Closing Bell - Closing Bell: Overtime: Instacart IPO watch, the outlook for autos, Walter Isaacson on Musk relationship with Saudi Arabia 9/18/23

Episode Date: September 18, 2023

Stocks ended an up-and-down session near the flatline as investors await this week’s Fed decision and signals from the IPO market via  Instacart. David Bahnsen from The Bahnsen Group explains why he “wouldn’t touch Instacart with a 10-foot pole.” Chris Harvey from Wells Fargo discusses opportunities in the market ahead of the Fed. Meantime the UAW strike dragged on to a fourth day, sending shares of Ford, GM, and Stellantis lower. Gabelli fund manager Brian Sponheimer discusses if there are any investable names in the auto space. Elon Musk biographer Walter Isaacson talks about new reports that Turkey and Saudi Arabia are angling for an EV factory. Plus the latest on Block, Norfolk Southern, and how art is performing as an asset class.

Call it the calm before the storm, as stocks close essentially flat ahead of the Fed this week. That's the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is on assignment. Coming up on today's show, have auto stocks reached a breaking point? The big three closing lower as the UAW's strike drags on.

We'll talk to a portfolio manager who says there are still names to buy in the auto world. Plus, we'll talk to the man behind the Musk book, Walter Isaacson, about reports today that Saudi Arabia and Turkey are angling to host an EV factory. We begin this hour, though, with breaking news on Instacart. The grocery delivery platform is expected to price its IPO at any moment.

Leslie Picker has the latest its IPO at any moment. Leslie Picker has the latest on this highly anticipated listing. Leslie. Hey, Morgan. Yeah, now that the market is closed, final pricing decisions are underway for Instacart's IPO. It's been a long road for the grocery delivery service, which filed an S-1 confidentially 16 months ago. But when the market took a turn amid higher interest rates and a sell off in tech stocks, Instacart put its deal on ice. Ultimately, Instacart set terms that market its deal at a quarter of the valuation it received in a private round two years ago. Investors feeling like they got a good deal put orders in and demand was strong enough that

Instacart raised its price range by $2 a share at the end of last week. That means it will likely price at the high end of the new range or above it, we should know, within the next hour or two. And the majority of the offering has already been claimed by cornerstone investors, including Norges Bank, TCV, Sequoia, D1, Valiant. That leaves a very small float here, just $260 million for institutional and retail investors to buy in at the IPO price. That's less than 3% of shares outstanding on a fully diluted basis. We'll see if the structure of this IPO, you've got a so-called down round, you've got significant cornerstone investors. This is a profitable company and a single class of shares makes this IPO palatable

in a still uncertain environment. Morgan, it was certainly the case for Arm, but we'll see what happens here for Instacart. Yeah, certainly seems like maybe perhaps some similarities. We know you're going to bring us those headlines and that pricing if and when we get it. So stay on watch and stay close to the camera. Leslie Picker, thank you. Let's turn now to our market panel. It was a mixed session as this crucial week gets underway with Fed decision coming in less than 48 hours. But joining us now is David Bonson of the Bonson Group and Chris Harvey of Wells Fargo Securities. It's kind of incredible. The S&P basically closed flat 44-53. So we'll call this a middling market. For that reason, David,

I'm going to start with this Instacart IPO. What does it signal about the capital markets? And are you going to be watching this? Is this something you would potentially invest in? No, I wouldn't touch it with a 10-foot pole. And that doesn't mean it doesn't go up on first day. And it doesn't even mean it won't go up a year down the line. It just means that these companies going public at significantly lower valuations in the last private rounds. This was unheard of when I was growing up in the business and having it happen all the time. Now it's become like expected and you have really significant companies, name brand companies, Uber and Lyft are great examples from pre-COVID era, going public that are still today trading at a significantly lower valuation than their last pre-IPO fundraising.

Instacart, unfortunately, is in that same category. We just don't think that it's the same IPO market of the 1990s. The money is being paid to founders. It is not being paid to investors in a public round. So interesting. You don't think that at a $9 billion plus valuation versus the $30 billion plus valuation two years ago that the market's correcting itself here with some of these IPOs like an Instacart? Well, I certainly acknowledge nine is a better number than 30, but I would use WeWork as an example. They were raising at a 44 valuation, trying to get 55, and it looks like the company might be worth zero and ultimately came all the way down below a billion.

At some point, even nine can be too expensive for an unprofitable company with a very difficult business model trying to deliver packages this way. It's been really tough. The whole world was shut down and DoorDash wasn't able to make money. I mean, it's just it's a tough business. So without getting into the details of their offering, I still think nine billion sounds like a rich valuation over time without a refined business model. OK. And of course, it's nine billion versus I should correct myself,, $39 billion two years ago. Chris, I do want to get your thoughts on this and how it speaks to the state of the equity market more broadly, given the fact that we have had this rally that, at least at the start of the year, took everybody by surprise. Yeah. So, Morgan, a couple of things.

You have a little bit of a push and pull here. You have a lot of seasonal weakness, right, that's bringing down the market a little bit. You have rates bouncing all over the place. But then, I'm not going to talk about Instacart as a whole, but usually when the calendar starts to heat up, it's because things are pretty good. And what happens is that also spurs risk appetite. I don't want to use the Vegas example, but I'll use the Vegas example. You get on a hot streak you make some money and then people take on more risk right and some of these IPOs have been trading pretty well they have been trading better and that should or what we've seen the past is that typically spurs more we're seeking the other thing to think about the other thing to take note of is this has been a very very

active conference season and we've had a few pre announcements but the pre announcements have been living it so I think once we get to the FOMC, things start to firm. And what you're going to see is that calendar starts to help the animal spirits and risk-seeking to a degree for the short term. Chris, what do you make of the fact that we've seen this steady creep higher in three cross-asset classes here? You've seen oil moving higher. You see the dollar strengthening. And of course, we've seen yields move up, too. And equities, at least right now, seem to be, I guess, hanging in there, maybe have hit a wall, are range bound, but not tumbling. Yeah. So I think the biggest thing out of all three of those is really rates. So rates have

moved up significantly. One of the things we have seen is the Treasury came in and dropped a bomb on the market about a month ago, or a little bit more than a month ago, with the amount of issuance they were going to do. It really surprised the market across the board. And since that point in time, rates have been bouncing all back and forth, but really upwardly trending. And what we want to see is, we want to see supply and demand get back into alignment. Once we see that, again, that'll be a positive for markets. We're beginning to see that. And what's happening underneath the surface is,

this has been a really big month for corporates bringing paper to market, issuing paper. But the amount that people spend on that or the investment grade corporate spread has been rather tight. And that's a very powerful signal, at least in the short term. Okay. David, you said you wouldn't touch Instacart with a 10-foot pole. What would you buy right now? Well, we're dividend growth investors. And so we are perpetually limited to finding companies that we think are growing free cash flow. There's a lot of great companies doing

such and some that we don't think are really all that dramatically overpriced. And energy is an overweight for us, but it's driven by bottom up company selection. I would add to the only utility name we own is American Electric Power, but utilities have been quite significantly sold off and consumer staples have pockets of value too we've just added to General Mills we love some of the asset managers Blackstone and Apollo and Blue Owl are companies that we like quite a bit so there are opportunities where there's long-term defensible business models growing free cash flow and you want that balance sheet strength in a position like this,

where there is a lot of question marks on what the Fed will do, what the economy is doing. We don't want our entire investment thesis dependent on PE expansion. And we think that dividend growth provides investors a better way to do that. Yeah, of course, we'll be focused on the Fed this week, but also the Bank of England and the Bank of Japan with some key rate decisions out of those countries as well. Gentlemen, thanks for kicking off the hour with me, David Bonson and Chris Harvey, with the major averages finishing basically unchanged, but the Russell 2000 under a bit of pressure here this Monday afternoon. Let's bring in senior markets commentator Michael Santoli for a look at how the cyclical bellwether groups

are performing lately. Mike. Yeah, Morgan, a couple of them, and ones that really were leadership to the upside of this market for a while, that's semiconductors and homebuilders. Overall market kind of stalled and stuck in this range for about six weeks. Similar story here with semis and homebuilders. Peaked in around July. Now, they're still up a lot on a year-to-date basis, as you can see right there, up more than 34 percent each.

You have the overall S&P, you know, up 16 percent or so. But you do want to make sure that they don't really break down fully. So far, the cyclical leadership, as well as sort of the risk appetite plays within the market, are hanging in there. Though the longer this consolidation goes sideways, you have to watch for stuff sort of falling by the wayside, momentum waning quite a bit here. Now, take a look, too, at Berkshire Hathaway. It's kind of its own animal in so many respects, both in terms of just the conglomerate set up, the fact that it sometimes moves with the market, sometimes not. Here, it's just blasted off relative to the S&P. This is a five-year chart. And, you know, it's got so much similarity to the underlying S&P 500.

And yet it's creating this separation. A few things going on. One, sometimes you do get a flight to safety that does find its way into Berkshire Hathaway. You sort of see right here where really in in late 21 into early 22 is a market seemed like it was maybe top of you got to rush in there. But also one hundred and sixty five billion plus in free floating cash at Berkshire Hathaway, a lot of it through its insurance subsidiaries. They invest in Treasury bills. They invest in safe stuff. That five percent prevailing yield on fixed income is going right to their bottom line, along with everything else. They have exposure to equities. I mean, energy equities as well, which have been doing nicely.

I just thought it was worth checking out. Sometimes it's toward the end of a rally, but right now it seems like Berkshire's got its own sort of source of energy to the upside, Morgan. Yeah, that's a really interesting chart. I want to go back to this notion of cyclicals and what's been performing and what hasn't been performing. Because the transports were under pressure again today. And actually, the Russell 2000 has been getting some more attention on Wall Street as well. It's kind of stuck, technically stuck on its 200-day moving average. I mean, how key is it when we've talked about over the months the expansion of breadth and the need for the rally to be bigger than just the big cap tech names. How key is it

to this market having legs to see some of these smaller, more cyclical names that are among, for example, the small caps to actually kick into gear here? Yeah, I mean, look, you'd prefer it if it was a very inclusive rally, if everything was working, if all the macro hotels were flashing green. Not the case. I'm not as concerned specifically about small caps. And by that, I just mean they just have to not break down to new lows at this point because they haven't helped to the upside. They're very acutely sensitive to financial conditions. Their debt payments, a lot of those indebted companies reset higher, big companies locked in their rates. So there's all kinds of reasons why they're not

benefiting. But transports, again, it's on my watch list for stuff that's trying to tell us perhaps whether the expansion is running a little bit thin right here in the broader economy. I don't think, again, they've fallen apart enough for you to say, yep, that's what's going on, especially because airlines are a big part of the recent downside, which to me is a little bit less about the broader industrial macro and is much more about them coming off a very high demand period and maybe seeing a little step down. All right. Mike, we'll see you later this hour. Always great to get your thoughts when we come back. Instant reaction to Instacart. We'll talk much more about the upcoming listing and the potential impact on names like Amazon, DoorDash and Uber with an investor in the company, along with longtime analyst Mark Mahaney. Overtime back in two.

Welcome back to Overtime. We have breaking news on Block. Kate Rooney has the details. Hi, Kate. Hey, Morgan. So this has to do with the Square division of Block. Alyssa Henry, she's the CEO of Square. That's the payment side of that business, is stepping down. Jack Dorsey, the founder of what was once called Square, now called Block, is stepping back in to head that part of the business. He is taking over the operations on the seller side of the business, that small business payment acceptance part of Square that you really think about. Alyssa Henry, according to LinkedIn here, had been the CEO for only eight months, less than a year. Jack Dorsey, again, stepping back in to lead that Square side of the business.

Stock down almost 1% here after hours. Back to you. Okay. Kate Rooney, thank you. In other breaking news, we are still awaiting pricing from Instacart ahead of its IPO. Joining us now is Mark Mahaney, Evercore ISI head of Internet research and Don Short, who is head of venture equity at InvestX Capital. The firm invested in Instacart on a secondary on the secondary market in 2019. Great to have you both here. Mark, I'll start with you.

I realize you have not added Instacart to your coverage universe per se yet. But I guess just walk me through what stands out to you in terms of the S1 and this company going public at this moment in time. Yeah, so you're right. I don't have an official position on Instacart. But if you read the S1 and we put out a report on it, it's a large market. I call it a T10 trillion dollar plus market. It's highly competitive. There's some very good digital first companies in there. And then there's some 800 pound gorillas like Walmart that are in there,

but they're in there because it's a very large category. And then third, maybe the biggest surprise is this segment, at least looking at Instacart's financials as disclosed, can be nicely profitable because of advertising, but also because of operational efficiencies. I think the knock on the street was that all of the profits come from advertising, which isn't necessarily a bad thing, but that's what the knock was. But if you look at those numbers pretty carefully, they've obviously squeezed some efficiencies out of just the core business. So that's why I think you see other companies like DoorDash, you know, making a play in here and Uber Eats too. And Amazon's kind of skated all around it and hasn't quite found the right format, but it's a large market and you can generate profits. I

think that's the real read that I took from the S1. Okay. Don, my notes here say that you invested in Instacart at $24.50 a share back in 2019. We just heard from Leslie that they're aiming to price shares between $28 and $30. That was according to the latest filing, that that could potentially signal that you see pricing at the higher end of the range because there's been a lot of demand. You're going to continue to hold Instacart here or are you going to cash out? Well, we're a private markets investor, so we typically hold true to the IPO or liquidity event. And then we'll either distribute out the shares or sell the shares and distribute the cash to our investors. Okay. So, what does that mean in terms of how you feel about this investment, 2019 to now?

Well, I think a lot of investors wish they used the hype around the pandemic to go public. But from a company standpoint, I think they're probably happier to, you know, use that time to get the business up and operational and deal with some of the challenges that they've had. Because, you know, Mark is right. It's a competitive business. And, you know, I really like the fact that they've added another leg to the stool with the advertising and the distribution channels to be able to give themselves more options for for for strategic decisions and strategic moves.

So, Mark, I mean, you touched on it a little bit, the fact that there are other competitors in this market. Even just earlier today, DoorDash announced a list of new partners on the grocery delivery side of the business. How competitive is this market still? I mean, what inning are we in, in terms of these businesses actually fleshing out? Okay. I think in terms of online grocery delivery or let's say omni-channel grocery delivery, because I think, you know, buying it online and picking up at Walmart counts too. I think we're probably, you know, second or third inning. I think that's probably fair to say. It does require a change in consumer behavior. And I think, as Don pointed out, you kind of had that. That was one of the biggest sort of takeaways from the COVID crisis. People learned that you had this inflection point

and demand for online grocery delivery or omni-channel grocery delivery because we were required to figure out convenient, efficient ways, safe ways to get our groceries. Anyway, so that's a big boost to the industry. I think that does bring in a lot of this competition. I'm sure it'll, and we've already seen some of this, we've already seen some industry consolidation. I'm sure you'll see more of it in the future, but I think there's a couple of different interesting ways to play that. Walmart, you have to put in that basket of stocks you'd want to buy to play this, I think. And I've been really impressed with some of the metrics that even came out in the S1 about DoorDash.

DoorDash has nicely expanded its share in this segment. It's a very challenging business, but I want to get back to the advertising point. This is really impressive because these companies are right where consumers are purchasing a lot of, obviously, groceries, consumer packaged goods, et cetera. It's really a target-rich environment for marketers and for advertisers who've spent all this money on trade promotions in the stores. I think that's a huge pool of revenue and profits that can come to the real winners in this space. If it's Instacart, the stock will go higher. If it's DoorDash, that stock will go higher. So that's why I find it so interesting to track this.

Okay. Mark Mahaney, great to get your thoughts. And Don Short, great to have you on the show as well as we do await that IPO pricing for CART. After the break, auto stocks taking a backseat today as the strike of the big three car companies stretches into a fourth day. We're going to bring you the latest on the negotiations and we'll talk to a portfolio manager about whether or not there is any case right now to invest in autos. And take a look at how Apple finished the day today, closing at the top of the Dow, following positive analyst notes from Goldman Sachs, JP Morgan and Morgan Stanley surrounding the latest iPhone. Shares finished up more than one and a half percent. We'll be right back.

Welcome back. The historic strike of Detroit's big three automakers stretching into its fourth day today. Philip Oh has the latest on where things stand. Phil. Morgan, not a whole lot of movement between the automakers and the UAW. Talks continue. In fact, when you look at what's happened over the weekend and today, the good news is that there's still conversations going on. Hard to know how much progress they're making. There were meetings today, the bargaining teams for Stellantis and Ford. Stellantis in the morning with the UAW, Ford this afternoon. And the question of pay has come up a couple of times now. Generally speaking, all of the automakers are around 20, 21%. Stellantis said over the weekend we were at 21%.

UAW came back today and said, you know what, they're closer to 19.5%. Whatever. That's the general area. And remember, the UAW wants it to be 40%. So they're far apart from each other. And the first of the suppliers has announced some layoffs will be coming. Speaking of layoffs, as you take a look at shares of General Motors, keep in mind that they plan to lay off potentially up to 2,000 workers at their Fairfax, Kansas plant.

Why? Because they get stampings from the plant where there's a strike in St. Louis or outside of St. Louis. You don't have stampings. You can't manufacture. We have not heard the official word, but that is expected sometime this week. What's the impact on inventory? Look at this. This week, according to CarGurus, GMC Canyon, Ford Ranger, and Jeep Wrangler, all products made at plants that are now on strike, they've seen a drop in terms of their inventory. And as you take a look at shares of Ford, keep in mind that it is facing a possible strike with Unifor up in Canada. That contract expires at midnight. Unifor also has contracts with GM and Stellantis as well. And then Stellantis,

the offer for cumulative pay, 21% over four and a half years. That's cumulative, 19 and a half percent if you just go straight by the percentages. Add compounding interest, comes up to 21%. And also, as you take a look at all of the automakers, keep in mind what they are focused on right now is trying to make some progress here in terms of the UAW saying, okay, things are improving. Because so far, when you hear Sean Fain talking, guys,

he's been pretty clear. He does not think they're anywhere close to getting a resolution with regard to these contract talks. Yeah, he really didn't mince words on that front on Morning Joe on MSNBC this morning either, Phil, and also, you know, raised the notion of the elimination of these pay tiers, too, in that conversation. Phil LeBeau bringing us the latest in front of it looks like the picket line out in Toledo. Thanks. For more on how to invest in autos in the midst of this strike, let's bring in Brian Sponheimer. He is a portfolio manager at Cabelli Funds and an analyst focusing

on autos. Joins me here on set. It's great to have you. Morgan, thanks for having me. We've called this a historic strike. It's also been a very targeted strike. Only three plants across three of the different companies. Are we potentially closer to a deal here than people realize, or is there still a lot of white space, as was just laid out by Phil? Well, I think you said a lot there, right? There's a 40% ask from the UAW. You have the Detroit 3 at around 20, 19 and a half, as Phil said. But at the same time, you have Wrangler, Bronco, and then the Canyon Colorado plants. These are we'll call them tier one and a half level products for the the automakers so

they didn't go after a transmission facility, they didn't go after F-150, they didn't go after Ram and they didn't go after the large pickup trucks and SUVs at GM. So they definitely left open the notion that they want to get something done, they want to declare victory. It's been four years since they had any sort of labor agreement. And clearly with record profits at the automakers, now is the time to do it. So we'll see. I think that the market has clearly had a rational reaction so far. The stocks really haven't moved very much. And the length and the breadth of this is really what's going to determine how this all plays out. Yeah. Phil also just outlined the drop in inventory for some of those vehicles at some of those facilities that are being impacted right now.

Are those lost sales or is that just delayed business? It's especially pointed that you ask the question because Wrangler and Bronco are effectively substitutes for each other. So if a consumer is waiting for a Bronco, there really aren't a whole lot of other products in the market that are very similar. Our take is that it's more of a delayed sale. And there will be some fixed costs that the automakers will have to and the supply base will have to work through. But ultimately, I think they'll make that sale and that profitability on that product. So the weakness we've seen in the stocks in recent days in the OEMs, is that a buying opportunity? Or do you see other areas of the supply chain as more compelling right now? The OEMs. Is that a buying opportunity or do you see other areas of the supply chain as more compelling right now? The OEMs are their own discussion. There's so

much capex and cost going into the EV investment right now. It's a difficult space. We look at the supply base. We look at the suppliers because you can pick the technologies you want to invest in. They're more diversified from a customer standpoint. They're more diversified from a geographic standpoint. Take a look at a stock like Dana. D-A-N is the ticker. It's a mommy Ohio-based company right down the road from the Stellantis facility. They have content on the Bronco. They have content on the Wrangler. But they're also, it's only half automotive. The rest is commercial vehicle. The rest is off-highway. And they're everywhere around the globe. They'll be able to endure this. They'll be able to generate the cash for the next generation of EVs. They're where you want to be in the market as far as from a supplier

perspective. Dealers are also another area that we look at. During COVID, no one else had to deal with a loss of supply more than the dealer space, so in Auto nation of Penske. These are compelling opportunities that we're looking at maybe outside of the OEM space. Okay. I mean, we step back and we look at all of this, and I realize that you're not necessarily invested. Gabelli's not necessarily invested in Tesla because you're focused on your value funds. But is Tesla a big winner broadly from all of this, no matter what deal gets struck? Well, you look at the comparative wages or all-in costs for labor at a GM at a Ford, at a Stellantis, and then you look at the $45

number at Tesla versus, say, call it a 70 number that's about to go much higher. And given the automation of the Tesla facilities, yeah, the non-union plants have a cost advantage. Now, whether or not the Tesla story plays out from a profitability perspective, you know, that's maybe that's for another segment. But yeah, at this point in time, there's a definite cost advantage. Okay. Brian Sponheimer of Gabelli Funds, thanks for joining me. Thank you. All right. It is time now for a CNBC News update, and we return to Kate Rooney for that. Hi, Kate. Hi, Morgan. Florida Congressman Matt Gaetz may be running for governor in 2026 at a ceremony

for the incoming Florida House Speaker. Sources tell NBC News that Gaetz implied several times that he would be running for governor. The field is expected to be crowded as incumbent Ron DeSantis faces term limits, regardless of the presidential race. ABC will air more Monday night football games that were set to only appear on ESPN. The extra 10 games will replace the fall television that has been delayed due to the ongoing writers and actors' strikes in Hollywood.

The network will have a game all 18 weeks of the season and simulcast two of the playoff games. And finally, a black bear sighting in a tree at Florida's Disney World prompted a closure at Magic Kingdom. The Florida Fish and Wildlife Conservation Commission has successfully captured the adult female bear. Video shows the bear in a white tarp carried by the agents.

Don't worry, the commission, though, is working to relocate the animal. She made it out. She's going somewhere else, out of Disney. Back to you, Morgan. All right. Kate Rooney, thank you. Up next, exactly where are we in the bull market cycle? There's been a lot of debate about that. Mike Santoli looks at one chart that may help tell the story. And later, is Tesla looking for a new EV factory site? We're going to talk about reports of outreach from Saudi Arabia and Turkey with Musk biographer Walter Isaacson. Stay with us. Welcome back to Overtime. We have a news alert on Norfolk Southern relating to the train derailment in East Palestine, Ohio, back in

February. The company saying this hour that it's launching a value assurance program whereby the freight railroad will, quote, compensate any reduction in value of eligible residential properties located in East Palestine and some surrounding communities impacted by the derailment. The company says the program will compensate homeowners who have sold, are selling, or plan to sell their houses. Shares of Norfolk Southern are down roughly 17 percent this year, but as you can see, not really moving right now in the after hours. We'll continue to keep an eye on it. Let's get back to Mike Santoli with a look at which stocks are performing best in the current market cycle. Mike, where are we

in the current market cycle? I mean, it's absolutely the key question right now. And there's no clear answer. You know, it's not like you look at the clock on the wall or the calendar to say where we are in the economic expansion. And a lot of folks are very sensitive to the idea that we are late cycle and obviously recession risks have been front and center for well over a year. Well, Deutsche Bank has baskets of stocks, basically the sectors within the market that tend to perform best at each stage of an economic cycle. That's early cycle, mid cycle, late cycle and then end of cycle. What I found interesting is you actually see the mid cycle group still performing the best right here.

That's this green one right here. Now, late cycle is right behind it. But I find it interesting that it's kind of been range bound for months. So it hasn't necessarily gotten any further boost on evidence, or at least as the equity market sees it, of this cycle getting toward the end. And as you would expect, early cycles been left behind. That's when you already have high unemployment and easy money and we're coming out of a recession and an earnings trough. And then, of course, you've got end of cycle. Things that might work end of cycle is perhaps energy is a good example of that. So that could perk up late and end of cycle. So obviously, you know, this isn't some kind of perfectly predictive thing, but it does show you that the market itself is suggesting that there might be a little more life left in this expansion, Morgan. OK, Mike Santoli, thank you. Elon Musk denying a report

Tesla is in talks to build an EV plant in Saudi Arabia. Up next, we will get reaction from best selling author Walter Isaacson, who just released his biography of Musk. And we are still awaiting the pricing of Instacart's IPO. We will bring you those details as soon as they're revealed. So stay with us. Welcome back to Overtime. If you're just joining us, shares of Block are falling in overtime on news that the CEO of its Square business is leaving the company in October after nine years. Jack Dorsey will assume that role, adding to his current titles of chairman and blockhead. Shares are down 2 percent right now. We're still awaiting Instacart's IPO pricing. We'll bring you those details as soon as we have them. Meantime,

Tesla shares ending the day down by more than 3 percent. A report today linking the company to Saudi Arabia. The Wall Street Journal saying the two are in, quote, early talks about setting up a factory there. Elon Musk responding on X, though, saying, quote, yet another utterly false article from WSJ. Musk also meeting Turkey's president Sunday here in New York. Turkish media reporting Erdogan invited Musk to build a Tesla factory there. So joining us now is Walter Isaacson, author of the new book Elon Musk. He is also an advisor, advisory partner at Perella Weinberg and a CNBC contributor. First of all, congratulations on the book. It is incredible. I actually have it here. I have not I have not gotten through the whole thing yet. But I do want to start here. I do want to start. I do want to start with this

notion of Saudi Arabia and Musk and the relationship there, because whether today's information report from Wall Street Journal was false or not, it kind of highlights the fact that there is a history here between these two entities, going back to the now infamous tweet about funding secured. And I guess just walk us through some of the historical context. You know, I think like Saudi Arabia's relationship with the United States, it's complex with Tesla as well. As you said, that famous tweet in 2018, funding secured, he acted as if the Saudi investment fund was all ready to back his effort to take Tesla private. And if they weren't

really ready, it becomes a problem. Now, the Saudis have had investments in Twitter and they've rolled over some of those investments. But Musk is not really talking to them now about, I don't think he says he's not, and I believe he's not, talking about building a factory now in Saudi Arabia. His focus is on the next generation, inexpensive, global car that will be done first in Mexico, but also with an assembly line in Austin, Texas, because he likes his designers to sit next to the assembly line. And there are many places he's talking about, including Turkey, as you said, but I wouldn't hold my breath for Saudi Arabia.

Okay, got it. So Turkey could potentially be in the running. I mean, there's also been talk of India as well. Yes, and I think he's going to India. There are a lot of places. And if he's going to make this inexpensive global car, there'll be millions made, he is going to design a platform, but more importantly, a factory that will make the platform, an assembly line, and it will be highly automated, I would guess. He spends a lot of time, I've seen him spend a lot of time going station by station and what a factory should look like and what do you automate and what do you not automate and as you just talked about the United

Auto Workers strike and everything else I think having a lot of options in the future with highly automated factories that can be replicated I think that's a good strategy I guess so how does that speak to the navigation of Musk, of all the geopolitical cross-currents? I mean, Turkey is an ally of and a member of NATO. It's an ally of the U.S. It's a member of NATO. But it can be a little bit of a tense relationship in and of itself. India, we know, is benefiting strongly from the tensions between the U.S. and China. He's obviously got a big footprint in China with Tesla, too. He does seem to move around and communicate with and negotiate

with world leaders in a way that, dare I say, seems maybe Saudi Arabia excluded, seems a little bit smoother than others sometimes. Well, definitely. I think a lot of countries, be it India or Turkey, would have said they would love to have a Tesla plant. And I think that he also has, you know, he controls his whole supply chain. When he first took over, when he first was putting together the group that was Tesla, they were making the batteries in Japan and the battery packs would then be in Thailand. In England, they put them in the chassis. And he wants end-to-end control, just like Steve Jobs did. So he'll be making his

own batteries, is making his own batteries, making his own battery cells. And there'll be a lot of places where I think he's going to want to have investments. Speaking of world leaders, apparently reports today that he says that Musk says Twitter, now uh... is moving to a small monthly subscription has five hundred fifty million users in this apparently came up in a live stream conversation with israeli prime minister benjamin netanyahu have you heard anything about this this idea of a subscription i mean i know you have to pay to be verified uh... but but we've could be seeing an overhaul of the economic model there in

general absolutely i don't think it he wants it to be advertising dependent. More than 20 years ago, he created X.com, which morphed into PayPal. And he wanted it to be a payments platform, a place where people could post content and even get paid for it. And from the very beginning, even before he took over Twitter, but after he made the offer in April, he said it was an accelerant to create what he wanted to do 20 years earlier and then got ousted when it was PayPal. So I think that he wants to get away from a pure advertising model.

Obviously, there'll be subscriptions, but there'll also be ways to pay for things. You look at WeChat and other things around the world. They're able to do that. And I think his live stream with Benjamin Netanyahu, the Israeli prime minister, was fascinating today. They also talked about anti-Semitism. Netanyahu talked to him about that. And Musk is just quite controversial. The problem is not the ADL uh... acts the platform that used to be known as twitter the problem is advertisers don't want to be in a very contentious controversial uh... sometimes toxic place so i think a he's got a tone that down a bit and be

he's got to find other revenue than advertising all right what i think in isaacson again congratulations on the book thanks Thanks for joining me here on Overtime. See you soon. For much more on Elon Musk and Tesla, don't miss an exclusive interview with ARK Invest CEO Kathy Wood coming up at 5.30 Eastern tonight on Fast Money. Meantime, up next, we will get a read on the state of luxury spending and art as an alternative investment when we are joined exclusively by the CEO of Auction House, Sotheby's.

It's been a choppy market so far in September, prompting some investors to seek alternative assets. And that's where art comes to play. Art topped the Knight Frank Luxury Investment Index in the second quarter of this year. And Sotheby's says it's on track for another strong year itself. Joining us now is Sotheby's CEO, Charles Stewart. Charles, it's great to have you on the show. And that is exactly where I want to start, because we have sticky inflation. We've had moves in the FX markets. We've had uncertainty in other markets as well. And yet art seems to be holding up at least the most sought after pieces. Your thoughts? Yeah, I would agree with that assessment, Morgan.

Certainly at the very high end, our markets have been resilient and strong. We've seen that, you know, throughout the world this year. And of course, there's structural change in the market. We all see it. But at the same time, there's continued strong, you know, strong interest in buying these works. And they're so rare. So that continues to propel, you know, everything that we're bringing to market. Have you seen more discernment among your customers in terms of what they're willing to buy and how much they're willing to spend? Well, I would say, you know, at the very high end, we've been, as I said, quite insulated and protected. We've brought over 30 works of art and objects, over $10 million to market this year. Our sell-through rates are very, very healthy. In some categories,

you know, perhaps there's a bit of softness, but our sell-through rates on everything we sell are still very high, about in the mid-80% range overall, which is consistent with past years. So, you know, that means that, you know, buyers and sellers are finding a place to meet, you know, in these markets. You've announced your fall auction season. What's gotten a lot of attention is this Pablo Picasso painting that you're going to be selling as well. I guess talk to me about, again, to this high end customer and to the ultra wealthy that are, you know, coming to Sotheby's, how it speaks to the resilience? Sure. Well, yes. In fact, we're bringing the collection of Emily Fisher Landau to market. That includes the Picasso that you mentioned, which is a true, true masterpiece in its own right. A 1932 portrait of Marie Therese Also includes the Jasper Johns flags painting behind me. I know it

looks like I'm announcing a run for president, but this is a seminal work for Jasper Johns. Really excited to have it. This is one of the top five collections ever brought to market. The quality is extraordinary and we expect to see strong demand for this extraordinary, exceptional, unique collection. Is the concept of what's collectible expanding right now? And I ask that because I realize streetwear, for example, you've seen cars, you've seen, and maybe this isn't your jurisdiction, but you've even seen trading cards make a comeback. It does seem like the notion of hard assets is expanding. It's definitely true.

And I think that a lot of it comes back to rarity, scarcity, to curation and storytelling. We see it for game-worn sports merchandise, for example. We sold last week a sweater that Princess Diana had worn, an iconic sweater that people would recognize and sold for over a million dollars. There's a 1977 Wilt Chamberlain game-worn jersey on our auctions right now, which is getting a lot of attention and high prices. And we're definitely seeing expanded interest in things that are particularly rare and unique with great provenance. When we talk about some of these assets, is this recession-proof? I guess, how are investors thinking about it? Are they thinking about it as an investment, or is it really more a discretionary purchase that tends to do well over the long term? I'm very careful

about calling, you know, describing art as an asset class. I think that really this is a collecting category, a passion category, something that gives people a lot of pleasure to have in their homes or to pursue the collection. But that said, from a financial performance context, great art has significantly outpaced inflation and in many cases markets. So I think people do see it as, you know, a very good store of value. And, you know, you have the added benefit of it being something you can greatly enjoy and live with. All right. Charles Stewart of Sotheby's, thanks for joining me. Thank you very much. And speaking of alternative investments, I'll be talking with two of the

biggest names in real estate at the 13th Annual Delivering Alpha Investor Summit next week. To register, scan the QR code on the screen right now. Okay. We're still awaiting Instacart's IPO pricing up next. Find out what to expect when that stock begins trading tomorrow. Welcome back to Overtime. We're still awaiting Instacart's pricing ahead of the grocery delivery company's highly anticipated IPO. Let's bring back Mike Santoli to discuss. Mike, I mean, this one's being watched. We had a strong start out of the gate for ARM.

That stock is still trading above its IPO price. And then, of course, we get Klaviyo later this week as well. So definitely a key moment for the IPO pipeline. Yeah, and I think, you know, the way it's starting makes some sense and probably creates a higher chance that they get a decent reception. By that, I mean companies that are relatively far along in their growth, in arm's case, a mature company, kind of known quantities. The investment communities had eyes on them for a while. I'm not that kind of alarmed or even that interested in the fact that Instacart's coming out

probably at a valuation at a deep discount to its last or peak private market value, mostly because back then it was just mirroring what the public stocks were valued at. And now it's just mirroring what they are as well. So still going to be sort of eye of the beholder as to whether you think this is a durable growth story, but probably some rational pricing being enforced by the public markets on both these deals. Yeah. Meantime, we're keeping an eye on the UAW auto company negotiations that are afoot right now with that strike going on. You got oil prices hitting a 10 month high amid output cuts and continued mixed data, especially where inflation, which is we know

is sticky, is concerned. How does that tee us up for the Fed? I think there's just a lot of friction points in the economy. You name a few of them right now. I think it makes the Fed less certain as to how things play from here, which means they're probably going to exercise their very strong preference to do nothing this time and maybe not even signal very clearly what their next move might be. Preserve flexibility in terms of responding to the data down the road. They're not going to declare any kind of victory. So we'll see how the market takes it, if the market is really just looking to get past this and get some color on the Fed's outlook as they update their so-called dots into next year.

Yeah, going to be a lot of focus on the dot plots and, of course, this idea of higher for longer. Mike Santoli, we'll see you tomorrow. Thank you. Here's something else you want to watch closely tomorrow. John Ford's first on CNBC interview with Intel CEO Pat Gelsinger from the Intel Innovation event. That's going to be happening here on Overtime starting at 4 p.m. Eastern. That's going to do it for us here at Overtime. Fast Money begins right now.