Closing Bell - Closing Bell Overtime: Major Drawdown in Tech, Semi Stocks; Energy Markets As Geopolitical Tensions Rise 4/19/24

Episode Date: April 19, 2024

A major selloff in tech and semis stocks today with Nvidia having its worst day since March 2020. Citi’s Scott Chronert and Wealth Enhancement’s Nicole Webb break down the market action from a volatile week. Rapidan Energy Group’s Bob McNally on the energy markets as tensions increase in the Middle Eeast. Evercore Vice Chairman Krishna Guha recaps a busy week in economic data and Fedspeak. Plus, our Kate Rooney on the bitcoin halving.

Well, the NASDAQ getting smacked and the S&P 500 finishing in the red for six sessions in a row to close out a rough week for the bulls. That's the scorecard on Wall Street. But winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Well, coming up this hour, we're going to break down the prolonged bout of negative sentiment in the market and new signals that we'll get next week on the economy with Evercore ISI Vice Chairman Krishna Guha. And elevated tensions in the Middle East are adding another layer of uncertainty for investors. We're going to discuss how geopolitics are impacting the energy complex, defense names and more. But first, let's break down today's action, the week's action with our market panel as

the Nasdaq and the s&p 500 post their longest daily losing streaks since 2022 scott cronert of city and nicole webb of wealth enhancement group welcome guys happy friday nicole so um i'll talk about today but i also want to look ahead right to to big tech earnings next week after netflix tanked on some pretty good results super micro dropping like 23 just because they didn't preannounce. That's a lot, but it was up a lot, too. Is the bar just really, really high for stocks like Meta, even maybe Visa ServiceNow? Yeah. I mean, it's been actually a little bit shocking, some of the stories that have been pulled out of Netflix just intraday

today. I mean, the upset around things like taking away subscribership data in 2025, you know, it really sets the tone, though, for what we expect out of some of the tech earnings to come. And I think it's this continued, you know, look through into the end of the year, which is, do we have a de-acceleration of earnings growth from technology? And is this then the beginning of that rotation, which really creates that stickiness for the broadening and the acceleration or the, you know, expectation of the acceleration of growth from other parts of the market. And so that storyline is picking up momentum here. And I mean, that's kind of where we went into the year from a positioning standpoint. So we like it. We like seeing it play out this way.

So, Scott, from from an overall macro environment perspective, we've lost sort of that hope, a lot of it for rate cuts anytime soon. Now there's so much focus on earnings themselves. What does the market action today and throughout the week tell us about what to expect there? So, John, I think it's supporting sort of a view that we've been up for the past several weeks now that we get it. The underlying S&P fundamental setup is very attractive. And our conviction in the 245 estimate for this year is probably stronger now than it was going into the year. And this is courtesy of underlying stronger economic data. But coming specifically back to

the mega cap growth cohort, the issue for us for some time now has been one of implied growth expectations. Valuations for the semiconductor sector, as an example, had gotten to literally their highest level of the past 10 years. And this isn't necessarily a negative, except that it does put the burden not just on beats, but raises that match where those implied growth expectations are. That's the issue. The underlying growth dynamics here we think are in very good shape. It's just a function of the market probably getting a little bit ahead of its skis and pulling too much of a forward outlook into the current price action. Okay. Nicole, I see you nodding

your head. I just want to note that the S&P 500 closed below 5K today, 49.67, down about nine tenths of one percent. And Mike Santoli was talking about this into the close. It was a really kind of fascinating day in terms of trading activity because the Dow Industrials actually closed higher. Dow Transport transports closed higher as well. It's really the sell off we're seeing. And this is particularly true today has been in the tech stocks. John mentioned Supermicro down 23 percent. NVIDIA, a 10 percent move for such a big name. Buying opportunities here? You said before you like it. You like the setup. I do.

And I think there's going to be a lot of trading activity below the surface here. There's a couple of things that appear to be incredibly, just the setup is there and the data is supportive of it. We have stickier inflation because we have higher growth expectations. Consensus growth right now is sitting near 2.5%. Where is a lot of that coming from? It's coming from onshoring. It's coming from productivity. It's coming from deglobalization. A lot of this setup, again, is going to make way for the value trade looking like the superior positioning into the back half of this year as we think about less cuts. We went

from a market that had baked in six cuts to three cuts, barely no hiccup. Now it's all about, OK, maybe it is less. Maybe the Fed does let the economy run hot. How do we start to think about that? And I think we also have to leave room for the Fed doesn't want the economy to fall out of momentum. And so below the surface, yes, I think you're going to start to see people moving towards those value names. And at the same time, if your positioning was light in the semi space, as one example, this is going to be a great time to shore up from a portfolio mandate perspective. And so I think you're going to see this as a buying opportunity for a lot of people, too. You're seeing this churning below the surface.

You know, intraday over the last five days, we've seen kind of the market gap up at the beginning, gap down through the day through a lot of repositioning trade. And then from our perspective, where you sit working directly with individuals and families, anytime you have a tenure that's approaching 5%, you start to have to make calls on, do we trim and move to treasuries? Where are you actually placing that money on the backside of some of these trips? Okay. Scott, how much are earnings going to matter here, particularly in the near term as we do get ready to go into the busiest week for earnings season, given the fact that, as you noted, we have seen multiple expansion. We have seen valuations move much more quickly than perhaps the fundamentals have been signaling. It's setting a really high bar here for a lot of these names when they do come out. And even if we do see earnings beats, we've seen it so far. Netflix

is a good example. A lot of this is going to hinge on guidance and some of the details within the report, too. I think you're spot on. Look, we're still in euphoric territory per our lead sentiment indicator. And the S&P valuation is still above the high end of our fair value range. So I think we just have to allow that this Q1 reporting season needs to unfold longer. And we'll reassess probably on the other side. We're going to get a heavy dose of mega cap names reporting next year, next week. I think we're going to get a pretty good read on how the market is taking the shorter term price action. But again, what I want to emphasize just in terms of our structural positioning here, no change to our 5,100 target for the end of the year.

I'm getting some questions as well. Scott, that's not much upside from here. But what I would redirect the conversation towards is where you were going earlier is that there's still a lot to do under the index surface. We've got this situation where that MAG-7 is, let's call it 30% of the index. It's going to influence the price action, but that's not going to speak for all of the dynamics that are going on underneath the surface. And so, yes, you know, we had taken tech down to a market weight, headed into Q2. So feeling OK about that. I think that's a transitional call. I think longer term, we're going to be exposed to growth. There's no question about that.

But for now, I think the playbook is to continue to focus on, let's call it a cyclical rotation. We continue quite bullish on industrials. We recently went overweight consumer discretionary, which actually held in quite well today, despite all of the macro tech and growth noise. And I think under the surface, we want Dow did finish basically at the flat line and yields higher on the week. Well, the Nasdaq falling the most. It fell 5% this week. It was the fourth weekly decline in a row. Major pressure on key components like Tesla, Micron and Nvidia, along with a big pullback on earnings for Netflix. Is the index due for a bounce? Let's ask Mike Santoli. Mike. Yeah, Morgan, it's exactly that time of the pullback on earnings for Netflix. Is the index due for a bounce? Let's ask Mike Santoli. Mike. Yeah, Morgan, it's exactly that time of the pullback where you say, has it been stretched far enough to the downside? Some things are falling into place. As a matter of fact,

here is the Nasdaq 100 going back a couple of years, actually, since before its prior peak in late 2021. We've gone below that level. By the way, this is as of this morning and we've actually kind of fallen a little bit below that 100 day average. You see, we violated that a couple of times along the way, also bounced off it a couple of times as well. So it's just one of these benchmarks for just how much of a deep pullback we've had in a while. This is the relative strength index, just really a measure of how the market has been moving. The index has been moving relative to its longer-term trend. And this is down right at levels around this 30 mark. That sort of coincided with some trading lows, although not perfectly.

It's certainly not always in a timely way. It tells you things are starting to get washed out. Now, a couple of bellwethers that I constantly take a look at, just as a snapshot of risk appetites plus the secular growth themes. This is semiconductors and homebuilders. Look at that. One year, they're still tracking one another. It's going to break apart at some point. They're not going to necessarily follow it at all times. But both of them succumbing to some of the right pressure and maybe a rethink of exactly how durable demand is in the face of where supply is going to get to. But of course, still vastly

outperforming the S&P 500. So there's plenty of error in there and plenty of outperformance to be given back before you decide that something is really broken in those businesses. All right. I'm going to go back to an oldie but goodie in terms of questions here. And that is if there's potentially further to fall for the big tech names because they have been some of the ones that have grown the most or gained the most. What does that mean for the broader S&P? I mean, it's not easy for a market like today to be the new mode of trading for an extended period of time where you basically have tech really dragging on the market cap weighted indexes and everything else managing to catch a bit. But I do think

one thing that this splintering of the MAG-7 has told us this year is there's no single way for the market to hold up and hang in there. I still think that, you know, in general, the rest of the market outside of tech has to get some assurance that this level of bond yields and this patient fed are not going to pinch the consumer over a longer term. So far, it looks OK on that score. So it's hypothetically possible. But I'm also interested in the fact that we're going into the big earnings a longer term. So far, it looks OK on that score. So it's hypothetically possible. But I'm also interested in the fact that we're going into the big earnings season next week.

You've got tech super oversold. You have positioning really cleaned up through this options expiration today. So maybe you've actually done a lot of the work in terms of that reset already. Maybe. All right, Mike, we'll see you in a bit. Speaking of Bitcoin bucking the downtrend today after briefly dipping below $60,000 before recovering, the crypto community is awaiting Bitcoin's halving slated to take place at any moment. Kate Rooney has the details. Kate. Hey, John. Yeah, so Bitcoin has only been around since 2009. This marks the fourth halving in its pretty brief history. This is pre-programmed into Bitcoin's code. The name can be a little bit misleading. It doesn't

cut Bitcoin's entire supply in half. It cuts the future supply in half. So you can think of it as pretty much a way to slow down production by changing what are known as the block awards. New Bitcoin is created mostly by miners, those companies running those high-powered computers you see there to validate transactions. They get new Bitcoin as a reward. Right now, it's six Bitcoin that's going to fall in half, hence the name halving, to three. So Bitcoin's scarcity, it has been a big part of its appeal. Why some see it as a store of value, supply is capped at 21 million. And as far as the price impact, guys, this event is widely expected.

People know about this analyst that I'm talking to, Warren. It might be another buy the rumor, sell the news event. The near term, they say it's all likely priced in. Bitcoin's already up about 50 percent or so this year. But if you look at the previous three halvings, as they're known, it did mark the beginning of these longer bull runs we've seen. Markets have evolved a lot, though, since we saw one of these last time the launch of the new ETFs ushered in a lot more institutional money. As Glassnode put it, ETF demand is having much more of an influence on the market than what we'll see from this having, guys. What's really fascinating to me, Kate, is the fact that it's not just the Bitcoin miners that

have been falling. And yes, we've seen the volatility and the weakness recently in the price of Bitcoin itself as well. It the weakness recently in the price of Bitcoin itself as well. It's been some of the names of some of the companies like MicroStrategy, for example, which is down double digit percentages here in recent trading. I would expect that name to actually be higher because it's sitting on such a stash of Bitcoin. And yet that's been trading lower, too. It seems like there's a very knee jerk trading reaction. If you're exposed to Bitcoin, you're moving with the price of Bitcoin, period, paragraph. Yes. And Morgan, that's a great point about MicroStrategy. MicroStrategy, the Bitcoin mining names, have typically traded

alongside Bitcoin. They're sort of seen as a levered Bitcoin play. So if Bitcoin were up 5%, you see these names up typically by 10% or 20%. So they're quite volatile. When it comes to MicroStrategy in particular. It's the largest corporate holder of Bitcoin. But there has been some selling by the CEO recently. And there's speculation that there may be traders sort of following him out the door. So that has been one dynamic to watch with MicroStrategy is Michael Saylor, who is a big Bitcoin bull. He's quite bullish on the asset class, but he'll also really transform that company from a software company into really a Bitcoin holding company. He's done a lot of

selling recently. I'm told it's pre-planned and was sort of out there that it's sort of a pre-sale, but he has been doing a lot of that. And that is one thing investors are watching and may account for some of the weakness, at least in that name. But you're right about those really typically and historically trading right alongside Bitcoin. All right. Kate, thanks. I guess bottom line, after the happening, we're going to have miners in possession of less Bitcoin. After the break, how Wall Street is thinking about the heightened conflict in the Middle East and what it could mean for crude prices and beyond. And later, we will talk to Evercore ISI Vice Chair Krishna Guha about next week's GDP and inflation prints and if those

results can shift the negative sentiment on Wall Street. Overtime. Oil modestly higher after spiking overnight following Israel's limited strike on Iran, and energy was one of the top sectors in today's session. Joining us now is Bob McNally, Rapidan Energy Group founder and president, and a former White House energy advisor. It's great to have you on the show. We can talk about the fact that WTI finished up slightly today. However, we are lower on the week. And going into this week, if you'd told me that would be the dynamic, especially what, 12 hours, call it 18 hours after Israel

conducted a counterstrike on Iran, limited in scope, though it was, that this is how we would be ending the week, I'd be pretty shocked, especially as we reimposed sanctions on Venezuela. I guess just walk me through how much geopolitics is or isn't affecting the energy complex right now. Hi, Morgan. You know, you're right. I think it's fair to say the market has been skeptical about geopolitics really impacting oil prices and so forth. You know, there have been a lot of head fakes. The Russia invasion in 2022, prices soared because everyone expected a disruption. Didn't happen. They collapsed. Even the Iranian attack on Abqaiq on September 19th, September 14th, 2019, short term events. So the markets are sort of in show-me-the-barrels mode. Now, that being said,

when Israel attacked the facility there near the Iranian consulate, Iran contagion risk did start to come back into the market. But as you said, when we had an aggressive but ineffectual Iranian attack, and then last night's limited attack by Israel, we didn't see barrels disrupted. We didn't see tankers stopped. And I think the market's inclined to say, I'm just not going to believe this until I really see it. And I'm not sure there's real cause for alarm or risk. Venezuela is pretty small in terms of the barrels and so forth. It's really about Iran contagion risk. And the market's in the view of like, you know, I'm just not buying it until I see it. And so far, we really haven't seen it. OK, so then what is moving the price of oil here? How closely should we be walking, watching, for example, U.S. producers when we're at

record highs in this country, even as OPEC continues to hold steady? So I think what happened is the fundamentals are firming up like fourth quarter last year. Pretty ugly inventory drops didn't happen this This year, demand's pretty good. The macro was looking pretty good. China was looking pretty solid. Inventories are declining. So this is a market that's pretty well supported. OPEC Plus is doing its job. So we're pretty supported here in the mid 80s, low 90s. Now comes geopolitical risk. In our view, there's at least another 10 to 12 dollars upside of just risk that needs to come in the market and likely will. But again, the market, it puts it in.

We were up three bucks initially last night on the Israeli attack. When the market saw nothing, it came off. So I think we have a well-supported market here. It's not too bad for macro. But we have an upside risk when we think, because we think this escalatory dynamic remains in place. It's not going away. And this will cycle up. And we think that there's more upside to crude prices than downside.

So, Bob, outside of geopolitics, then what's going to move the price of oil? Well, one thing that's going to move the price of oil is the great debate about demand. I mean, the huge debate among barrel counters is just how strong will oil demand growth be? You've got the International Energy Agency saying it's going to be on the low end of the range. OECD is about to peak forever because of EVs and so forth. You've got OPEC barrel counters saying, no, no, no, demand is going to be twice as fast in growth than IEA says. We'll see who's right, but there's an enormous debate over the pace of demand growth, which is partly a macro question. That'll depend really on whether OPEC

Plus increases supply or not on June 1. So in my view, it's not so much a supply story. Last year, it was the U.S. production was higher than expected. True. This year, not happening. This year's debate will be about demand and geopolitics. That, I think, is the next 10 to 15 bucks in crude. All right, Bob, thank you. Thank you. Now, when we come back, Ebercore ISI Vice Chairman Krishna Guha on what he calls the Fed's hawkish reset this week and the key data next week that could give clarity on the path with rates from here. We'll be right back. Welcome back to Overtime. Hawkish Fed commentary spooking investors this week, including Chair Powell's comments about a lack of further progress on inflation.

It's adding more uncertainty about where the rate cut timeline is going to go from here. Next week, we're going to get first quarter GDP and another key read on inflation in the March PCE report. Joining us now is Krishna Guha, Evercore ISI Vice Chairman. Krishna, welcome. So we started the week a little above 51.50. We're ending it pretty close to 49.50. How much do you trace directly back to Powell's hawkish commentary? So it's clearly not just the Fed, right?

There's anxiety about earnings, particularly around big tech going into next week. There's the unresolved Iran-Israel situation after the first set of tit-for-tat demonstrative attacks, but ones that could yet have escalatory consequences. But there's no doubt in my mind that the shift in the Fed backdrop is a very important part of the reason why markets struggling this week, right? We got a hawkish reset from Powell, not crazy hawkish, a measured hawkish reset. But what came out of that was a much less strong near-term bias to cut rates. And what I think we learned here is that the Fed's base case plan B is July for two cuts. But they're hedging. They're also allowing for the possibility that more persistent inflation might mean that rates have to stay on hold past July as well. So then how much pressure does that put on PCE?

Well, I think we know that the PCE print for March is not going to be good enough, right? We could do the math based on CPI and PPI. And of course, Powell's own discussion this week kind of provided an estimate of where that PCE report was going to land. Nonetheless, I think it makes a difference whether it's sort of a near miss, 0.27, 0.28 type print on core PCE month over month, or a bigger miss in the 0.3s with potentially worse composition, more services categories showing uncomfortable strength. That will set the tone some heading into the following month's data. But at the end of the day, it's going to be the ECI report. That's the wages report for the first quarter arrives on April 30th. And the April PCE inflation report, and then the May-June reports that come ahead of that July meeting, if they show the pace of month over month inflation increases

on that key core PCE measure down around 0.2, we're going to be OK. The Fed can get going in July. If they don't, the Fed can easily get rolled from three to two to one or maybe even no cuts this year. It's really been the U.S. versus everybody else in terms of the economic picture, with the exception perhaps of Japan. So what is going to matter more when you talk about the global bond complex and even some of the moves we've seen in the FX market and with currencies lately? What's actually going to matter more here? Is it going to be inflation data coming out of the U.S. and GDP data coming out of the U.S.? Or is it going to be commentary that accompanies the BOJ decision on the other side of the world? You're Or is it going to be commentary that accompanies the BOJ decision on the other

side of the world? You're absolutely right that we need to pay attention to all the moving parts here. And it's a complex picture, right? Because, you know, Japan is struggling with currency weakness on the yen dollar cross, which is driven by what's going on in the U.S. While in Europe, you have the ECB and the Bank of England trying to press ahead with their own rate cut plans based on the fact that their own economies just look very different from the U.S. And I actually think that divergence trade is for real, particularly in the case of the ECB. But at the end of the day, as you guys know full well, it's the U.S., it's the Fed, it's the dollar that

sets the tone globally. I just want to go back to geopolitics here for a moment, because it does seem like markets sighed a bit of a sigh of relief here today, given the response we saw limited in nature from Israel toward Iran overnight. Is the risk abated here? And I guess just in terms of gaming this out, depending on how it plays out over coming days and coming weeks, what does that mean in terms of how the Fed and other central banks are going to be factoring this in or not? And

what does it mean in terms of markets? Because geopolitics matters or doesn't matter until it has to so ever since the current mid-east crisis began with the hamas terror attack on october seven the key issue for markets has been the weather this can stay broadly contain to gaza or whether it escalates the point where eventually

israel and ir Iran are at war, including a full network of Iranian proxies in the region, including Hezbollah, of course, in Lebanon. Now, the last few days, we've gone closer to the brink than we have ever since this crisis began, with the direct strikes from Iran against Israel, from Israel against Iran. Nonetheless, the nature of the strikes in both directions suggested that they were performative, they were making a point, they were signaling deterrence and readiness to act, but not looking to escalate out of hand. So I think it is reasonable to think

that in the very near term, we may have gotten through this latest round without this kind of catastrophic escalation. But the caution, of course, is as long as this crisis lasts, that escalation risk is still there. And I would be looking, for instance, a few rounds ahead. Once Israel has dealt with the Hamas leadership and remaining forces in Rafah, I suspect that they will want to push Hezbollah north away from their border across the Latani River in Lebanon. And that's the kind of thing that would, down the line, potentially bring another very severe moment of escalation risk. Yeah, certainly hearing more of that kind of conversation out of the national security analyst community and former defense officials as well this week.

Krishna Guha, thank you for joining us. Thank you. Time for a CNBC News update with Leslie Picker. Hi, Leslie. Hey, Morgan. The NYPD just gave an update on the man who lit himself on fire outside former President Trump's trial earlier today. Police officials say he's from Florida and arrived in New York earlier this week and that before the incident, he threw conspiracy theory-based pamphlets around the park near the courthouse. He's currently listed in critical condition at a burn center. Meanwhile, the hush money trial continued this afternoon with what's called a Sandoval hearing, which will outline what could

be asked on cross-examination if the former president testifies in his own defense. And Citadel Securities today blasted Trump media CEO Devin Nunes after he sent a letter to the Nasdaq warning of possible illegal short-selling of the company's stock and mentioned Citadel Securities along with other major market makers. Citadel Securities called Nunes the, quote, proverbial loser for blaming short-selling for a failing, a falling stock price. Trump media fired back saying Citadel is, quote, world famous for screwing over everyday retail investors. Citadel Securities was founded

by billionaire Ken Griffin, a major donor to Republican candidates. Definitely the war of words indeed on this Friday. John, I'll send it back over to you. Leslie, thank you. When we come back, just how much damage has been done to the market in this pullback. Mike Santoli has a valuation health check as we head into the heart of earnings season. And take a look at pressure on the chips this week. It's one of the hardest hit parts of the market. The SMH falling around 10 percent. Nvidia falling 10 percent just today. Overtime, we'll be right back. Welcome back to Overtime.

Mike Santoli is also back with a check on valuations after another week in the red. And as we head into the heart of earnings season. Mike? Yeah, John. It's one of the jobs of a pullback in a bull market is to ease valuation pressures, and we've done some of that. We're down to almost exactly 20 times forward earnings on the S&P 500, still a relatively elevated level, but down from those 2021 peaks. We're at 21, not that long ago here.

I do find it slightly interesting that the past few lows, major ones in the S&P 500 have happened at successively higher PEs, at least for the market cap weighted. You got 16 and 18 or 17 last October. Of course, the equal weighted S&P in orange is much less aggressively valued, and you're back more or less down to a decade average. So you're paying up for the perceived predictability of mega cap earnings still, though less so than we were a little while ago, John. I mean, yeah, Mike, 20 times still, you know, nothing's on sale. And there's still quite a distance between the S&P and the equal weight S&P, right?

Now, there definitely is. I mean, one of the sort of rock solid tendencies of markets is when you buy at higher valuations, it doesn't tell you much about how the market does in the next one, two, even three years. But for over 10 years, you have to mute your return expectations because that's a pretty rock solid relationship. Now, the argument might be that for the average stock, you're in decent shape in terms of looking forward to average returns. All right. Mike Santoli, have a great weekend. You too. Thank you. Up next, we will discuss how Israel's retaliatory strike against Iran could impact the upcoming defense bills and defense stocks.

And speaking of defense, find out how one major contractor is looking to space as the next frontier in warfare. Overtime, we'll be right back. Welcome back to Overtime. Israel launching a limited direct military attack on Iran early this morning, marking the latest escalation between the two countries. This comes days after Iran carried out its first ever direct attack on Israel. For more on how this impacts the defense bills and D.C. policy, let's bring in Ed Mills, Washington policy analyst at Raymond James. Ed, we're going to start right there because it has been a very intense week from a geopolitical perspective. But one of the things it has done

is thrust back into the limelight in Congress these foreign aid packages, which seem to have been picked apart and separated out, but very similar to what we've seen proposed in the past, starting to make their way little by slowly through the House. Is the expectation here that these are finally going to cross the finish line? Morgan, these bills are going to pass. They're going to pass overwhelmingly. They're going to head over to the Senate after this weekend. To me, it's really a question of when the Senate is going to vote on this. Chuck Schumer could bring the Senate back as early as next week. They're scheduled to be on recess point, Morgan, that come early May, these bills are signed into law. And as you highlighted, essentially what is going to Joe Biden's desk is what passed months ago in the Senate, plus a couple of other provisions which are really important. But it's not that big of a change to what we've just been waiting on the House to move for.

Yeah. So you're talking about funding for Ukraine, funding for Israel, funding for Taiwan, a few other things. Largely, this benefits the U.S. defense industrial base as well. But curiously, and perhaps not unsurprisingly, knowing that this has happened many times with many other types of legislation in the past, TikTok folded into this set of bills as well. Is TikTok a done deal in terms of a ban or a forced selling? Yeah, Morgan, the clock is ticking on TikTok. And I think as we think about this, this is going to pass as well. This is going to get signed into law. It's really just a matter of time before TikTok is going to be forced to divest from their Chinese ownership.

When I talk to contacts and all the conversations I've had with clients here at Raymond James, is that it's actually pretty unlikely the Chinese government is going to allow for that divestiture to occur. So when you look at the details that have changed here is instead of having a six-month time frame, it's going to be a year-long time frame. So this is going to be a 2025 event versus something that happens before the election. That's important in terms of who gets upset about this before November. But importantly, this provision also allows the president to ban other apps. And we've seen movement this week as well to limit the influence and the profitability of other Chinese-based apps

through what's known as a de minimis exception. So add to the TikTok list apps like Timu, WeChat, Pinduoduo, Xian, a lot of things that we get plenty of Facebook ads and other ads for. A lot of that operation is also likely to be very impacted by what passes this weekend. Ed, what is it about the geopolitics of the moment that have allowed this logjamming Congress to loosen up? And does it say anything about what else might happen in Washington between now and November? John, I think it was inevitable before we were able to get this bill to the president's desk, because in D.C., one of the most difficult things to do is just be opposed to something. You have to offer up a solution. And if you're not offering up an alternative, ultimately, the solution that had already passed the Senate overwhelmingly on a

bipartisan basis is what you're left with. But to your point about what else is left, what we're seeing is probably the one true bipartisan issue in D.C. is getting tough on China. So I mentioned those de minimis bills. We're also very likely to see tariffs in the next couple of weeks on semiconductors, EV, solar. That's going to be supported by Congress. We could see other anti-China bills because Speaker Johnson, he finds that when he puts that on the floor, they're near unanimous votes. And not only TikTok, but also a data broker security bill against China is in this larger package. So look for those anti-China bills to be top of the agenda,

very much live balls here in this Congress. So does this strengthen Speaker Johnson or does it strengthen Donald Trump because it took a visit to his place for all of this to get momentum? Well, John, let's be clear. I think the reason why the House waited as long as they needed to to pass this bill is because of the opposition from former President Trump. And so Speaker Johnson did go to Mar-a-Lago, try to secure his base. But if there is a movement to oust him, which is still also a very live ball, it is going to be Democrats that save him. When we look at the final vote, it's going to be Democrats that put this over the top. So from a political perspective, I think you'd have to add a victory closer to the Democratic column than the Republican column in this fight.

The tariff piece of this is going to be an interesting one to watch as all of that legislation develops, too. And you have Secretary Blinken in China again next week. Ed Mills, thanks for joining us, going into a busy weekend for Washington. Well, as geopolitical tensions have soared this week and lawmakers focus on supplemental funding tied to Israel, Ukraine and elsewhere, casts a light on the ever more critical role of space as a warfighting domain. When you talk about missile detection and missile defense, space plays a role. It's been a focus with this week's events and was a key focus at the Space Symposium last week, where I was as well. That's where I sat down with Kay Sears, Vice President and General Manager of Boeing Space Intelligence and Weapons Systems Business. She oversees a vast portfolio spanning everything from space exploration to missiles and munitions, even underwater vehicles.

Sears telling me the U.S. Space Force and space community overall is facing two big challenges right now, being ready to fight or defend assets from threats in space and continuing to ensure that space provides, quote, the ultimate high ground, since it is increasingly the enabler for air, sea and land operations. She says lessons are being learned from current conflicts like the war in Ukraine and creating resilience is critical. Missile warning was a geostationary capability, but now we're starting to put assets into the Middle Earth orbit and the Low Earth orbit

so that we have missile warning capability in all three orbits. There's different threats that might go after one of those domains or another, but if we have all three, then we have a depth to that mission. And Boeing, in particular, is working on missile warning capability through our Millennium subsidiary. They are really a small-sat provider. They have a hot production line, which those production lines, when you're talking about the need to get more into space in order to protect space, those production lines are critical. And we know how important it is to have hot production lines look no further than some

of the missiles and munitions restocking that's been afoot and the investments to make that happen. Well, missile tracking has been a big focus of the DoD and Space Force, a number of contracts and programs and competitions underway to help address this. Commercial space increasingly playing a role here as well. The key question, though, is how quickly can the DOD move and whether the defense and space industries can meet those deadlines as well. So national security has been a big growth area for a number of defense contractors in recent quarters. It will be in focus again next week, an area to watch when earnings kick off with Lockheed Martin, Northrop Grumman, RTX, L3 Harris, General Dynamics,

and yes, Boeing, which reports results next week as well. And make sure to point your camera, your phone camera, here to the QR code. You can catch much more on space and on that interview specifically on my podcast, Manifest Space. All right, Morgan, and up next, how fintech companies are using data to help Americans solve some important and time-consuming money issues. Also, check out the names that helped power the Dow

to a positive close today. American Express, top among them, JP Morgan, Amgen, Coca-Cola, and Travelers, all finishing firmly in the green. We'll be right back. Welcome back. The death of a family member can be both emotionally difficult and financially challenging. A state settlement is a notoriously complicated process. This week, John takes time out with a serial entrepreneur who is using technology to make it easier.

Alexandra Mysore is co-founder and CEO of Alex, a seed stage startup focused on estate settlement. The company promises to save up to 500 hours in dealing with a loved one's estate, finding investment, retirement, savings accounts and benefits, pulling and organizing paperwork and more. Mysore has experience tackling tough problems. 20 years ago, she started what became a prominent e-commerce company selling baby products after she transitioned from being a marketing consultant for startup founders to becoming a CEO herself.

There was no Shopify yet, so to build e-commerce was going to be expensive and costly. And I bartered. I went back to some of the founders and I said, hey, do you think you could build me an e-commerce platform? It was like on Joomla. I bet it was really bad now that I think about it. But it got us up and running. And because I'd had a lot of relationships in PR and digital marketing, I was able to acquire customers. This is before Facebook had paid advertising. And so it was quite fruitful. And we ended up sort of building this business really big and becoming the number one seller, third-party seller on major categories in Amazon. And this is what it really taught me

that moment, was how data-driven merchandising online was going to be. And today, financial processes are data-driven too. You can think of Alex as a TurboTax for a state settlement. And Mysore believes the company is pulling together a unique data set that will feed artificial intelligence models that can make the process even smoother in the future. To date, there are these disparate pieces. There are single advisors handling a tiny sliver, but not the entire process. And if you think about that, like at Alex, we're really the only company that will have this set of data that marks what an entire end-to-end estate settlement looks like.

And what we hope to do in the future is build towards building AI models that are really efficient with this. Because right now, what would you feed the model with, right? One sliver, maybe, of an estate settlement, but not an end-to-end of all the things that go into it. So the timeout takeaway, new money engines. We've gone from storing financial data in the cloud and systems like Mint to designing bookkeeping workflows in QuickBooks to now tackling less structured processes like estate settlement with products like Alex. Investors can strategize now about which companies are best positioned to leap ahead by tackling the right problems. Morgan.

It's such a key idea for a service. I've got an idea for the next one, maternity leave. John, great stuff as always. For the magnificent seven stocks, we'll report earnings next week along with a ton of other household names. Up next, we will run through the calendar and what it could mean for the Nasdaq, which got crushed today. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We will be right back. Welcome back.

The NASDAQ getting crushed today, extending its losing streak to six sessions in a row, falling 5.5% on the week. Big tech will take center stage next week on the earnings calendar with Tesla reporting Tuesday, IBM and Meta on Wednesday, and Alphabet and Microsoft on Thursday. All of those reports will be here on overtime. And, of course, there's a variety of sectors and a variety of S&P and Dow components reporting above and beyond tech, too. But we know tech in particular taking it on the chin. Well, two big tests, I think. On the cloud and the hyperscaler side, you got both Microsoft and Google Alphabet reporting.

And both of them break out some cloud numbers. There's going to be a lot of attention to those leading up to Amazon, but they really need to challenge Amazon. Then you've got ServiceNow, which is arguably the fastest growing enterprise software company at scale, and they've done a bunch of AI work. So given what we saw from NVIDIA and Supermicro today, what do we see from the likes of ServiceNow next week? And to that extent, how high is the bar that these companies need to hurdle with the numbers and the outlooks, perhaps even more importantly, that they put up next week, given the fact that the debate has been, and you're seeing it play out in the market in real time, that the AI trade has gotten long in the tooth, we'll say. Pieces of it. I mean, look at C3 AI. It's down around 20 bucks a share,

and that's historically cheap. All right. Well, it was a mixed picture for stocks today, but the S&P and NASDAQ both finishing lower on the day, on the week. Have a good weekend. That's going to do it for us here at Overtime. Fast money starts now.