Closing Bell - Closing Bell Overtime: Intel CEO On Executing; Masimo CEO Talks Patent Fight With Apple 10/27/23

Episode Date: October 27, 2023

Stocks slid in the final hour of trading to send the major averages negative on the week. 3Fourteen Research Co-Founder Warren Pies helps us break down the market action heading into an uncertain weekend and the key sectors to watch. Jon sits down with Intel CEO Pat Gelsinger after the chipmaker’s strong quarter. Masimo CEO Joe Kiani on his company’s patent fight with Apple over watches. Andrew Borene, Flashpoint National Security Solutions Executive Director, walks us through the latest developments in the Middle East. NerdWallet recorded its best day ever, jumping 40% on earnings. CEO Tim Chen talks the company’s position.

A rough ending to a rough week as the NASDAQ clung to modest lead to gains today, but the major averages end the week firmly in the red. 41-17 it looks like for the S&P. That's a scorecard on Wall Street. The action is just getting started though. Welcome to Closing Bell Overtime. I'm Morgan Brenner with John Fort. Coming up this hour, three companies that bucked the downtrend today. Intel getting a major boost following last night's earnings results. Ending at the top of the Dow and S&P 500, second in the NASDAQ 100, and building on solid gains for the year. We're going to hear from CEO Pat Gelsinger about the company's turnaround and what he makes of new competition from the likes of Qualcomm and maybe

NVIDIA. Plus, shares of NerdWallet getting a massive pop on the back of strong earnings and the launch of its first credit card. The CEO will join us to discuss. Look at that. Almost 41 percent today. Nerds and a big win against Apple. The founder and CEO of MedTech company Massimo joins us exclusively to talk about a ruling from the U.S. International Trade Commission saying Apple violated Massimo's patents, a ruling that could lead to a ban on Apple Watch imports at some point. Not this watch, though. We begin with the market as the stocks wrap up another losing week, third in a row for the Nasdaq, second straight for the Dow and S&P. Looking at the sectors, communication services and energy sharply lagged this week while utilities outperformed.

Let's bring in senior markets commentator Mike Santoli. Mike, looks like we might finally be busting out of that area where we were chopping around for so long between 4,200 and 4,500 on the S&P. But where does this get tested on the downside? Yeah, we've definitely kind of buckled some of those areas that people thought and maybe hope we're going to be some kind of a support. Look, 4,100 maybe is a stop along the way. As I was just saying, we did spend a ton of time there several months ago. But to me, the story is that, you know, investors implicitly saying, you know, I don't care what you've done for me lately, whether the economy, consumers or companies in terms of earnings, they say, what are you going to do for me in the next six months? Because we

keep rolling forward our expectations that there's going to be some kind of a major economic hiccup or that earnings can't keep growing, even though the evidence in front of us has been better than anticipated. So to me, that's the issue, that the economy maybe is going to have a tough time digesting yields where they've gotten to, even though Treasury yields really weren't destroyed this week. They've more or less just gone sideways. Yeah. I mean, we've bounced off the lows of the session here into the close, Mike. But we did see the VIX spike this afternoon. We saw crude move higher. We saw gold move higher.

We saw stocks move lower for the most part, X the NASDAQ. And we saw yields come off a little bit from the highest levels of recent trading. Geopolitics, how much is this factoring in as we do get these headlines about Israel expanding its ground operation into Gaza coming into a weekend? Yeah, it's always been, without a doubt, part of the backdrop for the last several weeks, Morgan. And I do think you've been able to see this pattern, not just with the headlines today, but each of the last three Fridays. People have decided to just take risk down going into the weekend.

And the VIX has been up each of the last three Fridays, even though the markets weren't always that jumpy. So it does show you there's some impact here. I'm reminded, I go back to the lead up to the invasion of Iraq in early 2003, when it was kind of a when, not if question that was going to happen. And the market went down 10 percent in a straight line over the course of a couple of months. Until that March, you got the actual invasion. The market ripped from there. And that was the low of the bear market.

I don't think anything as dramatic is happening right now. But that similar type of dynamic seems to be at play. OK, stay close because we're going to come back to you, Mike Santoli, to talk more about the volatility. 314 Research Co-Founder Warren Pies. Warren, it's good to have you on here. I actually do want to start with you with gold because as we've seen the S&P move lower this week, gold is now outperforming year to date. And I know that's something you and I have talked about in the past. Yeah, thanks for having me on. This is, from our perspective, I think the setup looks nice for gold here, especially relative to some of the other major assets out there.

If you think about it, this is really the fourth time that gold has tried to break out to sustainable new all-time highs. You could go back to August of 2020, March of 2022, right after the Russian invasion of Ukraine, and then earlier this year in May. And the thing that I like about this setup is that each one of those times, speculators in the gold futures market had already really gotten overweight gold at that point in time, each time that gold had crossed 2000 in the past. And really, I'm not seeing any kind of optimism in the gold market when you look at the futures positioning this time around. So there's a rule in technical analysis. You don't make four. You don't make quadruple tops. You've never heard of such a thing because once you test a level a fourth time, you break through it. And I look at positioning. I think that this setup here

is a good one for gold. Okay. Speaking of technicals, I want to get your thoughts on the S&P and the other averages for that matter, because we do have an S&P that finished at 41.17. We're trading in or near correction territory. The Nasdaq composite, similar story in terms of the moves lower we saw this week. The fact that we've fallen below these key levels, what is it going to take to see a more sustainable rally in stocks now? I think it is as simple as yields, really. If you break down what's really going on in the market, I know you were just talking to Mike about geopolitics. I think that's a factor. But the real issue impacting stocks has been rates

really since the second half of the year. If you measure rates versus the Russell 2000, where we can strip out the mega cap tech influence, there's been a very tight relationship as rates move higher, Russell 2000 moves lower as rates move higher breadth, which is the number of stocks doing well, the number of stocks above their 200-day moving average, for example, has moved lower. So rates have really hollowed out the underlying market structure. It's something we've talked about before. And that puts a ton of pressure on these big cap tech stocks who've been reporting earnings. And if the market dislikes even the smallest thing in these big cap earnings, it makes the market dislikes even like the smallest thing in these big cap

earnings, it makes the market very vulnerable. So to me, I don't think you can rely. I've been saying this. I don't think you can rely on big cap tech to carry the water for the market any further. You really need a broadening. And in order to get a broadening, you need rates to back up. And I think it's got to be disheartening for the equity investor, the average equity investor to watch a 10 percent decline in the stock market. And you really haven't seen rates budge. So to me, I think bonds over stocks for Q4 is still the best positioning. Hey, Warren. So what is the role of mega cap tech then? Because a lot of these stocks are down at levels where they haven't been for strip almost six months at this point uh... i guess

you know stocks would've been a better call them to not buy stocks and that's in p was at forty five forty six hundred but some people were stay still by that now we're close to forty one hundred as we think about where the s and p goes from here what is the role of mega cap tech? Well, I think it gives us an important earnings is always is you get a lot of good information. And I agree again with Mike that there's a there's a lot coming through this big cap tech earnings cycle that shows you that

earnings are getting better. But markets are always about what's priced in. And the problem that I have with big cap tech is this when you have a negative reaction to what's ostensibly a very good earnings cycle. So you can go back to last quarter. If you remember, NVIDIA, when they blew the doors off of top line, bottom line guidance, everything, it was the best quarter anyone had ever seen in the stock just deflated. And to me, that was a really negative sign for how these stocks have been priced. It tells me that all the good news is already priced into these stocks. And it's really a valuation issue. And I think higher rates, even though higher rates don't impact this group as much

operationally, they don't need to go out and borrow money like a small cap does. But it impacts them from a valuation standpoint. So as rates go up, everything, including big cap tech, looks less attractive from a valuation standpoint. So that's where I see big cap tech fitting in. Did Meta's action this week, ending the week lower after a report that initially looked good, sort of validate that point of view for you? Yeah. I mean, honestly, you can pick nits across the board, but even Alphabet, you know what, their cloud revenue is decelerating. I'm not a tech analyst, but they're beating on the top line. They're beating on the bottom line. They're giving good guidance. If you do all of that and then the analyst community sells your stock off because

they don't like the guidance range is too big or something. That's just another way of saying all the good news was already in that stock. And I think that that's the theme for big cap tech, where we've squeezed as much out of this group of stocks as we can. And so if the market wants, if you want to see a market rally from here, you really need to get that bottom 493, equal weighted S&P 500, mid-cap, small caps. Those stocks need to move. And we really see no evidence that those stocks can move when rates are this high. All right, Warren Pies, thank you. Thanks for having me. Let's turn now to health care among the worst performing sectors today

and this week. The biotech space under significant pressure as well. CNBC health and pharmaceutical reporter Angelica Peebles joins us here on set to discuss some of these movers. And we do want to start with some of the biggest that that pulled the sector lower today, especially. Yeah. So Sanofi is the biggest laggard today. Their stock was down almost 20 percent, shaving off about 24 billion dollars in their market value. And that comes after the company announced this pretty big pivot. They are scrapping their 2025 margin goals and instead saying they're going to focus on investing in R&D, increasing those investments. And of course, that sounds like good news to, you know, to say that we're going to focus on what's coming next. But it's a pretty big change

for investors who were focused on that margin in 2025. And now they're looking at a different type of business strategy going forward. What does that mean for a company to say, hey, we were planning on saving on costs in this space? And then to say, actually, no, we're not going to do that. We're going to invest. Is it because we see competition coming that's going to strategically put us in a bad spot if we don't do that right now? Because I think a lot of companies are sort of in the position where, hey, investors want to see profits. So we're going to show them profits. And that's what makes this kind of a pivot surprising to me. And it's interesting. So Sanofi is talking about how they think that they are in a position of strength right now. They're in a different situation than a lot of their other pharmaceutical peers saying that they don't have these big patent losses coming up this decade. And that's what makes this the right time to invest because they're in a position of strength. But still,

it is a pretty big pivot. And so to come and do this, I think, is a little bit jarring for investors. They're saying, look, we'll come back in December. We have this investor day and we'll show you what's in our pipeline. But still, investors clearly surprised today. Yeah. On the other hand, Dexcom outperforming on earnings as well. What's going on there? Yeah. So Dexcom is saying that things are looking better than people expected. There's been all of this talk about how GLP-1s, those weight loss drugs, are going to just decimate the market for things like diabetes products, which is what Dexcom specializes in. They sell continuous glucose monitors.

And Dexcom is saying, look, we're actually doing OK. They beat on the top and the bottom line. They raised their revenue guidance for the year year and they announced a $500 million buyback program. And so they're saying that that trend is not materializing yet, that it actually could be a help to their business. And so that's why you're seeing their stock up so much today. And they are the one that beat out Intel for the top spot on the NASDAQ 100. There you go. Very similar commentary, by the way, to Abbott when he was on. Exactly. The CEO was on our air not that long ago. Yeah, they're saying the same thing that they think that the glucose monitors and the GLP-1s can actually coexist and potentially work together. Angelica, thanks. All right, back to the broader market now. The S&P 500 closing a second negative

week in a row. On track for another down month. Just a few days left in October. Let's get back to Mike Santoli over at the market dashboard. Mike? Yeah, John. The pullback starting to perhaps cut into some muscle here. You know, almost taking care of about half of the accumulated gains from last October's low to the highs in July.

This is a two year chart. It shows that we're actually deviating from that pattern that I was pointing out for months, which was this year was tracking 2021 really closely. We were kind of flat on a two year basis for a while. Now we're down 10 percent or so from these levels that were of a couple of years ago. And in fact, we're at a level the S&P first reached on the way up about 30 months ago, two and a half years ago. So that shows you that, you know, it's a long period of sideways trading ranges as earnings have built up. In theory, value is accumulating over the course of that process. But of course, nothing saying that it has to stop here in terms of this correction. Now, you mentioned just a few days

left in October. This is when, if the seasonal tailwinds are going to show up in a year, they ought to really be here. So this is this current year in terms of S&P 500 performance compared to the average year, the path of the average year since 1950. And you see that this is actually starting this morning. We were basically right at that point where you should start to advance. As a matter of fact, there's a micro cycle that I followed for years. Larry McMillan of McMillan Analysis says you buy on the close October 27th. That's today. You sell on the close November 2nd. You're up 85 percent of all years if you've already had a pullback in October. Who knows if it's if it's going to work or if anyone cares to play something like that. But it's sort of now or never for the

fourth quarter rally. And you talk about now. Next week, we also get earnings from Apple, which is the biggest stock of them all. How much of an influence will that have, you think? I mean, look, it'll have a significant influence. But the way we've seen the stocks trade off of the numbers, it's been very hard to handicap whether it's going to have a larger kind of impact on the index. It's really one of those things where I feel like if we're feeling good about the market's gone down enough

and the fundamentals are intact more broadly, Apple will probably feed into that narrative. I don't think it's about one stock rescuing this market. All right. It wouldn't be that simple, would it? Unfortunately, yeah. After the break, how Intel got its groove back. Shares on a tear today, even as the broader market dropped after a big bottom line beep. We will hear from CEO Pat Gelsinger about AI opportunities and growing competition in the PC chip market from the arm side. Overtime's back in two. Welcome back. Intel closing up 9% today, best day in a year.

Right after the earnings call last night, I spoke with CEO Pat Gelsinger about what went right in the quarter and the work they've still got to do. Most crucially, I asked whether the new batch of AI-capable chips due to start arriving in 2024 is going to be produced smoothly and on time. We're well into that validation cycle with our customers now. Multiple customers are far along in their validation cycles. And I wouldn't be using words like on or ahead of schedule if I wasn't of growing confidence in our ability to hit those products into the marketplace. Customers are now giving us very resonant feedback. Oh, wow, the mojo was coming back. Intel is executing again. I can increase my confidence in their roadmap. I don't have to second guess them anymore. They're delivering products earlier than I expected them to be. Samples, high quality software assets are

very healthy for those. And these are compelling products that our customers are starting to see. So, you know, Intel is back. Our execution has improved remarkably, and it really was an outstanding quarter for our Intel overall and for our data center business in particular. Now, tell me about Gaudi 3. That's the AI offering from Intel that we expect to be much more competitive with NVIDIA. When do we see it? When is it making the real contribution to your results that investors are going to be able to gain confidence in? Yeah, well, first, Gaudi 2, we saw about a doubling of its pipeline this quarter. So we're seeing from a small base but ramping quickly.

So we're getting a lot of momentum in Gaudi 2. And that will roll right into Gaudi 3. Gaudi 3 just came out of fab. We're now in packaging. We'll be powering that on very shortly and giving that to customers as quickly as we can. And that's a 24 product. So Gaudi 2 today is benchmarking very well, and we win some, others win some of the benchmarks, but Gaudi 2 is definitely showing up in the marketplace with

very competitive performance, but it's TCO, and the performance per unit cost is very compelling for our customers, and that really is having them, as they build out these big training farms, they're saying, wow, that's pretty compelling now. So we're getting a lot more interest. We saw a 5X increase in our dev cloud, this easy on-ramp that we present to customers to get their first experience with advanced technologies from Intel.

So a big uptick in momentum there. And now on Gaudi 2 today, we're supply constrained and we're racing to catch up to the demand that we're seeing from customers. And we expect that momentum to build into Gaudi 3 and 24. But we're already, John, well underway on Falcon Shores, our 2025 AI accelerator product. So and that's the design teams are working like crazy on that. And that'll go into, you know, FAB next year for productization in 2025. I also talked to him about the threat from ARM-based CPUs for PCs from Qualcomm and possibly NVIDIA. And by the time, because others are delivering the first generation products,

hey, we're going to be delivering Lunar Lake next year, a major step up of momentum and Panther Lake in 2025. As I said, we expect in two years we'll deliver over 100 million PCs that are AI-enabled, so a volume play. We're seeing the ecosystem momentum as well. We announced our AI accelerator program for the PC platform. Over 100 ISVs are participating in that, and they're not waiting for these other chips to come a year or two from now. They're jumping on the Intel platform right now. We'd also say that ARM-based clients have always been low-end, low-margin products.

They've never really made that much of a difference in the PC marketplace overall. So we feel like if we execute well around the x86 ecosystem, that we have so much ecosystem momentum to benefit from that we're going to do well. Cristiano is going to play that tape to motivate the team, I'm sure. Now, the inventory situation with the PC business for this quarter worked exactly as Intel hoped. Data center business was a little short on revenue, but the execution was crisp and data center margins improved significantly more than expected. Now, the odds, I will say this, are starting to tilt better than 50-50 now

that Intel can pull off this turnaround. Morgan, I'm not sure that the stock is priced for that. Even after this move, you can check out the full interview on Twitter or X, as they call it now, CNBC Overtime. It's interesting to hear you say that because you've been following this company so closely for so long, but particularly through this turnaround process. So those are significant comments coming from you. I want to go back to the PC, the 100 million AI enabled PCs, though, because at a time where everybody's focused on this and this was something that came out of their earnings print last night, you know, stabilization, maybe even the signs of early recovery in the PC market. Is that going to drive a whole new fresh cycle for PC spending?

I don't think that's the most important thing. I get that. I was just curious about it in general. I'm not sure. I'm not sure we've seen enough of the apps out there taking advantage of that. Sure, Microsoft is doing some things. AMD is going to have some stuff in market as well. The question is, can they deliver these chips on time and at a performance capability that's really on par with what NVIDIA and AMD have put out? And they're on schedule. This is a huge quarter for them as far as that goes. Okay. Yeah. Up next, long-term at long-term treasuries. Mike Santoli is going to return with a breakdown of something happening in the bond market that hasn't happened in more than a decade. And check out the rough week for the Dow Transports, and it was rough, sinking more than 6%, the biggest decliners, UPS and

Rider, a lot of earnings movers to the downside this week for the transports. Maybe a little Dow theory is in store next week. In the meantime, we'll be right back. Welcome back to Overtime. The 10-year yield stabilizing after peaking above 5% in the past week. But one ETF tracking long-term treasuries is falling today and retreating to lows not seen in decades. Mike Santoli is back at the market dashboard with more.

Mike. Yeah, Morgan, pretty dramatic as 20-year charts go for something as seemingly routine as treasury securities. But you have this price here in the mid-80s for the TLT, the long-term treasury ETF, that really does go all the way back to the, I've got to fix my little magic finger here, but it goes all the way back, as you can see, to the mid-2000s.

What's interesting is it's a reminder that this tracks the prices of long-term Treasuries. Those prices are so depressed because the securities that the TLT holds were issued and rates were really low, and when yields go up, that means the prices of those bonds have collapsed. They're at like 52, 54 cents on the dollar, the biggest holdings in the TLT right now. So if yields calm down at all, the price response of these types of instruments on the upside should be pretty dramatic, but it's tough to wait for that. Now, let's take a look at another ETF, AOR. It's a proxy for the 60-40 equity fixed income portfolio. Last year, one of the worst years into October of this strategy that we've ever seen. It has picked up from here, but as you can see, faltering and most of the downside pressure over the course of this year to date

has been coming from the bond side. Now, long term, this strategy gave you like 7% annualized total returns. It's been negative 6% annualized over the past two years. So in theory, mean reversion suggests this should be a decent opportunity as you're getting more than 5% upfront in yield from the fixed income side of things. Of course, a lot of people think it's broken. If yields stay high for a very long time or go higher still, it's going to be a headwind. But just for long term purposes, it seems as if you've discounted quite a bit on this strategy, Morgan. Yeah. I mean, are we really are we really going to be talking about in two months time the fact that we had two straight years of well,

I guess not because equities still are higher on the year. But I was going to say, well, based on the S&P 500, they're higher based on, you know, kind of more inclusive measures of the market. They're down on a year to date basis. Yeah. OK, Mike Santoli, have a good weekend. Thank you. Now let's get a CNBC News update with Kate Rogers. Kate. Hey there, John. Hi, everyone. Here's your CNBC News update at this hour. The Israeli military said late today it's escalating bombing assault on Gaza. Gaza right now is focused on the network of tunnels and underground facilities Hamas is said to use.

Those areas inside Gaza are thought to serve as the group's headquarters, as well as a holding area for some of the more than 200 hostages. The FDA announcing that advisers will review on Tuesday a possible new cure for sickle cell disease, which largely affects black Americans. A bone marrow transplant is currently the only cure. The agency will review a potential gene therapy that attacks the disease at its genetic source. If approved, it would be the first gene therapy on the U.S. market based on the CRISPR gene editing tool. And companies that make deodorant are benefiting from the push to get workers back into the office. Unilever,

which makes Axe, Degree, and Dove antiperspirants and deodorants, says it's seeing a 15 percent rebound in sales now that Americans are spending less time at home and more time at work. Back over to you. Okay, thanks. When we come back, Apple closing in the green today, despite a trade tribunal saying the company violated patent rights from MedTech firm Massimo, which could theoretically lead to an import ban on Apple watches. Not soon, though, and Apple will appeal. We'll talk to Massimo, CEO, about that news in an exclusive interview. And as we head to break, check out the big week for Bitcoin. Lower today, but bucking the market downtrend for the week, climbing 13 percent on hopes of approval for a Bitcoin spot ETF. We'll be right back. Welcome back. The International Trade Commission issuing an

order Thursday that could potentially ban the import of Apple Watches over a patent dispute with healthcare tech company Massimo. Shares of Massimo spiking on that news last night. Massimo accuses Apple of violating its patents for features like the oxygen reader on the Apple Watch. This now goes to the Biden administration, which has 60 days to decide whether to institute the ban. Apple, meanwhile, saying in a statement, in part, Massimo has wrongly attempted to use the ITC to keep a potentially life-saving product for millions of U.S. consumers

while making way for their own watch that copies Apple. Apple says it will appeal this ruling as well. Joining us now in an exclusive interview is Massimo founder, chairman, and CEO, Joe Chiani. Joe, good to see you. You and I were just talking about this a few weeks ago. You got this win. Are you copying the Apple Watch

with your Android watch coming? John, great to see you again. That statement you read was so loaded and so outrageous. As you know from the last interview, we've been working on pulse oximetry since 1989. Apple contacted us in 2013, right after we announced the first consumer pulse oximetry product that worked on the iPhone and told us we're the platinum of non-invasive monitoring. They'll sign our NDA. They'll work with us. So what do they do instead? They've

recruited 25 of my team. I didn't take any of their people. They copied us. They copied us poorly. The second thing they say in that statement, somehow it's going to affect the health of people. They know their pulse oximetry is not good. I saw the data in the trade secret trial where they knew it wasn't good enough to submit it for FDA approval. They knew that their product would only read two measurements a day on 37% of the people. Yet, as they put in their own document, because of chaos of COVID, if we launch SpO2 with our watch, we'll pick up market share from Fitbit. So for them to say this is somehow going to hurt consumers, no, it actually will help consumers because that product, we did a test. It missed 94 percent of life saving events.

OK. At the same time, you started in hospitals and you're trying to push into consumer electronics where Apple rules. And it's not just with watches. You also bought a company that does home audio. What are you up to? Well, first of all, in the ITC, in the trade secret case, we showed the jury that I had this idea of creating a watch since 1991. We've been working on it since diligently since 2015, 2016, where we shrank the power consumption of our product and the size of it so it could fit in a watch. So yeah, since beginning, I was trying to do this. But at the same time, a lot of things have come forward that makes it possible, like high-speed internet, like Bluetooth and all these new technologies,

cloud data sharing and data gathering. So, yeah, I mean, they called us. They wanted our technology. And now we're copying them. It's kind of not not legitimate. Joe, it's Morgan. Apple's already said it's going to appeal. How is this going to play out? What would feel like a fair result to you, given the fact that there is quite an array of, at least from an analyst's standpoint, of consequences in terms of how or resolutions in terms of how this could go?

Well, look, as a patent owner, as an inventor on about 500 patents, what we all want is for a period of time, 10, 20 years max, is exclusivity on our invention. So an injunction is our right, and I hope an injunction will go in place. Now, that doesn't mean I don't want to help and make sure consumers get pulse oximetry, and we were willing to work with Apple in 2013, despite everything they've done. If we can make their product better, or they could use even our technology, I'm happy to work with Apple because they have a huge footprint. And I want everyone to have a pulse ox that really works. So you're saying you're not looking to take pulse oximetry out of the Apple watch necessarily, despite the fact that you're coming out with a watch. You think there's a world in which there's a deal done

where Apple pays you for your intellectual property? Yes. It's not just about the money. I want pulse oximeters that really work. If you are taking opioids at home and you're about to get opioid-induced respiratory depression, you need a continuous pulse ox that alerts you and your loved ones for it. So yeah, if we can work with Apple to either make their technology really work, which it doesn't, despite taking my team, taking our IP, or use our technology, I am willing to do it. There's room for everybody. So realizing that there are a variety of timelines for how this could play out based on possible solutions, how do you plan for the business,

not only over the near term, but over the medium and long term, knowing that there could be a legal situation that's hanging over your head? Well, we, first of all, believe ultimately what we're trying to do is improve people's lives. And we do that through our technology and our products. And we have a product right here that works really well that I'm eager to get to many, many people. We're also happy to work with other watch companies from luxury watches to smartwatches to get our technology out there.

And that includes Apple. So we'll continue running our business. We will continue to defend our intellectual property. And we think the best thing for Massimo, consumers, and other smaller companies is this injunction. Because at the end of the day, Apple has thought for a while that it's more efficient to infringe than to work with other companies. And only a block will make them rethink that since they have more money than anyone. And money is not what moves them when it comes to settling these kinds of things. All right. Once again, Apple is fighting this. We'll see where

it leads. Joe Chiani, founder and CEO of Massimo. Thank you. Thanks for having me. Coming up, war worries intensify in the Middle East. We will look at how the conflict is showing up on corporate earnings calls from a wide range of industries and as the war heads into a new phase. Stay with us. Welcome back. Stocks under pressure today with concerns about the war in the Middle East ramping up and adding pressure on the market. An Israel Defense Force spokesperson saying today Israel is increasing the ground operation in Gaza. Some companies are already factoring in potential impacts from the Israel-Hamas war in their earnings commentary. Take the social media platforms, both Meta and Snap, saying they are seeing some weakness in ad spending coinciding

with the beginning of that conflict. Snap pulling its formal Q4 guidance, while Meta saying, quote, it is something that we are continuing to monitor. United Airlines giving investors two different financial outcomes for the current quarter based on how long Tel Aviv flight suspensions last, but both below consensus forecast when it reported earnings last week. Those shares are down more than 15 percent since then. Cruise lines affected, too. Royal Caribbean noting a three-cent impact to Q4 earnings. Dow Jones saying cruises typically sail out of the port of Haifa in Israel.

The war will increase demand for defense as well. RTX's CEO Greg Hayes telling me Tuesday the prime contractor will, with Rafael, build a production facility in Arkansas to make more missiles for Israel's Iron Dome missile defense system. And L3Harris CEO Chris Kabasic telling us here on this show yesterday their products are quick turns, sometimes even less than a week, meaning when demand increases, L3Harris can meet that quickly. We could hear more on this next week as well when Palantir reports Q3 earnings on Thursday before the bell. But for more on the conflict, let's bring in Andrew Boreen, executive director at Flashpoint and former senior officer of the U.S. Office of the

Director of National Intelligence. Andrew, we did get these headlines this afternoon that the Israeli army says that ground forces are expanding their activity in Gaza. There have been reports of Internet service cut in Gaza as well. We know earlier in the day the U.S. did airstrikes on Syria. I guess walk us through where we're at in this conflict right now as it's unfolding in real time. Sure. And I think to kind of set the stage, it's really important that everybody viewing understand that modern warfare is fought on multiple fronts. It is no longer just the kinetic activity of ground forces. It's social media through proxy activity. It's obviously news coming directly to consumers. It's also in the cyber domain. We saw early on some denial of service attacks by threat actors, and we're monitoring closely to see if there's any escalation of potential terrorist-aligned,

more sophisticated cyber attacks from state-level actors. And then there's a financial battlefront that's going to come into play here as well. So really, where we're at in the story is after Hamas conducted those terrorist attacks on October 7th, Israel announced that it would take aggressive action against Hamas, the terrorist group. And there's been a long buildup for what many felt was an indisputable forthcoming Israeli ground offensive. And I think right now it's going to be very, very important that people are cautious in what they believe in terms of information coming from the battle space. And I think also it'll be very, very important that the Israelis and their allies work to separate Hamas, the terrorist organization, from the population of Gaza who are not Hamas.

And that's part of what happened to the United Nations today with the vote on the need for a humanitarian ceasefire or corridor. Yeah. And we did get reports that more trucks bringing more humanitarian aid apparently have been coming into Gaza in recent hours as well. When you talk about being cautious about the information, what do you mean? Well, I think we have an expression at Flashpoint that the best intelligence requires the best data. And when we talk about data right now, there's a lot of corruption out there.

So we need to be cautious because we saw what happened last week when there was an explosion at a hospital that led to the traumatic, horrible death of hundreds of innocent civilians. Initially, there were reports that came from Hamas, a terror group, and some other sympathetic parties that it was an Israeli attack. Increasingly, and we can't say with certainty, but increasingly, evidence seems to show that that was actually a terrorist rocket launched possibly by Palestinian Islamic Jihad that killed innocent Gazans. And that's why I say it's really important because emotions are hot. People are concerned. And our Flashpoint customers in public safety in 50-plus countries are extremely concerned about the risk of either lone wolf terrorism or political violence being escalated because of emotions related to what's happening on the ground between Israel and Hamas and other terrorist organizations. Andrew, in this tragic situation, we still got about 200 hostages to be concerned about.

Multiple proxies in the area, say, militant groups working with Iran. There's this issue of a ground invasion. When's the last time we had a situation this volatile and multifaceted in the Middle East to deal with? I have to be honest with you, it's never happened in my lifetime. I began my service in the Marine Corps in 2001. I participated in the ground invasion of Iraq in 2003 with the 1st Marine Division. And I've been involved in security issues for more than 20 years. I have to tell you, I have never seen a situation in the Middle East this volatile. I'm not sure that even when Ronald Reagan deployed the Marine Expeditionary Unit

and it was struck 40 years ago, almost to the day in October of 1983, I'm not sure that even that had the kind of volatility and regional concern for, I guess, conflagration or an expansion of violence between potential belligerents. And the United States is in a very difficult position, along with all of the allies of Israel, as it will be important that this campaign is conducted targeting Hamas and targeting Hamas supporters, some of whom actually are the Iranian government or Iranian Republican Guard Corps, which is part of the Iran regime's military. We appreciate that perspective. Andrew, thank you. Andrew Breen. And some related news just coming out from Wells Fargo. Vice Chairman Thomas Nides will

leave the company, according to a news release from the bank, to, quote, return his attention to events in the Middle East. Nides had been the U.S. ambassador to Israel from 2021 until July. He joined the bank in September. Nides saying in the release, watching the horrific events unfold in Israel and Gaza these past few weeks have had a profound effect on me in ways that I could not have imagined. I now feel an obligation to turn my attention back to the region and continue to provide whatever assistance I can outside of an official government role to help find solutions for the people living there. Still ahead, the CEO of NerdWallet joins us as his company stock takes off after strong earnings and the launch of its first credit card. We'll get his read on credit conditions, the American consumer, and much more

when Overtime returns. Check out shares of NerdWallet. 40% is a good day. Skyrocketing today after a better than expected quarter of the results and announcing the launch of its own credit card. The company's CEO is going to discuss the outlook for consumer spending and credit conditions when overtime returns. And next week, join CNBC's Evolve Global Summit virtually on November 2nd where we will gather leaders and innovators from around the world, scan the QR code to register, or visit cnbcevents.com slash evolve. Nerd Wallet turning in its best day ever, jumping nearly 41% after a strong third quarter earnings report. Company also announcing the launch of its first credit card, a no-fee card for subprime

borrowers looking to build credit history. Joining us now is NerdWallet CEO Tim Chen. Tim, welcome. Big day in the market. How much financial risk are you taking on with this card and how do the tight credit conditions these days necessitate it? Thanks for having me back, John. Yeah, with this card, we're partnering with Bond. You know, it's not a thing we're taking onto our balance sheet. It's a secured credit card where the user will deposit money and that becomes their credit line. And we think it's incredibly important to understand that, you know, NerdWallet makes money differently than your typical credit card company. Our idea here is not to earn swipe fees and late fees and annual fees. We're trying to put that aside and give that value back to the consumer.

We really hope to build and nurture their credit scores, to register them, engage them, and refer them to other products when they qualify down the road, things like loans and unsecured credit cards. How is that going right now, that market where financial services companies are looking for consumers? How hard is it for consumers to get connected with the right company? And are companies willing to pay to bring on that new customer? So NerdWallet is seeing really strong demand. You know, we're taking share in a pretty challenging macro right now. So the number of matches we see, for example, is going up. But where it's really challenged

is that a lot of banks, a lot of lenders, a lot of insurers are under pressure. So, for example, you've got things like Basel III endgame really challenging the capital ratio requirements that banks has currently proposed. You've got things like high longer-term rates really raising questions around what will break next. Do we have SBB, but on a larger scale? So you've got some natural conservatism with the financial institutions right now, and that's really holding us back a bit in terms of monetizing some of those matches. Tim, I want to go back to the credit card for a second, because it sounds like what you're laying out is a vision for an on-ramp to increase your customer base for other products and services down the road. Who do you see as your competition here? Is it traditional

credit cards then? Is it buy now, pay later? Or is this you tapping into a market that's been largely underserved so far? Well, we see an opportunity to offer essentially a better secured credit card. You've got to really think about situations like new college grads with limited credit history or recent immigrants who don't have a ton of credit history, people who have damaged credit. And so a traditional credit card company would really need to make money here on things like swipe fees and annual fees to make it worth their while. For us, we can really, you know, make money in other ways down the road. And that's really where the win-win comes in here. What's the critical question on how the business is going to do for the rest of Q4?

Yeah, looking out into next quarter, you know, we have a lot of different things going on, you know, puts and takes in the business. The deposit demand in our business is still strong. There's questions around when insurers are going to come back in full force. Right now, they're still really facing headwinds from profitability, but those things are starting to resolve. So while it's hard to call the exact timing on some of those things, we've remained pretty conservative in how we're thinking about it going into Q4. All right. Tim Chen, CEO of NerdWallet. Thank you. Thanks for having me.

40% move in that stock today. Worth calling it out again. For sure. And more stocks are going to move next week. Apple is on tap for earnings as well as names like Airbnb, AMD, Starbucks. Yeah. Apple, the Fed and Jobs report on Friday seem like they could be the three big, and I am putting Apple in that category, macro market moving events next week, potentially. Yeah, can't forget about that jobs report. I mean, there's so many questions about that labor tightness. That's right.

We did have a down week for the major averages. It's actually red October as well. We're lower on the month still. That seasonal uplift hasn't happened yet. Yeah. That's going to do it for us here at Overtime. Have a good weekend.