Closing Bell - Closing Bell Overtime: Investors Look for What’s Next 8/14/26

Episode Date: August 14, 2026

Dan Ives of Yorkville Ives & Co. breaks down the renewed tech rally and what could keep it going. John San Marco of Neuberger Berman previews retail earnings. Marta Norton, Chief Investment Strategist at Empower, assesses the broader rally and what investors should watch as stocks continue setting records. AeroVironment Chairman and CEO Wahid Nawabi discusses new drone tariffs and what they could mean for the defense industry and domestic manufacturing. Former White House Chief of Staff Mick Mulvaney examines mounting pressure on prediction markets and the regulatory risks facing the industry. Joe Mazzola of Charles Schwab breaks down retail investor behavior and reveals where individual investors are putting money to work and which major tech names they are selling. Plus, our Robert Frank reports live from Pebble Beach on a dramatic generational shift in classic cars as younger collectors abandon traditional “boomer cars” for supercars from the 1990s and 2000s, raising new questions about a potential bubble. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell's bringing in into the trading day on this Friday at the NYSC, the New York City Parks, doing the honors and closing the session here at the NASAC, X-Trackers by DWS. Welcome to closing bell over time. We're locked in studio be at the NASDAQ market site. I'm Melissa Lee. Mike Santoli is off today. Stocks, I need the day in the red. The Dow down 130 points.

S&P 500 off about 15. NASAC down about 80 points for the week. The Dow, the only index lower, as Cisco saw big declines post earnings. The Russell, the real standout here, hitting an all-time high, closing higher for the day as well as for the week. It is now outperforming the Dow, S&P, and NASAC for the year. It's up 23 percent. Oil up today after the U.S. said its naval blockage of Iranian ports could continue indefinitely. Crude, by the way, up about 5 percent this week. And on our radar at the close, the big retailers get set to report the two S-S rally software and semis and drone stocks takeoff.

We start off with the markets. Christina Parts and Nevelist got a look at today's big movers. Hey, Christina. Well, stocks did fall in just a we should say today because of retail sales coming in weaker than expected. The market didn't really like that. Crew went in the other direction. Closing higher after the Trump administration, you talked about it, laid out plans to impose unprecedented economic pain on Iran. Energy-led Marathon Valero-Philips 66 did post double-digit gains this week.

And then you had the S&P energy sector, so it's biggest weekly gains since October 2022. Alternative asset managers, Apollo, KKR, Blackstone, also finished the week in the green. by strong fundamentals from wealth advisors, despite some recent redemption pressure. Memory really led the momentum names today. Sanda's jumped after management set an 80% gross margin floor through 2030, backed by $94 billion in signed contracts. Wells, RBC, just to name a few raise their targets well above $2,000. It's at $1,600 right now. Applied materials sank one of the worst on the S&B 500 in NASDAQ 100 after free cash flow fell,

CAPX climbed, and gross margins missed buy-side estimates. Rodcom slid on profit taking. And there was also this rumor. I haven't been able to prove it, but cut that they supposedly cut their Google chip sales in the back half of 2026. Oracle fell again on our Bloomberg report that a gas pipeline for its New Mexico data center slipped to actually February 2027. It was supposed to be very soon. Cybernames, Palantir, Crowdstrike also sold off. Reddit, so here's an individual name's popped on news that it's going to join the S&P 500 next Tuesday, taking Avalon Bay's spot. And lastly, restaurant names closing higher to end the week like Wing Stop, Shake Shakeshack, and Chipotle,

could be driven by some cabot results earlier this week or some buyout rumors for Wendy's. I didn't see an exact catalyst for these names. Big moves, though. Christina, thanks. Christina Parts in Nevelis. Yields moving higher today following softer than expected retail sales and no progress on Iran in the past week. Rick Santelli is watching all this for us. Hey, Rick. Hi, Melissa Lee. Indeed, if we look at the headline retail sales that was released this morning for July, month over month. We could see down six tenths of percent not looking very good. But I do want to point out, if you take a little different view and look at it on a year-over-year basis, this goes back to

December of last year. It looks a little bit better with regard to 2026. It's the seventh reading. We have three above it, three below it, the three below that 5 percent for this month, year-over-year reading, or January, February, March of this year. So there is a, a statement. story there that retail sales is weak and it's weakening a bit. But when you take a macro view, there have been some powerful months. We're just in a give-back mode. If we look at what's going on with regard to the week to date on two-year and 10-year, this is really interesting because yield curves have steepened dramatically, three-month-wides on twos to tens, a little over three-month wide on 30s minus tens. And you can clearly see it there. Two-year yields, they're down four

basis points on the week. Ten-year yields? They're up four basis points on the week. All maturities, of course, are up today. It's just at how much they're up changes. Once again, a lot of steepening. Short maturities are up about half as much as the long end. Ten year yields right now on the session are up, as I said, four, which means twos are only up two basis points.

I really want to continue to point out that the knob spread 30s minus tens. It's now closing in on 60 basis points. And the reason that's important, it really does go to show you why that longest maturity, the non-benchmark on the curve's yields are higher. Long maturities are used on the spread. Many traders now doing spread trades. They buy the short end, they sell the long end. Long end's reflecting.

Markets doing its job. Mr. Warsh wants it to deal with inflation. It seems to be dealing with stagnant inflation. The short end seems to be following percentages of the September meeting, which do not look like an ease right now, a one in three chance, a one-and-three chance based on the CME probabilities of a hike at the next meeting in September. Melissa, back to you. Thank you, Rick Santelli. Software stocks closing out another strong week, IGV ETF higher for the third

straight week, and now more than 40% off its low set in April at the height of investor worries about AI eating software. But the market's still clearly picking winners and losers. Take a look at the diverging fortunes in the past three months for stocks like Atlassian and Palo Alto networks on the other end of the spectrum, Intuit and Apploven. And the semi-trade is also returned after a very rough July. The SMH, E, is up 8% this month. So will the next wave of the tech trade be led by software or semis or maybe could it be both? With us now is Dan Ives partner and senior managing director at Yorkville Ives. Dan, always great to see you. Great to see you. What stage are we in in this trade in terms of

software and semis? Is it one or the other still? I don't think so. I think it just keeps coming down to like that software trade and we saw stock sell off SaaS apocalypse. That was a fictional narrative in my opinion. I think you're starting to see that prove itself out, but software is going to be the second third derivatives of the AI revolution. So I still view it, even though chips are leading, software now is starting to get ready to go into that AI party. And I think demonization, I think when you look at Microsoft, Pallenture, those are two specifically that I think gave much more validation to what tech investors are looking for. Right. And then there is this reported interest by Silver Lake for a workday. Can you sort of go through, extrapolate what that could mean for the space. If private

equity is looking at a name like a workday, an enterprise name, an HR software management name, you know, are there other names like this and could there be other deals to come? No, I think when you look at workday and you look what's happening across software, in that there's value. In PE and especially that 4015 area code, they're going to find the value. I think it does put a floor on a lot of these names specifically relative to the sector. But then you have to see as it actually plays out and are there more deals to actually be had. It all comes down to customer bases. The install bases are key because data, you can talk about compute, but data is almost, that's the hearts and lungs of the AI revolution.

These companies have the install bases, but there's winners and losers. And some of the names that you've talked about, Adobe and some others, this is, you're starting to see a separation relative to the names, if it's a service now or others, that will, benefit versus maybe others that won't. What do you think has been disproven since the initial IGV lull over AI displacing software? What has been disproven in that narrative so far? What have we moved past? I think it's the narrative that software companies, that they're going to get eaten from Anthropic and the model companies, no one's going to need software companies.

They're going to be disintermediated, typewriter companies, word processor, VCR, however you want to think about it, because now the monization on the use cases, you're seeing software companies. They're really key in a lot of these deals. And I think that is the shift in the narrative, as you're seeing the monetization case. That's the extreme of the narrative in terms of, you know, AI completely displacing software. But is there another narrative where AI just simply at the edges takes off the need for software? Certain kinds of enterprises may adopt AI instead of going to a CRM or a workday? No doubt. And that's right for software companies, they can just be on the treadmill 2.5 speed.

Like maybe they were four or five years ago. The hubris is out. And I think some of them are, they're going to have to do acquisitions. Or when it comes to boards and some of the decisions that they're going to have to make, do they look potentially strategically at other options? Because there's not all going to be winners. But the one thing that you're seeing, the AI revolution, the CAPEX, for every dollar of CAPX, five or six dollar multiply across the rest of tech, allow that win. will be software, infrastructure, cybersecurity is a good example as it all starts to play out. Is there more room for cyber as we're hearing about more and more, you know, models getting out of sandboxes, et cetera. Do you know, delexsa Crowdstrike, which, by the way, hit a new high in today's session? Do they have the tools? Are they the answer to, you know, breakouts like those that we've heard about so far? I think it's a golden age for cybersecurity because in our view from everything we've said, I think budget,

could ultimately double the next two to three years. When you look at some of the leaders, let's say what Georgian Crowdstrike, seeing around corners relative to agents and how you're actually going to make sure that the surface area are ultimately going to be secured. Powell Alto and others, but at the end of the day, it really comes down to surface area is increasing.

As the use cases grow, so is cybersecurity. It's a good example of the derivative beneficiaries. But I remember being to RSA in March and when you go back to the spring, just the negativity there. It just shows the narrative sometimes, you know, could be wrong. But these companies have to prove itself out quarter by quarter. Is there any area in tech that you don't like right now? Okay.

I think IT services is the one you worried the most about just because of how they're exposed. But it comes down to the next six months, the winners will have to prove it on the quarter's monetization, not just saying AI 15 times in a conference call. Dan, great to see you. Thank you. Dan Ives, Yorkville, Ives. July retail sales reporting a surprise drop after seeing a gain in the prior month. That report comes ahead of a number of big earnings in the sector coming out next week. Home Depot's reporting on Tuesday, Lowe's Tjax and Target will be out Wednesday. And Walmart is the big one out on Thursday. So what can we expect? Who could come out on top? Joining us now is John said Marco from Newberger. John, great to have you with us. Great to see you, Melissa. Thanks for having me on. It seems like conventional wisdom in the market is that targets are. earnings will be better than Walmart. I'm wondering if you fall into that camp. Yeah, I think that's fair. I mean, you know, at this point, the retail sales data when it

comes out is pretty well anticipated. You know, there's a lot of alternative data out there. And Target, of course, went into the second quarter with a lot of momentum. No reason to think that that they lost that. So, you know, they're up against some really easy comparisons, but I think we'll get a very solid quarter from Target. You know, the bars, bars a bit higher. So I think what will matter more is kind of prospectively the areas of the store they can touch how fast they can get to it and the reasons to believe they can kind of keep moving the ball forward. I was surprised reading in the notes, John, that in a time of higher gas prices that Walmart may not actually do as well. That's not the kind of environment that you're looking for. Why is that?

Because you would think that if consumers are squeezed, they'd be even more value seeking. Yeah, it's true. It's really tricky to analyze this because I think, you know, I think, you know, I think. as your question alludes, you know, high gas prices do not exist in a vacuum. And generally speaking, consumer distress, consumer value seeking, even a modicum of inflation, which tends to go hand in hand with high gas prices, these things tend to be good for Walmart. But, you know, I think if you can sort of extract that variable of high gas prices, which very much has been the environment we've seen the last several months, they do tend to under punch their weight at those moments. Their stores are

a little bit further from their customer. Their customers may be a little bit more reluctant to go do a big load-up shop and maybe let the dollar stores around the edges in between paychecks a bit more. So yeah, I think that's probably part of what we're seeing from Walmart. I do have bigger picture endogenous concerns to the industry that, you know, maybe are starting to materialize around competitive intensity. But to be sure, I think the environment's also likely a part of why Walmart's results will be okay, but not as spectacular as we were growing accustomed to the last several quarters. Yeah. How do you view the consumers at this point? Do you still believe in this sort of K shape or are you, have you moved on from that?

Because it seems like there are some wage gains in the lower K part of the spectrum, and maybe that's helping some of the lower end retailers, or the retailers more exposed to those households? Yeah, I would, you know, I think six months ago I would have told you it was like one of the, the easiest balls to see coming across the plate was this K shape. And of course, it was consensus for good reason because there was lots of data staring us all in the face. I'd say that's generally still true. And you're generally seeing it from the early reporters that are, you know, pointing to to more softness at the low end and more resilience at the high end. Although there have been some, you know, there have been some one-off some surprises. And if I had to pick a low common denominator, I think to your point, the labor market has been plenty firm for that low income earner. And they're out there shopping for essentials and consumables and low tickets. So if you're offering great value, if you're offering strong consumer value and serving that low income consumer and maybe also getting the benefit of a more middle income consumer trading down results are, you know, results are looking just fine. So the dollar stores, for instance,

a space that's been very messy. It was really awful. It was really great. I think, to use a golf analogy, I think they'll put the ball in the middle of the fairway as we get through earning season with the dollar stores. And then in terms of your top pick in, if you are somebody who wants to invest in consumer discretion in a retailer, but you're concerned that the economy may soften, that gas prices will remain stubbornly high, that interest rates could go higher. What is the most defensive name in your group? I think the place is to play. defense are not, are likely not the obvious, you know, essential food retailers because of some concerns I have on competitive intensity there. I'll call it shadow capacity growth with the way that

these platforms expand the stores reach. Yeah, I would look more to auto parts. It's another absolutely essential good with maybe better competitive dynamics. O'Reilly is a name that has very reasonable expectations they're operating at a very high level. And you don't have to pay the multiple of like a Walmart or a Costco where the resilience of those businesses is so well known. T-Day X is another one. You know, plenty to like about it. It's an all-weathered vehicle. They always kind of trudge along very handsomely. I think what's unique about this moment is I'm starting to pick up like a bit more rumblings of supply chain difficulty and transportation difficulty and those those moments tend to be really good for for tjax i you know i think you could see

good results become become great there potentially john great to speak with you thanks thank you johnson mark of newberger coming up problems for the predictions markets as lawsuits probes and investigations pile up for the industry what should regulators be doing will ask former white house chief of staff mic milvaney a large part of the rally has been driven by strong results with second quarter earnings showing 51% growth, but as the season winds down, what will drive the next leg of the rally? We will discuss that. You're watching closing bell over time, live for the NASAC market site. Markets are near record highs. Earnings have delivered in big tech earnings have helped put some of investors AI CAPX worries at ease. But now that a lot of the good news is in

the rear view, is it smooth sailing for stocks from here or are there roadblocks ahead? With us now, Marta Norton, chief investment strategist at Empower. Marta, great to have you with us. We've gotten everything that we wanted as investors. So now what? I know. It's been an amazing earnings season. I think when you look at the numbers, any way you cut it, revenue, earnings, earnings, earnings surprises, percentage above estimates has just been remarkable. And I think now the question is, can earnings continue to deliver? And if you're still looking just at estimates for 2026, they actually look to be similarly strong. It's when you start to look into 2027 that that deteriorates. But And if, you know, we continue to see stocks beat the estimates that we have, you could see

investors still somewhat enthusiastic about the environment. What has been interesting about this move to record highs in the S&P 500 is that we've had small caps, Russell, new highs, mid-capped, new highs, equal weight S&P 500, new highs. What does this tell you? And do you agree with being in a more sort of a broader sort of portfolio allocation as opposed Is it more allocated to tech? I find it actually really tricky because if you're looking at small caps

or you're looking at something like industrials, a lot of these areas are still attached to AI. So I know we're celebrating the fact that we're getting these different movements and different asset classes, but it still seems to be a single factor that's driving those markets. And I think this factor can continue to deliver,

but I wouldn't want investors to fool themselves into thinking that we have this really diversified portfolio on our hands when we're looking at USHEC. Yeah, I mean, when you take a look at industrials, which are also sitting at new highs today, hit new highs today. I mean, a lot of that is like a GE-Vernova. Yes. But at the same time, would you rather be in sort of the AI, you know, first sort of order AI trade or the derivative?

I mean, what is sort of, what is safer? Well, I think when you're looking at the AI trade, investors have been so focused on some really important fundamentals, like the cash flow consideration or the run that some of these areas have. And I think those are risk factors that you want to take into account. So when I'm looking at AI, I'm trying to avoid these areas that have just had such euphoric expectations around them. Even though they've come back a little bit, I still think they've run really hard. And there's some pretty serious questions around them. But other areas, like some of these hypers, Microsoft comes to mind, they've just been punished over and over again.

And I think the risk factors are more factored in. So I think you can take this kind of valuation orientation to the AI trade and help protect yourself a bit. But then I also think you do want to look at some of the beneficiaries. Yeah. In terms of a hedge to the portfolio, I know a lot of people probably have written off the bond market. You say do not write off the bond market, even though it seems like there are a lot of other factors that may be pushing yields higher.

Right. So here's what I struggle with with bonds. I know that the big frustration with folks is how they do in an inflationary environment. And we're clearly in a continuing inflationary environment. But they're also valuable from a growth perspective or protecting against a negative surprise there or concerns around AI. We've actually seen that in their performance in 2026. And their yields are now a lot higher. So even though there's risk factors for fixed income, I think it would be a mistake for investors to think I shouldn't use that part of my portfolio as a capital preservation stalwart.

I think they still have that capability. Okay. Marta, thank you. Great to see. My pleasure. Norton of Empower. Up next, why insurance stocks could be under the radar winners from big tech plans to build data centers in space, plus an exclusive interview with the CEO drone maker era of ironment on the impact of President Trump's new import tariffs on drones. Close your mail overtime. Be right back. Welcome back to overtime. Elon Musk, Jeff Bezos, and other tech titans are very bullish on the prospect of data centers in space. And there is a non-tech industry that could be a surprisingly big beneficiary of that. Contessa Brewer is here with the story.

Hi, Contessa. Hi, Melissa. Yeah. So if you think about the potential damage that SpaceX or Blue Origin or Google could face with orbital data centers, like there's launch failures, radiation, hardware breakdowns, debris collisions, and the repairs and replacement would be difficult and exorbitantly expensive. All of that provides what very well could be the next frontier for insurance. About 30 insurers worldwide specialize in this tiny little niche of space coverage, less than a billion dollars in premiums total.

Swiss Rees CEO told me there are basic questions about laws in space, regulation, insurance capacity and pricing. So basically insurers have to invent the rulebook before they can cover the next boom in data centers. FM, which specializes in insurance for industrial facilities, told me it's already assembling risk researchers and engineers. to create a product that meets the need of clients eyeing space. Global broker Marsh sees a massive opportunity. One insurance CEO, though, was very blunt when he told me, this is insane. He said there's not enough capital and no reliable way even to model the risk. He called it the wild west of space.

And then he asked me not to reveal his identity. Aw, I want to find out who it was. I mean, it's crazy to think that there could be teams of actuaries trying to figure out a table for the, you know, the lifetime of a component or something like that. I mean, and when you think about it, the collisions by all of this space junk are already increasingly frequent. And so if you think, okay, if I own a satellite and I own a satellite, whose coverage is going to pay if there's a collision between the two of them? How does it work with autos?

Well, that's the same thing. Who is at fault? And how are you going to prove that? And to get them up there, you've got to get a repair guy up to repair the satellite? No, normally it might mean that you have to launch again altogether. They're going to expect to have a lot of mitigation in place from the clients as part of getting coverage. Fascinating. Contessa, thank you. Always finding the interesting angle in insurance. I just try to make it interesting for everybody.

You always do. Contessa Brewer. Well, from space to a little lower in the atmosphere, drones. The socks taking flight today after the White House signed a proclamation putting tariffs on imports of drones and their components. These tariffs are the latest policy tool from the U.S. government aiming to boost domestic drone production. Past tactics included restrictions in the annual defense budget, an FCC ban on new registrations and equity stakes and companies. Joining us now is Air Environment, Chairman and CEO, Waheev Nawabi. Shara rally strongly at the open, but closing well off the session highs.

Wahee, great to have you with us. Great to be with you, Melissa. How should we think about these tariffs in terms of what it means for air environment? What sorts of business, what sorts of contracts could you possibly gain because other competitors are pretty much boxed out of the U.S. market with the tariffs? Melissa, this is certainly a critical event and piece of news. It basically underscores and over highlights the fact that this is critical to our national security and the strategic advantages of our nation and to protecting our. industry in general, primarily related to the national security interests of our United States and our allies. So this decision by the government is really critical in that a number one. Number two,

for us, for air environment, for AV, it's a non-issue because we've been designing and producing our products domestically in the United States for the last several decades. It has been a competitive advantage for us, and I think it's going to continue to be that way. I do commend the administration for taking steps in here because we do need to protect the industrial base, of what goes into our drones, where they come from, which countries are providing those things, and how we make sure that we're secure because it's becoming a bigger and bigger part of warfare in the future.

So it's a non-event for us. It's a competitive advantage for us, has been, and it highlights the strategic importance of this for the national security interests of the United States. Can you walk us through? You mentioned the components, because we have to make sure that not only are the drones or whatever it is,

for national security is produced in manufactured in the United States, but that the parts that go into those critical, you know, weaponry, that they are also safe, that they are also secure, they come from allies, et cetera. So what were the major concerns for a drone maker like you? Was it Chinese parts making their way into weaponry? I mean, because that's going on outside the defense sector. If you take a look at, for instance, autonomous vehicles, there are plenty of Chinese made LIDAR going into those vehicles that may actually be on the Department of Defense blacklist for, you know, for weapons, but they're able to be used in civilian purposes. That's very true, Melissa. Historically, many of the players in this industry, drone manufacturers

and subsystem designers of drone subsystems have been sourcing things without a lot of regard for national security interests of the United States. That is not the case with AV. We have been designing and sourcing and manufacturing are things all in the United States. Over 98% of our supply base, AV supply base and supply chain and subsystems are sourced right here in United States. The other 2% essentially are the closest allies to the United States, countries like Germany, Israel, United Kingdom, France, etc. Australia. So we don't see this as an issue for AV, but a lot of the players outside in this industry, domestically and internationally,

do not follow this very strict, stringent guidelines. That poses a significant national security threat to the United States and our military because there are lots and lots of intelligent systems in here that can be compromised, that can be gamed, that can be designed to be able to do things that we don't want them to do. And so it's important, essential,

that we protect these things and we secure the supply chain across the entire industry that it's safe and resilient and protected from those kinds of potential threats. Cameras, lenses, microprocessors, LIDARs. We do use LIDARs in some of our sensors, thermal cameras, EO and IRR sensors, many, many things that go in these systems are important. Besides that there are also passive components that goes into war hits, into lethal drones, and to counter drone systems that are critical.

All of those things have to be protected. We must take this seriously. I commend the administration for taking the step, and I think it highlights how important drones and counter drones are becoming in the future of warfare. I wanted to ask you, because there are reports that the U.S. is short of munitions, and I'm wondering, from your standpoint,

is there also a shortage of drones? I certainly believe that we have to have a paradigm shift in terms of equipping our military with a lot more of these systems. So the short answer, in my opinion, is yes. And the reason for that also is that the strategy in the face of warfare has changed dramatically since the Ukraine conflict. Drones, lethal and non-lethal drones, counter drones, directed energy weapon systems, and missiles in general, low-cost missiles, are going to become a much bigger part of the defense strategies and warfare in the future. And our military and our allies are not equipped with enough volume of those things.

We at AV have been taking proactive steps to scale production on over seven different products this year alone. We're going in increasing production of these systems by anywhere from 2 to 5x to 10x Eurovier increases in production capacity. We're doing that because we know our military needs it. We know that our allies need it. and we know that this is coming. The most important thing that the government has to do is to actually place contracts that are long-term, that allows us to actually plan for the larger volumes of capacity

and demand that our customers may have. We'll have. Waheed, pleasure to speak with you. Thank you for your time. Great to be with you, Melissa. Thank you. 13Fs out from Berkshire Hathaway and Appalusa. Kate Rooney's got the details.

Kate. Hey, Melissa. So we'll start with Berkshire Hathaway, disclosing a major increase in its alphabet class A and class C shares. We do know that Berkshire Hathaway did invest about $10 billion in the company in a private placement back in June, but it does look like they bought another $6 billion on the open market. In addition to that, it does also look like this vaults Google, or Alphabet, I should say, into its largest stockholding as well.

Berkshire, we should mention also increased its stake in Delta Airlines by about 44% and more than doubled its Macy's stake in Q2. And then turning over to David Tepper's Appalusa, that fund now taking a new stake in Goodyear Tire in the second quarter. Those shares are rising in after our trade here, almost 2% higher. Appalusa also disclosing a new American Airlines position in a new but relatively small stake in both Apple and Boeing. And then, as always, Mel, these filings are as of June 30th,

so some of these stakes may have changed in those 45 days since, but gives you a bit of a snapshot. Yeah. Kate, thanks. Kate Rooney. Time now for CNBC News Update with Mackenzie Sagalos. Mac. Hey Mel, President Trump today downplayed concerns over sailors enduring a nearly nine-month deployment in the Persian Gulf on the USS Abraham Lincoln, refuting family members of some of those sailors who've complained about living conditions and mental health issues aboard the carrier.

He said the deployment was, quote, not nearly long enough, but then acknowledged that another ship, the USS George Washington, will be replacing the Lincoln soon. The BBC is looking to subpoena Donald Trump, Ivank. Trump and Jared Kushner in connection with the $10 billion defamation lawsuit that the president filed against the UK broadcaster. The lawsuit alleges the BBC defamed him by splicing together clips from his January 6th speech to make it appear that he was endorsing violence. The BBC later apologized. And federal regulators today conditionally approved a bank charter application for the Trump family's crypto venture World Liberty Financial. If fully approved, the charter would allow

world liberty to manage and hold assets on behalf of customers and settle payments faster, but it generally does not allow deposit taking or lending like traditional banks. Mel, back to you. McKenzie, thank you. Up next, former White House Chief of Staff, Nick Mulvaney, on what action regulators need to take on prediction markets, which are facing a growing number of lawsuits and investigations. Close your bell overtime. Be right back. Back. Welcome back. Prediction markets. I've been facing a lot of legal headwinds recently. Two weeks ago, the news, New York AG sued Cal She alleging it was operating an illegal gambling business. Then a New York City Council launched a deceptive ad investigation to multiple prediction sites.

In the past week, Washington State ordered Calci to shut down in the state. Baltimore sued both prediction markets. And today, there are reports that the CFTC launch a probe into mention markets where users can bet on word choices made by famous people. This comes as attorneys general from 44 states recently sent a letter to the CFTC saying the agency does not have the power to regulate. sports-related event contracts on platforms like CalShe and Polymarket. We should know CNBC has a commercial relationship with CalChi. So what is the best way to regulate this industry? Joining us now as former White House Chief of Staff and executive director of gambling is not

investing. Mick Mulvaney. Mick, great to have you with us. Most of thanks for having me. It does seem like after this explosive growth in prediction markets that we are at sort of a turning point in terms of who should regulate, what should be allowed, etc. Your stance is basically you've got to leave it to the states. Well, it is when it comes to sports betting.

Look, a lot of us believe there's value to the prediction markets when it comes to things like, say, elections. But when it comes to sports, that has been something that has been typically governed by the states forever. Gambling is governed by the states, just like, say, alcohol is. And one of the reasons you've seen this explosion in the prediction markets is that 80% of what they're doing on any given day is related to sports. So I think that's where the focus is. You just saw the note there. I think it's the 44 attorney generals, U.S. state attorney generals have taken this position. When's the last time, 44 attorneys generals in this country agreed on anything?

So I do think the issue is, yes, we talk about mentioned markets. You can talk about death markets. You can talk about a bunch of different things. But really, the big debate here is on sports betting. Okay. For a lot of the other stuff, though, Mick, I mean, your group is called gambling is not investing. So I imagine that you've got a stance on other things, too, in terms of, you know, all the things that you can bet on. I mean, does your organization, do you have a view on whether or not, for instance, the mentions market should exist if there is value on betting, you know, in the next 15 minutes where Bitcoin is going to go?

I mean, there's so many derivative trades now out there on the prediction markets that people can bet on. Yeah, the mention markets are interesting to me because it goes to one of the issues, and this has a parallel. when it comes to the sports gaming, sports betting, which is what's the underlying economic activity? Look, Cal She and Polymark are trying to make the case that, you know, prediction contracts are sort of the same thing as buying corn futures. Well, there's an underlying economic activity in growing, selling, producing corn, et cetera. There's not any underlying economic activity when it comes to mention markets. Whether or not Donald Trump is going to say your name in his next rally, that's not economic activity. Yet that is what the CFTC is using as its connection to

regulate these industries. So the mentioned markets, well, a very, very small portion of what, say, Cal She and Polymarket do, is indicative of where that folks like us, our group, believes that the prediction markets wants to take it, which is everywhere. Keep in mind a couple years ago, Cali took the position that it had no right at all to deal in sports gambling. They'd made that argument to a court in Wisconsin, but now it's what they're doing. So again, the mention market's a small piece of what these are all about, but it is indicative of a larger trend. I mean, do you think prediction markets are sort of hybrid animals and that they offer different things that could be regulated by the CFDC? I mean, you could make an argument that some of the things that they offer should be regulated by the CFDC.

And you make the argument that sports contracts should be regulated by the states. I mean, how do we handle this? I think you can handle it exactly like that. In fact, I think that's what a lot of the states are asking for. Look, a lot of the states are not asking to ban prediction markets. They're saying, just please don't let prediction markets handle sports betting in our states. I'm sitting here in South Carolina. We don't allow sports gambling in this state.

I happen to disagree with that. I supported gambling when I was in the state legislation, but we don't allow it, and I respect that. And for Cal She and Polly Market now come into South Carolina and say, we know the state legislature said you can't bet on sports in that state, but the CFTC says we can do it in your state. That's where this breaks down. I think that's where you're seeing a lot of pushback from the states,

which is go do what you want to do on election predictions, you know, some fascinating dynamics in the primary races. this week on the betting markets. But stay out of the places where the states have typically exercised the most sovereignty, and that includes sports betting. All right, Nick, great to speak with you. Thanks to your time. All right. Thanks, Blase. Mick Mulvaney. Up next, Schwab's head of trading and derivative strategists on whether his clients are buying into this record market rally and the big stocks they're betting on and against right now. Closing Bell overtime. Be right back. It's been a strong start to August for the major averages with the tech sector racing ahead of all sectors. But can this

bullish activity continue. Joining us now with Joe Mazzola. He is ahead of trading and derivative strategy at Charles Schwab. He's got some new data on where customers are buying and selling. Joe, always great to see you and always great to get a read on the retail investor here. Are they feeling more risk enthusiastic these days? Well, they were in July, Melissa. A lot of great opportunities to buy some dips. If you look at the stocks that they bought, you know, SpaceX, Micron, Intel, Oracle, Tesla. They all had something in common, 20, 30, 40 percent drop. So, you know, investors kind of embrace that volatility and bought, you know, pretty heavily.

It was a two-to-one buy-to-sell ratio if you look at equities and ETFs, you know, relative. So it wasn't investors running for the hills. It was them embracing that volatility. Top net sells, Apple, advanced micro, broadcom, PayPal, Adobe. What did you see there in terms of how much conviction, they had when they sold these positions. I think a lot of those were more than likely trims as opposed to shorts or, you know, exiting positions. You know, they all have something in common for the most part. They just didn't have the same type of moves as the buys. So clients were really looking for,

you know, better opportunities to get in on some of the names that had dropped quite a bit. Another thing they were doing, Melissa, is they were selling a lot of puts in those names. So it was a way for them to kind of embrace some of that volatility. And as you started to see recently, I think this is an interesting phenomenon. The dispersion index, which basically kind of measures expectations for kind of idiosyncratic moves looking at individual names relative to the indexes, that really spiked in July, especially the second or third week. And it's really come crashing down these last couple weeks, as you've seen this rally really starting to broaden below the surface. So that's kind of, it's kind of created this dynamic where what we're

starting to see now in the first couple weeks of August is a little bit more of selling of some of those names that had outperformed. And you're actually starting to see some of our investors and our traders actually start to buy some of the index and ETF puts as a way to hedge. Yeah. Are your retail clients taking advantage of the fact that the VIX on the index level is low, though? Yeah, no, I think so. I think that's what we're seeing activities in the spiders and the cues. That's where we're really starting to see some of that put hedging. It would And what I find even more interesting is it's not maybe the same sense that you're seeing on the institutional side. Because if you look at something like skew, which measures out of the money puts versus out of the money calls in the SPX,

that tends to be more of like an institutional product. That's in like the 20th percentile. So, you know, whether it's hedge funds or some of the other institutional clients, they're not hedging, but you're starting to see the retail maybe get in front of it a little bit as some of the concerns that they're raising around maybe inflation, interest rates. Some of the other things happen in the macro and what's maybe happening in the Middle East is causing a little bit of concern as we're heading into August here. Yeah, what have you seen on the margin front, Joe? I know that when Schwab reported earnings, we saw the margin numbers and they were higher and it coincided with the change in margin rules at the beginning of June.

What are you seeing going into August and are clients using margin, which has traditionally been sort of a read on how bullish people are? Well, I think one thing that gets misunderstood sometimes about margin is that margin number can go up, but a lot of times it goes up because the underlying index is going up, right? So what we, you know, what we tend to look at a little bit more is like percentage of margin relative to the account. A little uptick in there, but nothing that's causing any, you know, warning signs at this point. All right, Joe, we're going to leave it there. Thanks. Thanks, Melissa. Joe Mazzola. Record high stock prices are helping fuel a new boom and classic car collecting will be live in Monterey, California,

where $500 million worth of cars are being auctioned. That is. next when closing bell overtime returns. Welcome back. Forget classic sports cars from the 50s and 60s. Super cars from the 90s and 2000s are skyrocketing and price in the classic car auction market. Robert Frank explains why live from Monterey, California. Hi, Robert. Mel, good to see. Well, over a thousand cars expected across the auction block here in Monterey this week. The total could be over $500 million. That would smash the previous record. You talk to auctioneers. They say all this wealth being. created from the stock market, from the AI boom, from all these IPOs, finding its way into

these classic cars, along with a new generation of collector. The wealth is coming from a lot of different places, especially these very large collections, are all being driven by someone who's had a big liquidity event, some sort of exit, and they're just deciding that they're going to set a little bit aside, and they're going to go after the car market. The big car of the week is this 1996 McLaren F1 G1. That's expected to sell at R.M. Sotheby's for over $35 million. It was once owned by Pink Floyd drummer Nick Mason.

Also up for sale is a 1964 Shelby Cobra Daytona Coupe. It's the only Shelby Cobra that was actually owned by race car legend Carol Shelby himself. And where I'm standing right now, it shows you a little bit of just how diverse the collecting is right now. You've got this pre-war 1937 BMW. This car expected to sell for about a half a million. here at Meekam Auctions. And then the most collected car in America, the Corvette. This is a 1962 Corvette expected to sell for a mere $100,000. I should add that these pre-war cars and these 1950s and 60s cars are falling out of favor because the new collectors who are taking over,

they love the modern supercars. That's where you've seen the real price action. For more on this market and what's going to happen in Monterey, you can sign up for the Inside Wealth newsletter at cnbc.com slash inside well. Mel. Is it just a generational thing, Robert, that maybe the people who have come upon this newfound wealth, they grew up with these cars and so admire them? You know? Why the 90s and 2000s?

You've nailed it, Mel. They say that we collect what we loved as teenagers. So the cars that the boomers loved as teenagers, these corvettes, they did well for years. Now the millennials in Gen Z, they love the cars, the 90s and 2000s, so that's what's hot. So if you want to invest in cars, think about what the next generation loves as teenagers, and buy them now. All right. Robert, thanks, Robert Frank from Monterey. That does for us here on overtime. Fast money starts right after this quick break.