Closing Bell - Closing Bell Overtime: Former Ford CEO on Autos & Tariffs; former Boston Fed Presidentent Rosengren on Latest Econ Data 3/5/25

Episode Date: March 5, 2025

Former Ford CEO Mark Fields weighs in what the one-month delay in auto tariffs means for the stocks. Former Boston Fed President Eric Rosengren breaks down the Beige Book, jobs, and Fed policy after the latest economic data. Vital Knowledge's Adam Crisafulli and Wilmington Trust's Meghan Shue analyze the market landscape, and we cover key earnings from Marvell, MongoDB, Victoria’s Secret, and Zscaler. Plus, Christopher Rolland of Susquehanna on Marvell's earnings. 

That bell marks the end of regulation. The Congressional Medal of Honor Society ringing the closing bell to New York Stock Exchange. Diginex Limited doing the honors at the NASDAQ. It's a rebound rally as tariff pressures ease slightly and services data comes in ahead of estimates, ahead of key jobs numbers tomorrow and Friday. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ft.

Morgan Brennan is on assignment today. Ahead this hour, former Boston Fred President Eric Eric Rosengren, on the tariff impact on the economy and the one thing he says could sharply raise the risk of economic stagflation. Plus, former Ford CEO Mark Fields weighs in on the breaking tariff news this afternoon about a temporary exemption for automakers. And we'll get earnings results from key software names MongoDB and Zscaler along with chip company Marvell and Victoria's Secret We will bring you those results as soon as they cross but we begin of course with the market Regaining ground today, but still looking at losses for the week and joining us now is vital knowledge founder Adam

Chris Ofuli and Wilmington Trust head of investment strategy, Megan Hsu. Guys, good afternoon. Adam, we got one more trading day, full day before the jobs report. ADP suggests a weak environment as does the Intuit Small Business Index. We brought you here on overtime yesterday. If we get weak jobs on Friday,

is it bad news, good news, because the Fed might cut sooner, or is bad news, good news, because the Fed might cut sooner, or is bad news, bad news, with the unclear impact of tariffs, the Fed may be less likely to cut? I think it's a great question. We definitely had a lot of indications over the last couple of weeks

that the economy is clearly slowing. I think if you were to get a really bad jobs report, it could be a positive, not so much for the Fed, but in that it could temper some of the tariff agenda. So we had a brief reprieve today with the one-month delay on the auto tariffs for Mexico Canada, but the month of March is going to see a ton of trade reports, and we have a lot of trade announcements and tariff announcements coming in April. So if you were to see the jobs report, which is the most prominent economic report the

government puts out, if that's really weak, then perhaps it could be the pain, you know, cross the pain threshold for the White House and cause them to kind of dial back even further some of their agenda on tariffs. Interesting. OK, so, Megan, you have reduced risk in your portfolio, shifting away from large caps overall mainly. Tell me why, you why, based on the uncertainty in this environment perhaps,

and what you're diversifying into. Yeah, so we've been seeing the economy and the markets as what we're calling a shoots and ladders economy, if you think about the old board game, where at any point in time, you could shoot up or down one or many spaces. And I think that really. Describes the environment today with the amount of policy volatility out there and how dependent.

Those policy announcements are on the details- so we started reducing risk taking a little bit off the table in small cap that way back in November. And then a few weeks ago ahead of really the- the peak tariff fears Reduced our large cap overweight and it was really just a matter of trying to reconcile what the market was pricing in with the degree Of risks out there. I think it's nearly impossible to predict how the tariff agenda will play out minute by minute But what we know is that the market is still somewhat expensive valuations have come in a little bit over the past few days. But for the most part it is pricing in a good deal of optimism and we didn't feel investors were being properly

compensated for taking on. Undo risk so it was really a matter of- kind of tightening everything up we added a little bit to international equities actually where we were under weight- that turned out to be a good move and then also added a little bit. To someities actually where we were underweight. That turned out to be a good move and then also

added a little bit to some of our defensive asset classes just trying to shore up those exposures. Okay, so Adam here in overtime, we've got Marvell and MongoDB both about to report. You can see them both as longer term data center plays Marvell from the chip side and MongoDB from the kind of software disruptor side. Both of them are off their highs of the past year. You've got Zscaler too, which is up today, I believe, even as CrowdStrike, a competitor, was not.

What are we gonna learn about sentiment, perhaps, for some of these growthier stocks based on how these respond? Yeah, I think Marvell is really critical. And you know, that's probably the most, quote unquote, macro of all those companies, you know, plays a huge role in the custom AI chip market. And, you know, Nvidia had decent results and guidance

that the stock kind of came for sale. So I think what I'm really looking for is not only are the numbers good, but how the stock responds to it. If it's another health report, healthy guidance, all the commentary around secular trends, if that all remains bullish, and the stock trades as poorly as Nvidia does,

it kind of suggests that there's still money that is bleeding out of tech and moving into other areas of the market. So Marvell is definitely the most important name tonight for the broader market, in my opinion. Okay, so Megan, as you're looking at the environment overall, we talked about how you're sort of shifting some things, how portfolios balance.

Is the story for 2025, you think, still fundamentally the same at this point, despite the uncertainty around exactly what the Trump administration will do, or are we on the verge of some major factor changing? Well, I do think 2025 is going to look vastly different from twenty twenty four and when you were looked at the very narrow market

leadership for the most part- last year I think twenty twenty five is going to be. A year where diversification is back in vogue which we've been seeing it's a good thing for. Our investors- international equities have staged a nice

comeback I think there's potentially. Some more room to run there but I think we're nice comeback. I think there's potentially some more room to run there. But I think we're looking at a rotation that's probably in the early stages and could be exacerbated by international capital finding other places to

go, whereas last year it was all about just one part of the market. And I think the thing to keep in mind is that we are expecting a bit of a slowdown on the economic front. And I think the thing to keep in mind is that we are expecting a bit of a slowdown on the economic front. And these slowing economies, the data can be messy. We are dealing with a before and after tariff type of situation. We've had weather, which impacts retailers and

other parts of the market. And anytime you have slowing economic data, it tends to be a little bit on the lumpy side. So I think the key is to not overreact to just one report. Want to mention Marvell, MongoDB, Zscaler all out we are going through the MongoDB and Marvell are both lower initially by quite a bit from my check Zscaler actually a bit higher. Adam we were just talking about the what we're going to learn from the reactions to these stock moves. So I'll wait for the actual numbers before I get specifically into those. But how should investors manage risk, you think, in their portfolios at this point

when we've seen quite a bit of movement back and forth, even if you're looking at the cryptos or some related stocks and the volatility in those so far this year. Yes, I think what Megan was talking about, the international performance. So US stocks have traded relatively poorly year to date, and especially in the last couple of weeks, but international markets are performing extremely well, Europe and then Hong Kong and China specifically. The biggest macro news of the day really came out of Germany in the last 24 hours, not US tariff policy. Hold on Adam.

Let me pause you here because Marvell earnings are out. That stock is down some 13 plus percent. Christina Parts-Nevelis has the numbers. Christina? Yeah, it was only just a slight beat on the top and bottom line for Marvell. They make custom chipsets that they're known for. 60 cents adjusted EPS on revenues of 1.82 billion dollars the Q1 guidance you know guide is usually what's driving these names lately 61 cents

adjusted which is really in line because the street was anticipating 60 on Q1 revenue of 1.88 billion again in line even Q1 non-gap gross margins there was a concern that margins would be diluted with the ramp up of a lot of their custom chips. That's coming in. They're anticipating at 60 percent. A quote from the CEO, Matt Murphy, saying, we are well positioned for a strong start to fiscal 2026. We expect first quarter revenue growth of over 60 percent year over year at the midpoint of guidance. And we anticipate strong revenue growth. But nonetheless, you're seeing shares really fall almost 14 percent after this earnings report John.

Yeah, wondering why that is so as we continue. I can come back and get back to you. Please do, please do. Adam Chrisafulli in the meantime, absent more information that there might be in this release, of course Christina is just bringing us those first numbers on the headline and on the guide. None of those numbers looks like a miss, though I'm not sure what the expectation was on gross margin.

This is quite a reaction, down almost 15% on that, no? No, absolutely, and I think it speaks to how there, you know, tech after outperforming for so many years, it's still a crowded space and there's still money to come out, so in-line results, in-line guidance could trigger this type of reaction, just suggests that there's still money to come out. So inline results, inline guidance, triggering this type of reaction just suggests that there's a positioning problem in tech and the money is moving elsewhere.

It's moving in particular internationally, which I was talking about before, Europe and China, Hong Kong. Some markets are performing very well, much better than the US is right now. But US tech is still relatively crowded based on this type of reaction. A lot more to learn here in overtime.

Adam, thank you. Megan, thank you as well. Now, as Adam was mentioning, let's look overseas with senior markets commentator Mike Santoli as German markets made huge moves today. Mike? Yeah, John, it's been pretty well acknowledged that European stock markets in general on a year to date basis have been outperforming the U.S. Seems like kind of a bounce off of a depressed level. But the German DAX index seems like kind of a bounce off of a depressed level but the German Dax index actually even on a two year basis has now eclipsed the gain

in the S&P 500 just by a little bit with this late surge very concentrated index as the even more so than the S&P is and that is a reaction to this news overnight in part that Germany was going to loosen up its borrowing limits and essentially

borrow more spend more infrastructure military spending things like that and it really is a sea change in their fiscal approach at this point take a look at the spread between the US Treasury 10-year Treasury yield and the German government 10-year Treasury yield obviously this is kind of sloshed around over time you You see the plunge here is much more about German yields going higher in response to that kind of higher fiscal metabolism they have going. And it's even, you know, arguably down closer to the bottom of the range because down here is when you had

absolute yield levels super low. As a matter of fact, German yields were negative in 2020 and you know, U.S. yields below 1%. Over here, we were a full percentage point lower in the U.S. 10-year than we are right now. So it shows you some convergence here, as the U.S. does a little bit of fiscal constraint around the edges, or at least tries to get

on that kind of trajectory. So we'll see if this is kind of a longer-lasting global rebalancing trade. Mike, what have you seen from a pro-Germany, pro-European market thesis in this environment? Given that, I mean, Germany's economy has not been doing well by most measures, and someone sitting on the sidelines might think, well, the U.S. has been doing better with all this talk about tariffs and Europe having to go it alone. Shouldn't that be bad for their stock markets?

I think there is a scenario under which it could have been bad, but the response in Europe and this largely as well, of course, is about the Ukraine standoff, is that it's sort of acting as a catalyst for European, especially Germany, to essentially open up the fiscal taps. And this is something arguably economists and investors would have wanted to see for a very long time. Germany was sort of unusually austere in its approach to

spending the other piece of it is. U.S. cycle has been kind of running about a year ahead of the European cycle for the last five years or so into and out of the pandemic and so arguably we had a great year U.S. growth

wise last year and Europe was in in a little bit of a tougher spot. Now they seem to be primed for more of a rebound. So it's a little more of a catch up as well. Interesting information for investors to factor in. Mike, thanks. Well now in MongoDB earnings results ready as well. Seema Modi has them. Seema.

It's $1.28 adjusted for MongoDB in the fourth quarter, but the key focus for investors has been on sales growth. Growth of 20% year over year, $548 million, which is well ahead of what Wall Street was anticipating, but it is a slower rate than the same quarter a year ago, also noting that it's also a slower sales growth rate than its direct competitor Snowflake, which in the fourth quarter delivered a quarterly sales growth number of 27.4% year over year. What MongoDB did do though is see a beat on its subscription revenue. Non-gross margins though, slightly light, 75%. The street was looking for 76% and that's contributing to today's stock fall in overtime by as much as 11 percent.

We'll get more details, John, for now. Back to you. Interesting. CMO, it might be important for investors to remember that they have different models. MongoDB and Snowflake. Snowflake, more of a consumption model. Well, after the break, tariff whiplash for automakers, the big three getting a big boost today.

After the Trump administration said it would temporarily pause auto tariffs. We will talk to former Ford CEO Mark Fields about this developing story and how reliant automakers really are on Canada and Mexico. And later, Needham analyst Laura Martin weighs in on the volatility in the tech sector and the mega cap names she says are most at risk if the economy slows down. Be right back. Zscaler earnings are out. Stocks higher in overtime by about 6%. Seema Modi, something must be going right.

Well, it's a strong beat for Zscaler on its bottom line. Revenue too coming in ahead of Wall Street consensus. And I was just looking through the third quarter guidance, a positive outlook when looking to the third quarter, better than expected. And then some of those specific metrics that we look at for a cloud-based security software company like Zscaler, billings and deferred revenue, better than the average analyst consensus. This is of course an important read on just the broader security space, John, following what we heard from CrowdStrike last night. We are looking at shares of Zscaler up about

6.4%. What I will be looking for on the earnings call is any mention of the recent federal cuts and how that's impacting software contracts, specifically in relation to the Department of Defense for this company. Interesting, yeah. Non-GAAP EPS beating by about 9 cents at 78 cents and revenues by, let's see, about 13 million at 648 million. Seema, thank you. Well, automakers accelerating out of the pits today with GM, Ford, and Stellantis all posting their best day of the year after the White House said it would delay tariffs on North American-built autos

for one month. Joining us now is Mark Fields, former Ford CEO and a CNBC contributor. He's currently a senior advisor at TPG Capital and a board member at Hertz. Mark, always good to see you. How bad would it be if these tariffs go into effect a month from now?

Well, it would be really bad, and it depends on the automaker. When you look at the 25% tariffs, it's not only, John, on finished vehicles that are assembled in Canada and Mexico that get imported to the US, but it's not only John. I finish vehicles that are assembled in Canada and Mexico to get imported to the U. S. but it's the components. What you've seen over the years over

the decades is this tightly woven. Supply chain between Canada Mexico in the U. S. and some automakers are really exposed for example Stellantis gets about 25% of their sales volume. In the U. S. from vehicles made in Mexico and over

Canada. GM's a little lower, about 20, 22%, and Ford's the least at 15%. But it's not only gonna be hard on the automakers, it's gonna be really hard on the supply base because they're still really, from COVID, the semiconductor shortage, and just their overall finances are much weaker

in some cases than the automakers. Now what about the theory of these tariffs? Let's say things work out in the sense that the parts, the whole supply chain moves inside the U.S. The cost of the vehicle goes higher. You have fewer jobs in Canada and Mexico and arguably fewer people in Canada and Mexico who can afford to buy those vehicles. Is that, and in the U.S. for that matter, is that a good outcome? Well, prices are gonna go up and that's never a good outcome, right?

When you look at affordability right now, the average vehicle is about 47, $48,000, the average selling price. That's down a bit from last year, but it's still at a reach of a lot of folks. I think right now, John, listen, if you're in the C-suite or you're on the board in one of the automakers right now

and the news you got today, I would think the discussion with the Trump administration was first, we'll delay it a month, but you got to give me a bone. You got to make some, starting to make some announcements on your moving some production, whether it's vehicle production or component production into the U.S. and whether it's vehicle production or component production into the US

and whether it's out of Canada, Mexico, or China. You're also thinking as an automaker, I think Trump's long game here is to accelerate the renegotiation of the USMCA agreement. And that has local content rules right now, 75% of the content of a vehicle must come from North America. And I think Trump regrets in his first administration, he should have set that higher for U.S. content.

And so if you're an automaker, you're like, well, you know, that could level the playing field. Yes, everybody's cost is going to go up, but everybody's cost is going to go up. So you won't have, you know, some competitors that say are importing from Korea or Japan who are going to face higher tariffs according to the Trump administration anyway. And you're just gaming out right now. If that's the case, what can be transferred over time, whether it's vehicle assembly or components? But then, Mark, what about global competitiveness, especially with Chinese EVs, low cost,

especially with Chinese EVs, low cost, quality seems to be at least good enough. What kind of danger does that present for US companies automakers on a global scale? Well, in the home market in the US right now, obviously, with the tariffs that are on Chinese vehicles, it's not a risk unless that changes. But you're right. These automakers, these global automakers

have to compete around the world. So they have to have competitive costs because outside of the US, they're gonna be uncompetitive. So they have to keep their foot on the gas pedal on reducing costs and making their vehicles more affordable. And I think you're going to see if in fact this happens where the USMCA agreement is renegotiated and more content is going to be produced in the

US, they're going to have to double down on cost reduction and value engineering efforts to compete not only in the US but more importantly to your point around the world. See how it works, Mark Fields, thank you. You bet. Well Victoria's secret earnings out as well, Pippa Stevens has the numbers, Pippa. Hey John, it's 260 adjusted on the EPS and we're not sure if that is comparable to the 230

that analysts were looking for. Revenues did beat coming in at 2.11 billion ahead of the 2.08 billion that Wall Street was looking for. Now same store sales were up 5%, also ahead of the 2.08 billion that Wall Street was looking for. Now, same-store sales were up 5 percent, also ahead of the 3.8 percent that street analysts were looking for. Q1 revenue guidance, a little bit soft here. They said 1.3 billion to 1.33 billion. Wall Street was looking for 1.39 billion.

And the company did say that as they begin the new year, we recognize the macro environment is uncertain and consumer confidence has shifted. They also said that the U.S. experienced unseasonable weather, which did create an additional headwind to start the year, which they said is factored into their guidance, the stock up about 2%. John? Yeah, it looks like perhaps the expectations weren't too high there. Pippa, thank you. Now, let's get back to Christina Patsanabalas for more on Marvell's results that had that one down

so much. Christina, what have you learned? It's like I have to go searching nitpick for certain numbers despite this top and bottom line beat guidance in line. So the only two things I'm noticing, the first one is that the estimates or the revenue for Q4 came in lower than buy side estimates.

So buy side represents the hedge funds, the institutional investors. They're expecting a 20% increase in revenue. We only, or 24%, we saw 20%. And then for Q1 EPS guidance, they were expecting 65 cents a share. We got 61 cents. And then also data center revenues.

That's the bread and butter for this company as well. That came in at 1.37 billion, which was slightly Slightly higher than what the street wanted at 1.36 billion So it seems to be a reoccurring theme that you would buy into these Companies before earnings and then you just see a fade despite the beats you saw that with AMD Nvidia credo today and now Marvell, but maybe the earnings call will say something else Definitely got to listen for the call it still looks like quite a drop you know for for what we mentioned there. Christina thanks. Well up next we'll talk

to Needham's Laura Martin about the comeback today for tech and the two MAG7 names most at risk in this volatile landscape. Later on former Boston Fed president Eric Rosengren is going to tell us why he says the specter of stagflation is growing, particularly if one key thing happens in the next month. Overtime will be right back. Welcome back to Overtime. The NASDAQ making a comeback today, but tech has been lagging since President Trump took office.

Is this the buying opportunity investors have been waiting for, or should you steer clear of the mega cap names during this bout of volatility? Let's bring in Needham senior entertainment and internet analyst Laura Martin Laura good to see you So one could argue mega cap tech had run too far ahead of the rest of the market So this is just normalizing, but what about garden variety tech? Well what I'd say about big tech is much of it is investing in generative AI. So to buy big tech, you have to have a point of view about the return on capital for round numbers,

70 to $80 billion of CapEx spending in 2025 alone for all of big tech, except for Apple. And if you don't like gen AI, then Apple's a good place to hide because they're gonna generate 90 billion a free cash flow. And have like twelve million dollars of CapEx which is not up from last year so. I would

say in big tech. There to us we differentiate also. If we're going to go under recession because of these tariffs you don't want to be anywhere near- alphabet or meta because there are 100% ad driven companies which means that 80% gross

margins. So as revenue slows or doesn't come in as expected, you really get hit at the EPS line much worse. Is it short-sighted or just rational to be very cautious about these companies that are spending tens of billions of dollars on data center infrastructure related to AI. Because if we think about the big impact of mobile

over the past decade and a half, or the internet the decade before that, it wasn't unwise for companies to invest in that. And in a way, there's a arguably vertical opportunity here for some of the cloud providers to benefit from the growth of those things that maybe didn't exist in the same way back in those earlier eras.

Well, and the smart thing is, if capital, if DeepSeq is wrong and you can't just spend $6 million to make a large language model, and it does take $100 billion or $200 billion, then the big companies are smart to do that because they create competitive advantage by using the capital from their mature internet business. So it's smart if it's gonna turn out

that really you do need to spend $200 billion for a large language model. So the question is when, probably not if, I think Wall Street has a consensus view that generative AI is gonna be a big deal And it will retool the global economy The question is how quickly does revenue come because you're spending one two three hundred billion in the back office Infrastructure in this race to try to be the large language model that wins Okay, so you argue that tariffs are particularly bad for the US companies, and I guess by extension

for US tech, why? Well mostly if they're ad driven, because advertising has 80% margins. So if you're not going to have as many ad dollars, and advertising is really tied to consumer confidence, and a recession implies that consumers aren't spending money, because consumers are two- thirds of our economy. So if consumers stop spending money, then advertisers immediately cut their marketing costs. So overnight, all the ad-driven stocks,

and specifically in big tech, it's Alphabet and Meta, and then they lose 80 cent dollars at the profitability line. So they get hurt much worse at the EPS line if we have a consumer, like if problem. I think that's a big part of the problem. And I think that's a big part of the problem. And I think that's a big part of the problem. And I think that's a big part of the problem. And I think that's a big part of the problem.

And I think that's a big part of the problem. And I think that's a big part of the problem. And I think that's a big part of the problem. but they've been metaphorically sending him flowers and chocolates over the past several months and weeks. Do you think the M&A environment is going to get better or worse for them and the Trump administration? I do. I think that based on the Bliszelensky interview, it's all about personal relationship with one guy. So if you send him flowers and you send him chocolates

and it works, you get to do what you want. You know, you should actually, You should actually argue you're gonna spend a hundred billion dollars on US jobs, that's helpful too. But the point is, I think you get more of what you want if there's one guy that believes you're his friend. So I think they're doing, I think they're being commercially astute by changing their tune to a much more conservative tack.

Yeah, I guess that's the fancy dinner after the flowers and chocolates, those hundred billion dollar promises. Laura Martin, thank you. Well time for a CNBC News Update with Kate Rooney. Kate. Hey there John, French President Emmanuel Macron says Europe needs to be ready to defend Ukraine without U.S. assistance.

In a televised address to the nation, Macron says he'll work with European allies on the idea of using France's nuclear deterrent to protect the region in case of Russian threats. EU leaders are set to discuss the idea during a special summit in Brussels on Thursday. Meanwhile, the Trump administration has been blocked from the cutting of the National Institute of Health's research funding. A district judge issued today a nationwide injunction at the request of 22 Democratic state attorneys general and groups representing medical schools and universities

who argue that the cuts were unlawful. And House Speaker Mike Johnson's chief of staff was arrested earlier this morning over an alleged drunk driving incident. Sources tell NBC News Hayden Haynes hit a capital vehicle around midnight just after President Trump's joint address to Congress in a statement to NBC News. A spokesperson for Johnson said the speaker has, quote, confidence in Hayden's ability to lead the speaker's office, guys. Back over to you.

All right. OK, thanks. Well, energy stocks falling again today as Brent crude touches its lowest level since 2021. We're gonna take a look at what's driving that rapid pullback next and much more ahead on today's earnings, including an analyst first take on Marvell as that stock falls, let's see, down almost 17%, we'll be right back. The energy sector sitting out today's relief rally

now down about 5% for the week as oil plummets Brent crude touching its lowest level since 2021 Mike Santoli is back with a look at the pullback in energy prices Mike. Yeah, John has the look of almost a four year round trip and WTI crew. That's this right here still up 8% but when you consider just how much the general price level has gone up with inflation over the past four years it shows you that oil energy in general is really

a much smaller basket of the overall consumer kind of cost burden and you know good news clearly for households on the other hand not creating a lot of fresh incentive to do a lot of exploration and drilling so that's the exploration and production ETF. Held up better, of course, cash flows have been fine with oil and gas at recent levels.

But OSX is the oil services index, and that shows you, the market believes, there's going to be a lot less activity going on. So take a look at the valuation, just trying to see if maybe we're hitting some kind of interesting kind of cheapness levels for exploration production as well as oil services this is price to book value so fairly stringent metric not quite near the lows of this range which goes back uh almost 20 years uh but you see that that was sort of this big trough around around covid around one times book values actually started getting down there in 2019 as oil prices went down.

So you wouldn't want to say that there's some kind of real fat pitch here that says this industry is cheap but it might be edging in that direction, John. Mike, what strikes me about that first chart that you showed us is how mediocre that performance is versus say the S&P, but if there were no label on that and you just showed me those, I might think that those were non-MegaCap software stocks.

Well, that's true because you did have a pretty climactic peak exactly four years ago in those stocks. And this of course was the Ukraine invasion, not some kind of an enthusiastic tech bubble. But no, you're right. There's a lot of parts of this market have basically sat it out, not participated.

But I think this one just has a better kind of macro resonance because you're essentially saying, you know, everyone's incomes, I mean, everyone's, the average incomes are up a lot in four years. Wage growth has been good. And here you have energy just really retreating on the list of concerns at least. Yeah, incomes up, expenses up too with that inflation.

For everything else. Mike Santoli, thanks. Well up next, former Boston Fred President Eric Rosengren on how tariff fears in the latest beige book could impact the economy and the Fed strategy. Plus, Marvell's earnings call is about to kick off and the stock is sinking down about 16% in overtime. A top analyst reacts to that move and overtime comes right back. Welcome back to overtime.

Stocks rallying after the White House confirmed tariff delays for automakers, but the Fed's beige book showed businesses are raising concerns about the fallout from tariffs with that word showing up 45 times in the report. All this comes as Wall Street prepares for Friday's jobs number and joining me now is The report shows that the federal government has been in the business world for a long time. And the federal government has heard showing up 45 times in the report. All this comes as wall street prepares for Friday's jobs number. Joining me now is former Boston fed president,

Eric rosengren. Eric, good to see you. I think of the beige book as being sort of like an intelligence briefing from across the fed districts. What's the buzz on the street? What are business people concerned about? What are they excited about? Is that right? And what highlights jump out at you from this particular report at a time of a lot of policy uncertainty? So it's a qualitative assessment,

but it's used in conjunction with the harder data that we get from other sources. And so I think it does provide some useful information. I think it highlights that there's growing concern in the business community that tariffs are actually going to happen, that they may be more significant than those people who thought they were only going to be a negotiating tool, and that if that is going to happen, that it'll be more disruptive to their plans

for the coming year than many had anticipated. Is there any chance that expectations of tariffs being disruptive or inflationary, kind of like inflation expectations, can turn out to be self-fulfilling prophecy that, well, if my contacts, if my customers expect prices to go up and then tariffs come into place,

well, that means I can raise prices. Well, I think that's one of the things the Federal Reserve is going to be concerned about. First of all, tariffs are likely to increase prices for many goods that are affected by the tariff and in some instances, while we have a one-month delay for autos, And in some instances, while we have a one month delay for autos, you could easily imagine that autos are not only going to be subject to the tariff tax, but they're also going to have supply constraints as the difficulty with their logistics become problematic. So I think that the prices are actually real. We've already seen some prices starting to go up.

There's some areas where we're likely to see prices go up actually relatively soon. So if you're thinking about foods and vegetables from Mexico that haven't gotten an exemption, you don't keep a large inventory, they're perishable goods. The result is that the flow through to those price increases is likely to be relatively immediate. Then there are other goods where firms are able to stockpile or it will be delayed before

the shipments actually occur. Price increases will be occurring over the next six months. But the bottom line is that I think firms are going to be expecting to pass a lot of the prices along to consumers. And even those organizations that produce domestically, since their competitors are international competitors, they're probably going to see this as an opportunity to have more flexibility to raise prices as

well to improve the profit margin. Okay, so we've been throwing around this word stagflation, this term here on CNBC and in economic circles, not every viewer is familiar with it or maybe associates it with Japan. It's one thing if prices are going up or if your dollar doesn't go as far at a time when overall the economy is growing another if it's not What's the threat of stagflation at this point? And what do you think would make that threat more serious? Well, I think the threat of stagflation has gone up significantly. So Stagflation is just that prices and inflation are increasing at the same time that you're seeing enough disruptions that unemployment rate goes up at the same time.

So that's not what we've been experiencing over the last 20 years in the United States. But I do think the combination of tariffs and some of the immigration policies are going to be very challenging for a lot of businesses. And I do think that some businesses faced with a lot of uncertainty are going to slow down the hiring. And in fact, we have some pretty hard data that the hiring rate was already declining prior to the concerns arising from the tariffs. And I think the hiring rate rates going to continue to fall we had a pretty weak a d p report which is uh...

uh... pretty noisy estimate of what the employment reports going to be but the a d p report had only seventy seven thousand jobs and it was disproportionately weak for uh... small businesses. So I think it just highlights that we're in an environment where consumers could be hit both with price increases but also have a rising concern that they'll be facing unemployment not just for federal workers but for people that are working in the private sector as well. Yeah.

Important to keep an eye on. Eric Rosengren, thank you. Thank you. Up next, we'll talk to an analyst about why he thinks Marvell stock is tanking right now, despite better than expected earnings, and because you love Overtime. You want even more of it, you can scan that QR code on your screen. Follow us on LinkedIn, where we'll post exclusive content. Overtime will be right back.

Welcome back. Let's check in on some overtime movers. MongoDB is sinking down, goodness, almost 18% despite largely topping revenue estimates, though full year earnings guidance was below estimates. Zscaler is higher by about 5% after beating earnings and revenue estimates and giving solid third quarter EPS guidance. And Victoria's Secret topping revenue estimates, same store sales were up 5% beating expectations.

Up next, an analyst with a buy rating on Marvell reacts to the post earnings sell off there. You see it now down 16 and a half percent in overtime, what he's expecting from Broadcom's report tomorrow And don't forget you can catch us on the go by following the closing bell overtime podcast on your favorite podcast app We'll be right back Welcome back Marvell technology down about 14 percent in overtime despite beats on the top and bottom lines Let's bring in Christopher Rolland. He's a senior analyst covering the sector at Susquehanna. Christopher, it seems like an extreme, sorry, do we have Christopher?

Yeah, okay. Christopher, it seems like an extreme reaction. I know perhaps management had left the impression with some investors that later in the year things would pick up considerably. Maybe the guidance doesn't suggest that as much as one might've thought, but down now 13%, it's quite a reaction, no? Yeah, it's a very difficult quarter indeed for them. Expectations were so high.

This is at the epicenter of AI stocks right now, and just the amount of enthusiasm embedded was not enough for Barbell overall. So yeah, a disappointment. I will say, however, during the call, they made a very interesting revelation, and that is that they are going to secure Amazon moving forward here which is which is a very big big win for them. So maybe that accounts for the being a little bit off the lows but those lows in the overtime session are quite low I imagine at least the longs probably feel that way. Run through for me what has changed in the narrative

for those particularly who aren't in video when it comes to chips and AI and how that sets up Broadcom for tomorrow. Yeah, so Broadcom does Google TPU right now. There is some hesitancy around whether there is a gap between TPU 6 and TPU 7. So we'll see for a broad com. There's also processing unit that Google uses in that AI process? That's right. That's their big chip that they're doing internally. Amazon is doing tranium through Marvell and I think there's a concern first

about volumes which seem actually very healthy but there's a concern that these companies might want to do more and more internally and there was a story out today saying that Google might do just that. So this is creating worries for

guys like Marvell and worries for guys like Marvell and worries for guys like Broadcom as well. Could this be a situation like the worries about Qualcomm some years back when Apple intended to take the modem business back and then couldn't do it nearly as soon as they wanted and Qualcomm bounced back after? That might've been the biggest socket in the world.

So I wouldn't say it's as large, but it is incredibly meaningful for both Broadcom and Marvell. So for semiconductor investors who are trying to play the long game, given where you see valuations here, how expensive things are, what do you do? Yeah, I think this whole sell-off and fears around AI

have been overblown in the near term. And so I would be a buyer of pretty much the AI complex across the board here. Marvell would also argue there's a lot of complexity in the various chips, various technologies in the cloud and the data center. They've been working on being kind of an interconnect there. And then you've also got connected vehicles, which despite the troubles in the auto sector

right now with the global situation tariffs, you have to expect that the car is going to be continuing to transform digitally. How should investors factor that in? Yes, when it comes to Marvell, but these stocks overall? Yeah, I think probably robotics and AI, Nvidia's already talking up physical AI. I think that might be the next step here. But as of right now, it's all about the data center,

AI in the data center. We'll see chips for physical AI probably proliferate over the next three years or so. But, you know, 200 billion plus is being spent in the data center right now on AI. So that's really where the focus is. But on autos specifically, I mean, Qualcomm talks about this a lot. I know Marvell does some as well. There's a lot of interconnect there. It's a relatively high priced item. Is that something that you think, given all the excitement over AI and the valuations that have risen because of it, doesn't so much matter right now from an investing perspective, or should investors key in on some of that potential in autos. Yeah, these are $5,200 chips versus $40,000 GPUs.

So really from a hardware perspective, semis have far more to gain from AI in the data center. Perhaps in the stocks, there is some embedded. If you look at the valuation of let's say Qualcomm, for example though, I would say very little is attributed to AI. It's really all about AI in the data center. All right, Christopher Rollin getting us ready

with how to interpret Marvell and how to think about Broadcom coming up. And we do have Broadcom tomorrow, a lot of macro data as well tomorrow and Friday. That's gonna do it for us on overtime.