Closing Bell - Closing Bell Overtime: Morgan Brennan Is Live In The Hamptons With A Lineup Full Of VIPs Including Wes Edens, Howard Lorber and Jared Isaacman 8/17/23

Episode Date: August 17, 2023

Morgan Brennan is live from the Hamptons with a lineup full of special guests. Wes Edens talks the macro environment, inflation, his rail project Brightline, energy and LNG, and the business of spots ownership. Douglas Elliman Chairman Howard Lorber talks the state of the rental market and housing, and why he says the high-tax states flight risk continues. Shift4 Payments CEO Jared Isaacman breaks down how he is gaining market share in the fintech sector. It was another down day for the markets – the major averages on pace for a losing week. Vital Knowledge’s Adam Crisfulli and Envestnet Co-CIO Dana D’Auria break down the action.

Well, another ugly finish as stocks add to their August losses and the S&P closes below 4,400. That is the scorecard on Wall Street. But the action is just getting started. Welcome to a special edition of Closing Bell Overtime. I'm Morgan Brennan, joining you today from Sag Harbor in the Hamptons. And I'm Mike Santoli, in for John Ford at the New York Stock Exchange. Coming up in just moments, we'll get earnings results from $115 billion market cap chip equipment maker Applied Materials, along with discount retailer Ross Stores and payments firm Bill Holdings.

And we've got a great lineup of guests here in the Hamptons this hour, including Wes Edens, the billionaire co-founder of Fortress Investment Group, co-owner of the Milwaukee Bucks, who is also the founder of high speed passenger rail company Brightline and the CEO of New Fortress Energy. So much to get to with him. Plus, real estate titan Howard Lorber, the chairman of Douglas Elliman Real Estate, will talk about the surge in mortgage rates to their highest level in more than two decades and what he's seeing in real estate. We'll be joined by billionaire astronaut and the founder of and CEO of payments company Shiftboard, Jared Isaacman, for his read on the consumer, the fintech landscape and so much more. We have got such a huge hour, Mike. Sounds fun, Morgan. We'll absolutely see you in a few minutes with those guests. But first, let's begin with our market panel. Joining us now are Dana Dioria from Investment, Investnet, excuse me, and Adam Crisafulli from Vital Knowledge. Welcome to you both. And Adam,

let me get started with how you're interpreting the action we've seen. We got the S&P 500 basically in a 5% pullback, a 5% pullback after a 20 percent run pretty much could happen for any reason. But there's a lot of reasons being thrown out here from yields to concerns about the Fed to bad reactions off of earnings. And maybe inflation picks up again. What's your read? Yeah, I think the primary catalyst, it's mostly technical, in my opinion. I think you had a lot of people dive into equities in July. So there's a positioning and sentiment now that flips into being a headwind. But I think fundamentally, the biggest change in the last couple of weeks has been the narrative around inflation. We've had a months-long process of disinflation driven by base effects, driven by

commodity prices, and a couple of other factors. And I think the July data on the CPI and PPI has created concern that that process is now stalling or possibly even reversing. And I think the July data on the CPI and PPI has created concern that that process is now stalling or possibly even reversing. And I think that, more than anything, has contributed to what you've seen in yields. And then that's fed back into equities and causes some that we've been in. The other critical components of the market earnings and underlying economic growth are both doing very well. If anything, I think both those are in a better position than they were just a couple weeks ago. You know, the recent economic data has pointed to a modest uptick in momentum. And then the July end earnings season, which really kicked off this week, has been pretty stellar.

So Cisco and Walmart were the two big ones out last night and this morning. Many at Home Depot, even Target, you know, I don't think was nearly as bleak as fear. So it's primarily, in my view, you know, a change in the narrative around inflation. Dana, how would you approach it as an investor when you're presented with, you know, a stock market that certainly had some questions around its valuation near the highs? Maybe they're still with us. And then you have the opportunity or perhaps the risk of longer term treasury yields pushing, you know, 15 year highs. What do you think the market is presenting you with in terms of decent options here? Yeah, well, I would echo a lot of what Adam said. And I think that that being the case, you know, leaning defensively is probably still a good place to be. Right. So we know if you're in the market and we represent retail investors,

I mean, regardless of whether they're in an index fund or they're in an actively managed model that's, you know, sort of closet indexing or low tracking error, they're all getting a big, big chunk of growth and tech communications, right? The enormous eight. So to the extent that you're going to tilt away and you can tolerate some tracking error, I would say to position a little bit more defensively, right? Look to quality, look to a sector like health care, for example, and low volatility, right? So that you can give a little bit more ballast to the equity in your portfolio. Yeah, I mean, certainly the higher volatility, higher beta stocks have borne the brunt recently anyway. And by the way, we do have applied materials. Raw stores numbers are out.

We're going through them. We're going to have them for you as soon as they are ready. You see the stocks both reacting initially, at least to the upside. Adam, if you feel as if this is just kind of maybe or somewhat routine and technical reset of the market lower, how does it play out from here? Because a lot of folks will say, you know, it can kind of feed on itself for a while. Maybe there's a recognition point that there were risks in the economy, either of short term overheating or of tipping us into recession that we weren't really appreciating a month or two ago. No. So I think that, you know, just looking forward, I guess the biggest problem is more just an issue of when do we get the next update on inflation? So we don't get the PCE for July

until the end of August. And then you're looking at nearly a month from today when you get the August steep jump, just to get another look at the evolution, the trajectory of inflation going forward. But I kind of look at just the core underlying fundamentals. And you're seeing it right now with another round of July end earnings on Ross Storrs and AMAC. If companies continue to form like this, and they did in Q2, and they're doing it so far with the July end quarters, and growth stays on a healthy trajectory, I wouldn't say that it's necessarily overheating.

You know, there definitely are enough red flags on the growth front that I think it's going to give the Fed some pause. But, you know, until I see a real sharp change in earnings, it's hard to kind of really say this is anything other than a normal, healthy pullback that should be bought. And that's my view. I do think the valuation constraints on the upside, though, are pretty severe given rates. Yeah, seems like that ceiling was reinforced at least recently. Let's get to applied materials earnings. Christina Partsenevelis has those for us. Yeah, it's a beat across the board. We're seeing EPS, adjusted EPS of $1.90.

That beats the streets $1.74. What they posted in Q3, revenues of $6.43 billion, also higher than the $6.1 billion the street was anticipating. For guidance, there's a lot of concern about cyclicality as well as weakness in wafer fab equipment. Not the case necessarily because they're posting Q4 guidance of $1.82 to $2.18, which is much higher than what the straight anticipated. So overall, a positive report thus far, and that's why the stock is up 2.5 percent. Mike?

All right. Started the month in the low 150s, so we're getting back some of those losses we've had in the last couple of weeks. Ross Storrs' earnings also out. Courtney Reagan has the numbers for us. Hi, Mike. Yeah, this one looks like a pretty strong report for Ross Storrs second quarter. Earnings per share of $1.32, above expectations for $1.16 on stronger than expected revenues, $4.93 billion. The street was looking for $4.75 billion. Same store sales coming in up 5%. And the company looking for a stronger than expected here third quarter and full year earnings guidance. Though there are notes here from the CEO that talks about despite inflation moderating, its consumers are still facing high prices on things like necessities.

So they're being a bit cautiously optimistic, looking forward for the balance of the year with their sales forecast. Nevertheless, you do see shares of Ross stores higher by 5 percent. Back over to you. All right, Courtney, thank you so much. Dana, you mentioned you think it makes sense to stay somewhat defensive areas like health care where maybe there's not a lot of earning cyclicality. How are you reading the current earnings season and what it's going to tell us about profitability going into next year? Because it seems as if whatever kind of turbulence we're dealing with right now, if earnings next year in aggregate are higher than this year, usually the market finds a way

to stay supported. Yeah, it's a good question, right? I mean, we've had a pretty good earnings season, surprises to the upside, beats that weren't rewarded. And, you know, obviously, I do think that folks are looking toward next year, as you point out, right? They're saying, well, but what's the guidance? And that what happens when when the market price is in kind of these higher valuations it's like okay we already assumed that um you know what's coming next and i think you know as we talked about right the the concern about that the fed is probably empowered at this point if not to raise in september you know maybe we get a raise at the meeting after because the the g blowout, right? Retail sales up. And yes, inflation has moderated, but you're seeing signs that inflation may not be, we may not have a firm hold on

inflation, right? Wages, oil, and inflation tends to come in waves. So that being the case, they're going to be more worried about that. And that's going to create problems for earnings going forward. Yeah. Adam, before we go, what's your read currently on positioning on the street? There's been a lot of attention on it. Everybody would have acknowledged in July. People got very long. You mentioned people binged on stocks in July. We've had some unwind of that. Looking at sentiment, looking at the options, put calls, things like that. How does it feel to you at the moment? So you definitely did see in July,

you know, kind of this outbreak of euphoria and a lot of people did get very long. It didn't really take it didn't go on for a very extended period of time, which is why I don't think it became that extreme. And you have given a lot of it back, you know, month to date so far in August. So I think that puts the market in a healthier position. You know, next week, I think the NVIDIA report obviously is going to be crucial. We've had a ton of AI enthusiasm propel a lot of big tech stocks in the market. So that's going to be a real test for the market. But I definitely think you're in a better position now than you were at the end of July with regards to positioning.

Yeah, we're not far from the S&P levels that we peaked at during Jackson Hole last year. So everything comes around full circle this time. Adam, Dana, thanks so much. Appreciate the time today. We've got Bill Holdings earnings out as well. Julia Boorstin has those numbers. Hey, Mike. Well, Bill Holdings beating on the top and bottom line, adjusted earnings of 59 cents per share versus the 41 cents expected. Revenues coming in a bit ahead of expectations at 296 million versus 282 million expected but the stock is down about two and a half percent right now and that appears to be because the first quarter and full year revenue outlook the guidance is weaker than anticipated just to look at those numbers here it looks like the company expects to see slowing revenue growth

from the the growth in the 40 percentage range of this quarter to guidance of 28 to 30 percent revenue growth in the fiscal first quarter. And then that growth growth slowing to 22 to 23 percent over the full coming fiscal year. So slowing revenue growth guidance is what's pressuring that stock down about three percent. Back over to you, Julie Borson, thank you. I'll take it. After the break, we're bringing you out east to the Hamptons for a key interview with billionaire Wes Edens, whose investments and business interests span everything from energy to professional sports to high-speed rail. We have such a big hour straight ahead for you. Stay with us. Overtime's back in two. Welcome back to Overtime. We are live out east in Sag Harbor. Joining us now, Wes Edens,

Fortress Investment Group co-founder, new Fortress Energy founder and CEO, and co-owner of the NBA's Milwaukee Bucks, as well as English soccer team, Aston Villa. Wes, it's so great to have you here. Well, thanks for having me, Morgan. Great to be here. So much to talk about. But first, I do want to start a little more macro to start, because we have seen yields jump higher, test the October lows. You're seeing more signs that credit is tightening right now.

And yet, data largely resilient, or good, but not too good. Yeah, surprisingly resilient, I would say. You'd expect all the interest rate hikes would have a bigger impact than they've had, I think. And there's a lot of debate if this is kind of a pause or they're going to go higher from here. But I think the economy has held up stronger. I think as long as employment stays robust, I think you're in a pretty good place. That would be the telltale that I would really look at for things to really change. But it's a pretty good place. That would be the telltale that I would really look at for things to really change. But it's a pretty complicated time.

Yeah. And I guess just to get your sense of the credit picture right now, too, because we've seen bank credit tightening. But you've also seen a lot of it seems to be the moment for private credit and non-bank lenders as well. Yeah. You know, really since the crisis in 07, 08, you know, there's been a huge move towards private credit generally. So banks, I think, have, like, lowered their impact on lending. They still lend in products like credit cards and on things like that, but a lot of it has gone into the private markets already, and it's only going to accelerate. I think it is actually the next phase of the private credit markets, and it's likely to be a huge move.

Yeah, and of course you have your hands in a number of projects already, and I'm going to get into all those in a little more detail here in just a moment. But is this an opportunity right now for you? You look around the landscape and you look across different industries. Is this an investing opportunity? You know, the best investments that we've made for the most part have been during troubled periods and higher interest rates, instability of capital markets, financings can actually lead to really good opportunities, kind of the inverse of what you might expect. And so I do think there could be some real distress with these higher rates. You know, if you have an apartment house that was financed at 3% and now it's being refinanced at 8%, you know, that's a real problem for the owner.

And those are the kind of things that lead to good opportunities. But we don't see real defaults and real credit exposure yet. But it would be something that if that did occur, I think can be a great investment environment. All right, let's shift gears. Let's talk about energy. New Fortress ended the day higher. You had earnings earlier this month. You're at a pivot point here in terms of all the investment and all the capital you spent on bringing all of this new capability online. Now it starts to pay off. Yeah, it's the 10-year overnight sensation so we've we've built about seven billion dollars in infrastructure about three and a

quarter billion dollars what we built it literally turns on the next 30 days so every day for me is kind of a whack-a-mole as we're going through the end of these construction projects but you know for the company to take all those assets and take them from construction to revenue producing is a massive difference it generates those assets will generate more than a billion dollars in revenues you know starting in the next quarter or so. So it's a huge, huge moment for us and a really exciting time for the company. What does it do to the LNG picture globally? You know, the LNG picture globally is just a super interesting one. You know,

there's about 400 million tons in production globally. They think that may have doubled with all the announced projects. But the problem is most of that stuff doesn't start for three, four or five years from now. So this gap period, the next two or three years, I think, is a huge window of opportunity if you happen to be long gas, long production, which we are. But really, it's not a market bet for us. It's really about trying to find, get a supply of gas, get customers on the other side, and connect the dots in the middle.

And so many people are really poor resourced with energy. I use the example in the middle. And, you know, so many people are really, you know, poor resourced with energy. You know, I use the example all the time. I mean, people in Jamaica use 10% as much electricity as you and I do. People in Kenya use 10% as much electricity as Jamaicans. So the big picture is the world is desperately short of affordable energy, and we're doing our part to try and connect those dots. Yeah, I remember talking to you last year as Russia was invading Ukraine and you were like, we got the infrastructure because Europe was facing this

energy crunch, this energy crisis. And you said, we've got the infrastructure, we can do the fast LNG, we can bring this stuff online pretty quickly. How's that going? First one is in the water. So it's pretty exciting. 5.4 million man hours later. It's three platforms. One of them is actually literally in the water in the Gulf of Mexico on site. The second one goes out on Monday. The following one comes out the following week. So really by about this time next month, we expect they'll all be connected and producing. And we've got a couple of projects right behind that. So we think it's a huge, huge victory for us. And our guys have worked so hard on this and it's now just in the last stages of it. It's exciting. Now, I realize New Fortress is not necessarily tied to the price of natural gas prices, but your thoughts on that?

I think, you know, I'm a big bull on natural gas generally. I think it is the transition fuel in the world, and, you know, we all want renewables and zero energy, and on a day like today where the sun's not shining out here, you need something else to kind of kick in. So you need cheap and affordable long-term thermal power to then complement all the the renewable stuff and so i i'm a big bull on natural gas the us is blessed with vast resources of it and now it's getting connected to the world markets through the lng you know process so i think it's uh it's an amazingly positive development for the country yeah and then of course from there you can shift into hydrogen and even cleaner aspects yeah and

we have our first hydrogen plant under construction down in beaum, Texas. So we're geolocating it where the people that need the hydrogen. So people like in the petrochemical business or refiners and whatnot, they need it. So that's where it is. The Inflation Reduction Act of last year has made the U.S. the most attractive place in the world to actually create hydrogen. And we're in the vanguard of that. And it's top of the first inning. There's a long ways to go, but I'm excited about it. So let's shift from one type of infrastructure to another bright line. You've got this private passenger rail down in Florida. You've got another project out West to between Vegas and South California. I guess let's start with Florida. What are you seeing in terms of

ridership trends and when do we see the next leg open? Yeah, so almost 100% year over year growth. So it's massive. Literally a day doesn't go by when somebody randomly doesn't come and tell me how wonderful they think our service is down south. And that's great.

The system was built to connect cities that were 250 miles apart. So Miami, Orlando was the destination. We actually start testing the trains in the final part of it on Sunday. We expect to have commercial activities to Orlando and the airport there the first week of September. Hopefully you'll come down. We're going to try and do some big public event on the week of the 15th, so it's literally the next couple of weeks that it all turns on.

It's pretty amazing. I'll mark it in my calendar. Let's talk about this first high, because that's not actually technically high-speed rail no but brightline west will be it will be so 186 miles an hour is what is what the definition is of high speed rail there's not a high-speed rail in america uh china has 26 000 miles on their way to 35 000 miles we have zero it's actually and it's actually worse than that because it's not just even the lack of high-speed because it's not just even lack of high-speed trains is lack of the high-speed train industry

you know china has millions of people that work in an industry building trains building tracks that's actually what you know we're very focused on uh... the first project for this will be california lost it to uh... in los angeles to las vegas we have a one hundred percent permitted one hundred percent right away project ready to go and we're hoping to break ground on it this fall. I've got to ask you about the Milwaukee Bucks.

There's so much to talk about there, but certainly a lot of attention being focused right now in general on sports media rights. Your thoughts? You know, the one thing that is a surefire thing to say is that media rights for sports are only getting more valuable. Right. So our our contract is league is up next year. Of course, we don't know what the outcome's gonna be, but higher, certainly, maybe a lot higher, I think. And just the number of participants that are interested has actually grown exponentially.

So the NBA has got a great product. The soccer, I mean, the investment in the Premier League as well, they've got a great product. People really want that as content on their TV. And so a whole bunch of different people ranging from the streaming to the linear folks are all over it. Yeah. Big news last week with ESPN now being the branded sports book for Penn. Sports betting, good for NBA or unintended consequences? I think it's great for the NBA in the sense, not because I'm advocating people should bet,

but people do bet. When you have sports betting that is legalized, it makes it easier for people to bet in a very kind of discreet way. What we find is that when people are engaged in betting, they are much more likely to watch and be more engaged. And so engagement equals better media, better media equals better media dollars for the content.

So without actually advocating gambling per se, I think gambling exists. I think legalizing it, bringing it out in the daytime is the right way to do it. I think it's good for the consumers and certainly good for the media. Yeah. You did mention English Premier League, Aston Villa. Yeah. I want to talk a little bit about that too. We don't always do it, I think, here on CNBC, but huge investment opportunities when you look at English and European soccer. Just to get your thoughts on that, especially as you are seeing more money come into the

space, not only from Americans such as yourself, but also from the Saudis. Yeah, no, you've got, you know, it's a big news item, right? The Saudis bought into Newcastle and put a lot of capital and money into that, and they're building their own league back in Saudi Arabia. That's probably the biggest story of the year in terms of all the impact that that's had. But you know, the world's sport is soccer for the most part. And when I travel all the time, you know, the first 20 minutes of every conversation with a president or a prime minister or an energy minister typically is about soccer. So I'm a huge soccer fan.

It's a lot of fun. It's a challenging and frustrating investment at times, but it's amazing. Yeah, the beautiful sport. Yeah, we just started the season. Wes Edens, thank you so much. Appreciate the time and the insights and a wide-ranging interview. Great, great. Good to see you, Morgan. Thanks much. All right, Mike, I'll send it back over to you at the NYSE.

Absolutely. Thanks a lot. After the break, shares of CBS Health finishing at the bottom of the S&P 500 today after a major California insurer dropped the company as a pharmacy benefit manager, opting instead for services from Mark Cuban's company and Amazon. We'll ask an analyst how big the fallout could be for CVS and its peers. That's next. Welcome back to Overtime. Shares of CVS plunging today on news that Blue Shield of California is dropping the company's benefit management services in favor of Mark Cuban's Cost Plus Drugs and Amazon Pharmacy. Blue Shield says it could save $500 million a year in drug costs from this switch. Meantime, CVS saying in a filing that it doesn't expect the move to impact its 2023 guidance and that the long-term impact will be immaterial. Joining us

to discuss is Barclays analyst Stephen Valliquette. Stephen, good to see you on this. I mean, the market clearly expressing some concern, if not over the direct earnings impact on CVS from this particular move, then maybe some kind of questioning of the PBM business model or what the attention on this area of health care is going to mean. Yeah, good afternoon. Thanks for having me. Yeah, we've tracked the PBM industry for, gosh, almost 30 years now. We've seen a lot of perceived threats throughout the years. There's a lot of barriers to entry, certainly a scale business. Amazon's kind of popped up a couple different times as a perceived threat.

At the end of the day, you know, the PBM industry, these companies are making roughly $3 of profit per claim. And that gets sliced and diced a bunch of different ways. But there's huge scale to generate those profits. What I would love to see over the next couple of years would be the profit per claim on, you know, this new consortium of entities that won this Blue Cross Blue Shield California contract. So that shakes out over time. But that's kind of our quick thoughts, at least from a sort of headline perspective. Sure. So what you're saying is that there really isn't as much of a friction created by these prescription middlemen in there? In other words, there's a perception out there there's a lot of waste, that they're taking a toll on the health care economy just by being there and not necessarily maximizing efficiency or optimizing cost. Yeah, PPMs make very little money at all off of retail claims. And even their share of rebates is also a very small percentage of profits.

There's some legislation out there that's going to potentially further whittle that down. So that's not really where the economics are for PBMs nowadays. And I know a lot of that press release coming out of Blue Cross Blue Shield in California kind of alluded to some of those areas. But at the end of the day, it's really the specialty pharmacy is probably the biggest source of profits. And that's the part that CVS is actually retaining within this contract. And that's why they have a lot of scale, a lot of core competencies. And also just on traditional mail is also the other major source of profits for the industry. So yeah, PBM has been a very misunderstood industry for a long time with this perception that they're making just a ton of

profits off of retained rebates and these other factors. And it's just not really the case. Well, I mean, I guess how do you explain that? This pretty dramatic market reaction, massive volume in CVS, which already looked like a cheap stock. Now they're reaffirming guidance. It seems like if those earnings come through, it still looks pretty cheap. But also Cigna, you know, which owns Express Scripts, also down 6 percent. Yeah, I've seen this movie several times over the past, you know, five, ten years or so, which if we created a portfolio, at least in health care, I can't speak for all industries, but every time there was, you know, a panic sell-off on some of these, you know, smaller competitors, at least in health care and, you know, Amazon specifically,

you know, there's a pretty good money-making opportunity on some of the recovery. So, you know, pretty much every time now, the bar's been worse than the bite. It all comes down to the costs and ultimately the pricing within the industry. And these large companies have just been at it for so long with so much scale. It's harder for new guys to step in

and figure out a way to still do it profitably. Yeah, well, I guess the fear is that Amazon maybe doesn't care about doing it too profitably, but we'll have to see. Obviously, as you mentioned, these scares have absolutely happened multiple times before. Stephen, appreciate the thoughts today. Thank you. All right. Thank you. All right. Time now for a CNBC News update with Bertha Coombs. Hi, Bertha. Hi, Mike. The House Judiciary Committee has issued subpoenas to FBI Director Christopher Wray and Attorney General Merrick Garland. The subpoenas are related to the panel's investigation into alleged online censorship by the federal government.

It wants documents and communications between the DOJ and FBI, private companies and third-party groups. The U.S. has imposed sanctions and visa restrictions today on four Russian intelligence operatives it says were involved in the 2020 poisoning of Alexei Navalny. The Russian politician and fierce Putin critic is currently serving 19 years in a Russian prison for charges the U.S. calls unfounded. All four sanctioned operatives are members of the Federal Security Services, the successor to the Soviet-era KGB. And actor Jason Momoa, a.k.a. Aquaman, took to social media today to warn against scammers asking for donations. He says people are making fake accounts and posing as him in order to get money. But Mo is directing people to a specific Venmo account for donations instead

and encouraging people to support local Maui businesses. It's a shame when that happens, isn't it, Morgan? Back to you. It really is. Bertha Coombs, thank you. Coming up next, we'll talk to Douglas Elliman chair Howard Lorber here in the Hamptons about the housing market, the surge in mortgage rates, which has been top of mind today specifically, which are touching levels that have not been seen in more than two decades. We're going to get his read on the impact on real estate so much more when Overtime returns.

Get pulled back deep end as Treasury yields hold near 15 year highs and investors. Oh, welcome back to overtime. Mortgage rates hitting their highest level in over 20 years today, hovering over 7 percent. This comes after yesterday's Fed Minutes prompted fears that rate hikes could come. Joining me now is Howard Lorber. He is the president, CEO and chairman of Douglas Elliman here in Sag Harbor in the Hamptons with me. It's so great to be with you. Thank you. Nice being here. So I think we do have to start there. I mean, 7.4 percent on a fixed year,

30 year mortgage. We haven't seen that since 2003. That's true. But that's why 67% of all mortgages in the last quarter were cash, all cash, 67%. And that's a record high? Record high, all-time record high. Okay. Is that just for the high end, or are you seeing that across different strata? It's all over. It's all over. The high end is always, always higher than the lower price in getting mortgages, but it's combined. There's very few people closing with cash today. Interesting. Except on the, excuse me, except on the high end. The high end buyers are pretty much all cash. Okay. I mean, we've seen some mixed signals,

I think, from the housing market this year in general. I mean, obviously the sales activity, particularly existing homes, continues to be pretty depressed. But you're seeing new homes being built, new starts happening, I think largely from the home builders looking to step in and fill the inventory void here. What do you think is impacting the housing market more right now? Is it those high rates or is it the fact that there's just not enough homes for sale? I think it's both. The reason business is down in general is because there's no inventory. The reason there's no inventory is because people that want to trade up can't trade up because they're worried about what the new mortgage rate is going to be. And so, therefore, that stops them from putting what they have on the market.

And that's what leads to an inventory shortage. So I think we're looking at the inventory shortage. You know, that's going to have to be made up at some time in the near future, hopefully. And we're a believer that, you know, by beginning of 2024, rates will start coming down. We hope. And if they don't, that'll be another problem. But we believe they're going to start coming down in the early part of 2024 as the Fed makes their adjustments with interest rates. Can we at least say that housing right now, because of the supply-demand dynamic, is stable? Yeah, it's stable. I mean,

the concern also is, and the other reason that people aren't putting houses on the market, is because they're thinking about 2021 too much. 2021 was not the base year to measure by. 2021 was a year. No one really knows why it happened. OK, it was euphoria. It went for about 18 months from the start of 2021 into the first half of 2022. And if you use that to measure prices and volume, you're always going to be disappointed. In fact, I would say that even in the last few quarters, which were nowhere near as good as 2021, those numbers were just as good, if not better, than 2016, 17, 18, and 19. Yeah. And of course, 2021 was a world awash in liquidity and stimulus. Right. To your point, what are you seeing in markets around New York? I mean, you put out a report, or I should say Douglas Elliman put out a report

that we're seeing record, not only average rents in Manhattan, but median rents in Manhattan. Rental prices have skyrocketed. They've just started to stabilize at this point. And that's because they were able to get it. The fact is there's still a lot of money around, and if you're not buying a condo or a co-op and you want to be in the city, you're going to have to rent.

So at all levels of the rentals. And by the way, renting a very high-priced apartment is pretty good for the brokers, but it's also good for the renters, because those high-priced apartments, the rental is always still cheaper than if you would buy it. What are you seeing in markets like this one, in the Hamptons, which tends to be historically more of a second home or vacation market or a summer rental market? Sure. So the summer rental market was absolutely crazy in 2021. OK, slowed down in 2022. And in 2023, it's basically standstill. There is leasing is way

down. Summer rentals are way down. And the pricing, like everyone was able to get $500,000 to their house for the summer. Now that $500,000 number would be $500,000 to their house for the summer. Now that $500,000 number would be $150,000 number. Still expensive, but still good for the renter, not so good for the owner. Yeah, and of course, Douglas Elliman is all over the country, major markets all over the country. Are you still seeing wealth flight from places like New York or California to Florida and Texas? 100%. We believe that that's going to continue going on. And in our ideas of what other markets to go in, we're basically staying with the low tax or no tax states.

So we've opened Texas. We're in Houston, Dallas and Austin. We're looking at other states like that. We're in Nevada, a no-tax state. And the states that are getting hurt the most are California and New York. And for the same reasons, basically, it's the government. It's not, you know, they pick on one person. It's not one person. I know Mayor Adams for a long time, and I would support him any time. But the city council and now even for the governor, they have no chance to do what they want to do, because you have very left-wing parties in both the council, city council, and in the state assembly and Senate. So it sounds like the policy

picture is not going to change anytime soon from hope they're just want to keep taxing people yeah now now I know Douglas Elliman is actually getting ready to when you have a one of your own commercial leases office leases roll off you're gonna walk away from that space so I want to just get your thoughts in general and what you're seeing in the commercial side of the market commercial side of market is very tough the office office leasing. Retail is picked up, okay, because restaurants have reopened and stores are doing okay. And that's probably the one shining point right now. And if there is any leasing in office

buildings, it's the newer product. Like one Vanderbilt, fantastic. You know, now Grand Central, the Long Island Railroad goes into Grand Central. There's lots of reasons you want to be there. It's a great building. I've been in it. Fantastic. What is suffering is the older office buildings. No one wants to be there. And that's where the problem is. But you can't get out of it. I mean, if you try to get out of it, you're going to get, maybe if you try to sublease it you're gonna get you know sense on the dollar and the landlord surely not Taking it back unless you give them a big payday. So it's very tough tough market Yeah, of course the question is going to be whether you now rezone that for residential and if so

Yeah, yeah, they talk about it. I don't think the rezoning is the problem, because if that really worked, you could get zoning changes in a lot of cases. The real problem is it's probably too expensive to really do it. And you're going to end up with a product that's inferior to a brand new new development project. OK, well, I'm sure we'll see how all of this plays out. Howard Lorber, it's so great to get your thoughts. Thanks for joining me here. My pleasure. All right. CEO and chair of Douglas Elliman. Well, up next, Mike Santoli breaks down the recent sell-off in bonds and what that could mean for the broader market. Look at that.

The total bond ETF under pressure again today. We'll be right back. Luxury e-commerce company Farfetch just out with earnings and the stock is tanking. Let's get to Courtney Reagan with the details. Courtney. Yeah. Hi, Mike. Yeah. So take a look at the stock.

This is really what's most shocking here. Farfetch shares down almost 34 percent after hours. Revenues are lower than expected, 572 million compared to 649 million expected. Earnings also, we believe, are probably a miss, if not at least disappointing, based on what we're seeing here. They did see an increase in gross merchandise value, but just ever so slightly up 1.2 percent year over year. This is a luxury fashion online marketplace, which is reportedly also closing its beauty business. Hopefully, we'll hear a little bit more about that on the call.

But obviously, investors not liking what they're seeing here. The company is also trying to talk about progress towards delivering profitable growth and positive free cash flow. I imagine in this current environment, we want a little bit more than just progress towards those things. Mike, back over to you. Yeah, with that kind of revenue shortfall, absolutely. Now close to a $3 stock. Courtney, thank you very much. Well, the bond market, a huge part of what's been going on with stocks for a while now. And it's not just that nominal 10-year Treasury yields are now above 4.25%. Treasury inflation-protected securities, the 10-year tips, also seen their yields surge. So what this shows is that it's not really inflation expectations that are surging and sending 10-year treasury yields higher.

It's the real yields, the inflation-adjusted yields up toward 2%. And you can see for much of the last 10 or 15 years, you actually had negative real yields. So remember, when you own tips, you get whatever inflation is over that period of time. You're going to get compensated for that. So this is the margin on top of that. So real yields go higher when economic growth is expected to be strong or perhaps bondholders feel like they need more compensation to hold bonds. The supply demand issue is in there as well. It also can act as a restraint on the economy valuations risk taking. So this is what the stock market's been struggling with. Take a look at how stocks, bonds and the 60-40 stock bond portfolio have performed. Here you see over the last couple of years, there was a big

comeback in that 60-40 portfolio, which is approximated by this ETF AOR. But you see it's kind of given much of that back. This is the total stock market. This is the total bond market. So it's only equities that are really keeping things at all afloat right here. Although, Morgan, you know, sometimes the cure for higher yields is high yields because people think the economy can't handle it. They'll start buying bonds again, sending those treasury yields below. And we'll see if you can get a little bit of that self-repair going. Yeah. Love a good breakdown of the 60-40, Mike. And to your point, as the world turns. All right, Mike Santoli. Up next, we will get the read on consumer spending and the outlook for the fintech industry

when Jared Isaacman, CEO and founder of payment processing company Shift4, joins me for an exclusive interview. Stay with us. Welcome back to overtime check out shares of bill holdings under pressure after hours the company reporting weaker than expected revenue guidance those shares down five percent right now meantime shares of dutch payments processor adyen which provides services for companies like netflix meta and microsoft closed lower by look at that, 36.5% today after missing analyst estimates and citing slower growth in North America. Well, joining me here in the Hamptons to discuss the payment space more broadly and specifically, Shift4 is the CEO and founder of that company, Jared Isaacman. Jared, it's great to have you on. Thanks for having me, Morgan. I mean,

those stock charts don't look so good, but Shift4 had earnings recently, and you beat and raised. We did. We beat and raised across the board, and we still traded down. So this is certainly not a great earnings cycle for fintechs. We seem to ride a roller coaster like this every now and then, but Addian happens to be an extraordinary business. You know, they power a lot of great—we aspire to be like them in a lot of ways. So it's a good company. I have no doubt they'll bounce back from this yeah do you compete directly with them in our ever-expanding global e-commerce market we are aspiring to compete with them I'd say what we're known for is like all the

great in venue experiences so a third of the restaurants a third of the hotels most of the major stadiums whether you're into soccer baseball NFL those are all our type of customers. But recently we have begun to diversify and move into Cardinal present on a much more global level. And in that arena, Addie is king. Yeah. So let's talk a little bit about what you are seeing across the businesses. Restaurants, as you mentioned, tends to be a big area, a big industry for you. And you're certainly taking a bite out of some of the

other rivals when it comes to point of sale systems when you think about fees with the likes of Toast. Well for sure I mean we grew payment volume 60% year over year this past quarter so you definitely tell like our growth is largely a factor of taking share from the competition Toast in the restaurant vertical happens to be an awesome competitor we're both actually winning a ton of share if you looked at their results. We both benefit from a lot of legacy acquirers, a lot of legacy payment companies with older tech. And as those customers migrate to more cloud-based solutions, actually Toast and Shift4 both happen to win quite a lot.

So what are you seeing? Since you are keyed into the services part of the economy, particularly here in the U.S. when you talk about leisure and hospitality or airlines or restaurants or some of these other venues, what are you seeing in terms of the data around payments processing? So we've been paying very close attention for a while. I mean, we touch almost a quarter of a trillion in payment volume every year. And again, largely in restaurants and hotels. And I have to say, you know, probably more than a year ago, we started to, you know, sound a little bit of the alarm that, hey, you know, prices have gone up a lot in restaurants. There's a lot of inflation here. We don't know if, you know, the ninety dollar stakes are going to last forever. And what's happened is you have a pretty resilient consumer that probably says, I didn't like being locked up during the pandemic and I'm going to keep going out and eating.

Now, what we have seen is a slowing of some of the same store sales growth that you've seen in the restaurant vertical. It's generally, I'd say, flat to up, meaning kind of flat in more of the rural markets, and then the destination markets are still up. And travel, too, even in hotels. We would have thought for sure that would have leveled off with the inflation in average room rates that we saw in hotels the last couple of years. You still have same-store sale growth even within the hotel vertical. So that's still strong. Yeah. Can you parse through that data and be able to tell whether disinflation is actually taking root despite the demand situation or no? I'd say it's well, what's certainly it's slowing. And if you want to point to kind of, you know, rural mainstream markets, which was always an area that we had a little concern for sure. You're you know, there was at one point during

the pandemic where even, you know pandemic where even motels near national parks had tripled the room rate. That's not happening anymore. But if you're going down to Florida, you're going to Las Vegas, you're going to some of the destination markets, restaurants, hotels, still doing very strong. Like I said, you're even getting same-store sales growth within those markets. But certain parts of Main Street America, I'd say flat to could be down in some rural areas. All right. So what's next for ShiftForks? Now you're closing on Fennaro. You mentioned the international expansion. How does all this take shape?

It really is. It's TAM expansion. It's expanding all across the world. I mean, we've been in business 24 years and we've grown year over year and even through every downturn in the most challenging and competitive payments market in the world, which is the United States. So if you've got a winning formula here for restaurants, hotels, and stadiums, there happen to be a lot of restaurants, hotels, and stadiums all over the world. Fennaro takes us into Europe. That's the first step along an international expansion journey. Jared Isaacman, so great to speak with you and to be here to do it. And I will just also give a plug because you are a history

making commercial astronaut headed back to space to be sure to check out my podcast, Manifest Space, where I will have much more with Jared on his space adventures, the outlook for the industry and what you need to know about the Polaris program, which he is in partnership with SpaceX on. So check that out. Up next, a look at some key after hours earnings movers. And there are some big movers. We're going to break that down on the other side of this break. Welcome back. Here's a look at today's after-hours movers. Applied Materials and Raw Stores both beating on the top and bottom lines. You see both stocks moving higher in

overtime and Farfetch losing a third of its value after revenue missed estimates. Company also offering soft revenue guidance as well, down close to 33 percent. Morgan, tough move there. Also kind of a sloppy day in the markets. Not a bad one for you to be getting a bit of a broader perspective out there. That's right, Mike. And certainly it has been a focus, I think, for the market today, as has been for the last couple of days. The fact that you are seeing yields move higher, you're seeing the 10-year Treasury yield test that October high. The impact that has, Mike, on something like housing and real estate, as we just talked about earlier in the hour

with Howard Lorber at a time where you do have real estate and the housing market also facing this structural deficiency between supply and demand. And I would also just say the role of government policy in general, speaking to Wes Edens at the top of the hour and what that means for energy investment and new types of energy like hydrogen in the week where we're celebrating the one year anniversary of the Inflation Reduction Act. Absolutely. All of that together gives a little bit of a good footing to figure out what comes next. We do have the S&P down about 5 percent. Morgan, hurry back. See you tomorrow. That's going to do it for overtime. Fast money begins right now.