Closing Bell - Closing Bell Overtime Fundstrat’s Tom Lee On Tech’s Strong Week; Former United CEO On Boeing Strike

Episode Date: September 13, 2024

Fundstrat’s Tom Lee joins to discuss the recent move higher in the markets after the S&P 500, Nasdaq post their best weeks of the year. Interactive Brokers Chairman Thomas Peterffy on his company’s proposal to offer betting on US elections. Boeing stock one of the few laggards today after one of its unions voted to strike; former United CEO Oscar Munoz breaks down the steps ahead. 

That bell marks the end of regulation. The F-Suite ringing the closing bell at the New York Stock Exchange. Evelis doing the honors at the NASDAQ. And stocks rallying again today ahead of next week's Fed decision. The NASDAQ and S&P 500 notching five positive sessions in a row. The Russell 2000 jumping another 2%. That's the scorecard on Wall Street. Winners stay late. Welcome to Closing Bell Overtime. I'm John Ford. Morgan Brennan is off today. We got a big show coming your way. In just a moment, Fundstrat's Tom Lee joins us with his prediction for how the market will react to next week's Fed decision. Plus, Interactive Brokers is looking to get into the election betting business by launching ways to wager on the outcome of the presidential race. Maybe some Senate races, too.

Founder Thomas Pederphy will be with us to discuss. And Boeing sitting out the rally in a major way after its factory workers went on strike for the first time since 2008. Former United Airlines CEO Oscar Munoz will break down the impact on the business and the fallout for shareholders. But first, let's break down today's action with our first guest, Fundstrat Global Advisors co-founder and CNBC contributor Tom Lee. Tom, the small caps that I know you're watching closely had a good day, but I mean, is it September or is it not September? We had a rough start and now some of that's in the rearview mirror. Yeah, I mean, I think if viewers are sort of confused, I think that's what the next eight weeks are going to be like into Election Day. I think it's a very challenging period because

no one can have conviction until they really know who's in the White House. But there are some positive sort of supports coming into play. And next week is the Fed meeting. We know the Fed is going to make some cuts. And with the inflation data being supportive and the labor markets needing some support, I think it's going to give the markets some confidence. So I think we do kind of trade well into that meeting and maybe even the week or two after. Does the market need a 50 basis point cut to stay within that 5,300 to 5,700 range that you think we're going to bounce around in? You know, I think that a 25 or 50 has both hawkish or dovish implications. So I think it's ultimately whether Fed Chair Powell comes across as this is the start of a

cycle where they're confident that we're moving back towards neutral. And whatever number they make is actually quite dovish and positive. But if it seems like this is dragging along the FOMC members and then there's even concerns about a hard landing, then I think the market can view anything they do as negative. I think it's going to come out positive, though. I mean, it seems like the Fed chatter would be in that direction. They didn't want people to get too excited about too much in terms of rate cuts. But now that they're there, it seems like they're signaling that they're kind of on a path.

Yes, that's right. But, you know, from a market's perspective, I think that they'd like to see the Fed sort of acknowledge that inflation is moving back as a secondary concern. And supporting labor markets while not in a recession is incredibly important. So I think that you're right. There's a chance that this could all be interpreted negatively if the Fed seems really reluctant to cut. Most people ought to be investors, not traders. So are we up against whether we're talking about the Fed or even about the election, a potential narrative shift in the markets or no? I think in the near term, we're losing visibility. And, you know, when you don't have visibility, people get scared and they sit on their hands. But over the next 12 months,

I think investors should be pretty confident. When the Fed has cut rates while in a soft landing or no landing, the win ratio or markets higher six months, nine months, 12 months later, almost 100 percent. And we also know post-election markets almost always rally. So the November, December looks pretty good. And I think the policies of both candidates is good enough for markets to do well next year. And I think the policies of both candidates is good enough for markets to do well next year. So I think we might have turbulence now, but it looks pretty good after that. Now, back to that turbulence for people who are trading. It's been a weird September because usually when the month starts bad, it's bad. But we have this situation. How

do you read it? Well, yeah, you're right. If you took the 10 worst first week of September, it's like the 10 times that September was down 2.5% or more. 10 out of 10 times the market never finished positive. For the month? For the month. In fact, if you took the 20 worst first weeks of September, 20 out of 20, September was a down month. So, however, three out of 10 times from the fifth day, which would have been Monday, to the end of the month, you actually clawed back gains.

You just didn't finish the month positive. So I think it's a strange seasonal. I might just say to me next week is more important because it's the Fed and the put coming into play. And that might be the dominant factor for the rest of the month. And that could be quite a support for markets. So let's talk about some broader issues, particularly mega caps versus small caps. We saw a big comeback for NVIDIA. We saw really some continued flexing strength from the likes of Apple, which is now, I would say, firmly on top in the market cap race, such as it is.

And then we've seen small caps struggle more than some might have hoped. Today is an exception. Which is more influential in this market? They're both important and they reflect different, you know, investor views. I think you still always want to own the best companies in the most important themes. I mean, that's NVIDIA and that's Apple. And they're going to really work over any cycle.

But when the market begins to believe the Fed is going to move rates back towards neutral, and that's both cost of money, mortgages, auto loan rates. You know, these are really big tailwinds for cyclical stocks and small caps in particular. So I think that's why I'd still want to make a very educated bet with high probability that small caps could do very well the next 12 months and even between now and your end. It's been a while since we've talked about your granny shots. Remind us what your thesis is behind some of these stocks that you like. Yes. Well, granny shots is built on the idea that there are themes like multiple, you know,

secular drivers of an economy. And our original granny shot model looked at AI, cybersecurity, energy security, you know, millennials as a generation. And then we want to own the best stocks in those themes. And that's really what was the genesis of the granny shots. And the names like NVIDIA, Apple, NVIDIA has been in that list since 2019. So I think it's always important for investors not to be trading the best names, but to really find the best companies and hold them for the cycle. OK, good reminder. Tom Lee, thanks for joining me. Thank you. On set and overtime. Now let's bring in CNBC senior markets commentator Mike Santoli for a look at this week's rally as we wait for that Fed decision next week. Mike. Yeah, John, going into Fed week, pretty much at the upper end of this trading range, which is what the last couple of months look like on a year to day chart of the S&P 500. So we bottomed a couple of times in the

last several days at around 5,400 on the S&P. Now, the low from early August was below 5,200. But you see this kind of shelf here at 5,400. When did we first break above 5,400? I always like looking at time and place together. That was on June 12th. It was a day of a very, very tame CPI report. And it was the day that the odds of a rate cut by September went above 50 percent, basically became a 70 percent. So that moment when it said, aha, we might have the makings of the Fed cutting into a soft landing, that's when we got up into that range.

So far, we're holding it. But you see, we bumped up against 56.50 or thereabouts several times in the last couple of months. And that's where we sit. Take a look at the small caps. You're just talking about the Russell 2000. Here's a longer term chart here a three year that shows this really long trench that the small caps were in for forever kind of capped out at 2000 for a couple of years. Now what's interesting about the latest move is you start you see that pattern there where every time there's a pullback it settles at a higher level. So it seems like there's a bit of an effort to get some traction and suggest that there might be a better move involved.

Now obviously not everything is great because also the rallies have been been capped. effort to get some traction and suggest that there might be a better move involved. Now, obviously, not everything is great because also the rallies have been been capped. So that's kind of an indecisive pattern, but one that's trying to hold above that prior range if, of course, things go right with the Fed and the economy. And now take a look at some of these capital markets related plays have been very strong, especially transaction based ones. So here's Interactive Brokers. I know you're talking to Thomas Petterfee in just a bit. CBOE, massive options trading volumes from retail and elsewhere. This is ICE, parent of the New York Stock Exchange and some commodities exchanges. They are way outperforming what I consider the proxy for buy and hold, BlackRock, right? $11

trillion in assets under management, mostly long term funds. So it shows you the kind of phase we're in right now. We're heavy turnover type business models doing well. Any way you slice it, they're all looking pretty well set up and bull market indicators, John. Okay. Well, Mike, back to that second chart, two out of three. What about this wrinkle lately where when rates have dipped, that hasn't been great for small cap reaction? Well, I think what you mean is when yields have gone down. So when the bonds are rallying and the long-term bonds are going down,

it has meant that there's been more recession fears. So I think that's the trick. You want yields to be tame. You want the Fed to be cutting rates. That should refresh the borrowing cycle and help out small caps, but not if the bond market is saying we've tipped over into an actual economic downturn. That's the delicate piece of this. I don't know what the magic number is for the 10-year yield. If it's 3.6 or 3.5 and below that, you don't want to see it go lower. I think that's the zone we're in right now.

Yeah, yields is what I meant to say, but does that challenge the idea that rate cuts are good for small caps? I don't think it directly challenges it, because in theory, if you get rate cuts and it's not because a recession is imminent, that does directly go to benefit companies that are bank finance, which disproportionately are small caps. I don't think it's magic for small caps. I know that there's this this sort of's this sort of algorithm that traders are using that says more Fed rate cuts means buy more small caps. But I do see the logic to it based on how those companies are exposed to fixed rate borrowing. All right, Mike. Thank you. See you again in just a bit. Up next, think you know who's going to win the presidential election? Well, soon you might have more ways to cash in on your hunch. A new court ruling could

open the door to election betting and Interactive Brokers plans to take wagers as soon as next week. Interactive Brokers Chairman Thomas Pederphy joins us next to discuss the business model. And later, we will talk about what a strike by Boeing's factory workers could mean for shareholders. Overtime is back in two. Welcome back to Overtime. Betting is seemingly everywhere. You've probably seen the commercials for companies like DraftKings and one major financial brokerage is close to letting Americans gamble on political events, including the presidential election. Interactive Brokers plans to open a market for such wagers as soon as next week, but there could still be legal holdups.

Joining us now in a first on CNBC interview is Interactive Brokers founder and chairman Thomas Paterfi. Thomas, always good to see you. So tell me, did you have any misgivings about betting on political events? Is there a certain size of event? How did you get to the point where you feel like this product is ready to launch? We didn't have any misgivings. This is not going to be the mainstay of our platform because we are focusing we are going to focus on economic indicators and climate variables which is on certain long-term questions that some of them existential questions such as climate or the national debt. But election betting is important

for us from the point of view that it brings in customers. And once we have those customers on our platform, then they are going to be engaged in serious hedging against economic outcomes and insurance kind of products, etc. Do you think that adding money, skin in the game, always makes these markets smarter? Or in some cases, can it corrupt an outcome? The evidence seems to be, and the literature is always on the side, that the consensus estimate that comes out of a platform where money is on the line is a better estimate of the eventual outcome. So that is the real logic behind the entire idea of these contracts. Who do you expect to be the audience that's betting on this?

I mean, I guess in a way, people who are donating to political campaigns are already placing some skin in the game and money on an outcome. Is this particularly different? Of course, it's very different. I mean, when you donate to a candidate, you are supporting that candidate's advertising efforts. And here you may want to donate to a specific candidate, but that doesn't mean that you believe that that candidate is necessarily going to win. So this is about trying to hedge against outcomes that may be unfavorable to your portfolio,

depending on what kind of stocks you're holding. And so that's the idea. Is there a limit, should there be a limit, on the type of race that's bet on? I know you're looking at presidential, You're looking at swing state Senate. Is that just because the audiences are potentially big enough? Or do you see the potential for doing this at the House of Representatives, even further down local level as well? Well, that is possible. But I think at this point point there would be more interest in

the presidential and senatorial races. I mean, as you go down the line, you could eventually, you know, list a contract on who is going to be elected to a specific school board. We don't want to go there. Right, yeah. But, I mean, you know, a mayor of New York arguably is bigger than bigger than Senate in Rhode Island. Definitely. Sure. I mean, yes, the mayor of New York is going to be at one point it will be listed as a contract when the next mayor election comes up.

So tell me overall, is there any point as a society where we're betting too much, or do you think that placing of wagers, whether it's on a stock or it's on a political outcome, I know you're a libertarian, so maybe the answer is obvious here that you're going to give, but it's a healthy exercise and a healthy outcome. Well, I mean, you know, let people do whatever they want to do, provide all kinds of services that they like. If they don't like it, then it's not going to survive. Right. So, you know, I deprive people of the opportunity. I get it. So September has been a wild month in the market.

We were way down to begin. We've had consecutive days in the major averages of gains this week. How much of that do you see reflected in activity on interactive brokers? Oh, well, the market has been very kind to us, you know, over the last several months. Yes, the market is great. So as long as it keeps rising rising we are going to do very well and even if it turns around and falls for a while as long as it doesn't fall too far we'll be all right as long as it's exciting it stays exciting i suppose for interactive brokers thomas petterfee always good to see you have a great weekend thank you very much when we come

back gold hitting record highs this week while oil touched its lowest level since 2021. We will break down the big swings for commodities and where those trades could be heading next. Plus, is the market getting ahead of itself with hopes for a 50 basis point cut next week? We will debate it and check out the biggest winners this week in the NASDAQ 100 arm a year after its IPO, Broadcom, Supermicro, Warner Brothers, Discovery and NVIDIA all seeing outsized gains. Overtime, we'll be right back. Personally, I think the Fed is a little behind the curve. You know, rates are, you know, five and a quarter plus and inflation is down to the two and a half percent rate. So we have almost three percent real interest.

So I think they've seen enough data that they can start bringing rates down. And I would suggest more aggressively would be better. So I'd be for a 50 basis point cut rather than 25. And that was Paulson and Company founder John Paulson making the case for a 50 basis point cut from the Fed next week. But should the Fed really go that far that fast? Well, joining us now, Warren Pies from 314 Research and Bob Elliott from Unlimited Funds. Bob, you say no. Well, I think when you look at the overall picture of the economy, we have seen a little bit of slowing, particularly in the

employment area. But the types of cuts that are being priced in, particularly through the end of the year, are relatively aggressive. You just compare today's dots, you know, the dots in June, the last time the Fed did it, to what the current market pricing is. What you see is that the current market pricing is 100 basis points below the dots that existed in June. Compare that to the incremental data that we've gotten. Unemployment has risen by about 0.2 percent. And we've seen the core PCE number come down about 0.2 percent. Those are big moves in short rates and expectations relative to relatively modest moves that we're seeing in the macroeconomic data. OK, Warren, you disagree? Yeah, I don't know if I necessarily disagree. I try to stay away from normative policy prescriptions for the Fed. I don't think it really matters if they go 25 or 50

at September. I'm looking more for a kind of a nuanced communication from them in the form of the dot plot. And so what I do expect is for this meeting plus the rest of the meetings this year, there's two more following the September meeting, that the Fed will signal probably 100 basis points of total cuts. And so I don't know necessarily if that's the right thing or the wrong thing for the economy. I just try to get in the right wavelength of the Fed and then adjust portfolios accordingly. And so that's how I see them communicating. I think it's going to be a bit of a nuanced thing. I think they want to split the baby, so to speak.

Okay. Well, going from the macro to a little bit more micro, Bob, lost potentially in all of this is the fact that after September, we've got Q4. And the consumer is very important during Q4 and not just the high-end consumer. We've seen some credit stress, inflation stress on the middle class, working class consumer. What kind of signal do you think the market, which is still expensive, is going to need to see during the fourth quarter to feel like everything's OK? Well, I think the key challenge on the equity side of things is just how strong the expectations are for earnings growth over the course of the next 15 to 18 months. They're really expecting something like low to mid-double-digit earnings growth. And the only way you're going to get there is either through pretty good top line or, you know, pretty significant margin expansion up back to highs.

And so the question for, I think, a lot of folks that are looking at the stock market is, how do we get those sorts of relatively elevated expectations to get realized? You're going to have to see a lot of strong demand in the economy. And so far, when we look at what's going on, you know, demand is OK. It's not meaningfully slowing or creating anything that's close to a recession. But we're a long way away from the type of boom that's being priced into stocks right now. I can't help but wonder if we end up seeing a lot of buying this holiday season without a lot of discounting. And then you don't end up with with those things that you talked about. Let's get to commodities. Warren, you can give us an update maybe on your energy views.

Yeah. Just to give everybody a hand, like where we come from, what do we see happening in the year? Entering the year, we thought oil would top out around $90 a barrel towards the end of Q1. And then we thought it would kind of get into a steady slide down and bottom out towards the very end of Q1. And then we thought it would kind of get into a steady slide down and bottom out towards the very end of the year. And that has really played out exactly how we would have expected a few little hiccups along the way from geopolitics. And so I do think the lows are in front of us for oil. And so that's kind of a negative view, I'd say. But right now, at this

moment, before the election positioning is so pessimistic we've gone from optimism off the charts in the spring to nobody wants to touch this uh the commodity or even the equities at this point in time and so i do expect a mild bounce between here and the election but post-election you have a bunch of stuff that starts to happen and work against you from a long oil position so you have a bunch of stuff that starts to happen and work against you from a long oil position so you have mexico starts hedging all their product production this creates a seasonal tendency for oil to sell off already and then you have opec they're they're bringing these barrels back you know 200 000 barrels a day increase every month through the rest of next year

and i know that all the bulls are going to say they can call that off. Once we get beyond the election, their motivation to keep prices high goes away and they'll switch to a market share strategy. That's what I think. And underneath all of this is really lackluster demand out of China. You look at China, the economy is weak in China. You've seen bond yields, long bond yields in China now below Japanese long bond yields. And you're seeing EV adoption really increase rapidly over there. So more than 50 percent of new car sales in the month of August for EVs in China. And so this is just going to weigh on demand. At the same time, OPEC is reintroducing a huge wave of supply. And so I think you get a short term balance, but you don't get married to it here. With all these demand questions and uncertainty, that's been pretty good for gold. Well, you know, gold, the best performing asset this year, a major asset this year,

and particularly as we've been through this period where a lot of easing has been priced in, you'd think, you know, that would really favor bonds, and it has to some extent. But the biggest winner from this shift to easing expectations has been the gold market. I think what it suggests is that maybe not U.S. investors who are bidding those bonds, but global investors are starting to raise questions about whether an aggressive Fed easing strategy is really appropriate monetary policy, given the overall set of economic conditions that they're seeing. Well, they can't say that you didn't tell them, Bob. Bob Warren, thank you both.

Well, time now for a CNBC News update with Julia Boorstin. Julia. John, President Joe Biden is planning to visit Angola in the coming weeks. Sources tell Reuters the trip, which would make him the first U.S. head of state to visit sub-Saharan Africa since former President Obama in 2015, would take place between the U.N. General Assembly this month and the November elections. The White House declined to comment on the trip. A Brazilian Supreme Court judge lifted the freeze on Starlink and

X's bank accounts today after the companies transferred the total amount owed in fines imposed during a feud between the judge and Elon Musk. According to the Supreme Court, the judge has not withdrawn his decision to block X in the country, though, citing the issue over a lack of legal representation, which has yet to be addressed. And Netflix is reportedly in talks to stream live versions of the popular YouTube show Hot Ones, according to multiple reports. The streaming giant is in talks with the series owner BuzzFeed for several live episodes of the show specifically for the platform. The show features celebrities eating spicy chicken wings

while talking to host Sean Evans. John, I don't know if you've seen this show, but it's pretty funny. I could see why Netflix would be interested. Yeah, I have seen it. Would you do it, Julia? You know, I like spicy food. I can handle spicy food, but when I see the reactions to those wings, I think probably not.

All right. Julia Borsten, have a good weekend with some spicy food. Up next, when good news is good news, Mike Santoli looks at the shifting dynamic in investor perception of economic data and how it all relates to next week's Fed decision. And we will hear from the CEO of recent IPO Klaviyo, which runs an email marketing platform, among other things, with his early read on how retailers might target consumers around the holidays. And Overtime. Let's bring back Mike Santoli for a look at how investors are feeling about the current state of the economy as we await next week's Fed decision. Mike? Yeah, John, we're firmly in a phase where stock investors want to see the economy do better or do better than expectations. That's what this chart is

depicting right here. It's the correlation of the S&P 500's moves with the moves in the economic surprise index. So when the economic surprise index is going up, the data are coming in better than forecast. And that is coinciding recently with better action in stocks because you see it's above zero here. Now, when do we wish for bad news or when does the stock market do better when the economic news is poor? Well, this whole phase right here was when the big enemy was a potentially overheating economy that would drive treasury yields higher, that would make the Fed much more hawkish and tighten even more. So that was the scary scenario. Now the scary scenario, once the Fed has already told you rates have peaked, they're going to go down. And in fact, we're trying to preserve a soft landing.

The market wants to see the economy hold up better. And so we're not necessarily at this super dramatic spring loaded correlation that we have seen sometimes at the highs. But definitely the market wants to embrace the idea that the economy is going to hold together. I think this is basically a 60-day trailing correlation. So basically over the prior few months, 60 trading days, over the prior few months, how has the stock market reacted to the economy? I mean, in a way, that also follows the degree to which there was chatter over the Fed's going to screw this up, the Fed's getting it wrong. Now we seem to be on the upswing, at least in terms of people's belief that a soft landing is a likely scenario. Yes. And that's why it's been interesting to me

the last couple of days when there's been increased discussion of potentially a larger rate cut next week. And the market is interpreting it as somehow compatible with a still firm economy as opposed to being some kind of a toxic signal that the Fed is deciding that the economy is going down. So I think that's a little bit of a change in perception. We'll see if it lasts another few days into the Fed decision itself. Well, a rule the market never seems to follow. You get what you get and you don't get upset. But at least we're going to get what we get. Mike Santoli, thank you. Well, after experienced marketing giant Adobe released results last night with cautious guidance for Q4,

I spoke this afternoon with Klaviyo co-founder and CEO Andrew Bialecki. Klaviyo helps customers use their data to customize marketing and the user experience to drive results. And Bialecki said as the economy slows, this holiday season will again come down to reactivating customers with the right message. We mentioned last year, it was the first time we found that the majority, you know, with the businesses Klaviyo works with, the majority of buyers were folks that people already had a pre-existing relationship with. So I think that just puts even more emphasis on this idea of, you know, how do I personalize that experience and then make sure that folks that are likely to come back, you know, that I sort of can optimize both the product selection I show them, you know, obviously, as well as any, like, you know, discounting strategy. A lot riding on whether that is successful with mobile and

digital being a big part of the holiday season. Well, strike out, Boeing factory workers walking off the job after rejecting a new labor contract. Up next, former United CEO Oscar Munoz on how the strike could impact the planemakers' turnaround plans and the entire airline industry. And Uber, one of the big winners in the S&P 500 today after announcing it is expanding its partnership with Alphabet's Waymo to bring self-driving ride shares to Atlanta and Austin next year. We'll be right back. Welcome back to Overtime. Boeing, the worst Dow performer today after factory workers went on strike for the first time in 16 years with 33,000 people walking off the job.

CFO Brian West saying at a Morgan Stanley conference the strike will hurt aircraft deliveries and jeopardize the company's recovery. And credit rating agencies Moody's and Fitch warning the strike could pose a risk for a downgrade. Joining us now with his stake is former United Airlines CEO Oscar Munoz. Eager for your take, Oscar, especially because a week and a half ago you told us Boeing's critically important. How long can they afford to have this strike drag on and how serious would a couple of downgrades be? Well, the first thing I would say for the flying public, this is not an impact. Think of it as akin to the audio manufacturers, right? So you're not going to feel the doubt. So if you're a flying public person, you're not going to worry about it.

But with regards to Boeing, right, we've known that they face all of these obstacles and this union contract was one of them. And so they've got to resolve it. How much time do they have? When could it have impact? All the financial ratings are all part of this, but they're already restricted to some degree. So I think they have a little bit of time. As I know it, these union contracts tend to reflect around, you know, they're very complicated, but it's labor and compensation, it's benefits, it's labor rules. And then there's always, you know, kind of a fourth sort of sensitive subject, which is about culture and empathy. Is there trust between the two management of the unions?

I think that's a big factor that's probably at play altogether in here. And I think as they sit down and walk through this and talk through this, we hope that it will be relatively soon because Boeing can't afford to have any more of these delays and these contract hits. Well, it's hard to trust a CEO who just walked in the door. This is quite an unusual test for Kelly at Ortberg right off the bat. What are you watching? What should investors watch in how he handles it? Well, I think he's going to have to engage would be my thing and how he engages and how he gets in and settles this, because it, frankly, it's not unexpected this would happen.

I don't think it's a reflection on him personally. I just think it's the union trying to get attention because of the things they feel they need to be heard. And this is a way to do it. They have this mechanism. You know, in the airline industry, we don't have that restriction because we don't have this possibility because we operate under the Railway Labor Act,

which allows cooling off periods. Again, this is akin to the auto workers where they can indeed walk away. So hopefully this is a show of solidarity from the unions. I'm sure management will get very quickly involved, and I think Kelly will be able to go in there and manage through this and work through this very quickly. I'm confident of that. They just have to sit down and talk. And the auto workers got a big deal not too long ago. How much does that factor into this? Well, they're very different industries, but I suspect the money that's on the table now is not

insignificant. So there's probably some of that. So I think there's probably a multitude of factors beyond just the money situation. But yes, settled contracts and similar spaces are always the barometer and the benchmark that everyone applies. And again, I'm not privy to a lot of those details, but there is some negotiating to do. And this walkout certainly has some leverage that the new Boeing management team is going to have to manage and deal with. How much do you think Boeing's overall reputational issues, challenges factor into the union's position here and decision to strike? Very often when companies go through these sort of things, a lot of workers feel like, hey, this wasn't our fault. We weren't the ones making

these calls. We don't deserve to suffer for it. Yeah, no, there's no question all of that comes into play, right? That's the risk. and we've talked about Boeing many times over the course of the last six months. The obstacles to regain their status are many and varied and this is one of them. I mean, it's easy to kick somebody when they're down and I think probably union management has taken this advantage to really, you know, get their attention. And so, yes, all of that comes into play. We hope that actual facts and data and true negotiations across the table sort of gather quickly and also gather momentum and then come to a resolution relatively quickly.

If this goes on for a few weeks, it could really start to impact suppliers, couldn't it? And workers there and revenues and profits there. Some are ahead on delivery. Some are behind. How much should investors keep that in mind? Well, they're clearly taking a lot into mind given the equity reaction, the market reaction today to that. So again, I think there's always a bit of time where this can be afforded. Boeing has been at a point where they have limited output anyway. They still got their 787 plant that's not unionized that's going to be working. So they've got that aircraft coming on. So I think both sides will begin to sort of play the time game as to who can last the longest. I really hope that they don't do that and they just

get to work. Really, at the end of the day, Boeing can't afford this. We as aircraft procurers can't afford this. We just need to get them back on their foot across all the different angles. And solving this and getting back in unity will be a big first step in the persona that Boeing presents itself to the public. And I think all of that can be helpful. You can't do that just at any cost.

Yeah, we'll see how they work it out. Down day for Boeing, more than 3.5% in an up day for the market. Oscar Munoz, former CEO of United Airlines. Thanks for joining me here on Overtime. Up next, word power, how the CEO of one company is helping AI write and understand language better when it comes to business deals. And there's no place like home on Wall Street today. The home builders were big winners ahead of next week's expected Fed interest rate cut. Over time, we'll be right back. Welcome back to Overtime.

As software reaches deeper into the details of business, some companies are looking to turn legal contracts into more strategic assets. Today, I take time out with a CEO who's pushing to challenge the incumbents and do just that. Samir Bodas is co-founder and CEO of iCertus, a private company with software for managing contracts. It has a quarter billion dollars in annualized recurring revenue and is now looking to AI to help drive innovation. Long before Bodas' journey as an entrepreneur began,

when he was a teenager growing up in India, he had to choose another journey, whether he go to the U.S. or the Soviet Union for college. He got some unexpected help with that decision after he mentioned his dilemma to a British woman seated next to him on a plane. And she was aghast that I was even considering going to the Soviet Union. She said, Samir, go to America. It is a land of opportunity. Don't be silly. And she like lectured me. I was saying, oh my God, what the heck is this? And she took my address and then she wrote a letter to me and my parents saying, go to America, essentially what she had said.

And I guess Rocky Mountain, North Carolina won over Moscow Soviet Union. And here I am. Worked out. Opportunity. Well, I-CIRTUS is now competing with the likes of DocuSign in a category called Contract Lifecycle Management. Now, Bodas told me that the pandemic showed customers the details hidden in contracts can sometimes have a big impact

when the unexpected happens, and those old details can demand new attention. Which one of these customers have a fourth measure clause in it so they can terminate the contract or a termination for convenience? And they knew which customers to focus on. When inflation hit several years ago, it was pretty bad. Our customers were going to their contracts and saying, where do we have COLA escalation clauses or cost of living adjustment escalation clauses? Can we go to our customers and saying where do we have cola escalation clauses or cost of living adjustment escalation clauses can we go to our customers and say gosh you know this inflation

is high can we raise prices or can you help us out here because the contract says that we have the right to raise prices depending on coal escalation so now this is a dynamic asset not something that is put away in some filing cabinet or repository. And then think about applying Gen AI to it. It's a hard problem, but one solves the amount of value it will unleash. So the timeout takeaway, word power. When we talk about AI in these early stages, it's often about how well it can write. Maybe more important, though, for some investors, how well it can understand the language that undergirds multimillion-dollar deals across the economy. This also touches big players like Adobe on the document side, Salesforce on the sales side. Well, a closely

watched oncology conference kicking off in Europe today. And up next, the key drugs and companies investors should have on their radars in the war against cancer. And check out the move in RH today, closing higher by more than 25%. We brought you that company's earnings yesterday on overtime. Management's saying demand accelerated through August, and they're expecting strong demand through 2024 and 2025. And don't forget, speaking of strong demand, you can catch us on the go by demanding the Closing Bell Overtime Podcast on your favorite podcast app.

We'll be right back. Welcome back to Overtime. Shares of AstraZeneca under pressure today. Deutsche Bank downgrading the pharmaceutical giant from hold to sell, citing disappointing results from an experimental lung cancer drug and increasing regulatory concerns. Investors are awaiting more clinical results from a key oncology conference in Europe, which began today, and our Angelica Peebles has the details. A lot of news coming out of there. Yeah, that's right, John. The European Society for Medical Oncology, or ESMO, getting underway today, and there's a lot to watch. One of the names that people

will be paying close attention to is Summit Therapeutics. Remember, that company last weekend showing its experimental drug beat Merck's Keytruda in a head-to-head study in lung cancer. This weekend, Summit presenting data on that drug in colorectal, breast, and head and neck cancers. Now, Biontech is also presenting results from a drug that works like Summit's, so we'll be watching to see how that drug looks and how the stock reacts. It's already gotten a boost from Summit this week. Another biotech to watch is ITOS Therapeutics. They'll give an update on a lung cancer drug it's developing with GSK. The company is already planning a phase three, but investors are looking for these phase two results to see just how competitive that drug could be. In large cap

pharma, Amgen getting a prime speaking slot to share phase one results for an experimental drug for some solid tumors. The company will also show how well its lung cancer drug Lumicross works for colorectal cancer. So again, a lot to look for, John. A lot to look for. The first couple of names you mentioned have already had some pretty strong moves. So I wonder for the general investors out there, how much new information is there typically that could show further upside or is the move mostly done well you already saw the big move like you said but we're talking about three more cancers here so that if those work you're talking about an even bigger opportunity here so that's why we need to pay close attention to these amgen is

a sizable name and it's had a really strong past three months it's back up near those all-time highs. And I wonder for them, compared to Merck, say, which isn't near the highs of the year, do they seem to be on more solid footing based on expectations? Well, the moves for Amgen are all about the obesity drug that it has in development. So that's why you're seeing the stock perform so well this year. These cancer data, while important, probably not going to result in as big of moves as you're going to see once they finally release the full results from that obesity drug. So that's what we're paying attention to for them going forward. How does obesity, the obesity drugs, have they kind of become the iPhone of the pharma space in the sense Apple earnings? I mean, yeah, you can have

a good iPad quarter. You can sell a lot of AirPods, but it really comes down to how well the iPhone's doing. Well, that's what everyone wants to talk about right now. And that's what investors want to hear about. What are you doing in obesity? And if you are doing something, how competitive will you be? Again, that day that Amgen said they didn't even disclose any data. They just said that our data look good. We're moving forward. That stock went up a ton. And so that really is what's driving a lot of these stocks. But again, cancer is still really important for Amgen. And so it's one to watch. Driving a lot of conversation as well. And Jeb Peoples, thank you for joining me here on set. And it has been quite a week, quite a month. Rough start to September with the markets down in a month

that typically causes a lot of agita, but then this strong rebound, and we've got a Fed decision next week where a big question is 25 or 50. Could go either way. Well, that's going to do it for overtime. Fast Money starts now.