Closing Bell - Closing Bell Overtime: Interactive Brokers Chairman On Election Betting; Navan and Brex CEOs On New Partnership 10/15/24

Episode Date: October 15, 2024

Stocks retreated from early trading gains to close in the red. Bespoke’s Paul Hickey and Truist’s Keith Lerner break down the market action, plus earnings from United Airlines, Interactive Brokers and JB Hunt. Interactive Brokers founder Thomas Peterffy talks why consumers keep joining his platform, plus the early feedback from the company’s new election forecasting service. Allianz’s Mohamed El-Erian on the economy and the markets – and why a soft landing is becoming more likely. Brex and Navan, two CNBC Disruptor 50 companies, have teamed up for a new partnership on business travel expenses. CEOs Pedro Franceshi and Ariel Cohen join to break down the new offering, plus what they are seeing in the startup markets right now.  

Well, that does it. That's the end of regulation. BlackBerry ringing the closing bell at the New York Stock Exchange. The We Inspire Promote Network doing the honors at the NASDAQ. Major averages closing near session lows as a big pullback for the chips offsets solid earnings from the banks. We've got energy leading to the downside as oil prices fall off a cliff. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan at CNBC headquarters. And I'm John Fort in San Francisco. Well, overtime earnings kick into high gear today with three key reports coming your way. United Airlines, J.B. Hunt and Interactive Brokers. We will bring you all the numbers and an exclusive interview

with Interactive Brokers chairman Thomas Pederfy before the analyst call. Plus, Allianz chief economic advisor Mohamed El-Aryan joins us with his latest thoughts on the Fed and market and how a big pullback for oil, which we saw today, plays into the inflation picture. And much more on this big move for the chips as ASML and NVIDIA fall hard and Wolfspeed soars on funding news. All right. Well, we're going to get to our panel. But first, let's get to Phil LeBeau because we already have our first earnings report. United Airlines is out and Phil has the numbers for us. Hi, Phil. Morgan, this is a beat on the top and the bottom line for the third quarter for United Airlines, the company earning $3.33 a share, well above the expectation on the street of $3.17.

Revenue coming in at 14.84 billion. The street was expecting 14.78 billion. Let me go through the three Q3 metrics, the numbers within the numbers. Revenue per available seat mile, total revenue per available seat mile, negative 1.6, though they did see the inflection into positive revenue per seat mile during the third quarter. Premium revenue up 5% compared to the same quarter last year. Basic economy revenue up 20% compared to last year. Cost per seat mile up 6.5%, a pre-tax margin of 9.7%, and they had free cash flow of $41 million. Now for the guidance for the fourth quarter, United expecting to earn between $2.50 and $3 a share. Just for a point of reference, the consensus right now is $2.68 out on the street. And there is some news from United as well. Another reason why we may see shares move a

little bit higher in the after hours. United is announcing that it will be buying back $1.5 billion in United stock. Up to $500 million of that buyback may happen this year. So again, United beating on the top and the bottom line. Guys, don't forget tomorrow morning on Squawk Box. You don't want to miss what Scott Kirby, CEO of United Airlines, has to say. This is a Squawk Box exclusive. We'll talk about the third quarter. We'll talk about the stock buyback. And most importantly, we'll talk about the setup for the fourth quarter in terms of the consumer demand for the holidays, et cetera. Guys, back to you. Looking forward to that, Phil. Thank you. With shares right now down about 1%. We've also got interactive brokers results out. We're going through those results. We'll bring them to you

in just a moment. But first, let's bring in our market panel, Paul Hickey of Bespoke Investment Group and Keith Lerner of Truist Wealth. Great to have you both here. Paul, I'm going to start with you because earnings are coming fast and furious. And so far this season, I look at the banks and the financials this morning, even what we just heard from United a moment ago, things seem to be going pretty well. Yeah, you're exactly right, Morgan. Since Friday, when the banks started reporting, I don't think there's been a company that's missed EPS forecasts and only Wells Fargo missed its revenue estimates. And so that's just small sample size, but first impressions are good so far. And stock price reactions have been positive. As of about an hour or two ago, the average one day reaction, including this morning's reports, was close to 2% in terms of stocks, how they reacted to earnings.

So I think that's a positive here. You have UAL today beat again. The stock is up 70% since early August, and yet it still trades for under seven times earnings. So, you know, it's hard to find a situation like that. Airlines are notoriously low, low multiple stocks, but even under seven times earnings after a 70 percent rally. And so the guidance looked pretty good there as well. So I think we're seeing good news in these earnings reports so far. Maybe management at United having a similar feeling about their own stock, hence the stock buyback. Keith, I want to bring you into this conversation because typically at this time of the year, we see a lot of volatility.

We usually see some turbulence in October specifically, whether we have an election coming up or not. We haven't had it. We're actually up on the month. And yes, markets took, major averages took a little bit of a pause in their their climbs to new records today. But just the fact that we've had so many of them so frequently, where do we go from here? You know, first, great to be with you. I think the first thing is you have to respect the underlying trend, right? A trend. The old adage is on Wall Street is don't fight the tape and don't fight the Fed. And, you know, you're seeing globally markets moving higher and we've been up now 10 out of the last 11 months. As you mentioned, the seasonal side of

things have been a little bit quirky this year, right? Everyone was braced for seasonal weakness in August and September, and we got it for about a week and then the market rebounded. So I think really what's happening is even though there's all this uncertainty, we move from worrying about the economy to the economy is growing too fast to inflation to the Fed. What's been really stable has been forward earning estimates continue to move higher. As Paul just mentioned, so far, the preliminary move is also positive. And then lastly, even though the Fed may go somewhat slower, they're still easing in an easing cycle. I think that's important because that's the second part of the adage is don't fight the Fed. All right. Keith, hang tight. Paul, hang tight. Interactive Brokers

earnings are out. Kate Rooney has the numbers. Kate. Hey, John. So it's a mixed quarter here for Interactive Brokers. It looks like a miss, at least on the bottom line when it comes to EPS. That number, this is the adjusted number, $1.75. Street was looking for $1.82 on EPS. That was on revenue of $1.37 billion. That was a beat. It was stronger than expected. And it looks like some strong trading volume here. Customer accounts up 28%. Daily active revenue trade, sort of a proxy for trading volume, is up 42% in the quarter.

Net interest income as well up 9% here. And then commission revenue up 31% in the quarter. Guys, you can see stock down slightly here after hours. Back over to you. Yeah, yeah, maybe a little bit more than slightly initially, 3%. Kate, thanks. Coming up, Interactive Brokers chairman Thomas Petterfee is going to break down those results for us exclusively before he dials in to the analyst call. Back to the panel. Paul, curious about the move in semiconductors today. It seems like it was off of the ASML sort of warning, but ASML said AI chips were strong and it's NVIDIA

down four and a half percent, AMD down five, say Broadcom down three and a half. That seemed percentage-wise to have suffered the most. What do you take away from that? So these stocks have rallied a lot in the last few days. But as far as the semiconductors in general, as we talked about last week, while we see a lot to like about the market here and the pros outweigh the cons, the semis underperforming the broader market is a bit of a concern because we look at those as a leading indicator for the economy as well as the market. So while the AI area may be strong, semis are embedded in just about everything we use nowadays. So if you're seeing weakness in other areas besides AI,

that could suggest that manufacturers had a lot of inventory on their hands. So that's something to keep track of. But for the broader market as overall, we still have more pros and cons, I believe. Keith was mentioning the Fed. Well, the pace of cuts may be slower than anticipated. The Fed and central banks around the world are in easy mode. 19 central banks currently based on our last tally. That's the most since 2021. And you have the earnings. Reth has been phenomenal in this market. So that just adds to it. So then those are positives. I think that can take us into rally into the year till the end of the year. But then we have to think about going forward into next year. The one year and two year returns for the market are both the 95th percentile relative to history. And the last time that happened was early 1999, which in, and then you have BlackBerry close ringing the closing bell today. It brings us back to the late nineties and memories of then. But so we have this period where

we can't keep these pace of games going forever. And we're going to need some time to catch our breath, so to speak. Right. OK, so, Keith, you point out the S&P 500 also is up 10 of the last 11 months, you know, and and this hasn't happened. Strongest start to an election year since Trump and Biden were in elementary school back in 1950. Right. So what what is the positioning then for investors here? I mean, I guess if you stayed fully invested in the market and the S&P, you're very happy. But what happens next? Yeah, well, I still think you should stick with the primary trend, which we think is still higher. I do think we're going to have at least one or two hiccups before a year. And I mean, we haven't had that October volatility, but we still have two months left in this month. And I think there's going to be some uncertainty around the

election, how quickly we know about it. So, you know, I think investors should be prepared that it's often two steps forward, one step back. But in general, when you have that 10 out of 11 months, you have good breath, as Paul mentioned. Those are all signs typically of a bull market. And then when you look back at historical bull markets, you know, we're up a little bit over 60 percent historically, depending on your measure, this the median bull market's up over 100 percent. So you will likely moderate as we get deeper into this. And again, maybe short term, you're seeing a little bit complacency in like the put to call ratios, some sentiment metrics. So, again, don't get complacent that there's not going to be any downside. But in general, if you're looking at the next three, six months, 12 months, we still think the primary

trend is higher and you want to stick with that. And we all still have an emphasis on equities overall. Okay. Keith and Paul, thanks for kicking off the hour with us as major averages did finish slightly lower. We've got another earnings report to bring you. This one is JB Hunt. Those results are out and it looks like it's a beat on both the top and bottom lines. Earnings per share coming in at $1.49. That was better than the $1.41 estimates from analysts. Revenue also coming in $3.07 billion. That was also slightly better. While you saw four out of five of the business segments with revenues declining, the largest segment and the one that investors watch particularly closely, Intermodal, actually saw an increase. Intermodal volume increased 5 percent year over year,

and the company's citing demand for their Intermodal service improved throughout the quarter across both the transcontinental and eastern networks. And we've been talking about it a lot, John, the buildup in inventory and anticipation of port strikes and anticipation of the holiday season. And it does look like that flowed through to J.B. Hunt's results here. You can see shares are jumping on this report now up about six and a half percent. Yeah. Flexport CEO Ryan Peterson telling us on this show yesterday about stuff coming into the West Coast that needed to get to the rest of the country. It makes sense with intermodal.

Well, as we mentioned, it was a rough day for the chips. ASML plunged after third quarter earnings were published a day earlier than expected. The report showed the company's cutting its sales guidance for 2025 due to weakness from China. Other chip makers like NVIDIA fell as well. That stock also took a hit from reports the Biden administration is considering capping its AI chips exports to Persian Gulf countries. Now let's bring in Mike Santoli with a closer look at the semiconductors and some other sectors on the move. Mike. Yeah, John, semiconductors, of course, recently had been finding their footing and trying to rebuild after that huge, this is the orange semiconductor ETF there,

that huge momentum kind of crescendo we had toward the middle of the year. So big sell-off, trying to rebuild. But here you see the bank index is basically just eclipsed it on a one-year basis. I would say on almost every other time frame you could look at, semis are still beating banks. So it's not as if this is somehow this long lasting persistent trend where they've run in lockstep. But it is telling you something a little more about the character of this market, not just kind of broader beyond tech, but the idea that we do have perhaps the makings of a benign economic scenario in the Fed

cutting. And that's been supportive of banks also getting the benefit of some decent results here. So you'd probably want to see ideally ideally, both of these groups act as leaders and continue to do OK. But right now, semis have a little bit more to prove. Take a look here at the various Dow Jones indexes, the industrials, the transports and the utilities this year on a two year basis. Now, the old theory, Dow theory would have it that you'd want to see all of these indexes in an uptrend or confirming a new high in the industrials. Kind of not quite, but we're almost there. You see that the transports have been really going sideways for quite a while. Obviously, UAL results. We'll see how that plays into some of this. Utilities have had this massive recovery move as yields went down and people got excited

about the AI power story. But in general, looking OK, even if you haven't necessarily got this very kind of loud signal from from utilities and transports that it's all systems go on the upside. Huh. Well, Mike, going back to that first chart, I think it was KBE versus the SOX. To what degree are we looking at the impact of some unusual catalysts to the downside for the banks, SVB, and to the upside for the chips, OpenAI, right? It's been a couple years since both of these events of people becoming aware of potential problems in the regional bank system and potential upside to the chips. And so we're sort of reacting to that in a way still, or at least we have been, right? We have. I mean, that certainly created the makings for why banks were so depressed on, you know, last October and actually had been for the months before that. So, I mean, the KBE is still not back to its old highs. It has a nice looking

chart on a one year basis. But because of that SVB gut check, it still has some some work to do there. And I agree on semis. And by the way, the SOX is market cap weighted. Therefore, NVIDIA and to a lesser degree, Broadcom are really carrying it at this point. So there's no doubt about it. It's not just about feeding off of, you know, incoming inputs from the from the broader economy. There are their own little quirky stuff going on as well. Yeah, of course, semi is really taking the big hit today. Mike, Nine out of the top 10 stocks with the most negative point impact on the Nasdaq 100 were semiconductors. We're going to see it later this hour. Mike Santoli, when we come back, access you will only get on Overtime. Interactive Brokers Chairman Thomas Petterfie joins us exclusively with his first comments on earnings

as that stock right now takes a leg lower. And later, Mohamed El-Aryan with his latest thinking on the Fed, markets, and today's big pullback in oil prices. Overtime's back in two. Welcome back. Interactive Brokers out with earnings moments ago. Shares are under pressure right now, down a little less than 3%, but off the lows. And joining us now in an exclusive interview before the earnings call is chairman and founder Thomas Pederphy. Thomas, always good to have you, especially when there are numbers like these to talk about. So customer accounts were up 28 percent, commission revenue up 31 percent, but also customer margin loans were up 28 percent. I remember you some quarters ago kind of telling us to keep an eye on that. What's your assessment

of the health of trading out there right now? Well, you know, people are still at it. I don't understand why, but everybody is very enthusiastic. It's just never stops. So that makes you a lot of money when people are trading. Is the trading healthy and understandable, given what we've seen happen overall in the markets, the AI excitement continuing and the Fed beginning to cut? Yes, of course. I mean, yeah, the AI excitement is never ending, it seems. And there is so much money in the economy that people have no place, nowhere else to put it. That's what seems to be driving it, in my mind. Thomas, it's Morgan. I know net interest income increased 9 percent in the quarter, but certainly that's been in focus across the financial sector as we have a Fed

that's beginning to cut rates. Is it a net positive to see the Fed cut rates and get to a place of normalization with its interest rates as we have this bull market start kicking off its third year? Or is it something to be thought about as a drag as that happens? Well, you mean for my firm? Yes. For my firm, it is not positive. My firm makes more money the higher interest rates are. But I think that from the point of view of the economy, it's certainly the positive when the Fed cuts rates, except if they lose track of inflation. Inflation forces still seem to be around. And so I do not think that rates will be cut as much as many people hope. I want to ask you about forecast contracts, because I know you came on this show back in September to talk about it. We have an election just a couple of weeks away. What are

you seeing in terms of traction and trading activity for this new product? So it is fascinating because election contracts we had on for about a week and a half now. And initially last week, Harris was ahead 52 to 48. And currently, over the weekend, it has turned around. So currently, Trump is up 52, almost 53 sometimes to 47, or 52 to 48. And so it is fascinating how these things move back and forth. It's very interesting. Of course, we have quite a few of the swing straight Senate races listed. Other than in Montana, where she is way up and is very likely to win, it seems, most of the Republican senators are in the twenty to thirty percent range

uh... i don't know if uh... anybody else is real get to see but so it's it's very very yes for for for your investors out there how should they think about the impact of election betting on the platform?

Is this sort of an on-ramp? Are there people who maybe wouldn't be as active in stocks but think they have a political, a smart political opinion or insight that are out there or who are looking for a hedge to their equities and other exposures who are upping their activity on the platform with this added feature? So I definitely think that it's more the latter. It's about hedging your exposure depending on the kind of stocks that you have in your portfolio, whether they will get hurt or not, depending upon who is going to be elected. Thomas Paterfi, thank you for joining us before the conference call. Thank you very much. Thank you.

The chairman and founder of Interactive Brokers. Well, coming up next, Allianz chief economic advisor Mohamed El-Aryan joins us. He's going to lay out the three factors supporting a growing economy and a soft landing. And if he thinks they will last. And later, a David versus Goliath story in fintech to disruptor. 50 companies are teaming up to take on corporate travel and expense giants like American Express and concur. The CEOs of Brex and Navon will join to talk about their brand new partnership. So. Welcome back to Overtime.

A big debate investors have been weighing is whether the economy is currently experiencing a soft landing or even no landing at all. It's a question that was posed to Bank of America CEO Brian Moynihan earlier on CNBC after the company's better than expected earnings. Take a listen. What we see and what our experts tell us, you know, we took a it's no landing might be the best choice if you're thinking it gets down about one half to two percent growth, which is where it was sort of for a lot of years prior to the pandemic. If we if we can glide into that level and keep the inflation, which is down a lot now, continuing to move down, that would be a no landing. All right. Well, joining us now is Mohamed El-Aryan, chief economic advisor at Allianz. Mohamed, it's great to have you back on the show. I want to get your response to what we just heard from Brian Moynihan, because I can't recall us hearing from a bank CEO that has such insight

into so many different parts of the economy talking about no landing. What he just said, Morgan, thank you for having me, that would be a soft landing. That is, in fact, the definition of a soft landing. A no landing has two variants. One is that growth stays high and inflation stays high and the Fed tolerates it. And by inflation stays high, we mean two and a half to three percent. There's another no landing, which is the really good no landing, which you get positive supply shocks and we are bigger but not hotter. And that has about a 15 percent probability of happening. What would it take for that to happen? I think we'd need the productivity enhancers from AI, from life sciences to come earlier. We'd need to continue to have positive

shocks to our labor force. And if we get those two things, you can get the bigger but not hotter economy, which actually would be perfect for almost everything you can think of, from households to companies to financial markets. I mean, no one's even really talking about recession anymore. It seems to have gone out the window and rather quickly here. So what are the key factors that you're watching through the end of this year and into next? I mean, inflation, for example, we just had Thomas Petterfie from Interactive Brokers on, and he basically said he doesn't think inflation's dead. Can we ring the victory bell on it yet? So my probability of a soft landing is 55 percent and a recession is 30. So soft landing is the most likely, but it's not a dominant scenario. Why isn't it dominant? Because we have weakness in the household sector and the lower income side.

And the Fed has been all over the place. Just think, Morgan. End of July, the Fed doesn't hike, doesn't cut, because everything is fine. Next meeting, mid-September, it suddenly cuts by 50 basis points. And now it is talking about cautious cuts. So, you know, the Fed's got to be careful not to increase the probability of something going wrong.

But soft lending is the most likely. The economy is strong. Corporate earnings are strong. And on top of that, we have well-behaved oil prices, and we have the hope that China may stimulate the economy, helping to boost our demand. The oil prices piece of this is particularly fascinating, because we saw a jump in crude, and then we've fallen pretty quickly here, as it would seem geopolitical risk is ebbing, not to mention you have an OPEC cut to the oil demand forecast. How much hinges on those prices staying a bit more depressed, which also seem to be, at least in trading today, pushing yields lower? Quite a bit.

High oil prices can complicate things. They would, of course, take up headline inflation, and then they would start feeding into higher production costs. In terms of where we've been, it's been about geopolitics. On September 10th, WTI was at $65 a barrel. Why? Because people were worried about demand, especially a weak Chinese economy. Next thing we know, we're all the way up to $77 a barrel on geopolitics. And now we're back down to just under $71 on geopolitics. So the geopolitics is the volatility enhancer. The underlying price of oil is being undermined by weak demand out of China.

How much hinges on the election and what the policy picture starts to look like for 2025 and beyond? So the market's pretty relaxed right now about that because it believes that the configuration of Congress and the White House will be such that policy will be more constrained than what we hear on the election campaigning. So a lot of it has to do with what happens to Congress and whether whoever's elected has a free hand. Where the two candidates differ, on the one hand, former President Trump on tariffs, and on the other hand, Vice President Harris on industrial policy. That's where the big difference is.

So just to bring this full circle, because we did talk about the Fed just a few moments ago, but we have gotten quite a bit of Fed speak in recent days, and some of it does seem to be tilting a little more hawkish. It raises the question, is the Fed too data dependent? Oh, I've said this, Morgan, for I don't know how long. It is excessively data dependent. I'm hoping that they're starting to be a little bit more strategic because they're being whipped around

by the data. But they have been excessively data dependent. And what has happened in the last few months shows you that. And I suspect that given the latest data, they wish they hadn't cut 50 basis points.

They wish they had cut 25 basis points. And that's why you hear the language getting more hawkish, because the last bit of data has not been supportive of the 50 basis points cut that they made last month. Mohamed El-Aryrian, thanks for joining me. Thanks for having me. Well, it's time for a CNBC News update with Pippa Stephens. Pippa. Hey, John.

The Treasury Department said today a pro-Hamas group that helped organize protests at colleges nationwide is a, quote, sham charity. The organization was sanctioned by the Treasury Department and listed as a terrorist entity by Canadian authorities where it's based. Treasury officials said the organization serves as a front and fundraiser for the Popular Front for the Liberation of Palestine, which the U.S. has labeled a terror organization. FEMA workers have resumed door-to-door visits as part of their hurricane recovery work in North Carolina. The effort was suspended over the weekend as reports emerged that militias were targeting the workers. Local authorities said Monday a man

was arrested during an investigation but that he acted alone. And NFL owners have just approved Tom Brady to become a minority owner in the Las Vegas Raiders. That's according to a person familiar with the matter who told CNBC that the former quarterback bought a 10% stake in the team with his business partner, Nighthead Capital founder Tom Wagner. The price is unknown, but CNBC's 2024 NFL team valuations would put a 10% stake in the team at $780 million. You can see the valuations for all 32 NFL teams and more news at cnbc.com slash sport. John, back to you. Hit the thanks. Well, after the break, risky business. Investors are taking more risks just as the market sets new records. Does that mean a pullback could be in the

cards? We will break down what the charts are saying and check out this chart as we head to break. It is Apple hitting all time highs today, eclipsing a prior record from July. The company announcing a new iPad mini and Morgan Stanley out with an optimistic note on iPhone 16 lead times keeps going back and forth. Over time, we'll be right back. welcome back stocks pulling back today but still trading right near record highs. Let's bring back Mike Santoli to gauge how risky investors are feeling. Mike. Yeah, Morgan, among the tidbits in the Bank of America Global Fund Manager survey is this item, which basically asks the survey respondents who are, of course, professional investors, how much risk are they taking relative to their normal benchmark and what percentage of them say they're taking above normal risk? So you see how it's kind of gone to the upper end of a train. It's below zero because you wouldn't expect there to be very many instances where people would say, yes, we are taking much more risk than our benchmark and our risk parameters tell us to do. When does

that happen? Early 2018. And then in 2021, at the end of very, very powerful risk rallies in equities and credit. So I would say that this says people are involved. They have their exposures to the market relatively high. Maybe there's not a lot of a reservoir of cautious investors left to kind of be scared into the market to chase it. But it's also not so elevated that you would say this is imminent danger at all. Take a look at a similar but sort of differently composed measure. This is the fear and greed index. It's produced by CNN. Been going for a while.

It's market-based indicators. That's this blue line. And it's pretty high. It's about 75 on a 100 scale. Doesn't get too much higher than that. Although I do want to point out how we sort of stayed around this area in the early part of this year, and the market just marched higher without really significant pullback. So it's not completely prescriptive in terms of how the market behaves,

not a pure contrarian indicator. But it shows you once again that, you know, the good stuff that's that's behind the rally we're having right now is relatively well known and the crowd is involved. Yeah, that B of A survey, what got my attention was the fact that most crowded trades are long, the magnificent seven long gold and long China stocks, which are all things we've been talking about for a while. The other thing we haven't been talking about, though, which we know is a proxy for liquidity in the market and for risk appetite is Bitcoin. And, yeah, it hasn't broken above its record high from earlier in the year, but it sure is trading close. It has gotten close. And the Bitcoin related stocks have actually been stronger than Bitcoin. And so maybe some would say that that's a little bit of a leading edge of what's happening there.

So I would say that would be more of a confirmation of a completely kind of risk seeking atmosphere in the markets as opposed to one that's going to lead to another leg. But yeah, it's starting to fall into place. Although you saw some of those trades wobble today, intraday. We'll see how they go tomorrow, John. Indeed, Mike Santoli, thank you. Well, the number four and number 38 companies on this year's CNBC Disruptor 50 list just joining forces to compete against American Express and concur in the corporate travel and expense business with some AI flavor thrown in. The CEOs of Brex and Navon are going to join us next in an exclusive interview.

And UnitedHealth, the biggest drag on the Dow today. The health insurance giant's earnings beat was offset by a full year guidance cut and higher than expected medical costs. Overtime, we'll be right back. A new partnership in the corporate expense world. Brex and Navon are teaming up to create a seamless travel management and card solution for businesses to take on legacy players like Incur and Amex. Joining me here at CNBC San Francisco Bureau for an exclusive interview is Brex CEO, Pedro Franceschi, and Navon CEO, Ariel Cohen. Both companies are featured

on our latest CNBC Disruptor 50 list, and of course my own Fort Knox viewers will be familiar with both companies. Thanks for being here in person with me. So Pedro, I thought of you guys as kind of like competitors before. Not complete overlap, but in that, you know, fintech unicorn space. Why team up? Yeah, so for us, I think there's been so much admiration over the years for the work that REO and the Navon team have done on the travel side.

And it really came down to speaking to customers as we spoke to them and try to understand what are their needs to solve really enterprise travel. It comes down it's more than just payments and it's more than just travel and then looking to customers and talking about it internally we spend the past seven, eight months just building this collective solution that we believe is the best in class solution across if you have enterprise travel and you require enterprise corporate cards together into one. Here's why I think this partnership

is potentially really important for public market investors to watch, besides the fact that we know that you at least are looking at coming public sometime relatively soon. And that is because right now there are questions about when AI really starts to drive measurable results and corporate expense management is a huge potential savings area in enterprise fintech. So Ariel, how long before we get to see some case studies on

that? And so far in what you've seen from this partnership, what do you think the potential is? Yeah, first of all, I think I'll join Pedro. First of all, meeting the team, the teams have a lot, a lot of alignment, and it's actually working really well. And we are there to provide the best solution in the market around T&E. And when I say best solution, it comes down to saving costs. So people that are using Navant today will save 20 to 30 percent of their entire travel cost. And I think that when you join forces here you actually have a potential to save 30 percent on your entire T&E and then AI is a really big part of it because you have the opportunity to pinpoint to here is an expense that you don't need to have here is a potential to save money

and we saw it we see it in the platform on both platforms but when you talk about real use cases I can tell you that Navan today, we are saving 50% of our support costs by using AI. And that goes to the customer because we are actually pricing stuff differently. We are more competitive in the marketplace. So I think this solution together and utilizing AI is becoming really, really important part of the customers. Pedro, you've had some fast growth. You've also had some cuts, right? Post SVB, you

had some fast growth and then you sort of pulled back. You did some layoffs. Where are we now with companies watching their bottom lines? And so you would think that that could be a bit of a restraint on demand, but they're looking to save money, which might also be driving demand, demand which is out weighing the other. It's actually perfect for us for that exact reason so you know we we at Brex we say that we like to eat our own dog food try our own products first and we decreased our burn rate by 70% just over the past year and that's really about us becoming more efficient as a company and when it came to customers they all come to us saying

hey there's all these new technologies out there. How can I use this back to improve my business? And we're seeing these new use cases around AI, around the expense management, for example, and how much time it requires to fill out documentation, memos, receipts. I was just showing Ariel on the way here. We went out for lunch. I swiped my card. And the expense gets populated automatically, who I am with, the memo, the reason, and all that is an AI assistant doing, typically the way you would have a traditional EA doing in the back of the day.

And then you have on the other side, on the accounting side, there's so much manual process that goes into closing the books. And one of the technologies that we've built that we've seen a lot of success with customers is just really helping them increase the efficiencies in how they go close their books to do things that are not just 20 or 30 percent better but like really three to four to five times better and faster than what they used to do before both in terms of you know the cost savings of course but also just more accuracy than a human would have doing that manually ariel concur as part of sap is an erp juggernaut yes so in order to achieve the scale you want and stay independent do you need to partner with another sort of mega scale enterprise uh software platform

for that go to market i'm always looking at this as what is the best thing for the customer and the user so if that a company that we can potentially partner with, providing something that is really good for the customer, that's always a thing for us. But it needs to be good for the customer and the user. And user experience is something that for Braxton and Navan is really, really important. You know, you talked about the need to fill up some forms right if you work in an organization that wants to be in the future right efficiency is important but also not sending your employees your

best employees to spend hours on booking their trip on updating their trip on expensing on doing all of these things, you cannot manage a company, a modern company, in the way that you used to do it. So the system needs to be good. The partner needs to be the relevant partner for our customers. If it's good for the customer, we will do it. And in this case, that's actually really good for the customer. Pedro, finally, how much of your expense in rolling out these capabilities is like a chip tax, right? Like an accelerator tax. Or how much do you think as the hyperscalers, as others start to build more capability into more commoditized chips, that the costs of making this available to customers will come

down? Oh, I think the cost is already coming down tremendously, right? So you just see even just the cost of using AI. Like a year ago, I remember having these debates of our teams about, oh, AI models cost this. And now it's 99% down year on year. And the reality is we can offer this for everyone for free. So I think really at the end of the day,

these costs are getting lower. And the benefit it's for is for customers, the customer experience. And it's funny because when we're going about building the partnership, we started showing this new product to customers and showing both integrations. And there was a customer that actually was brought to tears, like on the call of the customer, the customer was in tears because the level of automation that we were able to provide together by just deeply linking the platforms is unprecedented.

And the reality is this is also happening at a lower cost. So I think it's not just as a cost-saving tool. That's a very great angle and one that we want to deliver to customers. But to me, the most exciting things are what's new that you can now do with these technologies that just wasn't possible before, like we're doing now. That was either a CFO or somebody who really hates filling out expense reports. Absolutely right. In short, Ariel, thank you. Absolutely right. Thank you.

Thanks to both of you, the CEOs of Navon and Brex. Morgan? Yeah, great stuff. We fill out quite a few expense reports too, John. Up next, all the overtime earnings movers that need to be on your radar right now. And take a look at Walgreens. Getting a healthy boost in the regular session after earnings and revenue topped estimates. The drugstore chain also says it plans to close around twelve hundred stores over the next three years.

Shares are still down around 60 percent on the year, but up 15 percent today. Overtime, we'll be right back. Welcome back. Let's get a check on our overtime earnings movers. United Airlines shares are fractionally lower, the company beating on the top and bottom lines, announcing a $1.5 billion buyback. J.B. Hunt investors cheering a strong quarter. That stock up more than 7.5%. Management calling out intermodal service demand improvement. That call starts more than 7.5 percent. Management calling out intermodal

service demand improvement. That call starts at 5 p.m. Eastern. And interactive brokers in the red right now after beating revenue estimates, missing on earnings. That stock is up, Morgan, well, nearly double year to date. Yeah, definitely some big moves here in overtime. Well, up next, why investors are wolfing down shares of chip maker Wolfsbreed today, while big semiconductor equipment maker got crushed on earnings. Speaking of earnings, tomorrow,

don't miss our exclusive interview with Alcoa's CEO before the conference call and after the aluminum maker's results cross. Stay with us. Welcome back to Overtime. As a tale of two semiconductor stocks on Wall Street today, the best of times for Wolfspeed, the worst of times for ASML. Seema Modi has all the details for us. Seema. We'll start with ASML, Morgan, accidentally posting its earnings earlier than expected, and the market didn't like what it saw. We saw China business, its China business,

challenged by export controls. That led the company to guide lower for 2025. And outside of AI, ASML CEO said demand is moderating. Its ultraviolet lithography machines are used by the biggest chip makers across the U.S. and in the entire world, NVIDIA, TSMC, Intel, all of which traded down today. And then there's Wolfspeed. Shares surging after securing $2.5 billion in new funding from the Chips Act and a group of private investors led by Apollo Global. CEO Greg Lowe telling me the money will help the chipmaker speed up production of wafers used in the EV market. The New York factory is actually producing in relatively decent volumes today. And what this

funding is going to do is allow us to expand that wafer fab in upstate New York and increase the capacity there. Wolfspeed joins a growing group of semiconductors that have been granted funds from the Commerce Department. Capital expected to be distributed by the end of the year if certain milestones are met. Shares ending higher by 20 percent, Morgan. Yeah, I mean, it was quite a day for semiconductor stocks, Seema. How does this set us up quickly for Taiwan Semi tomorrow? How much does that matter? That is the big catalyst tomorrow night. The world's largest chip manufacturer reporting earnings.

We've heard so much bullishness from CEOs of Micron yesterday with Jim Cramer, the CEO of NVIDIA, Jensen Wong. Does the supply picture look intact? That will be the question when TSMC reports, Morgan. Okay, we know we'll be watching those results. Seema Modi, and we'll get many more tomorrow as well, including quite a few here in overtime. That's going to do it for us here at Overtime. Fast Money begins right now.