Closing Bell - Closing Bell Overtime: Paul vs. Tyson Promoter On What’s At Stake; FICO CEO On Consumer Health 11/15/24

Episode Date: November 15, 2024

Stocks closed out a down week with declines across the major averages on Friday, led to the downside by tech. Morgan Stanley Global Head of Thematic and Macro Investing Ellen Zentner on what she is telling clients and RBC’s Lori Calvasina on what you need to know for the weeks ahead. Netflix is airing Jake Paul vs. Mike Tyson and promotor of the fight, Nakisa Bidarian, discusses what the event means for Netflix, Paul and the future of streaming sports. Jefferies’ Sheila Kahyaoglu on why defense stocks got hit this week—and what Elon Musk might have to do with it. Plus, FICO CEO William Lansing on the stock’s rip higher and how the consumer looks from his vantage point. 

Well, that's the end of regulation. Entergy ringing the closing bell at the New York Stock Exchange. Safe Horizon doing the honors at the Nasdaq. The stock seeing another broad pullback and adding to losses on the week. Dragged down by big tech. The Nasdaq shedding more than 2% with yields on the rise. That is the scorecard on Wall Street. But the action is just getting started. Welcome to Closing Bell Overtime.

I'm Morgan Brennan with John Ford. And coming up this hour, Morgan Stanley's Ellen Zentner and RBC Lori Calvacina join us to talk about today's market pullback and if the post-election rally is over or just taking a pause. Plus, Netflix steps into the ring. J.P. Morgan says tonight's streaming fight between Jake Paul and Mike Tyson could be the most watched boxing match of all time. We will talk to the fight's promoter about how it came together and the big money that's at stake. Meantime, let's get straight to the market action. Ellen Zentner of Morgan Stanley Wealth Management joins us now. Ellen, welcome.

Thank you. Good to be with you. There's a lot for us to dig through here in terms of what has helped to move the markets, especially as we do see another down week for all the major averages, we've had more hawkish commentary from Powell and other Fed officials this week. You see the market continuing to parse out this so-called Trump trade and economic data that largely has looked pretty resilient. Where do you think we go from here and what do you think drives the narrative? So from here, I think as we further digest exactly what can a second term under President Trump deliver and when will be important, because it seemed clear that the market immediately was pricing in that Trump deliver all of the perceived good things about his plans and none of the bad things, and taking

it almost for granted that anything promised on the campaign trail around immigration, around trade, would not be delivered upon. And so what you do then is set yourself up for downside risks as you start to parse out what is the timing of these different things, right? You get a lot of the negatives if you are going to send 12 million plus people back across the border, if you're going to put blanket tariffs on the rest of the world, right? You get the negatives from those up front, and then you get positives from, say, more favorable tax cuts later on in 2026. So it just seemed like there was a little bit of jumping the gun here and a little bit of possibly hiding our heads in the sand about what he actually could deliver. I think that's a very key point, especially when I've had conversations with folks that are close to President-elect Trump or have worked with him in the first administration and say you should take his campaign promises very, very seriously, especially if you're trying to game out what future policy could look like.

So what does that mean in terms of what we're seeing in the bond market and how investors should think about the volatility this could inject more broadly across asset classes? Yes, I think for the bond market in particular, there are two things that it has to digest. It has to digest, you know, are there any different assumptions we need to make about expansion of the deficit? Whether it was a Democratic sweep, Republican sweep, mixed Congress with a Democrat or Republican president, we were going to get a larger deficit. Borrowing needs are going to rise, if not only for the fact that the structural deficit, because of the interest expense on the debt, is going to continue to rise. It doesn't matter if the Fed drops rates 200 basis points tomorrow. Average interest on the debt, that rate is continuing to rise. So bond market needed to react to the sort of what's perceived as possibly a fact that under a Republican sweep, you would get further tax cuts,

the understanding that tariffs do not replace lost revenues from tax cuts, period, and that that does mean a larger deficit. And so that's going to impact longer run rates in the bond market. The other thing is, as you mentioned, we have gotten more positive data on the economy. Chair Powell has been more guarded in terms of maybe we cut further in December, maybe we don't. I do think that they deliver another cut in December. But I think thereafter, we have to understand that they may slow the pace of cuts in 2025. So the market digested that as well. So, Eleanor, at what point do you think does the equity market start to really think about Trump policies as an economic factor all to themselves, affecting inflation, affecting corporate growth prospects? Is it not until we see the amount of money that's being spent on the immigration policies,

for example, or the amount of money that's being spent on extending tax cuts? Yeah, so I think it's a great question, the timing. Is Inauguration Day a sell on the news? I mean, Inauguration Day comes and goes, but you still don't have the exact timing of when policies play out. on immigration. So we have to take those policies seriously. And again, those are going to challenge the economy first before you get benefits from lower tax cuts. So there's going to be a lot of cross-currents here hitting the market. You're going to have probably a more forgiving regulatory policy under a second President Trump. And so that's going to impact some sectors more favorably than others. Obviously, immigration is going to be a challenge for construction, for food processing areas that relied very heavily on immigration

labor. And so there's going to be a lot of cross currents there with clear winners and losers. OK, Ellen Zentner from Morgan Stanley Wealth Management. Thanks for being with us. Now let's turn to senior markets commentator Mike Santoli for a broader look at this pullback today and this week for stocks. Mike. Yeah, John, in the S&P 500 in particular, the pullback brought us to a pretty interesting spot. I was pointing out as we entered the week that the S&P was a little bit getting a little bit extended above its 50 day average and and maybe wouldn't be surprising for it to settle back a little bit. Well, where it stopped at this level, 58-70, it's basically equivalent to the highs we had seen before the election actually set around October 18th or mid-October thereabouts. And you see this

is not that unusual when you've had a high that goes back and gets tested before you have another lag. As a matter of fact, it happened right there, too, sort of right in the early October area. So it doesn't mean that this is all we get, but it suggests that so far this is pretty orderly and not necessarily extraordinary based on the angle of that pop that we got. Now, take a look at the Nasdaq 100. Obviously, the leader of the first half of this year has really given back more and is looking like it's in a bit more of a struggle. This goes back to sort of early July levels that we first reached at this point. Now, still on a year to date basis, doing fine.

Overall trend is OK. But back then they had sort of a monopoly on earnings growth and investor interest. And that's now as the earnings picture has broadened out and more cyclicals have gotten in investors' sights, they've taken a back seat. At least at this point, it looks like that. Now, take a look at the 10-year Treasury yield. It's another chart. It was pointing out it was at a really interesting spot just last week, which was right at the point where that downtrend line was broken. So we have broken it now.

The question is, how much more upside might we have here? Is it happening for the right reasons? This is the whole debate. It seems like it's going along with better than expected economic data and, of course, minimizing or at least reducing what we think we're going to get out of the Fed. The absolute level, not extraordinary, but the pace could be a challenge if it really continues from here. Final point, consumer cyclicals, the equal weighted consumer discretionary ETF over two years has still been outperforming the average stock in

the market. So this has been one of those touchstones you want to return to and say, is the market's message OK or not? On a year to date basis, it's about even, but still participating. I'd also point out that banks are up from mid-October, even though the S&P is back down to the same level. Duly noted, Mike, comparing, contrasting last week to this week, when you look at volume, when you look at assets that led and lagged, what does it tell you about the nature of that surge and then the pullback? I think the surge last week was really feeding off of not just what was expected to come out of policy, but the quickness and decisiveness of the election result and the attendant crunch in volatility, or at least people

had just gotten hedged up. So that big release meant you went to some of the riskiest corners of the market, got the biggest benefit. You had heavily shorted stocks. Obviously, crypto has maintained its bid, but a lot of these other follow on stocks of lower quality had a big pop along with cyclicals. This week, I think it's, again, been pretty rotational in terms of how it's acted. Banks have been fine today. It's been it's been tech that was already for sale that has pulled back. So I don't I don't necessarily feel as if this week undoes the the conclusions or the bets laid last week, but it definitely sort of brings them back into line and has wiped away maybe just a little bit of the froth that was building up.

Okay. Mike Santoli, we'll see you a little bit later this hour. Check out the move lower in some big defense names this week, falling more than the broad market. Investors possibly keying in on the Department of Government Efficiency, DOGE, push from the Trump transition team, where defense spending could be in the crosshairs. Joining us now is Jeffrey's equity analyst, Sheila Kayailu. Sheila, it's great to have you on. Thanks, Morgan. Aerospace and defense was one of the worst performing industry groups in the S&P 500 this

week. And I do, it does seem like that was in large part due to this focus on cost cutting and what Elon Musk and Vivek Ramaswamy are going to mean for government budgets. Is it overdone here or are there reasons for investors to be concerned? Yeah, sure. I think in addition to the primes, the services names like Booz and Leidos and SAIC got hit significantly as well. So we did downgrade Booze pre-election, sort of forewarning this, and then ABAV earlier this week. In terms of what Doge could actually do, I think that'll be the hardest part. These names, let's not forget, earned 10% operating margins. And in fact, they've had massive losses, Boeing included, Lockheed, Raytheon, on fixed price programs, Northrop as well.

So I don't think this is the best place to go after government efficiency. If you do it, you'll go after heavier equipment, not so much the services names. But interestingly enough, the shorter cycle services names got hit a lot harder, almost double the primes this week. Hegseth, Gabbard, Ratcliffe, Waltz, Rubio reports that you could see a revamping of the senior most generals in the Pentagon. It does seem like this is an incoming administration that is poised to really shake up DOD. So I want to get your thoughts on some of these appointments and the read-throughs there, too. I think it's hard to tell. I think one thing Trump has talked about and what we've seen in the past few days is, you know, potential pullout out of the European region, and that's maybe impacting some of

these names. The way we're thinking about defense budgets is 3 percent growth, but supplementals add another 3 percent. So if you have a pullout of supplemental funding, obviously that would hurt the higher margin growth business. So that would hurt the higher margin growth business. So that would impact the primes the most. But Trump hasn't said too much about defense policy just yet, outside of cleaning up inefficiencies. Sheila, lawmakers enjoy cutting stuff the other party likes, but it's not clear to me that Doge is going to take that kind of thing into consideration and that Congress, even a Republican-controlled Congress, is going to be happy with what Elon

and Vivek come up with. What do you think? I think it's hard to tell. We don't really know what Doge will be able to do. I think that's the hardest part of our analysis. So what we're looking at is just broad buckets. And that's really not fair to these names, but that's what we have to do. So we're looking at who has DOD exposure, say, versus FedCiv exposure and potentially running analysis on that civil exposure.

That's about 25 to 40 percent of sales for the Fed IT names. And I think that's why you saw those names get hit harder. So why FedCiv? Because Republicans potentially don't fund civil budgets. But are they really going to cut back health care? Because Republicans potentially don't fund civil budgets, but are they really going to cut back health care for veterans? I don't think so. That's not necessarily making America great again. But what they could do is DOD exposure requires classified employees. And so potentially on the FedSIF side, you could move that to lower cost locations and move that to

commercial consulting firms so they could see some margin impact there. So I think it's... Who do you think is most immune? Most immune? I think Parsons. It's been our top pick in the IT services space. They have 50% of sales to federal government, 50% critical infrastructure. So on the critical infrastructure side, they're immune. And I think within that, they have a PFAS business. A good example of that is who Trump put into the EPA position, who's been a big PFAS remediation supporter. So that's one of our top picks in the defense space, as well as LHX. In general, we've been pushing the commercial aerospace names, particularly the aftermarket, which also has not had a great week this week. So across the board, you've seen aerospace and defense really get hit massively.

Yeah. And of course, Boeing today, one of the outperformers in a down market as Kelly Ortberg hits 100 days at the helm at Boeing. So it's a name we'll continue to watch as well. Sheila Kailu, thank you. Thanks a lot. We're going to talk more about aerospace and defense under the second Trump administration and how it relates to the moon, Mars, Musk. Later in the show, when we hear from former NASA administrator Jim Bridenstine. And after the break, tonight's Netflix main event between Jake Paul and Mike Tyson could be the most watched boxing match of all time. We'll talk to the fight's promoter about how it came together and how Netflix got involved in Overtime's Back in Two. Welcome back to Overtime.

Netflix looking to establish itself as a heavyweight in the live sports arena as it streams a much-hyped boxing match between YouTuber Jake Paul and 58-year-old Mike Tyson tonight. Analysts at J.P. Morgan writing it could be the most watched boxing match ever, given Netflix's global subscriber base and the ease of access since it won't be a pay-per-view event. Joining us now in an exclusive interview is Dynasty Equity executive in residence, Nikisa Bidarian. He's also the co-founder with Jake Paul of Most Valuable Promotions and is promoting tonight's fight. Great to have you here with us, Nikisa. So Mike Tyson has an estimated net worth of $10 million. Some reports ballpark Mike Tyson is getting paid $20 million to fight Jake Paul. Is that about right? Maybe low?

Well, first of all, thank you for having me. We're excited about this historical event. Mike Tyson and Jake Paul are making eight figures each individually. And in addition, what we're most proud of is the co-main event. The two women, Katie Taylor and Amanda Serrano, are also making record paydays for women's boxing. So really continuing to push equality within sports and particularly in the boxing field. So what's the insight here business-wise from how you bought not just this bout, but the whole thing you've done with Jake Paul together? I remember the Tyson Holyfield fight somewhere before my senior year in college.

I would struggle to name you two big deal heavyweight boxing matchups since. And yet here we have this. Where does this fit in the pantheon of what boxing has become? I met Jake Paul four years ago, and immediately I realized that he had a competitive advantage. And that competitive advantage versus traditional boxing and MMA athletes was that he had audience, a captive, engaged fan base that we could speak to, sell to, and build with. And over those four years, we built his audience to be 3X of what it was then. And then you fast forward to today,

we've partnered with Netflix, who has over 282 million subscribers, probably over 700 million homes globally. And we're able to bring boxing back to the forefront and give the sport its due that it used to have in the days of Muhammad Ali, that it had for a period of time with Mike Tyson. So we're very excited about the transformational nature of this event, not just for boxing, but for sports as a whole.

Nikisa, it's great to have you on. There's already, there's speculation swirling that this is going to be a rigged fight. So how do you assuage those concerns, especially when this is going to be a big betting event, albeit not in Texas, where you're not allowed to place a wager? Yes. So number one, I think every Jake Paul event, people try to say it's a rigged fight. And that speaks to the unbelievable progress this young man has made at the age of 27 in disrupting an entire sport and continuing to defy expectations. Secondly, we're partners with Netflix, the biggest media company in the world. If this was a rigged fight and there was legal sports betting happening, that would be

a federal crime. So Netflix, most valuable promotions, Jake Paul and Mike Tyson would be committing a federal crime. It's absolutely ridiculous to suggest that this is anything other than a professional bout under the rules of the Texas Athletic Commission. Yeah. And certainly a lot of people are going to be tuning into this. I think myself included tonight. The fact that this is the fact that this is going to be happening on Netflix, what went into those negotiations and how does it speak to what is perhaps this new chapter of media entities that are going to be taking on these live sporting events? Sure.

Look, we worked on a documentary with Netflix, the untold series, The Problem Child, which was Jake's story. That premiered in July of 2023. At that point, Jake qualified Nate Dia, actually here in Dallas at American Airlines Center. And we had some Netflix executives join us to see the breadth of the mainstream appeal of what Jake and MVP have been doing. On the back of that, we signed a deal November 1st of last year for Most Valuable Promotions to be the first ever live sporting event on Netflix. Next month, it's the NFL. But our company, three years old, is doing it first.

And look, we look forward to having a continued relationship with them. This is obviously their first foray into combat sports. There's a lot of big expectations, but we're pretty confident we're going to deliver on those. Nikita, I'm guessing that Mike Tyson is the most globally well-known living boxer. There was a video game named after him, et cetera.

What could you possibly do with Jake Paul after this to continue on, let alone top it? So, look, we strategically partnered with Netflix for this fight. All of our distribution strategies are dependent on who the opponent is, what the consumer is, and what we want to achieve with those outcomes in terms of the brand build. So for Jake Paul, who's 27, fighting a much more experienced but much older fighter in Mike Tyson, we believe that Netflix was the right platform for it. It wasn't necessarily about maximizing the last dollar, even though the gate here is close to $18 million as we sit here, which is the biggest boxing gate in the history of the United States outside of Las Vegas. But we wanted it to be on Netflix exactly of what you said. He is an iconic figure known worldwide. And you bring

in Jake and you connect those generations from the baby boomers to Generation Alpha. There is interest. Grandmothers are talking to their grandsons literally about this event. As we look forward, there is plenty of opportunities for very big events that will actually be commercially even more successful from a revenue perspective because we can explore the pay-per-view model. We've had conversations with Netflix around other potential flights on the service, but we're always going to look to maximize what we think is the best position between the brand and the revenue maximization. OK, Nikisa Badarian, thanks for joining us. Thank you. Appreciate it.

It's worth noting, John, that with Katie Taylor and Amanda Serrano, this is expected to be the most lucrative women's sporting event in history as well. So a few milestones here tonight. Yeah. Well, coming up next, the CEO of FICO, one of the biggest under the radar winners this year and over the long term, too. He's going to join us with an inside read on the health of the consumer after encouraging data today on retail sales. And later, RBC's Lori Calvisina gets you set up for next week's trade, tells us if she thinks the post-election rally will reignite. Overtime will be right back. Welcome back to Overtime. The Commerce Department announcing today that retail sales climbed 0.4% from September to October, indicating consumer spending is at a healthy level ahead of the

holiday season. Now that comes after new data from the New York Fed showed that U.S. credit card debt hit a record $1.17 trillion in the third quarter. That's up 8.1 percent from a year ago, though delinquency rates have improved slightly over the same period. Well, joining us now in an exclusive interview is FICO CEO Will Lansing. Will, it's great to have you back on the show. Nice to be here. Thanks. I do want to get your take on the health of the consumer and what you're seeing through your very unique vantage point. But first, just a question about the company, because

you continue to grow and grow strongly across your different segments. And you are one of the best performing FICO is one of the best performing stocks in the S&P 500 this year. What's propelling it? Well, you know, we have great prospects and we've had a great record with with our two businesses, our scores business and our software business. It's a great time to be in analytic software, which is what we do. We apply all different kinds of analytics to data and help our customers make decisions and optimize the way they interact with their consumer customers. And that's really propelled us. Our software business is growing double digit.

Our scores business is growing double digit. And that's what you see in the stock price. So the last time you joined us, which I believe was last year, you talked about the fact that credit scores were at a record high, which really spoke to the health and resilience of the consumer at that point in time. But you also cautioned that credit scores can be a lagging indicator. What are you seeing now, especially as we do see some of these stats that we just talked about, including the fact that Americans are taking on record amounts of credit card debt. Yeah, you just called it 1.17 in consumer credit card debt is a record. And the utilization of credit cards is up to 35 percent, up from 33 percent a few

years ago. So you see a little more pressure there. That said, the FICO score is holding steady at an average of 717, 717, which is a good score. And, you know, we're seeing a little bit more late payment, missed payment, but not enough to really move the score right now. Well, how much has the nature of the economic value of the data and analysis that you do? How much has that changed over the past decade? It used to be, I guess, you know, people got a FICO score, you know, looked at that when they were buying a car, buying a house, getting a job. But this is a data-driven economy right now. So how has that widened the total addressable market for your services, the demand from businesses? Well, so we started our scores business in late 1980s, and it was all built on credit bureau, credit card payment behavior.

And it's a shorthand. It's a very efficient metric, fast way to figure out the credit worthiness of a consumer and for for a consumer to figure out kind of what they're good for from a price and capacity standpoint. Our software business takes into account a wide range of data, much more than just the credit card payment history. And so I'd say as more data has become available, our software has been able to make ever more precise decisions, and we take advantage of that. So those are the two ends of our business, the scores end and the software end. So on the software business,

how does artificial intelligence, especially given the sensitive nature of the data that you're talking about, play in? What do you end up using it for? What do your customers end up using it for? We've used artificial intelligence machine learning for a very long time. We were in neural nets 25 years ago.

We don't use artificial intelligence in our scores because the regulators need to have transparency and understand how the decision was made. They need to understand how the model works. And AI is a little bit more of a black box. And so the regulators aren't really comfortable with it for underwriting, at least not yet. That said, we do use AI in all kinds of ways. We use it for synthetic data. We have patents in AI. And we're trying to come up with ways to audit and track the way the AI makes its decisions.

And so we have some patents around using blockchain to do that. So, you know, it's used in our business. But I think there's a lot of care before you put it into underwriting. All right. Will Lansing, CEO of FICO. Thanks for joining us. Thank you. Well, it's time for a CNBC News update with Bertha Coombs. Bertha. Hey, John. After announcing him as his pick for Interior Secretary last night, President-elect Donald Trump said today that North Dakota Governor Doug Burgum will also be the chair of a newly formed National Energy Council. In a statement, Trump said that the council will consist of all departments that deal with the regulation, transportation and production of all forms of energy in America. The daughters of Malcolm X are suing the CIA, the FBI, and the NYPD in a $100 million lawsuit today for their alleged roles in the civil rights leader's 1965 assassination. In the lawsuit, the daughters and the estate of Malcolm X claim the agencies were involved in the assassination plot and failed to stop it.

And the instruments owned by late rocker Jeff Beck are going up for auction. Christie said today more than 130 items from the musician's collection will be up for auction. The lot is worth more than an estimated $1.3 million and includes a 1954 Gibson Les Paul that's expected to sell for up to $640,000. Would make a nice Christmas sketch, right, John? That's about half the total right there, Bertha. Thank you. Up next, going all in on equities. Mike Santoli returns with a look at just how exposed investors are to stocks right now and how much more dry powder exists to drive the next leg of gains. And check out one big winner in the Dow this week. Disney climbing more than 16 percent since Monday's open for its best weekly gain in more than 24 years. They had earnings yesterday. Stock finished today at 5.5%.

Stay with us. Happiest stock on Earth. Welcome back. Mike Santoli returns with a look at investors' exposure to stocks. Mike. Yeah, Morgan, it's somewhat elevated. This measures from Bank of America, from their own clients within the Merrill Lynch Wealth Management Division. About 63% of assets in those accounts is in equities. It's about two

percentage points below the high for the last, let's say, 20 years, which is about 65 percent. It's equivalent to these levels. It's not to say it can't go higher. Mostly it's because the market is up. It's not because flows have been so consistently heavy. But it is a little bit of a pushback to the idea that there's tremendous potential for all of this cash to rush into the market from underinvested clients out there. It just doesn't seem to be the case. By the way, the other elections, the last two elections, we were down around there in terms of equity exposure, Morgan. Interesting. So a couple questions here.

And the first is, to your point, how much of that six trillion dollars call it in money market funds? What is it going to take to see that come off the sidelines? And perhaps just as importantly, looking at this chart, the other 37 percent, what is that made up of? Well, it's it's bonds and it's cash. And in fact, cash holdings in these accounts is below the long term average. OK, a lot of $7 trillion now in money market assets is kind of institutional. Maybe $3 trillion of it is individual. In terms of what historically it has taken to have a wholesale movement of cash out of money markets and into other types of assets, it's a bear market. When the market's going up, if you're involved at all,

you don't necessarily need to equitize that cash because you have your your allocation. So I've been suspicious of that idea that these discrete dollars and money markets have to come in. People just don't have to sell as much. They rebalance into stocks as needed and it can be fine. It's just not the mechanism that I would look out for for the fuel for for going higher. All right. You always give us a hot take, Mike Santoli. Have a great weekend. Thank you. Up next, former NASA Administrator Jim Bridenstine on the future of space exploration and defense under the incoming Trump administration. And AST Space Mobile shares falling to Earth after the space-based broadband company reported a wider-than-expected Q3 loss and missed sales

estimates. And if you love the show because you love the show and you want even more overtime, you can scan that QR code on the screen. Follow us on LinkedIn. There we post exclusive content. Overtime, we'll be right back. The Honorable Jim Bridenstine served as NASA administrator under the first Trump administration. Now, he established the Artemis program to send Americans and allies to the moon, this time to stay. While Artemis has progressed under Biden, timelines have slipped. But Bridenstine, a former congressman from Oklahoma and now space investor, expects the president-elect to accelerate those efforts, which could mean some contracting changes.

What we need to do is as quickly as possible get to the moon and then as quickly, transition to Mars, and or build the moon architecture with a thought for Mars. And because it is moon to Mars, it's both. It's using one to achieve the other, and we can go faster to Mars if we use the moon as the proven ground. And in my opinion, we've got to take advantage of everything that currently exists. And then as we move forward, figure out what is the best solution going forward. So I think, yes, there will be a lot of people coming up with different ideas and concepts of how to get to the moon and maybe different architectures and capabilities. But I also think that the starting point should be how do we get there as soon as possible? And then how do we build sustainability so that when we do get to the moon, we get to stay? And then when we go to Mars, how do we build as much of the moon program to make Mars possible?

That's got to be the key enabler. So I think there will probably be changes. Well, Bridenstine, who worked with SpaceX during his NASA tenure, also thinks Elon Musk's involvement in the administration will be good for the country. I hear a lot of chatter about how much influence he's going to have and those kind of things. And it's true, he'll have certainly a lot of influence with President Trump. And that's not a bad thing. But I also think, you know, there's also a lot thing. But I also think, you know, there's also a lot of people need to recognize that, you know, Congress is the one that funds all of these things and Congress has been creating the policies and putting the policies into law. And yes,

a lot of those policies will be driven by a vision that comes from the executive branch for sure. But we have a very, we have a ship of state that is also hard to turn. And I know Elon has done an amazing job of finding ways around that ship of state. And I think that's going to be good for the long term. And speaking of SpaceX, the next Starship test flight is expected to happen as soon as Monday evening. We'll be watching for that. As for whether Bridenstine himself could be a part of the next administration, he's not commenting on that. But he did tell me, quote, it's important to recognize that I want to be helpful to the Trump administration in some way. And if they call for whatever reason, I'm happy to entertain those phone calls. Now, for the full conversation with a former NASA administrator, which also goes into quite a bit of detail on the national security side of space and commercial space.

Go to manifest space, scan that QR code on your screen or download wherever you get your podcasts. All right. Well, Reality Bites. Yes, I am a Gen Xer. Up next, the CEO of a biometric online identification company on the fight to sort out real customers from deep fakes. And check out the biggest decliners for the week on the NASDAQ 100. Plenty of chip names on the list, including Supermicro, Micron and Microchip. Overtime, we'll be right back. Welcome back. With the rise of deep fakes and cybercrime, it's important, more important than ever, for companies to verify the real identities of customers, employees and partners.

Today, John takes time out with a CEO whose company does just that. Andrew Budd is CEO of iProove. It's a London based company. He started in 2011 to solve the problem of online identity verification. His company has customers including UBS, ING, and the Department of Homeland Security. Bud comes from a long line of engineers and entrepreneurs. His great-grandfather founded a company that made light fittings in the 1890s. His father and grandfather made high-precision counters for car odometers or even hand counting. There's counters, for example, that flight attendants sometimes use to click the number of passengers that are on. It's called a hand tally counter. That was invented

and manufactured by his business. I grew up in an environment in which entrepreneurship, in which innovation, in which engineering was the highest possible contribution and value that one could make, in which engineering was a vocation, not just a career. Keeping track of people has gotten a lot tougher in a digitally driven economy where the most elaborate heists aren't often physical attacks or ruses. They're software scams and hacks. iProof says transactions using its technology surged by more than 60% in the last year. So to prevent impersonations,

iProof uses a light, colored light, from a smartphone or monitor screen to shine on the face of someone trying to sign in and uses cloud-based technology to match those results with footage of the real person. The technology spots AI overlays and physical disguises. It would even pose a problem for Tom Cruise's Ethan Hunt. When Mission Impossible was started, you needed a suitcase with a sophisticated printer,

millions of dollars of technology. It probably wasn't real anyway. And it was an incredibly advanced, expensive, sophisticated thing in order to produce that mask which you put on. Today, using kits, there are over 100 kits available on the internet, some of them free, some of them under $100, which will enable anyone to do exactly that effortlessly. So the timeout takeaway, reality bites, as in it will increasingly take compute resources and software to tell reality from fantasy.

Flip side of the metaverse dream and digital twins for high-end design and testing, it'll be harder to tell who's real and therefore who gets access to buildings or to set up accounts or transfer money. We'll need software for that too, Morgan. It is a whole new world. Up next, RBC Capital Markets,

head of U.S. equity strategy, Lori Calvacina, on whether investors should buy this week's market dip when trading kicks off on Monday. And check out the vaccine makers, which are getting hit hard in the wake of President-elect Trump nominating vaccine critic Robert F. Kennedy Jr. to run the Department of Health and Human Services. Stay with us.

Welcome back to Overtime. The major average is losing steam after a strong post-election rally, with the Nasdaq shedding more than 3% this week. Joining us now to look ahead to next week's action is Lori Kalbosina of RBC Capital Markets. Lori, happy Friday. So you think the market action hasn't fully reflected a ho-hum earnings season and a stretched consumer. So what does that mean for entry points here? So, look, you know, thanks for having me, by the way.

I think we've just had a problem in terms of positioning and valuation coming into today. And I know there's a lot of uncertainty swirling, but I do think the market was largely looking through a lackluster earning season. I think the consumer's woes have been well known for quite some time, but there was just sort of a chill that came through and company commentary on the overall macro backdrop that was a little bit worse than what we'd been seeing coming in. And somehow the market just ignored that, focused on the election. And it feels like that kind of dour commentary is finally coming back home to roost in here. So the biggest tech companies were a big part of what brought the major averages to where we are today. Two big things in tech next week.

We've got Microsoft Ignite developer type conference and NVIDIA earnings. That's AI demand and supply. How important is it to watch how the market reacts or doesn't to those things? Well, I think it's always important just in terms of the heavy market cap representation. And even if those stocks underperform a little bit, we still need them to behave in general. And I think that we've just continued to see skittish investor expectations as earnings growth expectations are decelerating. And frankly, a lot of the commentary we've been reading about AI, not in terms of these companies, but in terms of their end users, has really been kind of ho-hum or small potatoes in terms of the

kind of outputs that people are getting from AI technologies so far. So I think there's a lot of skittishness in here. But again, you're sitting at sort of crowded levels. You're sitting at extremely expensive valuations in these stocks. And there's just not a lot of room for error in here. So given the fact that we have seen the market taking a little bit of a breather here, Lori, if that continues, do you buy on the dips? So I think we have generally been wanting to buy on dips. And most of the pullbacks that we've seen in recent years, and really all of them, frankly, since the late 2022 period, have been in that 5% to 10% drawdown. That is within the normal range of a typical correction. Anything beyond that tends to be associated with a growth scare. I don't have a growth scare, you know, sort of a recession near miss on my horizon right now. So we may need to see the market pull back just a

little bit more before we get into that kind of 5% to 10% range where you can really pull some froth out. But generally, we do think the economic backdrop is still very, very strong right now. So what does that mean for Russell 2000 and for small caps, which finished down four percent on the week now? Look, you know, I think small caps have needed economic tailwinds to come back. I think we we sort of put what we were going to put into that market in terms of the Fed. You haven't had sort of peak-like valuations in that space, but you have had peak-like positioning all the way back to the 2016 highs, basically right back where we were the last time Trump got elected. The problem is that I think a lot of the Trump move was pre-traded. And so we're sitting here and now we're dialing down Fed

expectations again. So, you know, I think the setup for small caps, as long as we're getting more skittish on the Fed, you know, that's very, very tricky for this space. So, Laurie, at the beginning of the show, Ellen Zentner was telling us that she thought investors were focused on all the positives out of Trump policy and administration and not the potential negatives from those policies. How much do you expect will really change or could significantly affect the market between now and, let's say, February, when that administration we expect will actually start doing things? So I think we're in a little bit of a discovery process right now. So President Trump or President-elect Trump is still putting through his picks. The market is reacting to those in some

instances, not in others. We obviously saw health care stocks get hit very, very hard today. But the reality is that we've got to see the new Congress, get the new administration and get these folks in their offices before they can even start working on legislation. And that, of course, will take some time. So it does feel like we've got a little bit of an information vacuum at this point in time. It is my sense that we could see trade slash tariffs and tax policy materialize in tandem. So it raises the question, does 2025 look more like 2016 for the stock market or 2018? I think that's a fantastic question, Morgan. It's one that came up in my meetings this week. What's the sequence of events? And if you go back to 2017 or 2016, rather,

there was initially optimism on the broader economic ramifications of a Trump presidency. Then people were focused on tax and then people were focused on tariffs. And now we're kind of doing the bad stuff and the good stuff at the same time right up front. And I think that has the market a little bit confused in here in terms of what to focus on. But the playbook of 2018, dramatically different from the playbook of 2017 and 2016. Industrials and materials were hit very, very hard during the China trade war. You're sitting at three standard deviations on my valuations models in that sector. And we've really been cautioning people against focusing too much on tax for the industrial sector

and really needing to remember that tariffs hit them pretty hard. All right. Lori Kalasina from RBC. Thank you. Well, as mentioned, on tap next week, my exclusive interview with Microsoft Chairman and CEO Satya Nadella. That's live from the Microsoft Ignite Conference in Chicago. That's Tuesday, 11.30 a.m. Eastern. And you know we'll be talking about it here on Overtime as well.

I've got some more coming from that conference as well. Oh, cannot wait. And then, of course, we get NVIDIA earnings next Wednesday, too. We do get some econ data and we'll continue just to monitor these markets after we had another down week. I think it's the third for the S&P and four.

As Lori just mentioned, there are some questions about how much use companies really getting out of AI expect to hear some of that out of Microsoft. All right, we'll be watching. In the meantime,

have a great weekend, John. Yeah, and have a great fight night since I know you'll be watching. That doesn't surprise you at overtime.