Closing Bell - Closing Bell Overtime: Michael Saylor On Bitcoin Surging, New ETFs & Microstrategy; Emil Michael On Gig Economy 2/12/24

Episode Date: February 12, 2024

Another record close for the Dow and the S&P 500 notched an all-time intraday high before ending the day lower. Microstrategy’s Michael Saylor on bitcoin’s rise and his own company’s transformation. Former Uber CBO Emil Michael previews gig economy earnings. Chris Verrone, Strategas Head of Technicals, breaks down how the market is positioned while Interactive Brokers Chief Strategist Steve Sosnick on the one stock he says could derail the market. Earnings from Arista Networks, Avis Budget and Cadence Design. Tim Rezvan, Keybac energy analyst, on the sector’s rapid M&A pace. 

Well, we got another record close for the DAO. The S&P just kind of holding steady after hitting an intraday high. That's the scorecard on Wall Street. But winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. It was the Russell 2000 that was the very big outperformer today, finishing the day up just about 2%. Meanwhile, Bitcoin hitting 50,000 for the first time in two years. We're going to discuss the outlook for Bitcoin with MicroStrategy Executive Chairman Michael Saylor. Plus, it's going to be another busy hour of earnings in overtime. Instant analysis of results from Arista Network's Cadence Design Avis budget. Goodyear and Vornado is just moments away. But first, let's get more on this record close for the Dow, at least. Mike Santoli joins us from the New York Stock Exchange to break it down.

Mike, yes, we had a record close for the Dow. We went back and forth with the S&P. The Nasdaq finished the day lower. But really, the small caps, as we just talked about, the outperformer here, how does it speak to where we're at in terms of this rally and how investors are positioning themselves or broadening out, given how oversold we are in some of those mega cap names? Yeah, Morgan, in a sense, it's following the preferred script of a lot of people, which is to say, OK, the big, magnificent seven-type stocks have done their work. Let them back away.

The rest of the market might be able to perk up a little bit. And the Russell 2000, the equal-weighted S&P, for as much as they've been left in the dust by the NASDAQ 100-type stocks, they have not in absolute terms been very weak. The equal-weighted S&P is up 20 percent from the lows. It's up a couple percent, you know, this year. Nothing gangbusters, but it's showing you it's kind of hanging in there. So I think that's all to the good. I'm very much, though, focused on some of these key reversals and some of the high momentum parts of this market that we saw today.

You saw lots of intraday highs up on a spike like Meta, like NVIDIA, and then big pullbacks like Adobe. So you have to be aware that that could create some instability in the overall tape. But today it was absorbed pretty easily. Yeah, Mike, I mean, it is just a day. I'm looking at the stocks I watch, which ones were up the most. Stuff like Peloton, C3, you know, even I hesitate to even mention some of these. They're so small. So what do we need to see to read through and whether this continues?

Well, I think those names and names like them represent we're at the phase of the rally where traders, fast moving money is finding the lower quality, beaten up, heavily shorted stuff and it's gunning them. Now, that's always a part of a bull market. Bull markets overshoot and over the short term. That could be happening right now. So I see a lot of that, these kind of cross currents happening at the moment. And, you know, again, it's one of those things where it's not like you ring a bell. A lot of this action is very intraday these days. There's one day options. You have kind of a sugar rush in the morning as the public comes in and buys upside speculation and then an insulin response from the market makers as they take the other side of it. So, you know, you have to kind of take it over a course of multiple days,

but there was some of that happening this afternoon. Yeah, not just about ringing a bell. It's what happens after the bell. There you go. That matters. Mike Santelli will see you again. The overtime. That's right. In just a bit. Joining us here on set now is Strategas Head of Technical and Macro Research, Chris Verone. Chris was ranked as number two macro analyst in the 2023 Institutional Investor Research Survey.

Congratulations. But we're going for number one this year. So should investors be worried about the small caps? No, I think they should be embracing how, if you look at the last six weeks, the only crime the small caps committed was they chopped, they went sideways. After a 30% move in November and December, I think that's hardly a reason to be bearish on the small caps

here. You have IWM breaking out above 200 over the last several days. The last three days in small cap world have been really, really impressive. And think about what drives that move. Biotech, second largest weight in Russell 2. The banks turning up from an oversold condition here. So I think, if anything, all this talk about how narrow the market's been, it's overstated. The small caps are getting better. The equal weight S&P just made a two-year high. This idea that it's just, you know, five, six, seven stocks driving this whole thing, I think, is misleading. So let's say you've been textbook up to this point and you've owned primarily the S&P 500 over a pretty long

period of time. You're feeling pretty good right now, feeling pretty smart. But maybe you're feeling like you ought to diversify. What do you prioritize here? Moves into fixed income because rates probably aren't going higher. They're probably coming down and, you know, bonds might behave better from here. Or do you go into certain sectors? Well, I think on the rate side, the persistence from some of the market's most speculative corners, whether that's Bitcoin or whether that's small cap biotech, is suggestive that bond yields probably aren't going a ton higher from here. I'm looking at 420 to 440 as kind of the top of the move in bond yields. And then when you kind of look elsewhere around the

world, let's not forget how much global confirmation there is. Again, this is not just the U.S. market going up. You've had new highs in German DAX and French CAC. You have maybe, maybe, maybe the beginnings of an early turn here in China. You see that more domestically right now with stocks like LVS and wind breaking out. You see it with maybe a hint of life from Starbucks and Nike. So there's these little clues, I think, globally that it's more than just U.S., more than just NASDAQ, more than just NVIDIA. So does that make cyclical parts of the market look more attractive? I mean, we're seeing industrials move higher. Right now we're seeing areas within consumer discretionary move higher.

I mean, is this something that can continue to happen? Morgan, last week you had more industrial stocks make a 52-week high than at any point we've seen over the last five years. I mean, that's not a narrow market. If you look at every sector, industrials have the highest correlation with the market itself. So when industrials are working, you're generally in a pretty good tape. You've seen an expansion in discretionary new highs.

We always pay a lot of attention to the discretionary versus staples pair. That's making new highs. So if the market's still rewarding the more cyclically oriented parts of the consumer space, you would generally say that the market believes the path the economy is on is still okay. That's the status quo. We always look for changes. We're always aware of what could upset the status quo. But I think by and large, the trend here is intact. Let's take a quick moment here. Cadence Design Systems earnings are out. The stock is lower initially. Christina Parts and Nevels has the numbers. Christina. Yeah, lower despite the earnings per share coming in at $1.35, which is slightly higher than the street at $1.33 on revenues of $1.07 billion. So not a massive beat there. You can see shares are dropping about 7%.

Despite the full year guidance, EPS strong. Revenue guidance coming in a little bit light, so perhaps that has something to do with it. But the company pointed out in their earnings report that they're pleased with their record year backlog of $6 billion. Let's see if that translates into 2024. I'll just pivot for a moment to Lattice Semiconductor. So they make the lower powered programmable chips. You can see their share price is also down about 7%. The major point with that, weak guidance. So they did, EPS came in one cent higher than the street. Revenue was a little bit light at 171, but it was really the guidance for this company that is causing the stock to drop.

Okay. Christina Parts-Naveles, thank you. So two names lower. You know, overall, we've got about two-thirds of the S&P 500 companies have reported Q4 earnings. I would wager that the numbers so far have been pretty strong. EPS up 9 percent as of the close Friday. Revenue up more than 3 percent as of the close Friday. But the guidance is has been a little bit more of a mixed bag.

Has that set us up for 2024 and what is pretty rosy projections and probably necessary to see those realized for the market to keep chugging higher? Well, I think that's the challenge here. When we do our work, there's really not much under the surface that is screaming some big change or big cyclical weakness in front of us. I think the challenge is the bar is really high to keep surprising on the upside. And in our world, we look at that through the lens of sentiment, through the lens of seasonality. I mean, the put calls have been pretty low now for about two weeks. So, you know, there's not a lot of protection seeking out there as the market has run away. I think those are short-term challenges. It would not shock me at all to get a consolidation or a correction here. But like, look at $4,750,

$4,800. It's pretty good support. Maybe $4,600, worst case. I think the guts of this market are still in very good shape. There's nothing brewing in credit. I mean, there's all this anxiety, again, about regional banks and real estate. Look at financial sector high yield spreads. They're on the lows, right? So you're not seeing it translated into the credit markets completely reevaluating the picture here. I think that's a good thing. If you've got a correction or consolidation, it's seasonal or it's sentiment-driven, and I think you buy it. Yeah, what a difference a year makes when it comes to the banks and the credit picture,

I guess, as we talk about when the Fed begins cutting rates. Chris Verone, thank you for joining us. Great to be here. Thank you. Avis budget earnings are out. Phil LeBeau has those numbers. Hi, Phil. Maureen, take a look at shares of Avis budget down about 5%. We're trying to figure out exactly why the stock is under this pressure. The quarterly earnings per share coming in at $7.10 a share. Now, that's well above the street estimate of $4.15 a share. Unclear from looking at the release, at least initially, if there are some numbers and some charges in there that need to be stripped out. So we don't have a comparable for you. Revenue did come in light of expectations at $2.76 billion. The street was expecting $2.805 billion. Again,

there are shares of Avis Budget now down a little over 3% after reporting Q4 results. Guys, back to you. All right, Philip O., thank you. Mike Santoli is back with his first dashboard. What are you looking at today, Mike? You know, Morgan, so much focus on the few stocks versus the many. Here's an ETF, the VXF. It's the Vanguard Extended Market ETF, which includes absolutely every stock in the market except what those that are in the S&P 500. It's like 3,600 plus stocks. Now, that means small and mid caps, but it also means large stocks not yet placed in the S&P 500. So things like CrowdStrike is a big one, Snowflake, Workday, things like that. So I

also use it as a little bit of a risk appetite gauge. And I wanted to do this kind of look back four years or so to suggest this is when things were really strong. That was the crazy days of 2021 when small and speculative and unprofitable stocks were really running. And here what you see, though, is it's trying to break out just like the Russell 2000 is. So I view it both as, yep, we have a broadening market. Maybe the economy, the macro message is pretty good on that. But also the animal spirits are starting to flow and that can overshoot a little bit in the short term. So in terms of other imbalances or potential ones in

the market, the semiconductor story has been fascinating. It's hard to interpret it because usually you want semis to lead. That's a good confirming indicator of a bull market. Well, here you have the SOX ETF. That is based on the Philadelphia Semiconductor Index. That's a good confirming indicator of a bull market. Well, here you have the SOX ETF. That is based on the Philadelphia Semiconductor Index. That's dominated right now by NVIDIA and AMD to a lesser degree. So it's market cap weighted. And here you have the XSD, which is more equal weighted. And it's just barely trying to get above that couple year range. So, you know, maybe we have some coming meeting in the middle at some point here, at least one of them not outperforming by by quite such a degree. Guys, OK, this is a hot take, especially, Mike, on a day where there's been a lot of focus on the iShares Edge MSCI USA Momentum Factor ETF.

And the fact that that is really stretched in terms of some of the technicals. You've had that Jonathan Krinsky at BTIG note that's been circulating here as well about momentum maybe being overdone. When I look at that first chart you put up, in some ways this is another way to kind of gauge the appetite there. It comes at a time where, at least through the close on Friday, we've seen yields back up. And for most Treasury notes, at the highs of 2024, are the two interrelated or not so much? There's no kind of special linkage necessarily. Now, if yields really started to melt higher and go toward the highs of last year, my guess is Russell 2000 type stocks, small caps, the extended market index would not necessarily kind of absorb that too easily. But at this level,

the equity market can make its peace with a given level of yields if it's seen as if it's not challenging to the economy and it's not really ramping the cost of capital more than we've been at already. All right, Mike, we'll see you again in just a bit. Meanwhile, Arista Network's earnings are out, hit a 52 week high today, but it is down initially. Christina, how do the numbers look? Yeah, that's because expectations were high for this name. But let's start with just the Q4 results. EPS $2.08 beat. Street was expecting $1.70. Revenues of $1.54 billion, also a slight beat. But the concern came from the Q1 revenue guidance range, which was between $1.52 and $1.56 billion.

And I say that because the stock, like you said, hit a 52-week high. It's run up over 20% year-to-date. There was all this talk about cloud capex spend and money going into networking companies like Arista Network. And I think the size of this guidance range, or I guess the level of this guidance range, wasn't high enough for a lot of investors to justify the stock pop year-to-date, which is why you're seeing a little bit of a drop now, 5% lower on your risk step.

Right. High hopes ahead of the Prince, the conversation we were just having with Chris Verone. Christina Parts and Avalos, thank you. Thanks. The market keeps chugging along to new highs, but coming up, a top strategist reveals the one stock, one single solitary stock that could derail the rally. What stock is strong enough to do that?

All right. Plus, investors waking up to a $26 billion deal in the energy sector with Diamondback looking to buy Endeavor Energy Partners. Up next, the top oil and gas analyst on whether this could spark a wave of M&A. Overtime's back in two. Diamondback Energy, one of the big winners in the S&P 500 today after announcing plans to acquire privately held Endeavor Energy Partners for $26 billion. Pippa Stevens has some details. Pippa. Hey, John. Well, this morning's deal is the latest in a wave of consolidation across the energy sector as producers look to secure top-tier acreage so that they have a long production pipeline. There's been a record $234

billion in U.S. upstream M&A deals over the last year, according to Enveris' Andrew Dittmar, who called it an unprecedented pace of consolidation. Now, part of this is because coming out of the pandemic, shareholders don't want growth at any expense. They want disciplined capital spending. And so if you can't grow organically, acquisition might be the only avenue to replace declining reserves. And after record profits in 2022, companies are in a better financial position for these large transactions. An acreage in the Permian, which is key to Diamondback Steel, as well as Exxon's acquisition of Pioneer,

is coveted since it offers high-quality drilling locations, resource expansion, as well as proximity to end markets on the Gulf Coast. And Veris' Dittmar likened the current activity to the consolidation of the late 1990s and early 2000s, which gave rise to the modern majors. Morgan, back to you. All right. Pippa Stevens, thank you for breaking that down for us. The tiramisu of oil fields, shale fields. What companies could be next as takeover targets? That's the key question. Let's bring in Tim Resvan of KeyBank. Tim, it's good to have you on. What's left? We've seen so much M&A in the Permian specifically.

What's actually left in terms of possible takeover targets? Yeah, thanks for having me. There are some targets left, but they're much smaller than what we saw with Endeavor. Endeavor was really the last crown jewel that was hanging out there as a private operator. And I think if you go down into the mid and small cap space, there are opportunities, but those are going to be more targeted mergers that really aren't needle movers for larger companies, such as what you saw with Exxon and Pioneer. Okay. I mean, are there other oil fields? Are there other geographic locations that could be compelling in terms of future consolidation, especially when we

are talking about an energy sector where free cash flow has been very strong as investors have pushed for that in recent years? And you have all these companies that are looking to put their money to use in more thoughtful ways. Yeah, that's a great question. I think looking at natural gas is really the next wave of M&A that we're going to see. We've been hearing a lot of rumors about acquisitions on that side. The Chesapeake Southwestern News was the first one to get across the finish line amid a very volatile natural gas market. And I think the economies of scale there and the advantages of one company, Chesapeake, getting an enormous footprint right near the LNG export facilities. That's going to be really interesting. Within natural gas, I think you should look to Appalachia for more mergers.

It's a growth-constrained area. So if you think about developing into the lowest-cost exploitation model, M&A opportunities where you lower interest expense, remove G&A, makes a lot of sense on that theme. So is that bad for, at least in the near term, larger natural gas stocks? Because the market's been valuing them higher already, and there's a tendency when some kind of M&A activity gets announced for the acquirer stock to take a hit. Yeah, I mean, for sure that natural gas markets are not reflecting today's prices. They're reflecting the upside that investors are debating in 2025 and beyond. But they're really the Chesapeake Southwestern story had been thrown around for quite a while. There really isn't another one that's out there.

I think you would see targeted opportunistic M&A. And I don't think it'd be a sell the news type of thing. You'd have to analyze everyone from a bottoms up perspective. But now that we have real interest rates and the cost of capital is a real thing, you know, credit facilities are charging seven, eight percent for companies. The ability to get bigger and lower the cost of capital, you know, really means something. So I think those are the real true synergies that companies can demonstrate are going to be what matters to investors. OK, so maybe give us some names. If you're an investor looking at the smaller natural gas names, perhaps those more likely to get acquired.

But you're looking for value because you don't want to suppose you can pick exactly what's going to get acquired. Where do you look? Yeah, I don't want to step outside my coverage universe, but one in that ballpark we've mentioned is one we've written about quite a bit, Gulfport Energy, ticker GPOR. The company emerged from restructuring two and a half years ago, has a very clean balance sheet and a pretty good, it's really Ohio-based in the Utica shale growth outlook. And that's one that I think would be pretty compelling to a larger major. That one has re-rated quite a bit over the last year.

So that's the one that I would point out in that area. And then also on the M&A theme, I think if you look to South Texas instead of West Texas, the Eagleford shale is a mature shale play that has a new life with multiple producing horizons, oil and gas, inventory. I think that's another area you could see kind of more consolidation coming. Great. Viewers love those names that they can dig into. Tim, thank you. Tim Rezran from Quebec. Now, we've got a news alert on TripAdvisor. Bertha Coombs has that. Bertha?

John, TripAdvisor is announcing the formation of a special committee of independent members of its board of directors that committee is going to evaluate any proposals that may be brought forward for a potential transaction the company isn't saying that they have one but that's what they say they are forming that that committee The result of that, they will look into alternatives, disclosure of intent to evaluate any potential alternatives. They will not be disclosing as it goes on. They've retained Centerview Partners as a financial advisor in connection with that evaluation. As you can see, that has sent TripAdvisor shares up more than 10%. It was one of the better performers in the travel group,

up about 3.9% before this for the year. Back over to you. Yeah, I think if it trades here tomorrow, that would be around a 52-week high. Bertha Coombs, thank you. Stocks, meanwhile, keep soaring into record territory. But up next, Interactive Brokers' chief strategist reveals the one stock

he says could ruin this rally for the bulls. And later, MicroStrategy executive chairman Michael Saylor on how high Bitcoin is heading after crossing over that 50,000 mark just earlier today. Stay with us. Welcome back to Overtime. Stocks, end of the day, mixed. The Dow setting a new record, but all three major averages in the green year to date. The NASDAQ up more than 6% for the year. But our next guest says one specific event could derail all this. Joining us now is Steve Sosnick, Interactive Brokers Chief Strategist.

Steve, why is NVIDIA the linchpin here? Hi, John. Thanks for having me. Yeah, I know it sounds crazy because this is really the stock that has been the performer. But that's actually why I'm starting to think of it as a big risk event as well, potentially, with earnings next week. And the reason for this is, when I was an options market maker, my job on the desk was really be the guy who could look for the monster under the bed and what could derail things. And sometimes it's the stuff that's performing best that actually is the scariest. And the reason here is, with earnings next week, this company really has to blow it out of the water because of the rally

it's had. And so the question becomes, can it do so and will it? And some of this, Steve, has to do with the way some investors have been placing bets. Explain how NVIDIA and some other stocks like it, perhaps that move with it, factor into that dynamic? Yeah, what we've seen in our shop is a lot of customers have been writing calls into this rally, which is understandable. It's a hedge, it's an income generator, et cetera, et cetera. But the problem is with the way the stock has been moving, people are running the risk of getting their stock called away. That causes one of two problems. Either number one, they don't want to sell a stock that's moving up, or number two, they don't want to sell a stock that will give them a big capital gains hit, because these are almost all short-term

capital gains in many cases because of the rally that the stocks had over such a short period of time. So we find that a lot of the people who'd been writing the calls in the first place are buying them back. They're maybe rolling them out to another month, but in the short term, they're buying back a lot of the calls that they've sold. And that's actually providing a fair amount of fuel to the rally that we've seen in this stock so far. So you've actually got the buying from people who are already bullish, already have good positions on in the underlying stock, but their options hedging has gone sort of in their face a little bit, and they're actually being forced to, not being forced to, but choosing to buy back a lot of those options that they've written

because they don't actually want to sell the stock at this point. Yeah, so we're talking about options trading in the name specifically, in NVIDIA specifically, but how do you, ahead of next week's earnings, how do you, as an investor, protect yourself from the possibility of big swings in either direction then? Well, you know, the obvious one would be to look at put options in Nvidia, but those are actually quite expensive and a very big moving target. I don't know what the right strike is going to be today. It could be 700, it could be 600, it could be 900, the way the stock has been moving. So what I'm looking to do here is approach the NDX with some puts as we get closer to the event,

because NVIDIA and NDX have been moving pretty much in lockstep. Obviously, NVIDIA has been outperforming the NASDAQ 100 dramatically. But in terms of the intraday moves, in terms of the day-to-day moves, it's uncanny how much they move together. So I would see that as a way to protect myself because my feeling is NVIDIA is the number one stock at our firm. It's clearly the number one stock in investors' mindsets right now. It's surpassed the perennial leader, Tesla. And so when things get that concentrated in terms of positioning and mindset, there's always a risk to the broader index. It's now the fourth largest stock by market cap, you know, if we combine the two alphabets. So that's how I look to protect

myself going ahead of these earnings. Okay. So we can talk about NVIDIA as a risk to the broader index. And we have seen that play out before. Last summer, we actually saw that. The bar was so high for NVIDIA earnings, even though they blew it out of the park, people sold on the news. So certainly this is a risk we have seen before. I guess the question that this raises for me now is if it plays out similarly, say it does next week, at a time where you've got seasonality, you've got overbought conditions, and you've got questions about broader equity valuations. How long could you see a reset or consolidation or could you see something more painful? Well, that really depends on what the number is and what their guidance is, Morgan. I don't mean to hedge on that one, but that's

really what it comes down to. If they really, you know, if they just come in as expected, I think that would actually be a real blow to the market because think about the way we've turbocharged these earnings. Think about the way that Google sold off, Alphabet sold off last week. They actually beat on the top and the bottom line. They missed their search revenue numbers by like a hair. I think it was 48.16 and it came out 48. And that caused the stock to sell off 6%. Microsoft had a bit of a hiccup, not as big originally because of the same sort of thing. They beat on every metric. So what you would need is sort of a meta-sized beat right now to get NVIDIA moving in the positive direction, I think, after earnings. And you have to wonder how much

of that is already priced in at this point with the stock up nearly 50 percent in the year to date, which, by the way, is only six weeks old. All right. Steve Sosnick, great to have you on from Interactive Brokers. Appreciate it. We have a news alert on PayPal. Kate Rooney has the details. Hi, Kate. Hey, Morgan. So we've got another shakeup here at PayPal's executive suite. This time, it's Aaron Kargsma, the co-executive vice president and chief enterprise services officer, entered a separation agreement, is leaving PayPal. He's been there since 2016. The EVP in charge of customer operations, risk policy, things like regulatory and government relations.

But again, another C-suite level executive at PayPal leaving. They had a new CEO who's really trying to turn the company around, Alex Chris. They've got a new CFO. So more leadership changes at PayPal. Stock down slightly here after hours, Morgan. And John, back over to you. All right. Thanks, Kate.

We'll see what it yields. Time now for a CNBC News update with Julia Boorstin. Julia. Hey, John. President Biden and King Abdullah II of Jordan are appearing together at the White House now. The president welcomed the Jordanian king earlier today at the White House to discuss ways to end the bloodshed in Gaza amid ongoing hostage release talks in the Israel-Hamas war. Walter Reed Hospitals say that Secretary of Defense Austin Lloyd will be able to resume his normal activities tomorrow after an

overnight stay for monitoring. Officials said in a statement released earlier that Austin had treatment for his bladder issue and that they expected an excellent recovery. And the early data is in from the IRS and refunds this year are a lot lower than last year. As of February 2nd, the average refund is $1,395, down about 29% compared to 2023. Despite the initial drop, the IRS says the stats show a strong start to the filing season. Back over to you guys. Of course, we know we're still early innings on that. Julia Borsten, thank you. We've got more earnings. Renato earnings are out. And Bertha Coombs has those numbers. Bertha. It looks like Renato coming in with an adjusted earnings of four cents a share on just about four hundred and forty two million. You can see the shares are moving higher there. The company

saying back a year ago that they had completed a deal with Citadel, and they continue to see that deal moving forward here. And Ken Griffin's company would own 60 percent of a joint venture, and the Renato joint venture would own about 40 percent. The master leases will terminate at the scheduled commencement of demolition on that property. At the moment, it appears that it is going well. Back over to you. All right, Bertha Coombs, thank you. Up next, Mike Santoli is going to look at what investor equity exposure could mean for the market as the Dow and the S&P 500 close at or close to new highs.

We'll be right back. Welcome back to Overtime. Mike Santoli is back with a look at investor positioning in stocks. Mike. Yeah, John, you know, with the S&P 500 of 14 out of 15 weeks on a real heater, it's time to ask if investors are getting a little overextended in terms of their commitment to stocks. This Deutsche Bank consolidated equity positioning gauge is something I revisit once in a while. And it shows that we're back up to where almost where we were last July. That was a short term peak in the market. We had a correction into August and September and also into October. But in absolute terms, it's not really at an extreme. As you can see, you know, periods of time here, you'll actually get way above those levels.

That was 2018, I believe. And you also see in the 2020, 2021 period, you spend some time up in this area. Now, what it does mean is a lot of good news priced in. People have full compliments of equity exposure. So you get a little bit of a bump in the road. A little pebble can knock you off a little bit. But so far, not too concerned. It's basically what you'd expect, Morgan, after you've seen such a persistent rally at this point. All right. Mike Santoli, thank you. Bitcoin crossing over the 50K level for the first time in two years.

Up next, MicroStrategy Executive Chairman Michael Saylor tells us how much higher he thinks the cryptocurrency could head. Shares of MicroStrategy a 46% in a week, by the way. Welcome back to Overtime. Bitcoin surged to its highest level in more than two years today after it broke past the $50,000 mark. But joining me now to discuss is MicroStrategy's executive chairman and co-founder, Michael Saylor. Michael, it's great to have you back on the show. Yeah, thanks for having me, Morgan. So MicroStrategy had a very strong day, finishing the day up more than 11%.

You're up 46% in the past week as well. I think this is your first time joining us since we saw these Bitcoin spot ETFs began trading. Initially, we saw shares of MicroStrategy sell off. But now, since January 11th, MicroStrategy is outperforming all of those ETFs. Walk me through your outlook for Bitcoin, and then we'll jump into earnings. You know, I think a lot of this is just indicative of the popularity of Bitcoin as an asset class. It's now the world's most popular investment asset. It's novel. It's digital. It's global.

It's unique. And it's uncorrelated to traditional risk assets because it doesn't come with exposure to any given country, currency, company, quarterly result, product cycle, competitor, not to weather, not to war, not to an employee base or supply chain. And so that makes it a natural addition to the portfolio of a responsible investor. There's 10 years of pent-up demand. People have been waiting for these ETFs. And finally, mainstream investors are able to access Bitcoin. And I think that's what's driving the surge of capital in the asset class. And initially, there was a rebalancing as people were moving capital between the futures

market and the miners and microstrategy and the ETFs. But following that rebalancing, I think the assets found its footing. And now people are beginning to realize that there's 10 times as much demand for Bitcoin coming in through these ETFs as there is supply coming from the natural sellers who are the miners. Yeah. And of course, we're going to get the halving event, which I imagine will, you know, sort of shift some of those supply demand dynamics coming into the spring as well. Earnings last week, you rebranded the company or announced the rebranding of the company as a Bitcoin development company. What does that mean? Well, it's a natural decision for us, given the success of our Bitcoin strategy and our unique status as the world's largest public company holder of Bitcoin. MicroStrategy is an operating company that can actively manage its capital structure and its business operations with more flexibility than an investment trust, which is what these spot ETFs are. So we're going to develop software. We're going to generate cash

flow. We're going to leverage the capital markets all in order to accumulate more Bitcoin for our shareholders and also to promote the growth of the Bitcoin network. Given the fact that the majority of enterprise value is now based upon those Bitcoin related activities, it makes sense for us to call ourselves a Bitcoin development company in the same way as you see a real estate development company or a petroleum development company. Yeah. And certainly the largest publicly traded holder of Bitcoin,

190,000 Bitcoin as of into January, worth at current prices more than $8 billion. The flywheel that is the software business, the business intelligence business, you're shifting to the cloud, you're rolling out generative AI offerings. That subscription services revenue was up last quarter, but overall revenue was down. I guess walk me through that business and how that rolls out this year and how that feeds back into the Bitcoin if it does explicitly. Well, we're going through a transition from on-premises to cloud, and AI is a really big driver of that transition. So there's a lot of enthusiasm for our new AI offering, and we built it into the cloud offering.

Just as you can see, people excited about Microsoft's co-pilot AI offering and it driving their revenues. We think that our AI offering is also going to drive an acceleration of migration from on-premise to the cloud. And over time, it'll allow us to continue to grow the business. You talked about leveraging capital markets or continuing to. What does that look like in 2024, especially when there are some speculative investors out there that believe you might embark on another stock split? Well, you know, we're fortunate to be able to manage our capital structure actively and in a creative way. So sometimes we look to equity markets when that's the best way to acquire Bitcoin.

But we've also done converts and we continue to look at the convert market. We can refinance debt. We've refinanced our debt in the past and retired debt before. So we may issue debt. We may retire or refinance debt. We're also looking at potential preferred equity issuances or anything else that might be accretive to our shareholders. We try to be open-minded, prudent, thoughtful, and opportunistic as these opportunities present themselves. All right. Michael Saylor, I'm Michael Shraji. Thanks for joining me. Thanks for joining me. Thanks for having me. Up next, the CEO of PagerDuty on whether she sees any signs of a rebound in enterprise tech demand when Overtime returns.

Welcome back to Overtime. PagerDuty, the $2 billion market cap DevOps software company, has been in headlines lately. At the start of the year the stock jumped on word private equity was kicking the tires well pager duty ceo jen tahata wouldn't comment on that but i did talk to her today about enterprise demand which she said has stabilized lately like three quarters ago we saw customers who were really uncertain about how their budgets might evolve from one quarter to the next. We saw customers focusing on looking at their human resources and thinking about not only curtailing their headcount growth, but in some cases reducing their headcount growth. We haven't been seeing that conversation as much.

They seem to be more comfortable in the prioritization of their investments. Our customers are still concerned about infrastructure modernization. They're still worried about cybersecurity and making sure that their operational resilience is strong, that they have a good stance as it relates to the unexpected that could go wrong that they have to anticipate. She also told me generative AI is helping customers' engineers do less paperwork after something in the network breaks. Generally, what's happened in the past is people have had to stop the process of troubleshooting to draft an update for their bosses

or for their customers to say, hey, this is what we understand is happening. This is what we're doing about it. Now, generative AI within PagerDuty will build that executive ready draft for you with all the specifics necessary. Instead of taking 30 minutes out of the incident management or incident response process, it takes two or three minutes to update and post that draft through status updates. So demand is stabilizing, Morgan, but customers are still trying to save money and time. So we'll see what that means for the top line. When I see PagerDuty on this show, it takes me back to our time together on Squawk Alley a number of years ago, RIP to that show. Any kind of commentary on some of the speculation that this could be a takeover target?

Well, she didn't say anything about it. But if you look across DevOps, this company, HashiCorp, there's some others like MongoDB that are doing better. Private equity is taking a longer lens, saying some things haven't participated as much in some of these rallies. They can see other things to put them together with. We've talked about Robert Smith at Vista. Here, he's one of those that's putting things together. So we'll see if it stays public or something happens. All right. Another one to watch. We'll lift an Instacart headline, another huge hour of earnings after the bell tomorrow.

Up next, Uber's former chief business officer on the key numbers to watch for those two reports and more. Welcome back. welcome back the gig economy is in focus this week with lyft and instacart earnings coming out tomorrow after the bell on this show doordash also reporting after the bell on thursday joining us now with a look at what to expect from all of those earnings is emile machine emile michael he is a former chief business officer at Uber. Emil, it's great to have you back on the show. And I think let's start right there with Lyft, which we know has languished versus its rival Uber, which reported last week. Yeah, Lyft is way behind. And as you know, it's about a year anniversary for their new CEO who made a bunch of cuts when he first came in and launched some new programs just for women drivers, women riders,

for example. And, you know, the proof will really be has that made a difference? Uber's printing 20, over 20% growth on their rides business alone. So that plus profitability is a lot to compete with. And Lyft's stock price is well below its IPO price, where Uber's almost double. So that's a big difference. Okay. Is there any possibility that you could see Lyft merge with somebody or being taken over by somebody? Or are those question marks sort of of the past and no longer a possibility? Especially when you start to talk about a DoorDash or an Instacart or some of the others. Yeah, it wouldn't be possible for Uber given the antitrust concerns. Then so you look at Instacart, DoorDash, General Motors, Tesla. I don't think General Motors or

Tesla have a need for this asset so Instacart and DoorDash very hard to see Instacart do it because remember what Instacart does their workers do is they pick things out of a supermarket shelf put in a bag and deliver it to your home it's kind of a much different motion DoorDash potentially but I've heard Tony Hsu say over and over and over again he has no interest in that asset. So it's hard to imagine who a rational acquirer would be. Yeah, I believe Tony Hsu, Emil. Good to see you.

So let's talk a little bit more about DoorDash. It's been outgrowing Uber Eats to a significant degree, even though it's bigger. Do they still have enough room to continue running post-pandemic. They've done well thus far by picking up additional categories and just being better about data and suburban expansion. They seem to have defied all expectations, John, on growth post-pandemic on food delivery, where everyone else sort of had a breather. They continue printing 20 to 30 percent growth year over year. And that's what I'm expecting this week as well. Adding new categories, doing product innovation

things like double hops where you could get things from two stores that are close to one another to make it efficient for the dashboard. And their loyalty program was the first in the industry. And that's allowed them to have great retention. Uber's loyalty program sort of launched way behind that. And so I think you're going to see continued growth due to innovation and efficiency and that's allowed them to have great retention. Uber's loyalty program sort of launched way behind that. And so I think you're going to see continued growth due to innovation and efficiency from this company. Yeah, that's impressive. That Double Dash option from DoorDash, very often it's at a convenience store, you know, buy some ice cream with your dinner that they're offering you. So that makes me wonder and worry about Instacart. Is it turning into a zero-sum game now between DoorDash and Instacart to some degree as they move more into food, more into grocery, which is already their strength internationally?

That's the right question. I don't think so. I think the average Instacart customer is doing their groceries for the week. And they're putting that stuff in the refrigerator. They're not eating it right away at that moment. And the basket size for Instacart is enormous. It's over $100 an order, whereas the DoorDash average revenue per order and Uber Eats is much lower than that. So I think they're kind of different use cases still. You never count Tony's You Out, but I still think

one's not cannibalizing from the other necessarily just yet. OK, quick question for you, as you have as you have drivers from Lyft and Uber and DoorDash saying they're going to strike on Valentine's Day on Wednesday. Is this something for investors to watch? You know, when I was there, I probably had 50 strikes a year. Not to diminish the importance of workers being asking to be treated fairly and paid fairly. But unless it's a nationwide strike that's going to shut down New York City Valentine's Day, I think these things are to make a point and to get management to the table, not necessarily to have an effect on the business. Okay. Emile Michael, thanks for joining us.

Thanks for having me. You missed a lot of tips striking on Valentine's Day. Ah, yeah. It's a very good point. CPI, we're getting that tomorrow. That's going to be a big one for the markets this week. Actually, NFIB small business optimism, I think, is one to watch, too, because we've seen that start to improve a little bit. Now I'm just really concerned about NVIDIA's earnings report and how good it has to be after. I don't know if we want to call it a reverse long squeeze that we're hearing about from IAB and so much hinging on it. All right. We had a record close for the Dow Industrials S&P intraday record. NASDAQ, we're on record watch for that, too. We didn't get it here today, though.

That's going to do it for us here at Overtime. Fast money starts now.