Closing Bell - Closing Bell Overtime: Former Ford CEO On Chinese EV Competition; Flexport CEO Talks Port of Baltimore 4/5/24

Episode Date: April 5, 2024

Stocks bounced back after a strong jobs report, but major averages still ended the week lower. Unlimited Funds CIO Bob Elliott on how to position right now. Former Boston Fed President Eric Rosengren on how immigration is impacting the labor market. Former Ford CEO Mark Fields talks the changing EV landscape and competition from Chinese brands. Flexport CEO Ryan Petersen talks the ripple effects from the Port of Baltimore and the impact of freight rates. Plus, Jon sits down with Intel CEO to talk the foundry business.

up 1% on the S&P, a little better on the Nasdaq. That's a score cut on Wall Street. But winter stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Yeah, stocks rebounding after yesterday's big late day sell off following this morning's stronger than expected jobs report. So how might that data impact the Fed's next move? We're going to discuss with former Boston Fed President Eric Rosengren ahead. Plus, my interview with Intel CEO Pat Gelsinger after a rough week for Intel. We're going to bring you the highlights in just a few minutes. But now, let's break down today's market action with our first guest. Joining us, Bob Elliott, co-founder and CEO of Unlimited Funds. Bob, happy Friday. So wages behaved, even though the jobs

number was a little hot. Why do you say here neither stocks nor bonds look great? Well, I think the main thing is on the stock side, we already have expectations that are pricing in something like two or two and a half percent real growth through the course of 2024. In that circumstance, you know, that's basically where we're at with growth. And the employment data largely confirms that. I think the real risk is on the bond side, where, you know, bond yields today printing their highest close of the year. And even there, still pricing in cuts from the Fed at a time when growth is strong, unemployment is at secular lows,

and those pesky inflation pressures keep picking up again, which will cause some hesitation from the Fed to transition to that cutting cycle. So just as we're in need of more data, we've got bank earnings right around the corner. What's the most important signal to get from those calls? Well, I think you've got to look at the deposit dynamics in the banks. And certainly at a macro level, when we look at the weekly data, we're actually seeing deposits start to pick back up for the smaller banks as well as stabilize for the larger banks. That's all pretty good when it comes to the bigger financing and liquidity risks that those

banks were facing. The really interesting thing that's going on there is that we're also starting to see a bit of a pickup in the loan book, particularly from some of the larger banks. That suggests that maybe there's a little bit of credit finance reacceleration in the economy going on right now. That's not what the Fed wants to see when they're looking at an economy that should be slowing to some extent in need of cuts. So what does that mean in terms of the landing thesis, if you will? I mean, on the one hand, you've got a lot of macro resilience showing up in the economic data, including the jobs report this morning. On the other, commodities are moving higher. Crude has had a big move this week.

We've seen the dollar strengthen. And to your point, I mean, you have the 10-year Treasury yield at 4.4 now, highest since November. Seems like something's got to give here. How does it speak to how this economic landing is materializing? Well, I think what we're seeing get priced into the stock market and commodities is we're starting to see a no-landing scenario pretty much priced in at this point. And the same is true increasingly on the short end as Fed cuts start to get priced out. The main place where that no-landing scenario isn't priced is on the long end of the bond market, which, you know, while it's pressing highs over the course of the last couple of months, we're well off where we were last summer

when bond yields hit five. And even then, you know, we didn't have a meaningful slowdown in economic activity. So I really think that long end is the area of the market that is most meaningfully mispriced. And that's coming at a time when we're getting a bunch of inflation data next week, combined with almost $120 billion of bond sales. That flow, that constant issuance, financing those large deficits, that constantly is going to weigh on the bond market, particularly here in the second quarter. OK. Cash, should that be a part of your portfolio right now? And I ask that because Bank of America reports show that $82 billion in the week through Wednesday went into cash funds and money market funds are now annualizing one point two trillion dollars of inflows. It's the second highest ever. So clearly investors are putting at least some money to work there.

Does it make sense in this environment? Well, I think cash is never a great asset to have unless you can truly market time. It's generally better to be invested in assets on a tactical basis with stocks where they are at this point and the pricing in a very, very high growth expectations and bonds not looking great. Cash can be an interesting alternative, though when you think about what assets are out there and where there may be interesting opportunities, might look to the commodity space where we're starting to get conditions aligning for a bit of a short squeeze for those people holding large, short positions in oil. And then, of course,

there's my favorite gold, which, you know, keeps pushing higher. Solid gold. I knew you were going to say it. I knew you would. Bob Elliott, great to have you. Of course, gold at a record high this week again, too. Yeah. I mean, everything's expensive. Well, I spoke with Intel, not Intel stock. I spoke with Intel CEO Pat Gelsinger last night at the Council on Foreign Relations. After a rough week for that stock, he addressed the losses in the foundry business. We expect to break even in that business in the 2027 timeframe and then turns nicely profitable as we go through the rest of the decade. We start to see ROIC get to the doubleit range by the end of the decade. But part of the problem is we had to significantly overinvest to get back to competitive. So we were years behind. So

we had to churn capital and R&D investments to catch up, and that's expensive. And when I build the new factory, it takes me four to five years to build the factory. So I'm investing 30 billion of capital before I get a penny of revenue, right? And then you got to ramp that new factory. So that takes a couple, three years, and it doesn't even start producing profits, right, out of a new factory for seven or eight years, right? You know, so it's hard to pay for your cost of capital at those investments, at those investments in a short period of time. So this is a long game in that regard. But semiconductors, yeah, it's a profitable industry if you're ready to go through these hard cycles, long-term investments.

And our objectives as we think about chips and the long-term chips policies is we have to rebuild a vibrant ecosystem on American soil. We're on the financial journey to build it back. You know, that said, we still have several years to go, right? This is, you know, if you want a great, you know, pop in your portfolio in the next two weeks, we're not it. But I don't want you. I want people who are committed to the strategic journey of rebuilding the most iconic technology company in American history, who is building long term manufacturing capacity for the digital future that is more critical to every aspect of human life, the national security and the economic engine. That's who I want as my investor. And that's a long-term commitment. And we're well on our way to getting there. And we bounced off the bottom of the stock price when it was in the 20s. It was a great buy, so I bought a bunch. It sounds like you're saying Intel's not a meme stock. No, no. We also discussed the impact of geopolitics as concerns about escalating tensions between Israel and Iran hit markets yesterday.

We seek peace as quickly as possible. And, you know, seeing that measured, right, you know, in the international community is not particularly surprising at this point, given the, you know, the human loss in Gaza. You know, that said, you know, our job is to continue running our business as well as we possibly can, making sure we have good resilience. I'd also say part of our core strategy is building globally resilient supply chains. And whether it's Taiwan, Ukraine, or Israel, that's why we're doing this. We have to build resilience in the technology supply chains. And it underscores the importance of the essence of the strategy that I've laid out for Intel, the technology supply chains. And it underscores the importance of the essence of the strategy that I've laid out for Intel, the technology industry, and frankly, the Western

world. Rough week for Intel and the understanding of those foundry losses and how long it's going to take to get to profitability there with the stock down about 12 percent. Yeah, it was the worst performer in the Dow this week. It also speaks to why the Dow finished the week down almost 2.3 percent. It was the worst performer of the Dow this week. It also speaks to why the Dow finished the week down almost 2.3 percent. It was the worst performer of the major averages. But I feel like that was very spicy from Gelsinger. It almost reminded me of like, you know, an Elon Musk or even when Warren Buffett talks about what if we were to get away from quarterly reports for publicly traded companies? You know, this is the case when you talk about long lead time investments and big, you know, sort of visions and pictures,

multi-year pictures about reimagining a company. He's saying this is the plan. They're going to have some AI news next week, though, so watch out for that. Okay, we'll be watching out for that. In the meantime, it's time to bring in senior markets commentator Mike Santoli for his first dashboard. Hi, Mike. Hey, Morgan. Let's see where we finished up here,

just in the broad markets. Obviously, we got a little bit of a stutter step in this rally. The question is, is it going to be more like a stumble? So far, hard to tell. One thing that did change this week, we got our first little 2% pullback from a high. We also, there was this sort of line that was holding. I don't even have my my drawing on. There was this line that's been holding for a while now. It's the 20 day average. We broke below it yesterday and then today we more or less just nosed above it. And it's one of these very short term tactical indicators. It's not necessarily make or break in terms of the broader trend, but it has held for the most part for the entire year until yesterday. So we'll see if that's a change of character. It's about a couple of weeks, three weeks,

we've been going kind of sideways on a net basis. Here's a check on some of the leadership groups. You know, I like to look at semis relative to home builders, lots of these big long-term supply shortage, demographic cases, or long-term growth cases for why they work. This goes back to the end of 2022, and they're pretty close,

and they're both having a pullback. You know, semis are like 70% off their highs, homebuilders maybe five percent. So the overheated parts of the market are cooling off, still vastly outperforming the S&P. And so far, that's as you might want to draw it up. You also have cyclicals doing better than defensives. So really nothing has changed about the macro message of the markets. The question is, you know, do investors just become a little bit harder to please? The threshold is higher for having economic data, both growth and inflation come in pretty much in the desired zone of not too hot or too cold. It was interesting, though, because big cap tech really led the charge here today.

And I realize every every sector in the S&P finished higher. But really, it was it was big cap tech that rallied the most here. It was also what sold off the most earlier in the week. So how does that factor into this equation when we do talk about broadening out and how much, I guess, friction or traction that that's going to have moving forward? Today's action just felt like yesterday's two-hour late-day sell-off

was a little bit of a short-term overshoot because we don't know what headlines are going to hit overnight or into the morning. No major bad headlines hit overnight or into the morning. You did get the better jobs report. So it was OK. Let's migrate back into the big index names, the ones that aren't really reliant on next week's inflation report, for example. So I'm not sure I'm reading too much into the sector leadership today or this week, as much as it is, you know, there's a general tendency out there to say a 2% pullback, at least the first 2% pullback is to be bought. We'll see if it actually holds. Okay. Next week's going to be busy. We'll be talking about this a lot more.

Mike, we'll see you later in the show. Up next, gaming out the Fed. Former Boston Fed President Eric Rosengren is breaking down what he thinks the Fed's next move might be. And that's following this morning's critical jobs report. That's coming up after this break. Stay with us. Overtime, back in two. Welcome back to Overtime. Today's job report coming in better than expected,

with payrolls increasing by 303,000, unemployment ticking down to 3.8%. Joining us now to discuss that report and how it may influence the Fed's next move is former Boston Fed President Eric Rosengren. Eric, it's great to have you back on the show, and that's exactly where I'm going to start with you. It does seem like this was a little bit of a Goldilocks report because you had that strong top line number. Wage growth, though, is basically in line with expectations. And while it's still

growing year on year, the rate of growth seems to be slowing down as well. Your take. Well, that's exactly right. I view this employment report as quite strong, but I think it's really good news for the U.S. economy. So the payroll number of 303,000 jobs makes three months in a row where there's been substantially more than 200,000 jobs a month. And I think that is primarily because the workforce is growing relatively quickly. And as a result, people that were expecting job growth to have to slow down significantly have turned out to be wrong. And in fact, we're getting the kind of growth that I think is roughly consistent with two and a half percent growth, maybe slightly higher than what potential is. The unemployment rate ticked

down by a tenth of a percent. But I think the best news in this report was the average hourly earnings, which is a measure of kind of wages and salaries. And it was about as expected, as you said. It was 4.1 percent. But I think if you look at the subcategories, what's interesting is when we first came out of the pandemic, it was quite hard to get people to do many of the service jobs. That includes kind of hospitality, hotel work, restaurant work. And now employers are not having to pay significant premiums and are still able to attract significant number of people in these less skilled jobs. So what that means is there's probably not going to be as much pressure on service wages. And seeing that the average hourly earnings is getting in a range that's more consistent with what we'd want to see for a 2 percent inflation target.

Yeah, we've had so much Fed speak this week, and I want to get to that with you. But first, I have to ask one more question on this, because we were discussing it with Steve Leisman yesterday. Rick Santelli has been all over it as well, and that's the role that immigration is playing in the labor data, too. Rick Santelli had Casey Mulligan on, and he pointed to a part-time jobs category and the fact that so much of the gains are happening there and that there's actually less employment per person. And the role that perhaps immigration is playing in that and is playing in the wage growth trajectory that we're seeing play out as well.

I think that's right, that we were probably underestimating how quickly the U.S. population was growing because we were underestimating how many foreign-born workers were in the United States. And as a result, many of those individuals are going into hospitality, restaurant, hotel type of work, where we were seeing real shortages when we first came out of the pandemic, but we're no longer seeing shortages in part because they're filling many of those jobs. Eric, this is a head scratcher for me because I'm seeing headlines that the top issue in this presidential election that we're having at the end of this year is immigration. A lot of people aren't happy about it, but it sounds like immigration is sort of what's keeping this economy afloat in the sense that a year and a half ago, a lot of people were

complaining nobody wants to work anymore. As you were saying, there was this shortage of lower wage service workers. So how does this pan out for the economy if we clamp down and there's more of a shortage of lower wage work. How does it balance out? Well, if we really clamp down, it would become an issue for some of those jobs that have difficulty finding workers. A lot of the farm workers, a lot of the restaurants and hospitality workers tend to be new immigrants because those are the jobs that they can initially get. And then over time, as their skills build, they move into hopefully other jobs. So I think without getting into the politics, nobody would argue our immigration policy

right now is the appropriate one. Ideally, we would want to have significant legal immigration of people that had the right kind of skills to match our needs in the economy. That's not what we currently have. But as you pointed out, if we have population growth as a result of the immigration, and if they do find jobs and are able to work, that actually adds to GDP, it adds to payroll employment, and it prevents the need to have wages grow dramatically higher and put inflationary pressures on the economy. Yeah, I'm happy to leave the politics completely out of it, but part of the conversation around legal immigration is,

hey, once you get that bachelor's degree and certainly once you get a master's even or a doctorate, then staple a green card to that. Those are very expensive jobs. And part of what seems to be celebrated, at least in the market today, is everything but those kinds of jobs being available and being worked. So is that part of the conversation for the economy being had? We should certainly have a rational immigration policy, which means we bring in the people that we need. That doesn't mean all people with PhDs, MBAs and law degrees. So there's certainly needs for those people, people that can do AI and engineering.

But there's probably a role also for less skilled workers if we're having trouble filling those jobs. So I don't think it, from a perspective of the economy, getting the right people into the economy so that the job continues, so that jobs continue to grow and the economy continues to grow is a positive aspect for the U.S. economy. All right. Eric Rosengren, former Boston Fed president, thank you for joining us. Thank you. Coming up, it's been a big week for the autos, both Ford and Tesla, shaking up their EV strategies. Former CEO of Ford, Mark Fields, is standing by with what he thinks these changes could mean for autos at large. And he's going to join us when Overtime comes right back.

Welcome back to Overtime. Tesla shares falling on a report from Reuters that the company is abandoning plans to build a low-cost electric vehicle and will be focusing on other parts of the business instead. Elon Musk went on X earlier today to say that that story is untrue. Well, this comes a day after Ford announced a delay in its production of an all-electric SUV and pickup truck, shifting its focus to more hybrid options. Here to react to all of this and more, Mark Fields, former Ford CEO and CNBC contributor. Mark, it's good to have you on. And I'm going to start with whether the details of this report were true or not. I'm going to start with the fact that we have more broadly seen a very marked slowdown in EVs and simultaneously have seen increasing competition come out of China with their low-priced EVs, too. It's

something that's expected to be in focus with Yellen meeting with Chinese officials all weekend long. How does it speak to global dynamics, the market for EVs, and how automakers are now going to navigate this with more production than deliveries afoot? Well, they're great questions, Morgan. I'll address the last one, how the OEMs are addressing this. I would just put it this way. Literally every global automaker is hedging their bets right now on the timeline for adoption of EVs. That's why you've seen, you know, many automakers, the latest Ford, where they're pushing out capacity that they announced. They were pushing out product timelines. Ford announced that they're going to have hybrids across all their ICE engines, which I think is a very smart move because consumers are much more willing to buy hybrids.

And I think Ford had their record quarter last quarter in hybrid sales. I think what this says about the overall EV market, the bottom line is right now around the globe, no matter where you are, the growth of EVs is slowing. Now it's still growing, but the issue is not at the timeline that a lot of the automakers expected. And so, you know, you're seeing a lot of price competition in China, which is a big problem, obviously, for Tesla, since that's one of their biggest markets. You're seeing here in the U.S. the EV industry is acting a lot like the industry of old, right?

You've got price cuts. You've got rising inventory. You've got increased incentives. And I think you'll see that, you know, for the foreseeable future until you see more acceptance of EVs. And that's really going to revolve around bringing out and building out the charging infrastructure and taking some of those inhibitors away from customers right now, whether it's price or convenience. I want to dig into the China piece of this a little bit more, because as I mentioned, Treasury Secretary Yellen made some pretty strong comments on her way to China about the role of EVs in that market and concerns about overproduction and subsidies

and flooding the global market with EVs. I mean, we know there's already a tariff on Chinese-made EVs here in this country. Is it possible that we could see that tariff increased? And if so, is that enough to get around some of the trade dynamics, for example, China setting up shop in Mexico and then importing through there? Yeah, I absolutely believe that you're going to see whether it's increased tariffs or just a barring of imports into the U.S. if they decide to set up shop in Mexico and take advantage of, you know, what was previously called nafta i think you'll see the u.s government take uh some pretty good uh and strong actions here because because listen morgan i mean we've seen this movie before from the chinese right we've seen it

in uh solar cells we've seen this in aluminum we've seen this in aluminum. We've seen this in steel, where the government over the past 10 to 15 years has put a lot of incentives for manufacturers in China to develop products and also put capacity in. And what started as what I would think a strategic approach to dominate the EV industry has now turned into a tactical approach because they just have too much overcapacity. Their market hasn't grown as much as it has the last two years. It's on a downward kind of spiral in terms of the growth rates. And they're looking to export. And I think what got everybody's attention was last quarter when they became the world's largest exporter of vehicles. So I absolutely believe it's a strong action. Mark, how do U.S. EVs realistically get cheaper, say even over the next five years, when we've seen EVs are expensive to buy,

sort of subsidized, they're expensive to have in your fleet, that's part of the reason why the Hertz CEO is no longer Hertz CEO, and there are questions about whether labor ends up getting, and I mean labor unions, the people putting the cars together, get squeezed if EV production increases, because maybe you don't need as many people putting those together. So as you try to lower the cost of EVs, you run into political problems if you're making them in the U.S. Do you not? Well, you run into problems, but also at the same time, if you can crack that code of producing, for example, a $25,000 EV, you're going to get a

lot of adoption. And listen, you know, John, there's always, when you're going through a change in technology, and this is a once in a century changeover in propulsion systems, you're always going to have some puts and takes. I think the most important thing to your question, you know, it's interesting. The Chinese started from an affordable car first and worked their way up to luxury EVs. If you look at, you know, folks like Tesla and some of the established automakers in the West, they started from high-priced EVs and are now trying to work their way to low-priced EVs. And I think the way they're going to do this is, you know, a number of automakers have what they call skunk works in place right now, basically saying, hey, you've got to target a $25,000 vehicle. How do we do that?

And from that comes interesting ideas. Some will work, some won't. But I think you're seeing a major focus right now on that. We'll see how it plays out. But the Chinese right now have cracked that code. Yeah. Well, cheaper labor helps. Mark Fields, thank you. Now let's get a CNBC News update with Kate Rooney. Kate. Hi there, John. President Biden just toured the damages to the France's Scott Key Bridge in Baltimore. He pledged full federal support and announced millions in grants for dislocated workers and to create additional jobs for those involved in the cleanup.

The president also announced small business association loans will be available to the area. Atlantic City casino workers, meanwhile, are suing the state of New Jersey to ban smoking on casino floors, which has been done across the Northeast and other sites in a suit filed today. The workers allege the state is giving special treatment to casino operators at the expense of their health. No comment from the state, but Governor Phil Murphy has said in the past that he would sign a smoking ban if it reaches his desk. And a group of Democratic congressmen today introduced a bill to rename a federal prison in Miami after former President Trump. It comes in response to a group of GOP reps who introduced a bill to rename Dulles Airport in D.C. after the former president.

Neither bill is expected to pass. Back to you guys. Sigh. All right. Kate Rooney, thank you. We're getting some news on United Airlines. Phil LeBeau has the details. Hi, Phil. Hi, Morgan. United Airlines has decided it will be postponing its investor day, which was scheduled for May 1st. They're going to push it off, may do it in the fall. Why? The airline says that at a time when they are focusing on reviewing their safety protocols and the procedures that they use to ensure that their operations are following all the procedures that have been laid out by the FAA, it would send the wrong message to be focused on celebrating their financial performance as well as their future plans. So as a result, they're going to focus on what they're doing with the FAA and the investor day

is for now postponed. They may have it in the fall. They haven't set a date at this point. Guys, back to you. All right. Philip, oh, thank you. Shares down more than one and a half percent right now. Up next, some shocking outperformers. Mike Santoli heads back to the dashboard with a breakdown of some of these under the radar market winners and what's driving them higher. And you can always catch us on the go, even over the weekend, by following the Closing Bell Overtime Podcast on your favorite podcast app. We will be right back. Welcome back to Overtime. Mike Santoli is back, and his magic finger is on this time with a look at some shocking market outperformers.

Mike? Yes, I did, Matt. I changed the batteries in the break. Yeah. Take a look at electrical components and equipment as a sub-industry of the S&P 500 over the last year. It's been a tremendous gainer within industrials, one of the strongest parts within this group. Eaton Corp was up 3 percent again today, by far the strongest. You got other stocks like Emerson Electric, Hubble, Ametek. These are typically all boring companies. A lot of components for power systems

and things like that, beating the market and also, of course, beating utilities. Now, part of the story here is, of course, AI and how much has to be invested to generate all the power, to retool data centers and build new ones. And that is a source of huge demand. So you can see why they're doing well in this order cycle. On the other hand,

the companies that are going to be delivering the power, they don't have the pricing ability. And so therefore, they can't preserve margins. They're not doing quite as well. And here's the valuation of that subgroup, along with utilities. They've obviously massively diverged, pretty much at a peak, you know, high 20s PE. Eaton in particular is above 30. It's double its 15-year average. Just asking the question here as to whether we've gotten a little too much AI excitement in one part of this sort of broader electrical landscape and maybe not enough attention on another one, John. Is it too much AI excitement or is it the AI wealth spreading into arenas where it wasn't originally? It's real. I mean, you're not going to deny that you're seeing the earnings revisions go up. You're seeing shortages in some of these product

categories and therefore there's pricing power. And these are actually very good companies too, like Eaton and Emerson have been known forever as just very, very well managed companies that do well by shareholders and all the rest of it. So it's not as if it's just hype. It's just a matter of what investors are willing to pay for right now. It's part of the broader momentum trade in various pockets of this market where people are just willing to just, you know, buy what's up a lot. Good stuff. And you didn't even have to draw a line this time. Mike Santoli, thank you.

Up next, the changing landscape of procurement. I caught up with the CEO of fintech company Ramp about his big push to save businesses some serious cash. The highlights are next. And later, the CEO of Flexport joins us with how the recent Baltimore Bridge collapse could impact the supply chain. We're going to discuss what's at stake when overtime returns. Welcome back. As the economy keeps humming with inflation sticking around, cost control is an important factor for business. Today, John takes time out with a software founder

who started out saving consumers money. He's now trying to do it for businesses. Yeah, Eric Glyman is co-founder and CEO of Ramp, a fintech company focused on spend management. His first company, Paribus, was bought eight years ago by Capital One. The idea was software automatically detected if the price dropped on a flight or, say, a hotel booking, and would send emails on your behalf to grab you the savings? The retailer would respond, and you'd wake up to $100, whatever, the next day. And so it was, and we charged a cut. That was how we did it.

And it just took off because it felt like magic. And it also was something, too, where for most people, it's just not worth your time to go every day, go back, check and do it. But it's a perfect use case for software. Now, with Ramp, Eric and his team are expanding that idea of software-driven savings to businesses. The company raised a Series D last summer at a valuation of around $5.8 billion. And earlier this year, bought Venue, a startup, to help expand the business into procurement. So in the same way that we know how to automate books from card transactions, we can apply that. Those rules can overlay onto bill payment transactions.

For procurement, really what a lot of this is, is it's integrated approvals. So making sure that if you need someone to approve a transaction that goes to the right manager, validation of pricing and contracts, we see billions of dollars of receipts of invoices every month and can validate that quote that sales rep on the software gave you. Is it market price? Is it below market price? Is it well above? And you should continue to negotiate. So you see all these products working together, saving more money and more time. AI, of course, a big piece of what's happening here. So the timeout takeaway, software for savings. There are big shifts happening here as fintech players converge. You've got other big startups using AI like Brex and Navon coming at this from the travel and expense side.

And you've got public companies like Bill and Marketta. The big player, of course, existing as SAP with Concur, will see if they can adjust for the AI era and defend market share, Morgan. We will see. Well, coming up, weighing supply chain worries, the collapse of the Francis Scott Key Bridge, raising some crucial questions over how this could impact time and cost. We've got the CEO and founder of supply chain logistics company Flexport. He's going to give us his take right after this break. Overtime, we'll be right back. This is one of the most important ports in the entire country,

one of the most important maritime vehicles that America has. The Port of Baltimore is responsible for $70 billion of economic activity, employs tens of thousands of people. Nine hundred businesses rely on the Port of Baltimore. That was Maryland Governor Wes Moore on Squawk Box this morning discussing the latest on the Port of Baltimore. A week and a half after the Francis Scott Key Bridge collapsed after being hit, the U.S. Army Corps of Engineers says it expects to open a limited access,

one-way traffic route by the end of this month. Joining us now is Flexport founder and CEO Ryan Peterson. Ryan, good to see you. So the issue here, it seems, isn't so much the diversion of traffic because ports in New York, New Jersey, and Norfolk, Virginia can handle it. It's what happens when the cargo gets off the ships. Can it get carried where it needs to go? What are you and your data seeing?

Yeah, John, thanks for having me on. That's exactly right, is that these containers are now getting delivered to the wrong place. And each one needs to be replanned and find a new trucking company that's going to deliver it. It's going to cost a lot more money. And the ocean carriers have declared force majeure, which means it's on the shipper. The company needs to go and get that cargo delivered, pick it up on time, get it where it needs to go.

They're operating on a fixed deadline. And if they can't get it out of the port within just a few days, they start to rack up fees. And it will cost about five times more for the trucking leg to move it from whether it's New York or Norfolk up into the Baltimore region. So it will cost about five times more for the trucking leg to move it from whether it's New York or Norfolk up into the Baltimore region. So it'll be a one-time short term, pretty high cost. Hopefully, you know, it's really good news that they're saying they'll be able to open up the channel. And so hopefully this is a pretty temporary incident as far as ocean freight is concerned. So can technology or better flow of data and information do anything about this?

I mean, yeah, like the number one thing that we did when we woke up that morning and saw that this container ship had hit the bridge was first off, find out, do we have cargo on the ship? It turns out we do. We had several containers on board, so we had to really make sure that they were all insured, which they were, thankfully, and then very rapidly reach out to those folks and start working with them. And then look across our wider network and see what containers do we have flowing into the port of Baltimore. It turns out we have almost 1,000 containers heading that way. And then act immediately to notify those customers. We can use technology to make it really clear which containers are being diverted, what their new ETA is. And then we have over 400,000 truck drivers on mobile apps at Flexport. So we can actually get these, you know, find new truck drivers, get them arranged, get them to these other ports, pick it up.

So it can be pretty seamless thanks to technology. Hey, Ryan, it's good to see you. We're focused on Baltimore, but we've obviously seen different flashpoints and different dynamics in terms of rerouting of cargo and freight, really the globe over in the last couple of months. I wonder what you're seeing in terms of the Red Sea and these flaring tensions in the Mideast, whether those routes are beginning to normalize at all and what that's meant for freight rates as well. Yeah. Hey, Morgan. Yeah, it's a very difficult time to be moving cargo into the East Coast of the United States. The main routes to get there if you're coming from east or south Asia is either to go through the Red Sea and the Suez Canal, which, as you mentioned, has been blocked. The container ships are having to go around the Cape of Good Hope, around the southern tip of Africa because of missile strikes against and piracy against the ships. And the secondary route is to go through the Panama

Canal, which has been congested and only operating at two thirds capacity because there's not enough water in the river system there that keeps the canal running. And then now you add this with Baltimore port being taken offline. And later this year, what we're going to see is that the union that operates the East Coast ports has an expiring contract. It ends on September 31st. So we're going to see is that the union that operates the East Coast ports has an expiring contract. It ends on September 31st. So we're also in the midst of kind of contract renegotiations and a lot of uncertainty about whether there'll be work slowdowns or even a strike at the end of the year. All of these are kind of confounding factors, making it very difficult to move cargo to the East Coast. Prices have gone up a lot. The Red Sea disruption in particular drove spot market pricing earlier in the first few months of this year up about three to four times what they would have been otherwise.

We're starting to see that normalize as there is quite a lot of excess capacity, but it's taken a lot longer to get cargo there and is costing more. Okay. Ryan Peterson of Flexport, thanks for joining us. My pleasure. We're getting some news on Boeing. Phil LeBeau has the details. Phil. Hey, Morgan, it is proxy season, so we find out about executive compensation. And in the case of Boeing, we find out more about the executive pay package for outgoing CEO Dave Calhoun.

Overall, Boeing's board approved compensation totaling $32.7 million for Dave Calhoun. But let's be clear here. A lot of this will come in the form of stock grants, stock awards that will vest over time, not immediately. The current value of those stock awards, $24.8 million. So not close to the $32.7. He did realize $5 million in pay in 2023. That's down from $7 million in 2022. He has declined a $2.8 million bonus. Also, the Boeing board, in terms of Dave Calhoun's 2024 compensation, the long-term incentive has been cut by 38%. And when you look at how much Boeing has paid Dave Calhoun in terms of his compensation from 2020 to 2023. It totals $12.8 million right now, though we should point out, again, with stock awards and stock grants,

it has the potential for another $50 million, depending on what happens with shares of Boeing in the years to come. Guys, we'll send it back to you. OK, Philip O., thank you. Coming up, is an IPO the next frontier for Sierra Space. I caught up with the CEO of the space company and got the latest update. We've got those details after this break. Over time, we'll be right back. Breaking news on Tesla.

Phil LeBeau, what's going on? John, we have a date for the unveil of the RoboTaxi. Yes, Elon Musk says there will be a RoboTaxi, and he plans to unveil it on August 8th. He just put that out on X. That's all he said. Did not say anything about when we might see this go into service, any of the particulars, if it's going to be a new model, if it'll simply be software attached to a current Tesla model.

But again, Elon Musk saying that we will get the unveil of the robo taxi on August 8th. Let the speculation begin in terms of what that will entail. Guys, back to you. All right. Phil LeBeau, thank you. Shares now up almost 3 percent. Well, investors are watching Sierra Space as it lays the groundwork for a possible IPO. Spun out of defense contractor Sierra Nevada Corporation three years ago, Sierra Space is the result of a big bet on commercial space by the billionaire Osmond family, currently valued at $5.3 billion. Now, it is perhaps best known for its NASA-contracted space plane, Dream Chaser, which is poised to make its first flight later this year.

But it's also working on a commercial space station with Jeff Bezos' Blue Origin. It recently won a high-profile defense contract to develop a constellation of missile-tracking satellites. Just today, Sierra Space unveiled a line of buses, these are the main bodies of satellites, to sell to others as well, called, not coincidentally, Eclipse. We've been very focused for the last three years when we spun the company out from Sierra Nevada, de-risking the business plan, as I mentioned, de-risking the technology stack, getting Dream Chaser into flight. And as I think when we start to look at 2025, we'll start to look at that as an option and make the decision depending on what the markets look like.

We really wanted to think about making sure we had very strong differentiated revenue streams, not just, again, in one particular part of the market, but I think a very broad set of parts of the market. So again, transportation, destinations, in-space infrastructure, national security and satellites in our components business. So 2025 possibly for an IPO. National security is the fastest growing business for Sierra Space right now, but CEO Tom Weiss says the company has $4.4 billion backlog. It's poised to double its sales this year and is focused on becoming free cash flow positive. The company's very focused as well on building out infrastructure in low Earth orbit. It's targeting four key markets that could benefit from testing and manufacturing in microgravity stem cells oncology vaccines and industrial glass those

four segments terrestrial markets were 900 billion dollars in 2022. they're huge uh they're growing at a rate that'll put those markets somewhere around 3.7 trillion by 2038. Our focus on putting up a space station is actually to disrupt terrestrial markets by using microgravity in the difference of the space environment that's just 250 miles above our head. So you think about the next factories in biotech, right, aren't somewhere on the globe, they're 250 miles above our head because there you can do some things that are radically different in terms of protein crystallization that we know actually will produce better drugs. So we think actually this is a huge market for us. It will be our largest market in CR space.

So Vice is betting that CR space will help usher in the quote most profound industrial revolution in human history. It's ambitious. Meantime, CR Space is finalizing its Series B funding round, capital for potential acquisitions, and Wall Street's paying attention. There are a number of analysts now tracking this still private company. To listen to the full interview with Tom Weiss, scan the QR code right there. You can check it out on my podcast, Manifest Space. All right.

Will do. And then on CNBC and in the markets, the economy next week, we once again have bank earnings starting up on Friday before the bell. We do. And CPI, PPI and Fed Minutes. That's going to do it for us here at Overtime. Fast money starts now.