Closing Bell - Closing Bell Overtime: Former NEC Chief Economist On Trump 2.0; Early Real-Time Data On Holiday Shopping 11/27/24

Episode Date: November 27, 2024

Neuberger Berman portfolio manager John San Marco gives his top retail picks for the holiday season. Former NEC Chief Economist Joe Lavorgna on what to expect under Trump 2.0. Tony Fadell, new Ledger board member, and Pascal Gauthier, Ledger CEO, on making a hardware product for digital currencies. Zeta Global CEO David Steinberg on early data signals from shoppers on what will win this holiday season. 

That bell marks the end of regulation. The Salvation Army ringing the closing bell at the New York Stock Exchange. Lakeside Holding Limited doing the honors at the Nasdaq and a mostly lower finish for the major averages ahead of the holiday break as tech drags on the Nasdaq while real estate, health care and crypto get a boost. That's the scorecard on Wall Street. But winners stay late. Welcome to Closing Bell Overtime. I'm John Fort. Morgan Brennan is off today. Coming up this hour, former Trump National Economic Council chief economist Joe LaVornia joins me with his first read on today's inflation report and how tariff and immigration policy might impact prices under Trump 2.0. Plus, Neuberger Berman's consumer portfolio manager lays out his top retail picks into year end. And Bitcoin prices on the upswing again today after dipping earlier this week. And we'll talk to Tony Fadell, godfather of the iPod, about his latest crypto venture, bringing more physical hardware to the digital currency world.

Well, let's begin, though, with the market action. Joining me is BD8 Capital Partners CEO Barbara Duranuran, and Crossmark Global Investment CEO, Bob Dahl. Guys, happy Wednesday. Barb, so we got the PCE data this morning. I'm not sure there were many big surprises there. I haven't talked to you for a while because you've been in New Zealand. So tell me, everything that's happened and a lot has since, anything changed your market outlook at all? Or is it steady as she goes?

No, my market outlook has not changed i mean you saw the pce number it's kind of been stuck the core pce around 2.7 percent for about six months so you know you're hearing the fed say more about it's not going to ease as quickly as people might have expected but the market is is absorbing that it seems to be okay the big the new uncertainty is really about tariffs. I mean, the Fed, I think, not only can they delay and maybe they will cut rates in this next meeting, everybody's wondering, it's about 50-50, but with economic strength, inflation sort of holding steady, the Fed needs to see what happens with tariffs. Because if President-elect Trump were to come in and do the maximum in tariffs, I think what you're seeing on the street is lots of analysis saying how much the economy would slow down, how much inflation would go up, and it would not be great.

And some people think it might not be enough to offset even the tax cuts that are anticipated. So I think that's a big uncertainty the Fed, who's always data dependent, will be watching to see. And, of course, we're not going to know for a little bit of time how much is just negotiating tactics, as the market believes right now, or is real. So that's a major uncertainty that will be taken with us into the new year. Okay. I want to ask you more about that in a moment. But first, Bob, you say we're in a risk-on environment with everything going on. How long does that last? What are the biggest risks to risk assets from here? We're in a seasonally strong period, John, as you know, but the risks, we just talked about it, Barbara just outlined uncertainties,

50-50 on the Fed, tariffs, yes or no. I stare at my screen, I see multiples on PE basis in the mid-20s. You know, how good can the news be? Markets discounting a near-perfect world? Maybe we'll get it, but I have a feeling there's some uncertainties out there. So, fully invested, but biting my fingernails. Bob, how certain is it that tariffs are going to have, even significant tariffs, the impact that the people, the anti-tariff crowd thinks they will. Because there's an argument out there, well, if the U.S. is making the stuff that's being tariffed, then you shouldn't overestimate the impact of that. That tariffs maybe are necessary to get

more to an even playing field in free trade because the U.S. has been taken advantage of in the past. Do you put any stock literally in that? Well, I think you're starting to see a lot of analysis going into this now that, you know, that President-elect Trump has now put or hopes to put in place two pro-tariff people in key positions. That's the Treasury Secretary and the U.S. Trade Representative. So it looks like there is there are going to be some kind of tariffs. But I think when you look at, for instance, let's take autos, you know, we're talking about tariffs on Canada and Mexico, and this is where U.S. automakers and companies have done long-term planning, assumed this policy

would be in effect a long time. And you've got 42, something like 42, 43 percent of car parts imports come from Mexico to our companies. So the question is, what's that going to do? Will they absorb part of it? Margins? Will they increase their prices where consumers are already at historically high rates of affordability in terms of cars? They're about shut out. And also Mexico, which some 82 percent, you know, of car parts, you know, contribute to them. So and that's it. You know, we're trying to stop immigration. That means helping those kind of countries grow. But I think the impact will be real, but we don't know how much it will be. And so we've had tariffs increases in the past. It's been absorbed. But you also have the threat of retaliation. What's the retaliation? In fact,

the Mexican president has already been out, you know, rattling the chains on that. Yeah, she had a strong response in that in that letter about tariffs. So, Bob, small caps, Russell 2000 actually ending in the green, it looks like to me today, only significant index to do so. How do the small caps you think fare under these Trump themes? I think down cap will continue to win. It's been going on for a bunch of weeks now. They're cheaper stocks. They tend to be more cyclical. And if the economy does better under Trump than was doing before, all that points to some down cap portfolios. I know in my portfolio's days, the Russell two beats the Russell one. I have a good day and vice versa. So I think there's

more of that to come. All right. Bob Dahl, I'm Bob Duran. Thanks for joining us. Bob, good to see you back stateside. Breaking news, meantime, on Microsoft, Julia Boorstin has that story. Julia. The U.S. Federal Trade Commission has opened an antitrust investigation into Microsoft. This is according to a report by Bloomberg. This report saying that this is drilling into everything from the company's cloud computing and software licensing businesses to cybersecurity and AI products, and that this inquiry, this antitrust investigation, excuse me, comes after a year of conducting informal interviews with competitors and business partners. We see shares not really moving, or they're down just fractionally in

after-hours trading. But we will come back as we hear more reaching out to Microsoft for comment. This report saying that FTC antitrust lawyers are set to meet with Microsoft competitors next week to gather more information as part of this investigation. Back over to you. Yeah, interesting stuff, Julia. And those competitors are also being investigated in many cases. Thanks. Well, let's turn to senior markets commentator Mike Santoli for more on Microsoft and software stocks. Mike? Yeah, John, it's an extra little kind of pebble thrown into the pond here in this group. Take a look at software relative to semiconductors. Been on quite a ride. This is going back a few years, back to early to late 2020, actually. So a four year chart. Remember this 2021, especially in the early end, was the peak

in a lot of that concept software, a lot of recent IPOs, non kind of blue chip software. And then big crash semis take off. Obviously, the first phase of the boom really privileges semis. And that's when they're coming up relative to semiconductors. And then this recent ramp higher, I think because you had this violent rotation in the market toward laggards from leaders. You also had these kind of neglected stocks, heavily shorted, higher beta. That was software. So they had their big run and then they pulled back. Obviously, a couple of poorly received earnings reports last night contributing to some of this.

But just thought it was important to show that even though, you know, software has had this big run recently, it sort of comes after this choppy period and kind of interesting, really right back to the old relative highs. Now, take a look at Microsoft compared to the broader software sector. That's the IGV ETF. It's kind of an equally weighted. So it doesn't give any extra credit for bigger market caps. And you see right here on a three year basis, Microsoft has sort of caught down to the rest of software and has done nothing for months right here. Now, whether that is just the fact that mean reversion after a great run or the fact that it seems like it might be a little bit hamstrung by regulators and, of course, has a pretty full valuation. I just thought it was

interesting that it really has given up a big lead that it had built. It certainly is, Mike, and it's a great visual representation. It's something I've been poking at on the micro level for several days now about some of these software moves. And I find the fact that software has been under this pressure for a couple of years now so interesting because in these technology cycles, so often there ends up being either consolidation where a smaller name that gets the technology right takes out others or a vertical integration where the likes of, you know, in the past an Oracle or a Microsoft starts doing deeper industry dives and starts buying up smaller software names. But, you know, maybe investors haven't been betting in that direction. Yeah, it's unclear if maybe the absolute largest can do a whole lot of rolling up of smaller companies. But I wouldn't be surprised if one element of this snapback in software was because

they're all trading, many of the smaller ones trading at big discounts at their peak levels. And even if there is any kind of freeing up of M&A regulation, it likely would be targeted based on their economics and even private equity. As that FTC headline stretches across the bottom of the screen. Mike Santoli, thanks. See you in just a bit. Well, now let's turn to one winner in the tech space today. Ambarella mentioned it in closing bell overtime yesterday, higher on the back of results, off the best levels of the day. Christina Partsenevelis joins us now with more on that stock and the read-through for some other companies. Christina.

Well, this is considered a name often overlooked in the chip space, this according to Oppenheimer analysts. And as you mentioned, it's getting a lot of attention today. Ambarella makes chips specifically used in autonomous driving, assisted driving, and video recordings and streamings. And despite this subdued auto market, you just spoke about it, John, with a previous guest, Ambarella defied expectations by posting its first profitable quarter in 18 months. The company's revenue surged 30% sequentially, and it's shown now, or it has now increased its guidance for the third consecutive quarter, clear indicators of just this business transformation.

But this is a company-specific story. And I say that because it's ramping up products, which mean more umbrella technology in cars at higher price points. It's completing an inventory correction in its legacy processors. And lastly, expanding its share in advanced driver assistance systems, ADAS, for example, with Rivian. Their auto pipeline did drop, though, from $2.4 to $2.2 billion because of delayed and canceled projects. Similar trends faced by competitor Mobileye. Mobileye missed on Q3 earnings very recently, but the stock has actually been climbing steadily since early November on the notion that long-term growth continues in the autonomous driving world. A narrative also, and I know you know this,

John, pushed by a competitor, Qualcomm. They just had their auto analyst day last week. The commonality between all of these companies is the ramp up of AI on the edge and the peripheral. So it would not just mean the cell phones and PCs, but also in the cars. Yeah, and Mobileye having an investor day coming up that we'll be watching. Security cameras, another angle on this. And not just security, make sure nobody is breaking in, but cameras that are watching processes, whether that's across retail, across manufacturing floors, making sure that things are being done in the most efficient way, even tracking to suggest more efficient ways to do things. Samsara is a company that we've talked to often here on Overtime

that uses cameras in that way. And you need intelligence in the camera at the edge, as you said, right, in order to most efficiently enable those AI and IoT technologies. Which is interesting because now you're making a link between semiconductors and retail and maybe a trend that we could start to look at in the near future with retailers that maybe are downplaying the shrink situation but do need to utilize these cameras everywhere and companies like ambarella will be the one stepping up to the plate yeah and potentially in the warehouses as well we're talking about amazon of course and walmart and all the others as we gear up for the holiday season. Christina, thanks. Thank you. Well, some major moves for retail names speaking of today, including a big drop for Nordstrom

following earnings and a jump for Urban Outfitters. Up next, Neuberger Berman's consumer portfolio manager joins me with the names that should be on your shopping list and how tariffs, taxes and rate policy could all impact his holdings. And later, former Trump National Economic Council chief economist Joe Livornia weighs in on today's inflation data and Trump's economic policy proposals. Overtime's back in two. Welcome back to Overtime. Retail stocks taking center stage as the holiday shopping season kicks off on Friday. And we've already seen some big moves this week with Nordstrom sinking on results, urban outfitters soaring. Meantime, the XRT retail ETF is on pace for its best month since February. Joining us now with the names on his shopping list,

Neuberger Berman portfolio manager, John San Marco. John, good to have you. I think Ulta, Ulta Beauty is one of the names on your list. That stock had a good day, up about 4%, but it's way down, almost, I think, 200 bucks a share down from its highs earlier in the year. It was over, I think, 560. Now it's at around 375. I had a guest earlier today on CNBC arguing that the downswing in beauty has only just begun why do you disagree jim john great to be a bank thanks for having that they grab me on the beauty kit that doesn't lend itself to to violent uh... pendulum swing that uh... highly

considerable category many named uh... uh... academic macro theory after the lipstick effect in the you know in our our experience in in the data we see that the category does behave accordingly. It's a very affordable luxury for consumers who are using it up. It expires. There's a constant flow of innovation that expands the category and makes it interesting. And maybe the last thing I'd sort of throw in there is just that you have this demographic expansion of the category. Consumers are using it younger and younger, and there's more use cases for older consumers as well. So

great category and would, you know, respectfully disagree with the other viewpoint. Okay. How do you make sense of this dichotomy that I seem to be hearing on the consumer as it affects retailers right now, where on the one hand, the consumer looks pretty healthy. The PCE numbers today suggested that things are OK. But on the other hand, you have stretched credit. You have Walmart and Amazon saying that consumers are being really choosy about what and when they buy. They need discounts. And you've got a shorter holiday shopping season this year than we've seen since 2018. Yeah, I think the results that we're seeing in the consumer's behavior and where they're spending their wallet lags the sort of obvious inputs.

You know, it was quite a bit after inflation first spiked and food prices really you know, really started to increase and gas prices too, going all the way back to 2022, before you start to see some of that pain slowly leak into the retail space. And, you know, I believe what we're seeing now is the opposite, which is, you know, real wages have been positive for quite a while. Significant cohorts of consumers have balance sheets that are in pretty good shape, particularly homeowners. And yet, to your point, you know, we really haven't seen discretionary come back yet. I think prospectively, you know, all things equal without any major market disruptions, you know, I believe we'll see the consumer behave in a little bit more healthy fashion looking forward. How much should the retail investor be concerned about a dynamic

where perhaps some retailers are trying to get inventory into the country now ahead of tariffs, but at the same time it's the holiday shopping season, so they've got to manage that, and it's shorter, so they might end up having to discount to avoid having warehouses too full, and that might hit margins. I don't envy the folks whose job it is to figure that out. Tactically speaking, in the industry, it's a really tough job right now. It was made much harder by the volatility around the election. It was made much harder by a very unhelpful fall from a weather perspective. And so I think from an investment perspective, just taking a step back, a name like TJX,

we own in the Connected Consumer Fund, they can capitalize on some of that unpredictability of the business and buy stuff opportunistically. But I really do think a premium on high-quality retailers that offer sort of an unbeatable consumer value proposition is paramount. Okay, finally, let's put a Warby Parker chart up. I mean, I thought direct-to-consumer was dead, but this chart doesn't look like it. What's happening here? Is it Warby-specific, or can we read across this into some other things? It's a very good category. And three years ago, our conversation would have been different than over the last three years. For decades, this category was a reasonably

fast-growing but very steady category with really rational behavior. And Morby came along with an innovative mousetrap. They were great at the digital stuff. They had built a wonderful brand, were really strong on design. And then, you know, the volatility around COVID was just surprisingly disruptive to this category. And shortly after they came public, I thought management leadership did the best possible thing, which is, you know, took a full dose of medicine, reset earnings expectations much lower. And since then, they've just, you know, they've done a great job on the whole bit, managing expenses, managing expectations, allocating capital smartly. And you're starting to see

the category come back because it is a medical necessity and the consumer can defer a new pair of glasses, but not indefinitely. Not if you want to see where you're going. John San Marco, thank you. Thank you. After the break, the defense of tariffs. Former Trump National Economic Council chief economist Joe Livonia breaks down why he thinks tariffs make a lot of sense and why he says inflation will come down during President-elect Trump's second term.

And later, Bitcoin's likely to be a popular topic around the Thanksgiving table. We'll get you set up for that conversation as prices head back toward $100,000. Be right back. Welcome back to Overtime. The Fed's preferred inflation gauge, the Personal Consumption Expenditures, PCE Index, was in line with estimates for October, according to this morning's data. This latest reading comes as some on Wall Street worry President-elect Trump's proposed tariffs will have an inflationary impact on the economy. But our next guest says that won't be the case.

Joining us now is Joe Livonia. Joe is chief economist at SMBC, NICO Securities America, and a former chief economist at the National Economic Council under the first Trump administration. Joe, good to see you. Thanks, John. Good to see you. You say these inflation numbers today are fine, but not great, but that President-elect Trump is going to get it down to 1% next year while moving ahead on tariffs and immigration policy. How does he get 1%? I'm not sure. It's going to fall about 1%.

It's around 3%, give or take a little. So it'll go from 3% down to 2%, which is price stability. And that'll happen, John, namely through a couple of things. Number one, certainly lower energy costs, which filters throughout the economy in so many ways. There are energy, such an important input into the production of so many items. And, of course, anything that needs to be transported, obviously, is dependent upon combustible engines and energy. So certainly lower energy costs combined with what I think, John, will be a very supply side led animal spirits increase in capital spending.

Capital spending inflation tends to be quite low. And when you have capital investment, it adds to the capital stock or the economy's productive output. And that should also keep inflation down. Thanks for clarifying that. There's a big difference between. I mean, it could be. I mean, it was I mean, look under under Trump 1.0. I mean, inflation was by the Fed's metric was actually under 2 percent. It had a one handle on it. Right. So we could get back there at some point. And I'm pretty optimistic inflation is going to come down and that it's not going to be the problem that we've had the last four years. Now, why won't immigration action and mass deportations shrink the labor supply such that the cost of labor goes up and actually

fuels inflation? Part of the problem, John, is that we're looking at these are illegal workers coming in. In many cases, they're not even part of the official wage data. They're not part of the household survey that measures unemployment. And in some cases, they're probably not even part of the establishment survey, which, by the way, shows that we actually have fewer jobs than what the government was reporting. We had data last week from the BLS that showed that in addition to the roughly 800,000 in downward revisions we're likely to see as of March of 24, we lost an extra 400,000 jobs by June. So we're talking over 1.2 million fewer jobs. So there is tremendous unused labor, you could argue, in the United States economy.

And therefore, this notion of deportation somehow leading to what economists would call is a leftward shift in the labor supply curve, I think is completely inaccurate. So you don't buy the argument that the jobs that these immigrants are doing are jobs that the people on the books don't want to do? No, what I'm saying is, is I don't think in many cases the people that would be deported are functionally a real integral part of the market. In fact, if we look at deportations under President Obama, we had about three million deportations over his eight years. And under Trump's first term, it was less than a million, according to the ICE data, you know, the ICE, which is part of DHS. So, no, I don't think that, you know,

we're going to somehow have this shortage of labor supply. By the way, if we look at the labor market, what we're seeing is job growth slow, labor supply, labor force participation still below its pre-pandemic peak. And we're seeing wage pressures moderate. So we're not going to get inflation from less labor. And by the way, inflation is not a labor phenomenon anyway. It's a, it really, it's a money and credit phenomenon. Let me get too much money chasing too few goods. Let me get one to you on tariffs. There are people questioning, is this a negotiating tactic or is he really going to do it? And if he really does it and it's maximum tariffs, they're saying it's bad. You say tariffs make sense.

He's really going to do them. Why do they make sense? Well, they make sense because it allows us to extract some sort of competitive advantage where in the case, say, of China, we're not on any type of level playing field in terms of labor laws, in terms of environmental laws. So I think that the tariffs are used as a tool to try to extract a more beneficial relationship for the U.S. The reason they're not inflationary is that, in theory, when a tariff is increased, it's a tax. It's an increase in the price level. Inflation is a rate of change. Inflation is a function of money, excess money and credit creation. In the case of the tariffs that President Trump proposes, it's also being designed to try to re-onshore and re-galvanize U.S. manufacturing, which if you have low energy costs, you have deregulation,

and you've got a reduction of corporate tax rates from 21 percent down to 15 percent, the tariffs all work, everything works in unison. It's a fully integrated approach. And by the way— But the tariffs work immediately, and it takes a while to build up that manufacturing capacity now. Well, it can. But if you look at the data from 18 and 19, when the tariffs were in place with China, import prices from China were falling at about a 2 percent rate. When the tariffs were actually put in place, import prices fell faster, almost 3 percent. And that was because China absorbed the bulk of the tariff increase through a weaker exchange rate. All right. Thanks for explaining your point of view. An important one. Joe Livornia, good to see you.

Thanks, John. Well, time for a CNBC News update with Julia Boorstin. Julia. John, a federal judge found New York City and its Department of Corrections in contempt for failing to stop the violence and excessive force used at the Rikers Island jail facility. The judge ordered the city and lawyers representing the prisoners to create a plan for receivership by January 14th. The ruling today comes nearly a decade after a class action lawsuit settlement brought the city's jails, including Rikers Island, under federal oversight. Boston marathon organizers will pay prize money to athletes who originally missed out because of doping offenders who finished ahead of them but were later disqualified.

The organizers said the payouts will begin in January and apply to runners going back to 1986 when the race started awarding prize money. And Hyundai is recalling more than a quarter million vehicles in the U.S. on concerns the rearview camera image may fail to display. The National Highway Traffic Safety Administration says the recall affects certain Santa Fe SUVs and Elantra sedans from the 2021 and 2022 model years. John, back over to you. Julia, thank you. Well, coming up, the flight to quality. Mike Santoli is back to look at whether so-called quality stocks are starting to look overvalued, and if that could be a warning sign for the bulls. And let's get another check on Microsoft. It is

moving lower in overtime after a report said the FTC has opened an antitrust investigation into the company, including its cloud computing, software licensing, cyber and AI businesses. Overtime will be right back. Welcome back to Overtime. Mike Santoli returns with a reality check on quality stocks. Mike. Yeah, John, I've kind of been on this idea for a little while, which is the market really is willing to pay up heavily for so called quality stocks. Now this is a quantitative set of factors that goes into it. It's profitability return on equity balance sheet strength all that kind of thing. Here is the premium in terms of P. E. multiple that the is now being paid for that quality factor within the market compared to the S. and P. five hundred. So we're talking about a five to six times or five to six P.E. point advantage for quality stocks. It's the highest since right there, which is really around 1998. Back in that bull market, the average blue chip peaked like a year and a half, two years before the overall index indexes did. Because what happened after this was people had a flight from quality and they bought more speculative stuff, riskier, lots of IPOs, things like that.

Maybe we're headed for a phase like that right now. But one thing that J.P. Morgan, which created this chart, mentioned is quality is no longer synonymous with defensive. If things get a little bit choppy, because it's much more about souped up growth than it is about defensive properties, at least as tech reporter, that chart scares me because it reminds me of when Cisco was most highly valued and it never got back to that point. Microsoft had a loss decade after around 2000 before Satya Nadella came in and drove it to new heights. I mean, you can go down pretty far in a quality stock under certain economic conditions. Yeah, and that's the sort of fringe case where things get so overvalued. I mean, back then, Microsoft would have traded briefly at like a 50 to 60 times P.E., right? So that's like double what the overall market was at the time.

Cisco, like NVIDIA, I mean, they literally can't put to use all the cash coming in the door in a smart, constructive way just because of amazingly concentrated demand for their products. So not to say Nvidia is at that culmination point yet that Cisco eventually got to, but that is the idea that somehow you're overpaying for companies that are kind of over earning in the short term. And then, you know, things break the other way. All right. Investors, watch your back. Mike, thanks. Bitcoin resuming its March higher today after just failing to hit the 100,000 mark last week. After the break, former Apple executive and iPod godfather Tony Fidel tells us why he just joined the board of Ledger. It's a company bringing more physical hardware to the crypto world. We'll be right back.

Welcome back to Overtime. Bitcoin is up more than 5% today, inching closer to that $100,000 mark after its post-election rally took a pause over the weekend. Meantime, crypto wallet maker Ledger recently announcing that former Apple executive Tony Fidel, who helped create its Stacks wallet, will be joining its board of directors. The company makes physical hardware wallets to store crypto keys. Joining me now are Tony Fidel and Ledger CEO Pascal Gauthier. Welcome, guys. Tony, good to see you again. So tell me crypto wallets. OK, I'm sort of supposing maybe this is for everything but Bitcoin because you can buy Bitcoin in your Fidelity account nowadays. But this, in a way, for those who are crypto

uninitiated, might seem like a throwback to earlier days before there were more different ways to buy it. Why is this important, particularly from a security point of view? It's a question for Camilo. Well, so cryptocurrency, it's about a secret. You own a secret. It's a cryptographic secret. And actually, that secret is everything. If you share the secrets, no longer a secret. Your money is gone.

Ledger and secure hardware is the only way to really make sure today that you don't compromise on your security, both when your clients are at rest, but also when you engage and you want to make transactions. And so this is why the success of Ledger today, we have reinvented cybersecurity to protect online secrets and cryptocurrency is how we started. So Tony, what made you want to design something like this, which is, you know, certainly a niche product

in the sense that not everybody has enough crypto to want to need to protect it this way. Well, specifically in this case, you know, the hardware that I saw before joining Ledger, you know, and working with them four years ago was it was really arcane. It reminded me of MP3 players back before the iPod. And I saw an absolute need for reinvention of that. And that's why I went after the Ledger stacks and helped to design that and put that together for Ledger. But really, you're going to find out more and more that your smartphone can get hacked. Those private keys that people are using to open

up their software wallets can be hacked. Ledger is the only device. And the reason why I joined them was over 10 years, the devices from Ledger have not been hacked. And that's a special thing to really understand. Security is key and paramount when you're doing financial transactions on the blockchain. Pascal, there are a lot of different, certainly, currencies on the blockchain and a lot of financial transactions happening on phones. How broad is your ambition for this product? Look, you know, we think that cybersecurity will be a bigger problem next year, a bigger problem the year after.

And we also think that we will become tokenized beings, meaning that you will own more digital stuff tomorrow. And so the combination of these two factors mean that everybody will need to upgrade their security. And I think right now, you say that it feels niche. Tomorrow, I think that everyone will be concerned by the security because it's not just your money that will go on the blockchain,

but also your identity and everything that has value for you. And that makes you a digital being. So we think this is really big. And this is why I need Tony's help at the board now, you know, to after we design the product together to come and help me, because this is no small deal. And we want to build a very big company. Tony, I want to step back and ask a broader technology industry question. Just got a headline earlier in the past couple of hours, few minutes, about an FTC antitrust

inquiry into Microsoft, investigation into Microsoft. There seem to be so many of these antitrust investigations going on. What's the impact of having so many big technology companies competing with each other, yet also being investigated for antitrust? What's the impact on growth? Any impact on innovation? Well, look, we've seen these types of FTC investigations in these companies

for years and years and years. And so I think it's just showing this, the current administration and how much they're targeting these kinds of views. We'll see what the new administration brings. brings, it's a mixed bag with that. But I do think each one will deal with them differently. But again, these are distractions for their management team. And it has to be said that they do spend precious time to do this as well as resources to be able to answer each of these investigations. So when you have lots of them, they do hinder the business team

from actually doing the job at hand, which is growing and creating new products. All right. Tony Fidel, Pascal Gaultier, thank you so much. It's Ledger that we were talking about there, Digital Wallet, and Tony Fidel joining the board. Well, after the break, when high spirits are a bad thing, we'll look at how President-elect Trump's proposed tariffs on Canada and Mexico

could be a buzzkill for some American customers. Plus, could consumer tech makers be in trouble this holiday season? Coming up, a warning about online interest in mobile phones and appliances and which products are taking some of that attention away. Overtime will be right back. Welcome back to Overtime. Your after-dinner Thanksgiving drink could get more expensive next year if President-elect Trump's proposed tariffs go into effect. Brandon Gomez has a look into why Mexico and Canada are so important to the spirits industry.

Brandon? Hey, John. Yeah, lots of booze coming over both borders. Look, take a look at estimates from the Distilled Spirits Council of the U.S. In 2023, they found that imported 4.7 billion worth of tequila and mezcal from Mexico and over 200 million worth of whiskey from Canada. So who stands to be hit hardest? Well, Diageo, for starters, owns Casamigos and Don Julio tequilas.

Market data shows that imports from Mexico account for 26% of U.S. sales by value. Canada accounts for another 16% there. And then, of course, you have Modelo and Corona Maker Constellation Brands. Now, year-to-date, 86% of that company's sales have come from Mexican beers. Roth MKM estimates the company would have to raise beer prices by 12 percent to offset tariffs. Now, important footnote when it comes to Constellation brands is that they could obtain an exemption because of a 2013 antitrust settlement that required the company to keep production in Mexico. Now, there's been a broader push, too, for exemptions across the industry. Investors might not want to offload shares of Constellation

just yet. But in a better position, you have companies like Molson Coors, like Boston Beer, who do have domestic production companies with more European import exposure as well. Although the EU isn't exactly tariff free either, John. Yeah, I imagine this isn't bad for the likes of Maker's Mark either. You know, if you're making bourbon in Kentucky, no tariffs there. Good for domestic consumers. But if you look at the exports in terms of those American-made whiskeys to the EU in March of 2025, those 50 percent tariffs that were retaliatory based on the steel negotiations are set to go back into effect. So unless the Trump administration renegotiates those terms that the Biden administration has delayed,

you could see those impacting the Kentucky bourbon and the Tennessee whiskeys. Anything being said out there about how much substitution there tends to be? I mean, I know if you want mezcal, there's only one place where you can get it. But do consumers' tastes perhaps tend to shift based on how expensive something is? Are they more likely to try something else, maybe domestic produced under these sorts of conditions? They can. There's a lot of elasticity in the category, right? Because of the tariffs impacting Canadian imports, perhaps instead of a Canadian whiskey, they try an Irish whiskey or a scotch that comes from the EU or from the UK.

I mean, there is a lot of elasticity in the category. So there are options for consumers, and you may see them turn. But consumer spending doesn't always dip just because prices rise in the spirits category. People got to get that happy hour drink somehow. And I imagine you might just see some people stocking up on some of that stuff that'll keep for a while. Brandon Gomez, thank you. Up next, why in-store shopping could make a big comeback this holiday season and the companies that stand to benefit most. Also, don't forget, you can catch Overtime on the Go

by following the Closing Bell Overtime podcast on your favorite podcast app. Be right back. We have a news alert on Applied Therapeutics. Julia Borsten has it. Julia. That's right. The FDA has declined to approve Applied Therapeutics' genetic disease drug. This was a drug to treat glaucoma, a rare genetic metabolic disease. And on this news, the stock was halted when it resumed trading. It plummeted more than 80 percent now, about 80 percent in after hours trading. Now, before the market closed today, the market cap of this stock was about $1 billion.

Now, clearly, it's just a fraction of that on this news that the FDA has declined to approve one of its key drugs here. Back over to you. Wow. Okay. Julia, thank you. Well, meantime, the consumer discretionary sector hitting a record high today, up more than 12% in November. My next guest runs a firm that uses AI and real-time consumer data to help clients acquire and retain customers. It can also give us an early sense of what brands and categories are hot and which are not during the holiday season. Joining us now is Zeta Global co-founder, chairman and CEO David Steinberg. David, great to have you. Before we get into the data, I got to ask a question about the company and the stock.

The stock was hit on a short seller report earlier this month. One of the claims raised in that report is that Zeta has what are called consent farms, websites that are getting people to hand over more data than they intend. Are you involved in the consent farms at all? Would you frame it differently what these practices are? What should investors know about that? Let me start by saying that the report that published was so erroneous and so filled with misstatements, it didn't even get our audit firm correctly. Now, John, to put it in perspective, we publish our audit firm on almost every document we put out there. I had to ask somebody what a consent farm was in order to respond initially. No, we never do consent farms.

Our organization is one of the most powerful as it relates to our data. hundreds of millions of dollars over the years in acquiring companies that create first party opted in data where we partner with the consumer. The consumer is always getting a value exchange, whether they're getting a newsletter or able to comment on a site or share different content to their social graph. A consent farm is when somebody is running misleading ads to get somebody to sign up for something that they have no intention of giving them. We never do that and we have never done that, John. Well, thank you for giving a substantive answer to that question. Now, let's talk about the holiday season. Over the past couple of years, there's been this shift in consumer spending away from discussionary items and toward experiences. And now the consumer's credit stretched. What should we expect to see this season and how is it going to affect retailers?

So it's interesting. We think it's more of a barbell effect if you think about it. Right now, we're seeing a big uptick in consumers looking for discounts in retailers where you can't get bulk or wholesale type products on the Internet. So ninety nine cent store and other savings. And then we're seeing a big uptick in luxury goods, a 21 percent uptick in luxury goods in the United States. So I think it's very interesting. We think there's going to be a return to retail because of this move to discounts while simultaneously seeing people at the higher end going into stores and buying online. We're running up against the end of the hour, but I want to sneak in one more. Last year in the holiday season, especially,

loyalty was very important. A lot of companies that use AI and software to drive that did well. Is it going to be as important this year? We think it's going to be a blowout quarter for companies using artificial intelligence like Zeta. And we're seeing big upticks in how organizations are using AI for personalization to the consumer and around more efficient and effective marketing. But with the election, it shortened the cycle where people are giving mindshare to the holidays and then Thanksgiving is late this year. Marketers are really going into overdrive right now. And we're seeing that at Zeta in a meaningful way. You think this, you know, Black Friday, Amazon Prime shoppable football thing is going to work? No, it's hard to bet against Amazon. They tend to always do a really good job.

And you put football together with the Internet, with Thanksgiving, it's hard not to have a great event. For sure. I do. We got to leave it. We got to leave it there. David, thank you from Zeta Global. Meantime, don't forget to catch a special edition of Overtime 1 p.m. Eastern here on Friday. Have a great Thanksgiving, everybody.