Closing Bell - Closing Bell: Overtime: Nasdaq CEO On AI In The Marketplace, Van Eck CEO On Spot Bitcoin ETF Approval 01/10/24

Episode Date: January 10, 2024

A busy market day got busier after hours when the SEC approved 11 spot bitcoin ETFs, including one from VanEck; CEO Jan van Eck joins to break down what it means for clients and crypto. Nasdaq CEO Adena Friedman talks AI in the marketplace, fighting financial crime and the IPO pipeline. BD8 Capital’s Barbara Doran and Evans May Wealth’s Brooke May discuss market positioning as tech stocks had another strong day. Plus, Retired Rear Admiral Joseph “Digger” DiGuardo on the attacks in the Red Sea and Dr. Emil Kakkis, Ultragenyx Founder, on the race to develop drugs for rare diseases. 

That is the scorecard on Wall Street with the S&P back above 4780. The Russell 2000 didn't have a great day. Winners stay late. Welcome to Closing Bell Overtime. I'm John Fort with Morgan Brennan. Stocks in the green across the board, led by the tech sector, helping the Nasdaq extend its winning streak to four days. Coming up, Nasdaq CEO Adina Friedman on the outlook for the market. Hot investing trends like

AI and whether the IPO market will in fact rebound this year. Plus, we're just moments away from KB Holmes earnings and another read on the health of the red hot home builder industry. But first, after today's gains, the major averages are on track to close higher for 10 of the last 11 weeks. Ex-Russell 2000, to your point. Mike Santoli joins us now from the New York Stock Exchange with his take on what we're seeing. Mike, I mean, what's really leading the charge here this week are the big tech names that had been leading up until maybe two months ago.

Yeah, for sure. It's a little bit of a reversion back to sort of summer 2023 type of markets. NVIDIA and Microsoft are accounting for most of the support the S&P has gotten on a year-to-date basis. It's only two weeks. By the way, I also like the enthusiasm on a Wednesday looking forward to the weekend, saying we're on track for that winning week. We'll see what the CPI has to say about that. So I don't think it's necessarily an outright negative that the mega caps have been essentially protecting the index right here. You have seen small caps give some back. Some of the riskier names that really started to fly at the end of December have also

sort of retreated a fair bit. It's still part of a normal, at this point, routine-looking digestion process. The bond markets managed to stay out of the way. Ten-year yield did tick up today, 404 or thereabouts, after the John Williams comments and after the Treasury auction. So we'll see how the bond market absorbs the CPI tomorrow. That's probably going to dictate the next move. Mike, interesting day beneath the surface there. Meta had a standout day, up more than 3.5 percent. Intuitive Surgical, pretty close to its 2021 highs, up more than 10%. I think it was the best performer in the S&P. Yeah, a lot of sort of the old big growth favorites.

I know Visa made a new high today, too. The names you mentioned. What I do find at least moderately comforting is that the Magnificent Seven, as we've defined them, are not moving in unison. Of the seven stocks, you've got five up, two down on a one-month basis. They range from up 13% over that period to down 5%. So that's good. You're seeing differentiation. It's not just all about buy the seven most obvious biggest market cap stocks.

Yeah, obvious is dangerous, I guess. Mike, we'll see you again in just a minute. For now, let's bring in our market panel. Joining us now, BD8 Capital CEO Barbara Duran and Evans May Wealth Managing Partner Brooke May. Good to see both of you. Barb, I know that you've been watching health care. You're interested in it. I just mentioned Intuitive Surgical. They're not, all the health care names aren't moving exactly the same. So how do you play it in this market? Well, in the health care, it's interesting because health care, cyclicals, value, small cap, we're all running and people are looking right now for

the laggards. I think you've got to stick with names. I mean, I'm a growth investor, you know, that really have good growth pathways. And even, for instance, an Eli Lilly, which has tremendous market opportunity, I think is still not too late to buy it. You're going to continue to see earnings going up. Or UnitedHealthcare, which is a core holding in my portfolios, I think, is still not too late to buy it. You're going to continue to see earnings going up. Or UnitedHealthcare, which is a core holding in my portfolios, has really done nothing. There's been concerns about high utilization and costs. And yet, if you take the longer run picture, they are one of the best business models in the business. So I think you have to continue to look for good names, high quality that have not

performed or lagged for various reasons like a UNH. And those things, when you look at the steps they're taking, they will do well. Okay. And Brooke, we get the first wave of bank earnings Friday morning. That means one more trading day to prepare. You say not to trust any overall rally off of these levels. Why? We do think in the short term, there could be some opportunities in banks. They're cheap, but they're cheap for a reason. The economy though, wasn't as bad as expected in the fourth quarter and losses from our, um, reduced earnings expectations from last year already baked in. So we think there could be some near-term upside earnings surprises when it comes to the banks, but there are regulatory issues that linger. And until we

have more clarity there, we're hesitant to buy banks for the long term. So, Brooke, I'm looking at your, I guess, outlook here for 2024. S&P 500, you expect to end in positive territory this year. Bottom up target price of 5,200 to 5,400. What's actually going to power us there? Is it going to be unexpected, maybe not fully priced in earnings growth as we do go through the year? Is it going to be the Fed cutting rates? Is it going to be something else? All of the above, but really earnings. The market trades off of earnings and we think earnings will be higher than expected. As we all know, the consumer has been incredibly resilient. Unemployment has stayed very low, and so consumers are going to spend, and that think that six or seven cuts is unlikely. It might be three or four, but coming really towards the second half of the year. If unemployment stays low, there just isn't that urgency to start cutting rates. And so if unemployment stays below 4.1 percent, which is what the Fed is expecting for next year, we think that it might be the middle of the year before we see the first rate cut. Barbara, how are you thinking about it, especially the rate cut piece of this? I mean, we just got commentary from another Fed official, Williams, last hour, and he basically said that restrictive policy will likely need to continue for some time. That doesn't sound like a huge

flurry of rate cuts in the cards. How much matters in terms of CPI data we get tomorrow and some of these other key readings? Yeah, well, it's interesting. I think you're going to hear continual talk from different Fed officials just trying to keep the market under control. You know, I think the CPI number and the PPI number, the wholesale number due on Friday, are going to be important, not because, you know, everything hangs on one or two numbers, but I think it could be helpful in terms of the timing of the Fed rate cuts. You know, as Brooke said, the Fed is not in a hurry to cut rates. We're not, we don't see a recession in sight. The economy has been, to use the word everybody's using, is very resilient. Things are moderating. We're seeing this in all

sorts of ways in consumer spending, et cetera. But basically, things are holding up. So I think if the number, for instance, comes in lower than expected, that could mean inflation is coming down more than expected because the Fed will cut rates aggressively if, one, things are really tanking quickly. We don't see that. Or, two, inflation is coming down much faster than they expect, in which case you don't want to leave the real rate too high because then that will become restrictive. And we've already seen what happened. We know what's happening in manufacturing. There's a recession there. We've seen what's going on in housing. But if you look at just the slight decrease in the 30-year mortgage rate, you saw the

numbers this morning. It went, it averaged 7% last year, 8% high in October. Now it's 6.8. And you saw a big weekly jump up in refi applications, mortgage applications, new home sales. So interest rates are having a powerful effect. So but I don't think the Fed is in a hurry. But tomorrow could change their timing a little bit, depending, you know, if the number is better than expected, meaning lower. Yeah. So we'll see. All right. And of course, in terms of those mortgage rates and what it means for housing, it's going to make those KB home numbers, those earnings that much more important to watch as we await those results.

Barbara Duran and Brooke May, thank you both for kicking off the hour with us. Thank you. Boeing shares bouncing back a bit today after selling off in the wake of a door plug blowout on an Alaska Airlines flight over the weekend. Philip Bo just spoke with Boeing's CEO. He joins us with highlights from that key interview. Phil. Morgan, Dave Calhoun is clearly rattled by what he saw Friday night on the Alaska Airlines plane,

where you had that fuselage door plug sucked off the plane and a gaping hole at 16,000 feet. So the question now becomes, what happens with the investigation? How quickly will Boeing be able to take lessons learned, at least initially, and then from the final investigation, as well as inspections with airlines? So here's where things stand right now. There is an internal safety group here at Boeing. They have a war room. Dave Calhoun's been there since Saturday. They are reviewing the work history of that particular aircraft, as well as all of the MAX 9s that have been grounded. Why? Because they're going to be working with the NTSB on the particular crash investigation, as well as with the FAA in terms of determining what can we

learn from what happened and how do we make sure that this doesn't happen again. Here's Dave Calhoun talking with us a couple of hours ago. ItVE CALHOUN, It's a safety incident, and nobody is going to live with that, period. So we're all going to be certain, all of us, that the airplanes that fly will never, never thought like this again, have a safety incident like this again. JOHN YANG, We just heard from Secretary of Transportation Pete Buttigieg in Washington. He was asked about this. He indicated that he has been in contact with Boeing executives. They're confident that they will make sure that no planes, no grounded MAX 9s are flying again until the safety protocol is where they want it to be.

MAX production, we should point out, is at 38 a month, moving up to 50 per month. That's the plan by 2025, 2026. We asked Dave Calhoun if anything with this incident changes that. They're in a quiet period before earnings, so he's not going to go into that. That's what he told us, essentially. But I think they're fairly confident that they're not going to have to change their guidance at this point. They didn't say that. That's just my sense from watching the way this

company has operated. One last thing to keep in mind, guys, as you take a look at this grounding of these aircraft, Sheila Caiula at Jefferies gamed out, if they're on the ground for two weeks, how much will that cost Boeing in concession payments to United, Alaska, and the other airlines that cannot fly these planes. She thinks it's going to be about $36 million. That's her back of the envelope math in terms of what it might be if it's a two-week rounding. Guys, back to you. Phil, are you at all surprised or are you picking up on any surprise that Boeing owned this as a mistake so early and so quickly before the investigation is done? And what, if anything, does that signal about the reputational risk this arguably second time around?

I'm not surprised. I think Dave Calhoun, remember when he was brought in, he saw, he was on the Boeing board. He saw the way that Dennis Mullenberg and his team handled the two MAX crashes. And you guys, you remember how this went down. There were a lot of people who said they were too slow and a little too tone-deaf at times. handled the two Max crashes. And you guys, you remember how this went down. There are a lot of people who said they were too slow and a little too tone-duff at times and that really manifested itself with the families of Max crash victims just attacking Dennis Mullenberg when there were the hearings on Capitol Hill.

Dave Calhoun knows you've got to be transparent, you've got to be clear. And one of the things that they did with the employee town hall yesterday was to say, look, that was a scary incident Friday night. We're lucky that it wasn't worse. We need to address not only what happened, but make sure it doesn't happen again. Boeing, clearly it's a, Phil, clearly it's a Boeing aircraft. So there's ownership of the aircraft in that sense and allowing it to be delivered. But Spirit Aerosystems, what happens in terms of that relationship with that company now? That stock also bouncing back today. Well, that relationship is going to stay in place. They're the manufacturer of the fuselage for the 737 MAX, as well as the fuselage plug. So you just can't go out and find another company

to do that. By the way, Pat Shanahan, who is the new CEO at Spirit Aerosystems, he was here in the Boeing war room over the weekend all the way through today working with Boeing executives. So they're a part of this investigation. Are they part of the reason why this incident happened Friday night? Way too early to know. The NTSB is not close to finishing this investigation. So the relationship, though, between Boeing and Spirit, it remains. Okay. Philip O., thank you. Now let's check in on the health care sector with Mike Santoli's first dashboard. Mike. Yeah, Morgan, health care seems like kind of a crowd favorite early in 2024.

It's got something for everybody. There's a mix of growth and value. It really did lag last year in an up market. And you see here how it has performed recently, kind of bursting higher relative to consumer staples, which is often kind of paired with it as defensive sectors. You see they move together very closely over the majority of the past two years before health care has really taken off. Now, health care, very, very large and amorphous sector. And you have to kind of carve it down to its component parts to see really what's going on. So here are four of the major subcomponents here. So health care services, as well as pharmaceuticals, even within health care, would probably qualify as the defensive parts of it. They have sort of held up better, but not done

as much lately. They would be the parts that you would say are much more value oriented as opposed to growth. And just recently, the much growthier parts of health care, biotech and medical devices, which are coming from lower lows, have really found new buyers. So it's almost the parts of health care that are most adjacent to tech in terms of, you know, the business dynamics, as well as the investor base have been the ones that have been driving things this year. On the medical devices in particular, Mike, is this the snapback of the GLP-1s? I remember Intuitive Surgical over the summer was getting beat up and it's near all-time highs today. It's fascinating. There definitely was an overhang on that group in particular, if you're talking about joint replacement parts and things like that.

Although Intuitive Surgical, I know they do hips and things like that. But anyway, yes, I think part of that is lifting. I even heard if you looked at inside the medical devices and medical sort of laboratory tools and sciences, parts of health care, you know, that's things like Thermo Fisher. And I think you even heard people say, hey, is AI going to obviate the need to do all these experiments? So the point being, when prices are weak, people find a thesis that can help explain it, at least in retrospect. Some of that has been thawing out. Yeah, I think it was the bariatric surgery unit over there at Intuitive that took the hit. That makes sense. Yeah. Mike, thanks. We'll see you again in just a bit. Well, last year was a rough year for the IPO market, too.

Up next, NASDAQ CEO Adina Friedman on whether an IPO comeback is in the cards for 24. Plus, we are still awaiting the SEC's approval of spot Bitcoin ETFs. The CEO of VanEck discusses the fee war that's heating up between asset managers ready to launch these new funds. Overtime is back in two. It hasn't happened yet. It has not happened. Has not happened. KB Home earnings are out.

Diana Olick has the numbers. Diana. Yeah, if we could turn it off, that'd be great. Share versus estimates of $1.69. A share revenue reported at $1.67 billion versus estimates of $1.62 billion. Deliveries exceeded the company's expectations, but the average price was down 4.5%. That may be why you see the stock taking a hit. CEO Jeff Metzger said in the release, We have experienced a meaningful sequential increase in our net orders for the first five weeks of 2024, first quarter, as consumers are responding favorably to recent

decline in mortgage rates. Now, the quarter, the past quarter, Q4, was a very important one for mortgage rates. In October, the 30-year fix hit a more than 20-year high, going over 8%, fell slowly through November, then sharply into December in the 6% range. And builders had been buying down rates aggressively to get buyers into their homes. As for guidance, the prices are still in that lower range, about $480,000 to $490,000 for a KB home. So, again, the prices take a hit, but the sales are doing better. Yeah. Pass it back to you. And we see the stock taking a hit right now and after hours trading as investors digest this as well.

Diana Olick, thank you. The average is solidly higher today, led by a strong session for tech stocks, which helped the Nasdaq close higher for a fourth straight day. Joining us now, Adina Friedman, Nasdaq chair and CEO, who joins us from CES. It's great to have you on the show. Welcome. It's great to be here, Morgan. Thank you. So you're getting ready to deliver a keynote at CES. I guess just walk me through your outlook for 2024, what that means from a market standpoint, what that means from a NASDAQ standpoint.

Great. Thank you. Well, I would characterize our outlook as being cautiously optimistic. And I would say cautious because there is a very complex world out there. And as I think a lot of companies have been wondering, when is the world going to return to quote-unquote normal, I think we have to realize that this is the new normal. We have a lot of complexity in the world, and you have to build resiliency across your business to be prepared for different shocks that may come. And essentially, expect the unexpected.

But optimistic because I would say that the u.s economy has remained very resilient we have a falling inflation which hopefully is going to give the opportunity to drop our interest rates back to a more normalized level and that will give investors more confidence and be able to put risk capital to work i also think it's worth noting that in 2023 the ipos that came out in 23 have performed well so i also think that should give a boost of confidence to investors as well. When we talk about resiliency, how much of that is related to tech and tech adoption? I mean, we know 2023 was really sort of the breakout year for AI and generative AI. From a NASDAQ standpoint, I mean, some of the biggest tech names that are spurring this new gen AI revolution trade on NASDAQ indexes.

But then on the other side of it, we've also heard from so many people who've come on this show that financial services is one of those areas that is prone to be disrupted and reorganized and rethought with this type of capability. Yeah, well, first of all, I would say that 2023 really for AI was the year of potential and 2024 is the beginning of a real year of execution. We have to understand what this potential, the technology, what potential it really has, how do we actually integrate it into our businesses, into our products. And so within financial services, certainly there is a huge potential for AI to have a

very meaningful impact on the industry. For NASDAQ, of course, it allows us to be more efficient and effective, productive as a technology provider to the industry, but also introduce some AI capabilities into our products. As you know, Morgan, we have our anti-financial crime business and we've been using AI for many years to really make those products much more effective in rooting out criminal behavior. But we also have the opportunity to apply AI into the markets. And so I do think that there's going to be a lot of opportunity that we have and that the entire industry has to take AI to a new level and to create new opportunities,

but also mitigate risk more effectively. All right. Adina, good to see you. Happy New Year. I want to ask you about Adenza, not to be% in four years. How do you do that? What incentives do you put in place maybe even to convert existing customers to software as a service more quickly? Yeah, hey, John, it's great to see you. So with Adenza, we are very, very excited about what we can do now

to help the industry solve their greatest problems. And as you know, John, I've talked to you about this several times. We've been on a cloud journey within NASDAQ for over a decade. We've been bringing our markets to the cloud. We had our latest options market move to the AWS Outpost cloud at the end of last year. But we also have built out almost every one of our solutions as a SaaS-based solution now. And we've moved many, if not almost all of our solutions now to cloud first. So we know how to do that. With Adenda, they already have been on that journey. They now can deliver their modules in a cloud-delivered service.

So about 52% of the new order intake that they received through the first half of 2023, at least, was really cloud-delivered. So that actually moves them more towards the idea of more subscription revenue. But that's going to be something that we think we can really help them accelerate. We can bring more focus to that. We can also bring our expertise into that way of delivering their software. So we see that as a big opportunity for us. But it also means that over time, what we have learned with anti-financial crime is if you deliver a cloud-based solution and you have the opportunity to bring data together,

you can make that solution just so much smarter and so much better at managing risk, managing criminals out of your system by using data, by having very, very large data lakes, by also allowing the AI to root out certain criminal behaviors. So we do feel like there's a lot of opportunity to apply what we've learned there to Adenza over time. One more on your go-to-market with Adenza and specifically the Calypso piece of that. How much of success there is selling more into the larger customers who are already part of the NASDAQ fold? Well, I think we have opportunity to cross-sell across everything. So whether that's having Calypso, we have a great clientele

within the United States. The largest banks are our customers across surveillance and, of course, in our markets. And we have an opportunity to bring more Calypso products into those banks, but also our anti-financial crime solutions. We've been now penetrating the tier one banks with our anti-financial crime solutions. At the same time, the Axiom product, as well as Calypso, we have an opportunity to bring that down market into the tier threes and four banks, which is really where Verifin, our anti-financial crime business, is their sweet spot. So the cross-sell opportunities across everything we do, I think is going to be one of the big opportunities

that we unlock with the Adenda deal along with Verifin. And of course, anti-financial crime is so fast growing for NASDAQ, up 21% in Q3. I do, we teased it. So I got to ask you, the IPO pipeline, what's your outlook for this year? Are we going to see a more meaningful number of companies start to go public? Well, we certainly feel like the ingredients are better for a better IPO environment for 2024.

As I mentioned, I would say it's still cautiously optimistic. As I mentioned before, some of the unknowns in the economy are becoming better known, whether that's the cost of capital or the inflationary environment. Also, with the performance of the 2023 IPOs being fairly strong, I do think that investors are more ready to put risk capital to work. We have about just almost near like 100 companies or so that have filed to go public on NASDAQ. So we're very excited to have the opportunity to bring them out this year. We're hopeful. All right. Idina Friedman, Nasdaq chair and CEO, thanks for joining us. Great.

Thank you. And we might have a fee fight on our hands. Up next, VanEck's CEO is going to weigh in on asset managers prepared to slash fees for their upcoming spot Bitcoin ETFs, which are still awaiting SEC approval. Over time, we'll be right back. As you might imagine, here at CNBC, we are trying to be very clear about exactly what is happening about crypto and Bitcoin ETFs as we parse what decisions the SEC is making. And as we continue to do that,

joining us now is Jan van Eck, CEO of Van Eck ETF. Jan, an errant tweet or X or whatever we're calling them now, you got a bunch of us with a head fake yesterday. But what's your sense of what's coming with these SEC rules around Bitcoin ETFs? Well, John, I can break news because your producers were asking and a colleague just gave me the thumbs up, which means that the SEC is going to declare our prospectus effective, which means we can start trading tomorrow. OK. And so what's your expectation of how this is going to shift the environment and the mood around Bitcoin? There's been a lot of anticipation around this. The prices of Bitcoin ran up in expectation and sort of unclear what kind of volatility we're going to see from here.

Yeah, I mean, with any ETF, it depends how is the underlying market trading. So that was the context that I'd like to set today. So first of all, about $30 billion of Bitcoin trades every day, half of it on exchanges like Coinbase and the other half over the counter. So there's a lot of liquidity in the underlying asset of Bitcoin. Compare that to the biggest Bitcoin fund, GBTC, right now, which is about $26 billion. So there's a lot of liquidity. GBTC trades under $200 million a day. So if that kind of on-exchange volume shifts over to the ETFs, things should be pretty smooth tomorrow, would be my expectation. Okay. So it sounds like you got approval. Congratulations. I know

this has been literally years in the making. You first filed in 2017 to have one of these spot Bitcoin ETFs. The question is, who's going to buy it? Is this are you expecting a lot of institutional investor adoption? And if we have multiple approvals and multiple ETFs now coming to market, is there room for everyone? Well, first question, I think a lot of people will be now exploring Bitcoin for the first time. There have obviously been a lot of retail investors involved, but a lot of fiduciaries, financial advisors, and frankly, the banks have been sold by the regulators do not touch crypto. In fact, even even today, as you know, these ETFs are structured with cash contribution and redemptions because the regulators wanted the banks to stay away.

So a lot of major institutions handling huge amounts of money are going to be looking at Bitcoin for the first time as something they can safely buy in custody for their clients. Will it be a day one event? No, I don't think so. People are trying to figure out how does Bitcoin fit into their portfolios? And what we say is, look, it's part of your real assets allocation, your protection of value against inflation and things like that. And you have to size it appropriately given the volatility. Okay. How should investors who maybe are a little bit newer to this asset class, how should they be thinking about it, especially when you have things like publicly listed miners and debates about centralization of minings and some of the some of the fees and and other aspects that are associated with that?

Yeah, I like to say that Bitcoin's an eight year old and I'm very excited it's going to have a big jump up, maybe be a 13-year-old tomorrow, because there's been a lot of threats. You know, when VanEck started its first gold fund in 1968, it was illegal to own gold bullion. So there will continue to be threats about Bitcoin. But I think this has really set it firmly in the kind of hemisphere, if you will, of financial assets in the United States. What we say is buy a little, but dollar cost average. With the volatility of this asset, you do not want to try to time it or do it all at once. But dollar cost averaging through its history has always proven to be a profitable strategy. No guarantees going forward, of course. So that's what we're really telling people is don't be shy about buying

just a teeny bit to kind of experience it, but then be very careful to spread your investment out over time. The framing, sorry, just to finish really quickly, the framing is we have an accommodative Federal Reserve coming into this year and there's the Bitcoin halvening happening in April. So as a Bitcoin investor, you do want to have some position going into that halvening in April. OK, Jan, stay right there because we do have breaking news around all this. Kate Rooney has more on this decision by the SEC. Kate. Hi, Morgan. We are just getting word from the SEC that a wave of Bitcoin ETFs have been approved. The SEC just putting out a statement

saying that 11 of these have gotten the green light to trade in the US. We do expect them to start trading tomorrow based on what some of the exchanges have said earlier in the day. The CBOE said that those spot Bitcoin ETFs will begin trading tomorrow. I have a statement here from Gary Gensler,

the chair of the SEC, that he talks about some of the risks involved here. He says, though we're merit neutral, he would note the underlying assets. When he talks about Bitcoin are primarily speculative, volatile assets that are also used for illicit activity, including ransomware, money laundering, sanction evasions and terrorist financing. So he does in the same breath as approving these Bitcoin ETFs. Mentioned some of the illicit use cases, he says, while we approved the listing and trading of certain spot Bitcoin exchange traded products and shares today, he says,

we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad of risks associated with Bitcoin products whose value are tied to crypto. But Morgan and John, this is a long awaited milestone for the asset class, really seen as this legitimizing moment and a way for cryptocurrencies to enter the mainstream investing landscape. You've got the largest asset managers in the world on that list I mentioned of those approved. BlackRock, you've got Fidelity on that list. It is seen as a way to bring some more safety and stability into these markets. And again, a big moment and highly anticipated for this asset class. So as of tomorrow, people will have the option to hold Bitcoin in their brokerage accounts next to your regular

old stocks and equities. So a big moment here, guys. Back to you. All right. Certainly. Kate, thanks. Jan, back to you for the last word. Does this asterisk that Gensler put on Bitcoin itself here matter at all? I don't really think so, except it's really confusing to the marketplace. There's no way that sort of criminal activity can happen in an ETF ecosystem. And we get a lot of conversations with compliance officers. We are only accepting money into our ETF from firms, brokers that have their own AML, anti-money laundering processes. So really, as far as the ETF is concerned, these comments about illegal activity should be really taken out of people's minds.

Okay. I do want to ask about the fee structure for holding or trading in your ETF. And we've seen Cathie Wood, who also just had her Bitcoin ETF, it looks like approved in this list of 11, had cut her fees. We've seen some others within this ecosystem follow suit. How are you thinking about it? Listen, you know, VanEck, we try to be very competitive when it comes to our fees. And we, you know, we put ours out at 25 and we haven't changed from that. And other people have now matched us, and some have gone a little lower, which is great. But we're all basically in that lower ballpark. We don't believe in fee waivers. I think that's kind of a short-term gimmick. It typically hasn't worked in the ETF industry.

We want to be transparent with our clients. 25 basis points, I think, is really cheap. And also, it's way cheaper for investors to buy an ETF than through the crypto exchanges where spreads are wider. Okay. Jan Van Eck, thanks for joining us. And congratulations as we got this news. Fighting to be here. We're really partying at Van Eck. All right. And of course, getting the news from you right here on Overtime. Thank you. Let's bring in Bob Pisani. Another. I'll just say let's bring in Bob Pisani. Bob, we talked about this yesterday. In some ways, it's deja vu. But this time we know we know for real that this came from the SEC today.

Yeah. And we just looking at the website and you heard from Kate there. Look, this is a big moment. No matter what anybody thinks about Bitcoin and whether it has a use case or they think it's worth something or not worth something, it's very clear that some people want to own it. And it's also very clear that the ETF structure is a far safer way to own it than any other structure. It's very simple. It's custodial. There's somebody out there who's holding the Bitcoin for you and they'll know where it is. You're not going to lose your password. You're not going to have it stolen necessarily. If it is, it's the custodian's responsibility. So it's just a not only more

safe way to own it, it's a cheaper way to own it. And Morgan, I don't know if you've been seeing in the last three days, there has been a price war that's broken out before the thing even trades. There's 11 of these out there and all of them have essentially changed their price structure or most of them in the last three days as they've seen what everybody else is doing. So the investor wins by getting lower fees because you've got a lot of competition and it's safe for trading environment no matter what you think of Bitcoin, Morgan. All right. Thank Pisani, thank you. Another round of attacks in the Red Sea overnight. Up next, how the private sector is teaming up with the Navy to keep commercial ships safe in the key trading route and protect the global economy.

Stay with us. Welcome back to Overtime. Tensions in the Red Sea are rising once again after Iranian-backed Houthis launched their largest attack to date on merchant vessels. Joining me now to discuss security across our oceans is retired Rear Admiral Joseph DeGuardo of Ocean Power Technologies. Admiral, it's great to have you on. We saw this overnight, the U.S. and the U.K. repelling what is believed to be the largest attack to date, the 26th attack on commercial shipping lanes just since November 19th by the Houthis. Are we seeing a clear and stark escalation in terms of that activity right now? Well, Morgan, thanks so much for having me here. I'm excited to be here representing the industry

and OPT. Yeah, absolutely. We're seeing an increase. You know, I think it's over 200 percent increase in threats to our vessels that are moving through the straits right now. And I think that that clear and present danger requires some deterrence and some actions by the United States and others. So what does that deterrence need to look like? What does the action need to look like? And we know we just stood up this Operation Prosperity Guardian, but how do you actually keep this key trading route safe if that initiative alone is not doing it? Well, yeah, that's a great question, Morgan. I think that there's multiple ways to do it. The CENTCOM AOR focuses on an integrated deterrence, which means all forms of the, all parts of our government work together to pull all the levers we can, whether they be

military or economic. But in terms of what Fifth Fleet is doing and Prosperity Garden with our partners, it's really about presence. It's about to show the Houthis that we are there, we are capable, and not just protecting the ships but projecting the power to take action against them should they continue these kind of acts. I guess one of the key pieces of this is obviously it's interrupting commercial trade right now, as you see many different shipping companies now rerouting their vessels around Africa. But the other piece of this is it raises the risk.

And I'm wondering how acute that risk is becoming now of the U.S. becoming more embroiled, more directly in a broader conflict in the area. How to game that out or tease that out? Well, yeah, that's the wicked, complex problem, right? So our, you know, and the best minds in the country are thinking about it all the time. But I would say that, you know, our ability to protect the global commons with our maritime forces is key to the prosperity of the world, not just our nation. And when a non-state actor like the Houthis, a terrorist organization, can utilize a very low cost and a very capable weapon like an unmanned drone or sea mines that can stop the flow of that global commerce,

it's a very big deal and should cause us all pause. You know, our ability to protect that strait keeps oil flowing, it keeps commerce flowing, and it keeps money in the pockets of our consumers. So it's the number one thing that we need to do. At the same time, we are risking escalation any time that we use force against any of the forces around the world. But that escalation is then tempered by the other forms of our national power, economics and diplomatic, to help us keep that level to a point where it's manageable. I mean, we talk about the sophisticated and exquisite weapon systems that the U.S. Navy and the U.S. military writ large have at their disposal. But we're talking about some of these

more inexpensive, proliferated, easy to deploy weapons and hardware that is coming from the Houthis in these attacks. What is now necessary and how quickly can it be, I guess, purchased and deployed to offset that? Thanks for that question. It's absolutely the case. We saw it with the IEDs in Iraq and Afghanistan. These inexpensive weapons become a weapon of strategic influence, not just a tactical one. We're using, as you said, exquisite capabilities to counter that. So the Houthis are getting an outsized return on their small investment. And we are, you know, not just losing money, not just blood, but treasure in the in the in the straits. So I would say that companies like OPT, the company that I'm with and multiple

across the industry have unmanned, capable systems that are ready to go right now that can be purchased for low, low price points at scale to give us the capacity, the simultaneity, the depth and and the mass that we need to show our presence in all places at one time. And I think the Department of Defense and the United States Navy are committed to doing that, as we've seen Deputy Secretary of Defense Hicks, CNO Franchetti, and others talking about initiatives across our government to build quickly this industry capability that allows us to launch and utilize in the maneuver space unmanned systems. Okay. We're Admiral DeGuardo, a.k.a. Digger. Thanks for joining us.

That's right. Yeah. Thanks so much for having me, Morgan. Up next, a big biopharma boom, Ultragenyx, a company focused on the treatment of rare diseases, sees gains of nearly 40% over the last two months. And we'll hear from the CEO with his take on that growth and where he sees Ultragenyx headed with all this recent M&A activity in health care. Overtime, we'll be right back. Welcome back to Overtime. We're getting some news on Citi and Leslie Picker has the details. Leslie. Hey, Morgan. Yeah, Citi Group filing an 8K, disclosing some specific figures, some specific areas that were impacted in the fourth quarter ahead of this company's results on Friday. Citi

saying they recorded an approximate $1.7 billion charge to operating expenses in the quarter related to some of the, and that affects the reserve bill of about $1.3 billion that they plan to record. They also said there will be an $880 million translation loss due to some depreciation in the Argentine peso that will impact the results in the quarter. And then perhaps something that the street is very keenly focused on is this restructuring charge in the quarter. Citi's saying it plans to record about $780 million in restructuring charges in the quarter, largely driven by severance, non-cash asset impairments, and other related charges. And of course, this is related to the implementation of their streamlining management simplification, five different business areas that will be reflected in the quarter. So as I mentioned, we'll see a $1.3 billion reserve build in the quarter related to some of these areas. And we will, of course,

be focused on the full results as they come out on Friday morning. John? All right. Leslie Picker, thank you. Meanwhile, the rare disease biotech company Ultragenyx, presenting this year at the J.P. Morgan Health Care Conference, announcing expects 20 percent revenue growth in 2024, profitability in 2026. Joining us now from the conference, Ultragenics President and CEO, Dr. Emil Kakas. Dr. Kakas, thanks for being with us. I want to ask about the rare disease area first, because there's been a lot of attention to that in the market, especially recently. I know you've been working on accelerated approvals. What sort of shifts might be coming in that arena? Well, we've been working on rare disease. We've been on the public markets the last 10 years,

and there are so many rare diseases that have no treatments at all. And yet the science is strong. We can do very powerful things for them. We've been working hard to improve the process so the latest precision therapies, genetic gene therapies, can actually get applied for some of these diseases. What we've seen in the last year is the FDA, through Peter Marks, has been talking about improving the ability to use accelerated approval for some of these rare diseases. He was here at J.P. Morgan saying the same. We're encouraged. We think the ability to use these accelerated pathways will allow a lot of horrible diseases to get their first ever treatment. It seems almost like hitting the lottery from an investor perspective, trying to figure out which of the companies in the rare disease space are going to have outsized success. What can you say about Ultragenyx process? Clearly, you are deeply

technical in this arena and how it differs from other companies and how they choose which rare diseases to work on. Ultragenyx works on rare and ultra rare disease. We look at very clear, potent biology, and we look for situations where we can accelerate the development through to an approval. A lot of our strategies relate to learning from patients, understanding the disease well, applying that in design of trials, and to develop trials that are accelerated in their approach and can generate the kind of data that compels one to use these treatments. We have four approved products, a drug like Crisfita that is able to change the future

of kids with a really bad bone disease called XLH. And that disease, we did the development in just four years. So our strategy is one, design of endpoints, learning from patients, accelerating development allows us to put in our first, here, first 10 years, four approvals and six programs in late-stage development. So we're definitely, and our goal is to lead the future of rare disease medicine. When we talk about these rare diseases, I mean, these are not necessarily large markets. You're not talking about developing drugs that could be potentially, you know, multi-billion-dollar blockbuster treatments.

So I just wonder how key it is to be able to have some changes or a push that's realized in terms of that accelerated approval rate to actually be able to realize a market here and make money on it. Well, it's extremely important, Morgan, because the probability of success is greatly enhanced with those biomarkers, and the number of patients required and the amount of time required can be shortened. And that allows you to reduce the development cost and get to the market faster, and that's what's really important in making those smaller markets possible and achievable. So I think those are really important for what we need to do as a company in accelerating the transformation of good science into great medicines. All right. Dr. Kakas, Ultragenics founder and CEO, thank you for joining us. Thank you for having me. Up next, a look at what investors need to know about tomorrow's key inflation report. And tomorrow, don't miss an exclusive interview with IBM CEO Arvind Krishna on the outlook for growth in AI and the challenges of managing a services business in 2024.

Over time, we'll be right back. Welcome back. Investors awaiting the key December CPI report. Those numbers are set to hit the tape tomorrow morning at 8.30 a.m. Eastern. Headline CPI. It's expected to show that inflation rose about 2% in December compared to November's 0.1%. We're going to watch this because we've been talking so much about disinflation, what this is going to mean for the Fed, restrictive rate cuts, all that kind of stuff.

Yeah. I mean, inflation is still the name of the game when it comes to people questioning what's going to happen with yields and how does that affect stocks and et cetera. Also, if you love the show and want even more overtime, which I mean, come on, of course, we got a QR code for you. There it is. You can scan it. It's on the screen. That'll take you to the page. There's exclusive content, sharp takes from experts who know the data, keeping you ahead of the curve. I'm on LinkedIn all the time. I know people like Twitter, X, whatever you want to call it, but the pros, the professionals are on LinkedIn. Yeah, and we're there too now to meet them. But the pros, the professionals are on LinkedIn. Yeah. And we're there, too, now to meet them. In the meantime, Bitcoin's under a little bit of pressure here, as we did see 11 of these

spot Bitcoin ETFs get approval from the SEC. We saw major averages close the day higher other than the Russell 2000. And then, of course, Citi were on watch there with that pre-announcement ahead of bank earnings, including Citi on Friday. On Bitcoin, it does feel like we've gone from gold rush days to like gold ETF days. It's a little different than rushing into California and, you know, oh, where did I leave this Bitcoin in my closet? As Pisani was saying, now it's an ETF. Yeah, that's going to do it for overtime.