international side of things.

But once you get the customer, they're very loyal. They're sticky if you do a good job for them. Ryan, it's Morgan. I want to go back to the inventory buildup, you know, pre-strike that you were just talking about and this idea of, you know, getting ready for peak season earlier than usual. What does that mean, especially at a time where inventory buildup has been a real tailwind for broader GDP? What does that mean in terms of freight flows and activity you're expecting through the rest of this year? Yeah, it's, hey Morgan, yeah, it's a great, it's a really interesting complex challenge is that these companies had to plan for a potentially longer port strike. They brought a lot of inventory in. Some of it was diverting to the

West Coast. So, for example, August had the highest month of imports into the West Coast. Other than the pandemic, it was on record the highest. I think May of 2022 was slightly higher. But we're basically on the West Coast back to that level. So now companies are sort of like, one, they may have too much inventory. It may be more on the West Coast than they would like it to be. And so there's kind of this rebalancing that goes on to be ready for what comes next. And then there's all kinds of disruption. We saw last couple of weeks with hurricanes on the East Coast that have slowed some things down,

made trucking capacity a problem, the Red Sea earlier this year. So I think brands are starting to learn this lesson. It's like you've got to have extra inventory if you want to ride out these problems. I mentioned 80 percent had enough inventory or too much. That means 20 percent may not have enough inventory in stock. So it's always a hey, you know, it's very hard to plan for the future. Sometimes you have too much inventory, sometimes not enough. And getting that balance right is just a real challenge. I mean, today we got the September cast freight index and it's it's showing softness again. We're going into another earning season. It we got the September cast freight index, and it's showing softness again. We're going into another earnings season. It all raises the question, this freight recession everybody's been talking about,

are we going to turn a corner on it? You know, I really, knowing what's going to happen in the freight markets is beyond me on some level, even though we think we're the best, like part of what our job is to be humble and be really good at responding to in real time. Our prediction for a long time has been further declines in the international market. There's a lot of excess capacity out there. This year, that was our prediction. And then you had this disruption in the Red Sea that caused international prices to spike.

So, you know, the moment you make a prediction, there's something that happens out there in the real world that makes you wrong. So we always have to approach this with some humility and be ready for anything. Domestic side, they're really looking for a catalyst. There's not enough freight to match all the driver excess capacity on domestic truckload freight. And we haven't really seen an end to that. But on the international side, we've had very high rates all year. Have to believe it's going to come down.

There's so many ships on order. And a lot of international cargo capacity flies in the belly of passenger planes. And those have been coming back on the long haul international flights where they were grounded for a long time or diverted. Every month you get new flights being restored for the international passenger market. Ryan, good to meet up with you here in San Francisco. Yeah, it's great to have you. Thanks for having me on. Yeah, absolutely. Ryan Peterson, CEO of Flexport. Well, Google, the latest big tech company, to ink a deal for nuclear power amid soaring demand to power AI data centers.

We've got those details straight ahead. And investors, tuning into Sirius XM today, the satellite radio company surging after Warren Buffett's Berkshire Hathaway revealed it purchased nearly 4 million more shares. It's bringing the total stake to 32 percent. You can see Sirius finished up 8 percent today. Stay with us. Welcome back to Overtime. Google is teaming up with a nuclear energy company to help meet soaring demand to power AI data centers. Deirdre Bosa has the details. So, John, this is a really interesting one because it's a bet on the future of energy technology versus the existing infrastructure. And it's part of what Google is calling its clean energy portfolio. Now, the backdrop, of course, is this huge need for new sources of energy as part of the

artificial intelligence boom and the many, many data centers that are going to be required. Amazon and Microsoft have inked nuclear energy deals this year. This one from Google focuses on the development of small modular reactors or SMRs. This is a new way of developing nuclear energy on a much smaller scale. Now, Kairos Power, it's a private company, will develop the SMRs to enable 500 megawatts of the new energy. That's enough to power roughly 400,000 homes. The announcement itself was enough to boost shares of a public company, Oklo, which is also developing this technology. Now, a bit on SMRs. They differ from traditional

reactors in that they are much smaller, as I said, but that makes them more adaptable for localized energy needs, and it can benefit from a more streamlined regulatory process. But because the technology still needs to be developed, Google and Kairos don't expect this project to be powering data centers for at least five years, a decade until they all potentially come online. They're betting that AI, though, here is going to be here for decades. And by going this route, they'll be better positioned in the future. So this isn't just, you know, restarting a nuclear power plant. This is developing new technology. Part of the dynamic here that fascinates me is because of regulatory pressures,

there's a limit to the ways that mega cap hyperscaler money can flow, that investors can take advantage of. But it's starting to look like nuclear power might be becoming one of those ways. Right. Almost like a revival here in America, right? You have the Microsoft three mile island. This is interesting because they're smaller. You may not need the approval for each major plant that comes online. I think there's going to be about seven or eight of these SMRs. And the idea is if you can get regulation for one, you can get regulation for seven or as many as you need. So a way to sort of feed the needs closer to the data centers as well, giving them a little more flexibility and adaptability.

It's really fascinating. And certainly SMR, some of this capability has already been tested out actually with space exploration. So from space to Earth, we're talking about nuclear. Guys, great conversation. Well, up next, all the big earnings reports that need to be on your radar tomorrow, including what to expect from three more banking giants. And don't forget, you can catch us on the go by following the Closing Bell Overtime. Earnings season begins to pick up speed tomorrow. Johnson & Johnson, UnitedHealth, Walgreens, Boots Alliance, United Airlines, and Interactive Brokers report results. Interactive Brokers chairman and founder Thomas Petterfie

will break down those numbers right here on Overtime in an exclusive interview. Don't want to miss that. But that's not all. Investors will be digesting earnings from three more big banks. And Leslie Picker has the details for us. Hi, Leslie. Hey, Morgan. Yeah, picking up speed indeed. In fact, that KBE index adding to Friday's three percent gain, it was a strong response to J.P. Morgan and Wells Fargo's results and the potential follow-through to the

rest of the big banks that have yet to report. You've got Bank of America, Goldman Sachs, and Citigroup set to share numbers tomorrow. The key questions particularly for those two with more lending exposure will be how the outlook for net interest income is faring and what the pipeline looks like for investment banking. So far, the revival in capital markets seems to be in effect. J.P. Morgan had guided last month at a conference for investment banking. So far, the revival in capital markets seems to be in effect. JP Morgan had guided last month at a conference that investment banking would be up around 15%, and then when it reported actual numbers on Friday, the firm had raked in more than 31% higher revenue year over year from that division. JP Morgan CFO Jeremy Barnum attributed

the late quarter outperformance to debt capital markets, with corporates seeing improvement in market levels and jumping on those. But he also mentioned there was an acceleration of closing some M&A transactions. That could bode well for Goldman Sachs, as well as Bank of America, which are each estimated to generate more than a billion dollars from investment banking this quarter. Guys. All right. We're going to have another busy morning. Leslie Picker, we're looking forward to it. Bank of America Chairman and CEO Brian Moynihan will break

down his company's earnings tomorrow at 10.30 a.m. Eastern on Squawk on the Street. John, we're also going to get results from J.B. Hunt going back to freight recession conversation and actually Rio Tinto, which will be interesting given everything we're seeing coming out of China and the fact that that company is forging further into lithium. And with NVIDIA having now passed Microsoft again to be right behind Apple in this market cap race, we're in this interesting three-year period where we'll see how quickly AI materializes. Yeah, 46th record close for the S&P 500, record close for the Dow, too. That does it for us here at Overtime. Fast Money starts now.