Closing Bell - Closing Bell Overtime: Freeport-McMorgan CEO On Global Copper Demand; What To Watch In Next Week’s Big Tech Earnings 4/21/23

Episode Date: April 21, 2023

Stocks ended slightly higher today but end the week in the red. Bleakley’s Peter Boockvar and G Squared Private Wealth’s Victoria Greene discuss the market action and lookahead to a busy week of earnings. Freeport-McMorgan shares fell today after reporting earnings; CEO Richard Adkerson discusses global demand for copper and the company’s execution. Former CEA Acting Chairman Tomas Philipson discusses the Fed’s path ahead of next week’s FOMC meeting. New Street Advisors’ Delano Saporu gives his favorite big tech stock name; Microsoft, Alphabet, Amazon and Meta all report in the coming days. Plus, our Hugh Son takes a look at First Republic and what to expect when it reports numbers next week. Morgan sits down with Space Force’s General Chance Saltzman in his first interview since taking on the role of Chief of Space Operations. 

A choppy day for stocks, but managing to eke out a gain at the end of the day here. We're still lower on the week, though, for the major averages. That is the scorecard on Wall Street, but the action is just getting started this Friday afternoon. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Coming up on today's show, the CEO of copper miner Freeport-McMoran will join us to break down today's earnings report and to share his outlook on global growth. That stock did fall today, 4%. He joins us exclusively. Plus

we are going to get you ready for another huge week of earnings ahead. Reports coming from Alphabet, Microsoft, Meta, Amazon, Intel, First Republic and many, many more. Let's get right into today's market action and some big individual moves that are under the surface. Joining us now is weekly CIO Peter Bookvar and G-Squared

private wealth CIO Victoria Green, both are CNBC contributors. Peter, you're joining us on set. The S&P 4133, it looks like that's where we're settling right now. The technicals, we have this 4200 level that everybody's been focusing on and whether we can bump against that and even break through it. But fundamentals, we have earnings and ahead of next week where it's going to be just a flood of those results. How are you looking at the market here right now? I really think what's keeping the market up is, yeah, the Fed will raise rates in a couple of weeks, but I think the market just assumes that's it. And they're trying. They don't want to miss the Fed is done trade.

But I think that they're ignoring that historically, it's not always a good time to be buying when the Fed's done. Usually, the markets, at least in a bear market, the bear markets pre-COVID, they didn't bottom until the Fed was almost done cutting interest rates. So I think that over the next couple of weeks when we see tech, because we know tech still dominates the S&P, that that will be sort of a wake up call that even those names are not immune. Because when you look at look at their customer base, small, medium sized businesses or even large businesses, everyone is calling a time out on IT spending. And I think one of the most relevant conference calls this week in earnings reports was from CDW, who specifically highlighted and actually said that they expect IT spending this year to be down high single digits. It was one of the worst performers in the S&P for the week, to your point.

Victoria, I'm looking at your notes. You took a SpaceX reference to some things up here. Rapid unscheduled disassembly. What do you mean? Well, it was a little bit earlier in the day when the markets were selling off a little bit harder. But look, we finally had a week in the red after four weeks of rallies. And I do think you are hitting that wall, not only the technical level, but next week is make or break. You've got 222 members of the S&P 500 reporting all the mega caps and all your blue chips. But there have been some signs that maybe we won't have a SpaceX moment because you saw

like Parker Gamble was the first major staples that came out and they had very solid earnings. And they also said the consumer is super strong. We're going to see if that gets reaffirmed as we get Coke and Pepsi and McDonald's and other consumer focused stocks next week. How healthy is consumer spending? Because this week was about how healthy financials were. I feel like next week is how healthy businesses and consumers are going to be. And I am a little concerned that we are going to be teetering out because we haven't seen any of the mega caps really been able to move it. If you look, Netflix wasn't bad, but obviously they had a bad reaction to the subscriber number.

And then Tesla did miss the mark a little bit. And if you look at what's driven this market, the lack of breadth that we've had and that Meta and Tesla and Nvidia have really, really pulled this market up, it could pull it back down pretty quickly. But what if not, Peter? In a way, things would be clearer. The picture would be clearer for investors if these results were worse, right? From the regional banks, Amex and P&G both had some really good reports. There's not a lot of pain in there. P&G was able to raise prices. Amex's, you know, rich customers are still spending. How clear is it that one more rate hike is going to do the trick and that the Fed is actually getting enough of a restriction in credit to slow the market down?

Like the chair said he thought was happening? It's not clear. And especially if you try to estimate what's the impact of the post SVB world that we're in. You know, Austin Goolsbee estimated that he thinks that the credit slowdown is the equivalent of 25 to 75 basis points of rate increases. So let's just say it's to the upper end of that. You throw in another 25 from the Fed. Can the economy handle another 100 basis points of rate increases? I think we have to understand that this takes time. When I say this, I mean the bank impact of SVB. It takes time to filter into the economy. Loan officers don't act that quickly. They're now every day evaluating new loans, and I think in much different, tighter standards. Now, standards were tightening even before this,

but you can be sure they're tightening even more. And all you had to do is read the Beige Book and see out of all the districts, outside of maybe one or two, there's credit drying up everywhere. But it's not just the supply of credit. It's also the demand for it, too. So everyone expects like this immediate reaction to the economy on a jolt of that. But it takes time to filter through. And I think that's still ahead. And so, Victoria, do we need to expect tepid guidance to reflect that in the coming week? Or is it better if we don't get tepid guidance, if we get, you know, even from names that seemed like they should be a little shaky, the confidence like we heard from a lot of regionals this past week or two? Yeah, and I feel like the banks themselves are trying to say, hey, this was not a systemic issue.

This was idiosyncratic. These were two bad banks. The financial system, this wasn't a regional banking crisis. I think that was citizen financial group CFO kept pounding the table. This was not regional banking crisis. I think that was Citizen Financial Group, CFO, kept pounding the table. This was not a banking crisis. This was two individual banks that were having problems that isn't systemic. So we'll have to see what the lending does. They all did report decent numbers. You had some misses in their own deposits. You definitely saw net interest income starting to get dragged by the cost of funding. And I think the cost of funding and the problem

is it's going to not only slow lending, but you're also going to see slower earnings potentially because they're having to actually pay deposits versus the two basis points you were making at some banks on your savings account. This cost of interest-bearing deposits, as well as how aware consumers are of their options and moving money around, that's not going to stop while the Fed's still raising rates. So I think you're still going to see pressure potentially on their margins. But at the end of the day, I think the one thing I'm most worried about is the market's still pricing in cuts. And right now, with earnings not being horrible, we're not in a banking crisis and inflation still being sticky. We got to pay attention to PCE next week because the Fed

all of a sudden becomes a market driver again if June comes on the table. I know right now, highest probability is May one and done in a pause. But if June comes on the table, I know right now highest probability is May one and done in a pause. But if June comes on the table and there are no more cuts, you're having a massive mispricing in the Treasury spots market and what's going to happen with interest rates. And do we hit the debt ceiling in June? But, you know, that's a whole different. That's a whole. I'm going to keep bringing it up, though, because I think people should. Victoria, Peter, thank you. Thanks, John. Thanks, Morgan. Thanks, John. Well, CNBC senior markets commentator Mike Santoli is joining us now from the New York Stock Exchange. Mike, happy Friday. What's on your radar?

You as well, John. Well, just trying to get a handle on where we are with this macro picture. You had that big discussion about all the leading indicators of recession and the market maybe not acting so much as if it's clear and present. Here is an economic timing model so-called by Ned Davis Research. It goes back a long way, as you can see. It's been retrofitted back to the middle of the last century. And it has bottomed each time during a recession. And you can barely see the 2020 recession because it was a flash one.

But essentially, we just saw this come down into mild or moderate recession territory and then reverse higher. This is a monthly number. This goes through March and it's not definitive. We can't say for sure whether a statistical recession is here, is coming or will be declared. But there's 27 indicators in this model and they span housing and monetary, industrial production, all those things that the market has been trying to digest. So I'm against the idea that the market is somehow oblivious to what's been going on with all the signals in the macro economy. And by the way, that's not a bad place to be if we're coming off the lows in terms of economic momentum. Not saying it's going to last, but that's a good spot to be. Paradoxically, if we're in the recession now, that's actually bullish for stocks

because then we're going to start to handicap the end of it. Now, take a look at some individual stocks, which I would also argue are registering some concern about recession. Economically sensitive, consumer-exposed names. So there's the S&P 500 over the last year, down 6% or so. Dow Chemical, Whirlpool, Ford Motor, Capital One Financial. So consumer credit, autos, appliances, housing related and macro chemicals. So all this stuff suggests that the market is not ignoring the idea that we have. By the way, all these stocks, except for Dow, are like seven, eight times earnings. So that suggests that there's downside earnings risk priced in, too. So I don't mean to

say the whole recession's priced in and done with, but I do think the market has been taking to heart some of these signals that a lot of the bears have been have been yelling about. I don't know if we can get your first chart back. Are all of those dips in there, are they all recessions? Yeah, as it happens. Okay. They are. It's hard to see, but there's shaded areas there where all of them have been recessions of one depth or another. And I will say that it's not as if this indicator has existed since 1950. So a lot of it was retrofitting the indicators to determine what the model is. But the model itself has existed for decades. And this is what it's telling us now. Very cool. Or not very cool.

Mike Santoli, we'll see you later this hour. After the break, an insider's read on one of the most important economic bellwethers. Dr. Copper, we're going to talk to the CEO of copper miner Freeport-McMoran, fresh off earnings this morning about demand for the metal and what that does say about Dr. Copper. We're going to talk to the CEO of copper miner Freeport-McMoran, fresh off earnings this morning about demand for the metal and what that does say about global growth. Overtime's back in two. Welcome back. Some big moves in the lithium space today.

Shares of Albemarle and SQM closing in the red after Chile's president announced plans to nationalize the country's lithium industry, the largest in the world, behind Australia. The newsmaking Albemarle trade at lows not seen since March 2022. That's also this week's biggest loser in the S&P 500. A pending congressional approval, operations would be transferred to a separate state-owned company, and future lithium contracts would only be issued as public-private partnerships with state control. Current contracts with Albemarle and SQM would not be terminated as a result. Chile is the latest country to nationalize critical materials for EV batteries. Mexico nationalized lithium deposits last year, and in 2020, Indonesia banned exports

of nickel ore. All right, well, let's turn to another metal, copper. Mining company Freeport MacMoran falling despite beating earnings estimates on the top and bottom lines. This morning, Freeport MacMoran CEO Richard Adkerson joins us now. Richard, it's so great to have you on the show. Thanks for being with us. Good to see you, Morgan. So let's talk a little bit about earnings. As we mentioned, you beat on top and bottom lines. The stock fell today, production very much in focus, and also full year guidance for copper sales and cash flow. How would you assess the state of the copper market in general right now?

Yeah, it's always a disappointment to see the stock fall on earnings day, but it was a sector-wide situation today. I felt much better after the positive comments on your halftime show about our company. Today, the copper business, of course, will be affected by broader global economics, and there's uncertainties there. But the demand for copper, even today, is strong. China had a very strong second half of the year, and its economy is picking up this year. But the story, and this is the focus of our company, is really longer term. The demand for copper is inevitably set to grow through electrification of the world, whether it's electric cars, alternative energy, AI, connectivity.

And supplies are just very difficult to develop. So we have a clear-cut strategy of being foremost in copper in the global industry, and we're very pleased about where we're situated. Yeah, and I want to talk a little bit more about that strategy and longer term what this means in terms of the structural mismatch between supply and demand. But first, you just mentioned China. We know China and activity there drives so much of the moves in pricing in industrial commodities like copper.

A lot of focus on how choppy the reopening has been there and what it signals about economic growth in that country and how it's feeding into the global picture. What is your sense? Well, China does consume today half the world's copper, and it's been the primary driver for growth in copper demand for the past 20 years, those growth drivers are changing to the developed world with the economic changes going on there. You know, our situation is interesting because we sell all the copper we produce. We have customers that are seeking more. That's been the case all along. But at the end of the day, you mentioned Dr. Copper, it will be affected by near term by global economic developments. We're prepared to deal with those as necessary. We have a very strong balance sheet.

But I just want to keep coming back, Morgan. Our focus as a miner is long term. And that is what we've had for many years now. We actually made this strategic decision 20 years ago and we're very pleased with it. And I'm increasingly confident about the outlook. So let's talk a little bit about that long, longer term outlook, especially as we do see mass EV adoption on the outlook. So let's talk a little bit about that longer-term outlook, especially as we do see mass EV adoption on the horizon, and we know that there is a lot of copper that is going to be required for that transition to take place. Yeah, that's correct.

And EV is one aspect of it. But when you look at alternative energy generation through wind and solar. And then the need to connect these new sources of power and these new vehicles will require much more copper just in terms of the connectivity of those sources. So it's really the world's on this course for that. There's a lot of questions about timing. But as you look at it, the entire world is committed to carbon reduction. Carbon reduction requires more electricity, and 70 percent of copper goes into electricity. Richard, thanks again for being with us. It's John. So you mentioned on the call you've got a staffing shortage. You say you're both aggressively recruiting and pursuing technologies that'll allow you to stay productive and grow with fewer people.

What's the mix of those technologies that you're most focused on? How much of it is AI and knowledge worker automation? How much of it is robotics automation? Yeah, John, good to see you. It's really a combination of all of the above. This is an issue in our operations that's limited to the United States. We have ample workers in Indonesia where we have a huge mine and in Latin America. But in the United States, it's a real problem. Part of it started with COVID, but other industries are seeing this as well. These questions of lifestyles, our mines are in remote rural locations, and so it's a challenge to keep workers there.

We are offering greater benefits, trying to encourage people to join us. But beyond that, we're looking at things like driverless big haul trucks for our mining operations. We're instituting automation and robotics in our underground mine operations. And then we're using artificial intelligence and other data analytic tools to help make us much more efficient. It's a great opportunity for us in any event, but it becomes a necessity as the need for workers. And we want to grow our business in the United States.

We currently supply about a third of the market downstream for copper in the U.S. We have 50% of the mine copper in the U.S. And it's a very favorable place for us to operate. So we're working hard to solve this, but it has been a near-term limitation on the sheer amount of material that we can mine. Yeah. Made in America.

I just want to quickly tug on that thread about the U.S. being a favorable place to operate because we did just talk about, we did just have that report on what's going on with lithium in Chile. How does it speak to the geopolitical dynamics right now that your company navigates when it comes to these critical resources? You know, Morgan, not too many years ago there was the accepted wisdom was that copper mining was dead in the Southwest United States. But because of the global demand led by China, these mines that we have, and some of them go back to the 19th century, have become very profitable. And so we're, for example, we own virtually all of the property that our mines are located on in fee, and that means we pay no royalties we have great support from

the communities where we operate terms of providing education health care welfare and housing and so forth so it's just a tremendous advantages of operating in the United States it's not widely appreciated because companies have to go where resources are. And around the world today, political issues, community issues are causing delays in projects and making overseas operations more costly than they once were. Made in America. Richard Adkerson, it's great to speak with you. Thanks for joining us today.

All right. Thank you for having me. CEO of Freeport-McMoran. Now, breaking news on the Fed, Seema Modi has it. Seema. John, we have new numbers from the Fed on deposits across the banking sector. And what we're seeing is a reversal from last week where commercial banks saw deposits down $76 billion versus the last week. Deposits at domestic banks down $49 billion versus the last week after rising by $45 billion.

Fed deposits at large banks down $45 billion. And deposits at the smaller banks, which we know have been particularly challenged by higher rates, down $5 billion. This does follow two consecutive weeks of deposits rising across the financial sector. And next week, we do get major earnings from eight regional banks, including PacWest and First Republic. So we'll see what the story is when it comes to deposits, which, again, the takeaway from earnings season has been that they've been rebounding, but week-to-week data suggesting otherwise. John? Seema, thank you. And now the volatility index is near the bottom end of its long term range. But there are some questions swirling about how effective it really is as a market signal.

Well, new data could be coming. We will explain when Overtime comes right back. Welcome back to Overtime. Time for a CNBC News update with Courtney Reagan. Courtney. Thank you very much, John. Here is your CNBC News update at this hour. Sources telling CNBC that Google has halted plans to build an 80-acre mega-campus in San Jose after the initial demolition phase. This comes as the company faces the impacts of rising interest rates and recessionary concerns. The construction project, which was scheduled to break ground before the end of 2023, does not have a new start date in the near future. Kim Potter, the former Minnesota officer who fatally shot Daunte Wright, is set to be released from prison on Monday. Potter was convicted of first and second degree manslaughter and sentenced

to two years in jail in February of 2022. Prosecutors had pushed for a longer sentence. And more than 2,000 Miller High Life cans were destroyed in Europe this week for donning its The Champagne of Beers logo. A trade organization focused on defending the joint interests of champagne houses and growers requested the, quote, illicit goods be destroyed. Miller High Life has used the, quote, Champagne of Beers slogan for years, and so have many of us. Back over to you, Morgan. Oh, my God. This just seems like such a waste. Send them to America. We'll drink them. They call themselves the bourbon of beers and get destroyed in Kentucky.

Oh, no, they'd get drunk. All right. Courtney Reagan, thank you. The volatility index is near the bottom of its long-term range, but there are questions about how effective it is as a market signal. And Mike Santoli is back with a closer look at the VIX and why that may be. Mike. Yeah, Morgan. So there's a lot of consternation around this. Now, part of it is people feel as if a 16 level on the VIX, which you see right here, takes us back to late 2021 levels, somehow is inconsistent with just all the macro concerns. The Fed's still tightening, recession risk, all the things the markets have been dealing with. Also, somewhat out of step with fixed income bond volatility levels, which are much higher. I would argue that really the market behavior itself accounts for most of

the low VIX, meaning the index itself has been sleepy. There's been a lot of movement within the index in terms of back and forth action among individual stocks. However, there also is some talk that the heavy, heavy trading in single day or very short term options has taken a lot of the volume activity away from the 30 day or thereabouts index options on which the VIX is calculated. So basically, they're saying the true sentiment, the buying and selling of protection for downside risk is not reflected as much in the 30-day options, therefore not as much in the VIX. The CBOE on Monday is going to start rolling out a one-day VIX indicator. It's basically going to try to approximate what that options activity

in single-day options is telling us about trader expectations. And we'll see how it if it does any better job of creating a signal. We're going to have to have some time to figure out exactly what the meaning of different levels is, I'm sure. But it does answer some of that question. Now, by the way, here's the share price of CBOE by far one of the best financial related stocks we have in the market. And it's just taken flight because of all that heavy activity in equity options and index options that has gone on recently. It's hard to know whether that's a sustainable pace we're on right now. But so far, people love it, Morgan. Yeah, it's kind of amazing.

It's almost become a proxy for, or I guess a hedge against, all the uncertainty in the market. Right. Exactly. It's a way of, you know, you're kind of, I know this sounds dismissive, but you're owning the casino. And there's a lot of bettors out there that are willing to try to bet on the next little wiggle in the S&P 500 on a one-day basis, and they're reaping the benefits. Okay. And I know you'll be keeping close eye on that one-day version of the VIX next week

to see what kind of intel we get. Mike, thank you. You got it. Well, the Fed is about to enter its blackout period ahead of its main meeting, but we've already heard from a number of officials this week with the latest thinking on rates. We're going to discuss the Fed's path with former acting CEA chair Thomas Philipson next. And do not miss the first installment of Deep Fake Friday. That's tonight. On last call, Brian Sullivan sits down with one person he's never interviewed, his AI self. What will he say?

Tune in at 7 p.m. Eastern. I want to know what he's going to say. Never interviewed him in public anyway. Welcome back. Markets closing out a losing week after recent economic data showed warning signs of an economic slowdown, including the Philly Fed Manufacturing Index, jobless claims and existing home sales. Joining us now is Thomas Philipson, former acting chairman of the Council of Economic Advisors. He is also a professor at the University of Chicago Harris School of Public Policy. Thomas, how much of an X factor is this debt ceiling debate, given all the other pressures on the economy and how much we've got

to feel this lag effect of some pretty big rate hikes? Yeah, I think, I mean, the debt ceiling is kind of an annoyance, I think, for the market, right? I mean, but I don't think the cuts that the House has proposed that's going to do anything. They're proposing a very small set of cuts on discretionary spending. Discretionary is about 25 percent of the overall budget and the rest, 75 percent of non-discretionary, is going to grow far more than those cuts in the discretionary. So I think regardless of whether the House gets what it wants or not, we're going to have a future, you know, piling on of the debt. And that's for your long term investors. It's going to be monetized sooner or later, probably. So it's going to be more inflationary pressure in the future coming out of this.

Yeah, you're looking farther down the line than I. I just wonder what this is going to do if in June, July, the markets have to digest it. But OK, beyond that, in the nearer term, what do you see happening with the banks, particularly the regionals that so far in their reports, things have been calmer than some fear yeah i mean we saw a lot of the positive going from small to larger banks right they got scared and they know that blotting guys are more protected by the government would that you know to be to felt on our policies

that kind of translated into big guys earnings are not taking it at all and the smaller guys are kind of translated in the big guys earnings are not taking a hit at all. And the smaller guys are kind of wobbly. It looks like less less of a growth in the big guys, certainly. But we kind of seeing a side effect, I think, of a too big to fail policy, which is that, you know, once you have that in place, everyone wants to go to the big guys and get more concentrated markets in banking, which ultimately leads to lower payments on rates for depositors and higher rates on loans. Thomas, I want to go back to something you just said before, and that is the future trajectory of spending in the U.S. and the monetization of that and the fact that that is inflationary. What do you mean by that? I mean, we saw, you know, once we have government have to borrow more and more, many times it's monetized. And I mean, we saw, you know, once we have government have to borrow more and more,

many times it's monetized. And I think that that is, you know, suppose the Biden budget actually got passed, even though it has no chance of passing, obviously, with the House. But suppose that's the case, we would have a massive amount of new borrowing taking place that presumably part of it would be monetized again just like it was in 20 and 21 essentially which would put more pressure and on top of it they have a balance sheet you know which is now increasing again it went down from nine to eight trillion and now it's going up to again because they're bailing out the banks with the liquidity essentially so there's no question that if you keep these spending levels that are talked about, that we will have some monetization of the future borrowing.

So where do you think the economy is headed then as the Fed has, you know, hiked interest rates? And yes, maybe we get one more hike. We'll see what the data brings, especially next week, which I know is going to be a big focus for the markets, especially with the Fed in a blackout period ahead of its meeting. But when I hear you talk about that, I mean, is stagflation on the table? Hard landing, soft landing? How do you see it? I don't see that, you know, the naming of what's going on so important. What I think is important for the big chunk of people in the U.S., the middle class, is that we had basically real wage growth that on a 12-month

basis has been declining for the last two years. I think everyone thinks that's going to continue in Q3 and Q4, because essentially, even though inflation is going to come down, nominal wage growth is going to come down as well because of a recessionary pressure, essentially. So we will continue likely to have negative real wage growth going forward just as we had in the last two years finally thomas do you think we're feeling yet the full effects of those three in particular 75 basis point hikes yeah i mean like we we have housing and you know every intersensitive uh sector is kind of responding right housing is clearly in a recession you see that

in volume a lot more than prices because when you basically have high mortgage rates no one wants to sell their house either to take a new mortgage on a new house so you see both demand and supply coming down with those rate hikes which have offsetting effects on prices but you see enormous drop in volume so you know you know, mortgage applications are down a third. Refinancing is down two thirds, et cetera. So we're really in a housing recession, obviously. And that's the most interest sensitive sector. Other sectors are following. But, you know, for inflation, the non-housing sector is what's still keeping it up. All right. So we're starting to feel it. Maybe not full effects yet. Thomas, thank you. Thank you. Well, Alphabet, Amazon, Meta,

Microsoft, they headline next week's massive slate of tech earnings. Up next, a top asset manager on which tech stocks he thinks investors should buy ahead of their reports. We'll be right back. Well, strap in a major week ahead with one third of the S&P 500, almost half the Dow reporting earnings next week. That includes big tech names like Alphabet, Microsoft, Meta and Amazon. Joining us now to discuss what he's watching, New advisors founder and cdl on the support don't know uh... you'll like microsoft alphabet got a hold on that which you like better microsoft alphabet you know without a doubt that she probably microsoft the mobile you know

one of the final holding this time uh... business is still a lot of of news and earnings that we're going to see next week. I think the big thing investors will be watching is the guidance going forward. With Microsoft, you have scale efficiencies. If you look at how the shift of their revenue makeup is going, 65% going towards the cloud-based revenue, that's going to be a big operating profit and potentially operating margin juice for them. And so on that side, I really do, you know, like the things I've seen as an investor standpoint for Microsoft. Yeah, I mean, we've spent so much time talking about AI and who's better positioned for this AI arms race. Is that actually going to matter in the results we get from Microsoft and Alphabet next week?

Near term, I don't think so. In the near term, you know, there's still so much as far as, you know, the actual products that are going to be used when it comes to AI. I think obviously all of these companies are making big bets

in this area, but they're longer term bets. And I think from my standpoint, if you take it from a high level view right now with the information we have, I actually like Google

kind of winning that race overall. I think just from the amount of data that they collect, they're going to have to be well positioned to kind of winning that race overall. I think just from the amount of data they collect, they're going to be well positioned to kind of win that race long term in my mind. But, you know, I think none of that matters right now in the short term. You know, materially, I think it'll be longer term bets that these companies are making. But it will play a part, a big part in the long term. Well, if that's true, then Microsoft's open AI investment isn't worth what some people think and maybe was for naught.

I mean, can you still like Microsoft and think they're not going to win in AI? I think there's going to be, you know, more multiple players that do well in the AI space. I think Google comes out as the ultimate winner overall, but I think the multiple players would do well. And obviously, you mentioned what was around $10 billion in the open AI investment. So they made a big first splash. And I think that's the tool so far is great. But I think

there will be multiple players that win in this space. We're all in the AI spaces, really. I think Google ultimately will win long term just with the amount of data they hold. You have a hold on Meta. We've seen a big rally in that name. And actually, the market cap of Meta has now surpassed this week that of Tesla, given the sell-off we've seen on earnings for that name. Why? Why are you holding? Just as you mentioned, there's been a big jump in Met meta. And, you know, I think if you have that stock, and obviously you've seen the rise of the stock year to date, you know, one thing that you have to be watching is the daily average users and the monthly average users, which rose slightly last quarter. So I'm curious to see where it heads this quarter.

I think they'll have a little bit of a slight rise on average users. But the landscape isn't as strong, right? You know, I think the ad revenue, the ad spend has been cut back. And so, their core business obviously being so heavily focused and concentrated on that, as opposed to some of these other names, which are a little bit more differentiated. This one is one I behold, because there could be some sort of a pullback if earnings and revenue, especially on the top line, aren't as strong. But they've been doing a lot of things to be more efficient on the cost side. We've seen a lot of cuts.

They're trying to look at a lot of the cost efficiency, the different things with CapEx. So that's an area where investors can take a little bit of solace. But overall, I think that revenue number is going to be one really want to watch. Okay. Delano Sapporo, thanks for teeing that up for us. It's a good thing we got a weekend ahead of us, John, so we can rest up because next week is going to be busy for closing bell overtime. Yeah, rapids for sure with those numbers coming in.

Well, up next, Space Force's Chief of Space Operations, General Saltzman, on why jammers, dazzlers, and lasers are a threat to both our national security and the space industry overall. Stay with us. Well, strap in a major week ahead with one third of the S&P 500, almost half the Dow reporting earnings next week. That includes big tech names like Al microsoft meta and amazon joining us now to discuss what he's watching new street advisors founder and ceo delano saporo delano uh you like microsoft alphabet got a hold on meta which you like better microsoft or alphabet

you know with that one i think i would actually probably go with Microsoft. They're both, you know, ones that I would be buying or holding this time. As you mentioned, there's just a lot of news and earnings that we're going to see next week. I think the big thing investors will be watching is the guidance going forward. With Microsoft, you have scale efficiencies. If you look at, you know, how the shift of their revenue makeup is going, 65% going towards the cloud-based revenue, that's going to be a big operating profit and potentially operating margin juice for them. And so on that side, I really do like the things I've seen as an investor standpoint for Microsoft. Yeah, we've spent so much time talking about AI and who's better positioned for this AI arms race.

Is that actually going to matter in the results we get from Microsoft and Alphabet next week? Near term, I don't think so. Near term, you know, there's still so much as far as, you know, the actual products that are going to be used when it comes to AI. I think obviously all of these companies are making big bets in this area, but they're longer term bets. And I think from my standpoint, if you take it from a high level view right now with the information we have, I actually like Google kind of winning that race overall. I think just from the amount of data they collect,

they're going to be well-positioned to kind of win that race long-term in my mind. But, you know, I think none of that matters right now in the short term. You know, materially, I think it'll be longer-term bets that these companies are making, but it will play a part, a big part in the long term. Well, if that's true, then Microsoft's OpenAI investment isn't worth what some people think, and maybe was for naught. I mean, can you still like Microsoft and think they're not going to win in AI? I think there's going to be, you know, be multiple players that do well in the AI space.

I think Google comes out as the ultimate winner overall, but I think the multiple players that do well, and obviously you mentioned what was around $10 billion in the open AI investment, so they made a big first splash. And I think that's the tool so far is great. But I think there will be multiple players that win in this space. We're all in the AI spaces, really. You know, obviously, you talk about that. I think Google ultimately will win long term just with the amount of data they hold.

You have a hold on Meta. We've seen a big rally in that name. And actually, the market cap of Meta has now surpassed this week that of Tesla, given the sell-off we've seen on earnings for that name. Why? Why are you holding? Just as you mentioned, there's been a big jump in meta. And, you know, I think if you have that stock, and obviously we've seen the rise of the stock year to date, you know, one thing that you have to be watching is the daily average users and the monthly average users, which rose slightly

last quarter. So I'm curious to see where it heads this quarter. I think they'll have a little bit of a slight rise on average users. But the landscape isn't as strong, right? You know, I think the ad revenue, the ad spend has been cut back. And so their core business obviously being so heavily focused and concentrated on that, as opposed to some of these other names, which are a little bit more differentiated. This one is one I'd be holding because there could be, you know, some sort of pullback if earnings and revenue, especially on the top line, aren't as strong. But they've been doing a lot of things to be more efficient on the cost side. We've seen a lot of cuts. They're trying to look at a lot of the cost efficiency, the different things with CapEx.

So that's an area where investors can take a little bit of solace. But overall, I think that revenue number is going to be one really want to watch. OK, Delano Sapporo, thanks for teeing that up for us. It's a good thing we got a weekend ahead of us, John, so we can rest up because next week is going to be busy for closing bell over time. Yeah, rapids for sure with those numbers coming in. Well, up next, Space Force's Chief of Space Operations, General Saltzman, on why jammers, dazzlers and lasers are a threat to both our national security and the space industry overall. Stay with us. We'll be right back. Steve Kovach. Steve? Hey there, John. Yeah, we just got this filing in from the SEC from SVB saying that CEO Greg Becker and CFO Daniel Beck have formally stepped down. Now, these were the

two figureheads of the bank. In fact, Greg Becker was on with our dear Drabosa just shortly before the collapse of SVB, kind of painting this rosy picture. Now they're officially out. This is not an unexpected move. We thought this was going to happen, but formally they are no longer with SVB and the FDIC, of course, is running the organization, John. All right, Steve, thank you. Got it. Well, earlier this week, I spoke with the U.S. Space Force's chief of space operations, General Chance Saltzman, in his first broadcast interview since becoming the three-year-old services leader last fall. As space rapidly commercializes and a heightened geopolitical backdrop means more threats extending beyond Earth, he told me we have entered a new era of space activity. The threats that we face to our on-orbit capabilities from our strategic

competitors has grown substantially. The congestion we're seeing in space with tracked objects and the number of satellite payloads and just the launches themselves have gone at an exponential rate. And so I think we're in such a new era of space that I wanted to make sure that we were thinking about our processes and procedures differently and that old processes wouldn't be as successful as new processes. And we've got to start innovating. One of the things that gets talked about is this idea of space resilience. What does that mean from a satellite constellation perspective? And I think just as importantly, what does it mean from a future launch perspective?

Since I know you're looking to potentially bring more companies on with their future rockets as well. Absolutely. The key to resiliency, one of the keys to resiliency that we're able to take advantage of are two factors. One, the lowering costs of launch. And this is the innovation in the industry, again, that's allowing the per pound to orbit. Those costs are coming way down. So we can conduct more launches for less money. Each of those launches is actually launching more satellites because the technology associated is shrinking. We're able to put smaller satellites on orbit.

This allows us to have much larger constellations that are refreshed on a much more quick timeline. So we used to launch a satellite and think 10 to 12 years before we can replace it. Now we're thinking more in terms of three to five years to replace it. What are some of the real-time threats? Well, they come in two forms, both physical threats as well as what I'll call interference threats. You might call it jamming, for lack of a better term. But we're seeing both China and Russia

have demonstrated physical attacks with those anti-satellite missiles that they've launched against their own satellites. We're also seeing traditional jammers of satellite communications of the GPS constellation. We're seeing lasers both on orbit and on the ground, things like dazzlers that interfere with a camera on orbit from collecting imagery of the ground. We're seeing satellites on orbit that actually can grab another satellite, grapple with it, and pull it out of its operational orbit. These are all capabilities they are demonstrating on orbit that actually can grab another satellite, grapple with it, and pull it out of its operational orbit.

These are all capabilities they are demonstrating on orbit today. And so the mix of these weapons and the pace with which they've been developed is very concerning. Are we developing these capabilities, too, or just deterrence possibilities against them? Well, my first goal is to deter a conflict from extending into space. And so by being more resilient, by training my operators to the tactics that allow our missions to continue, I think we can create a deterrent effect which prevents a war from extending into space.

But my job is to think about all kinds of contingencies and be ready to provide the president with full-spectrum options should deterrence fail. Well, to help accomplish all of this, the Space Force is requesting $30 billion for its fiscal 2024 budget. That's a 15 percent jump from this year's enacted level. It's still a very small fraction of the broader defense budget, but an area that is fast-growing. And this week, that was very much in focus at the Space Symposium, as well as in Lockheed Martin's earnings, which beat in part thanks to that company's space segment. So follow and listen to my podcast, Manifest Space, wherever you get your podcasts, because this is just one slice of my conversation with General

Saltzman this week. John, we cover the gamut in this podcast. There's also an article up online as well. So who makes money from spending on space defense aside from Lockheed? And is the mix different from what it's been in the past? Yes and yes. So you see you see the more traditional defense contractors, aerospace and defense contractors like a Lockheed Martin or like a Northrop Grumman or some of these other names, that benefit from the increased dollars that are flowing into space investment from the different areas of the government. But you are increasingly seeing these new space companies and these new commercial space players benefit as well. Case in point, what was referenced in some of that tape right there, the National Security Space Launch Phase 3. So this is a new competition that is afoot.

It's expected to run into the billions of dollars, and that is to bring on more launch capabilities from more rocket makers. And Rocket Lab, Relativity Space, Jeff Bezos, Blue Origin, these are some of the types of companies that could potentially be going out to bid for some of that future launch contract work. So it's really a mix. The Space Force is seeing this as an opportunity to essentially leverage and augment its capabilities and its ability to secure space with some of these private sector players. All right.

And I'll be looking for those investment opportunities as you help us to understand the space space better well a key of a pair of key regional banks are on next week's earnings calendar so up next we're going to look into what those results might say about the health of the banking industry when we come right back regional bank earnings closely watched this week. We heard from Regions Financial today that stock under some pressure after missing earnings estimates and reporting a slight quarter-over-quarter decrease in deposits. But we still haven't heard from the one key name that's been making headlines. That's First Republic.

It's coming Monday after the bell. Joining us now is CNBC.com banking reporter Hugh Sun. Hugh, what's going on with First Republic. It's coming Monday after the bell. Joining us now is CNBC.com banking reporter Hugh Sun. Hugh, what's going on with First Republic? Hey, John. So just set the scene a little bit. Obviously, with the Silicon Valley bank situation last month, First Republic was really considered a bit of a firewall to stop the spread of contagion in terms of the bank runs that were occurring at the time. So what happened? They got $30 billion injected into them. They got special credit lines that were available only to them. And they got advisors in the form of J.P. Morgan and Lazard to look at strategic options. So a full month later, where are we? And so I checked in on this.

And certainly the issue with First Republic is the hole in their balance sheet, which is estimated to be about $13.5 billion, is too large really for an acquirer to come at and really conceive isn't really in a great shape to go forward without some kind of either an equity injection or ultimately to be taken care of in some kind of forced receivership and thus be taken care of in a sale. And so that's the situation we have. I mean, what we're looking for Monday is clearly what's the state of their deposits. It's been reported a month ago that they lost something in the order of $70 billion. And what that's done to their profitability going forward, because when you lose that much of low-cost deposits, it leaves you leaning on the Fed and other facilities that charge 5% and upwards, ballpark figures. So their funding situation is vastly different than it was just a month ago. And that's really the issue that they're facing, John. Yeah. I'm also kind of

curious. We're butting up against the end of the show here, but PacWest, how closely are you watching that one on Tuesday as well? Because it's been the other one that's been hit hard. PacWest, I mean, that's another one where people are concerned about. But I think they're in a different situation, a different category, certainly from First Republic, I mean, that's another one where people are concerned about. But I think they're in a different situation, a different category, certainly from First Republic, in which, you know, there are some, frankly, existential questions about them. PacWest, I think, is going to be a situation where, you know, they've obviously lost deposits, but they're not in a situation where they're going to have to be resolved in any way soon, I think. Okay.

Hugh Son, thank you. Thank you, Morgan. We're going to have another busy week next week. You have something like 45% of the S&P reporting earnings, including some of the biggest names. We also got PCE on Friday, the Fed's preferred measure of inflation. GDP reading as well.

I think the hyperscaler cloud names, Microsoft, Amazon, are going to be really important. Well, that's going to do it for us here at Overtime. Fast money starts now.