Closing Bell - Closing Bell Overtime: Pavlov Markets, Big Earnings & the Geopolitics of Business 10/21/25

Episode Date: October 21, 2025

When the bell rings, investors buy — Steve Sosnick of Interactive Brokers explains why markets still behave like Pavlov’s dog. With major earnings rolling in, Mark Mahaney of Evercore ISI breaks down Netflix results, and Bill Browder of Hermitage Capital discusses if markets are mispricing geopolitical risk. Alan Trefler, CEO of Pega Systems, shares insights from the software front, and Seth Goldstein of Morningstar Research looks ahead to Tesla earnings and what they’ll reveal about the state of innovation and risk-taking in today’s market. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the end of regulation. HB Fuller in the closing bell at the New York Stock Exchange, ACI worldwide, doing the honors at the NASDAQ, and the Dow trading above 47,000, couldn't close there. For the first time, small gain for the S&P 500, small, well, actually, I don't know. S&P, yeah, maybe small game. Unchanged, basically. Small loss for the NASDAQ, yeah, right on the nose there. Earning's a big driver of today's action, General Motors, hitting a record high, having its best day in five years.

story for 3M following its results, setting back to levels seen in August of 2021. Coke contributing to the Dow's gains, while the other major averages, yeah, basically flat. Consumer discretionary and industrials were the leading sectors, utilities, and materials were the worst performing and big losses today for gold, silver, and platinum, but of course the precious metals trade overall has been hot. Well, that's a scorecard on Wall Street. Welcome to closing bell over time. I'm Morgan Brennan, along with John Fort.

We are waiting for several earnings reports this hour. The biggest Netflix that's coming as the company is reportedly interested in buying all or part of Warner Brothers Discovery. Other names we're watching in overtime include Texas Instruments, Mattel, and Western Alliance. That's one of the regional banks that fell sharply last week. And it looks like Netflix and Texas instruments are already out. We're going through those results right now. But we will turn our attention to that big report that is due out tomorrow as well, Tesla. We've got two analysts.

one who rates the stock of buy, one who calls it overvalued. But we begin with the markets, and today's mixed close, Christina Parts Nevelis has more on today's big movers, Christina. I'm going to start with the big movers, meaning gold. You mentioned it and logged its worst single session since 2013 and really dragged the miners down with it. Kinross Gold Corp closed by 11% lower. You've got Alamos gold, El Dorado Gold,

all of these posting their worst date in five years. Now, switching to text, shares of alphabet, sank about two and a half, after opening I announced a new AI-powered web browser called chat GPT Atlas. Keep in mind, perplexity AI rolled out its own browser for free just earlier this month, ramping up competition for Google's core search business, and that's why shares fell lower. Apple got more love from Goldman Sachs on iPhone 17 strength. Shares close about a quarter of a percent higher, and the company's market cap is inching closer to the $4 trillion dollar club, so elite. And shares of Beyond Meat, let's talk about that name because they soared

146% today, continuing its rally from yesterday when the stock surge 127% after it was added to the round-hield meme stock ETF. Yes, a meme stock ETF. Today's surge, though, comes after Beyond Meat announced a deal with Walmart to expand distribution to more U.S. stores. I'll be right back with Texas Instruments. All right. Appreciate it. And now to the bond market as the 10-year yield continued to fall even further below 4%. Rick Santelli's got that in Chicago. Yes, John. Let's look at twos and tens. If you look at a 12 hour or two year, you should notice three basis point range. If you look at a 12 hour or 10 year, basically a four basis point range. Well, twos are down maybe a half a basis point. Tens are down about two basis points. But here's the issue. October 1st, the government shuts down. Where's the data? Obviously, the only data we're getting are confidence data and PMIs outside of the Fed Minutes.

And the Fed Minutes were released on the 8th of October. And in my opinion, that's one of the last times we really saw inflation underscored by many Fed officials. So let's look at a month-to-day chart of 2s, 10s and 30s. Look at the left side. Look at how rates were holding up. Basically, the 8th and 9th is at high watermark there, and then yield started to fall. There isn't any data out. What's driving the market?

Many sources I talk to find it a little bit interesting. We got a, sorry, got to interrupt it because breaking news. Netflix results are out and the stock is dropping. Last I looked, it was down more than six and a half percent. Julia Borson has the numbers, Julia. Yeah, that's right. Revenue is right in line with expectations at 11.51 billion, but earnings, a big miss.

The company reporting $5.87 in earnings in EPS, the estimate was for $6.97. The company explaining this saying that our operations, margin of 28.2% was versus the 31.7% street account estimates saying that was below the guidance of 31.5% due to an expense related to an ongoing dispute with Brazilian tax authorities that was not in our forecast. So explaining that lower than anticipated operating margin as a result of that Brazilian tax issue. And then one just little hint here, the company does guide to Q4 revenues ahead of estimates and EPS, a penny ahead of the street account estimate. I'll be back with more. Back over to you.

All right. Julia Borson, thanks. Shares are down 6% right now. Our next guest says traders seem to have a Pavlovian response to any sell-off in the markets right now. When the bell rings, they buy. Joining us now is Interactive Broker's chief strategist, Steve Sosnik. Steve, it's great to have you back on, and let's start the conversation right there with this Pavlovian response. Is this just retail, jump? jumping in, buying on the dips and holding on for dear life, or is there something bigger, broader happening here?

Well, good afternoon, Morgan. It's great to talk with you. I think it's some of each. I mean, I think we see it with smaller investors, certainly. But I don't like to classify active traders as strictly retail. We're seeing them of all stripes from large to small, but they are just sort of jumping in. I think, you know, the thing that we see at the opening bell is just is the way they're essentially reacting to the order flow that does come in from smaller traders who are putting in their orders overnight for the open. But, you know, another bell that I think a lot of traders are reacting to is the alarm clock because we often see futures taking a bit of a lift higher somewhere between 6 and 7 a.m. Eastern time. And I really think that a lot of traders are

hitting the buy button before they even brush their teeth or take a shower. And because we're seeing that futures lift. All right. I think we have more earnings to bring you. Texas Instruments and Christina Parsonablus has those numbers for us. Hi, Christina. Hi, so this is an analog chip company and we are seeing a mixed report. EPS of $1.48, so that's a penny light of what the street anticipated. Revenues was a beat, $4.74 billion. That was 7% sequential growth. The company in their press relief saying they're seeing growth across all markets, so that would include auto. But you're seeing shares down almost 5%. Why? Guidance. Q4 EPS guidance.

came in light huge range dollar 13 to a dollar 49 so really you know hedging all bets over there big range over there and that's less than expected with Q4 revenue guidance also a range that was mostly below what analysts were expecting and so that's adding to the the share drop guys all right christina parts and have less thank you those shares are down about 5% right now we're going to get back over to julia borrston for more on netflix earnings julia yeah just some more comment here commentary here about this dispute with the brazilian tax authorities yielding lower margins than anticipated. The company does guide to Q4 operating margin of 23.9% that is lower than the 24.2% street account estimate. But some other areas of strength

here, the company talking about its ads business, saying they are now on track to more than double our ads revenue in 2025. And they concluded the U.S. upfront with commitments more than doubling this year, talking about the greater opportunity they have with their new ad tools and how that should enable them to create a better experience for members and for advertisers. One note here about AI, since there's been so much talk about generative AI and the potential threat of SORA to IP rights, the company says in its letter to shareholders, we're leveraging Gen AI to further enhance the member experience by improving the quality of recommendations and content discovery, also saying we're empowering creators with a broad set of GenAI tools

to help them achieve their visions and deliver even more impactful titles for members. So really leaning into AI here as opposed to talking about being fearful of copyright infringement or IP infringement. So talking a little bit about competition as well, no comments in this letter to shareholders about any interest in big acquisitions. But I'm sure there'll be questions about that on the call. All right. Julia Borsden, thank you. More earnings out, Mattel, which just did a deal with Netflix over K-pop Demon Hunters. Don't know if they're going to mention that, though.

Kate Rogers has the numbers. They kind of mention it. Not quite. Let's get through the numbers, John. So the stock was down. You can see 9% was down as much as 22% on these Q3 results, which are disappointing EPS. 89 cents adjusted, lower than the $1.7.0.00. Also lower than the 1.83 billion analysts we're looking for. So miss on the top and bottom line there. It does see its full year revenues in a range of between 1 to 3% versus 1.2%. Estimates also sees full year adjust. EPS in a range of $1.54 to $1.66 versus 161 estimated. Also, it's adjusted third quarter gross margin was at 50.2 percent lower than the 53.1 percent. It was a year ago. A quote from the CEO here. He says, while our U.S. business was challenged in the third quarter by industry wide shifts in retailer ordering patterns, the fundamentals of our business are strong with growth in consumer demand for our products across every region since the beginning of the fourth quarter orders from retailers in the U.S. have accelerated significantly, and our POS is growing, looking into the

balance of the year. We expect a good holiday season for Mattel, strong top line growth in the fourth quarter. We are reiterating our full year 2025 guidance, and as you mentioned, advancing our strategy to grow our IP-driven toy business and expand our entertainment offering, which gets at the K-pop Demon Hunter's deal that Netflix has with both Mattel and Hasbro, guys. Back over to you. All right. Kate, thank you. Steve Sosnik, back to you now. We've got two consumer-connected names reporting here, both lower, but for different reasons, Netflix, Brazil having really nothing to do with consumer demand. And Mattel trying to say they expect a good holiday season, how, if at all, does that affect the way an investor should be factoring

in this, you know, micro data in the outlook? Well, John, I think you have to be holistic about it. I mean, part of the way I was thinking about today was it was actually in with the old and out with the new to some extent. Because, you know, we saw rallies in things like Coke and GM and 3M, you know, some of what, you know, talk about sort of your old, older, more established names. And meanwhile, we saw pullbacks and some of the hotter names, including some, you know, gold stocks, which, because the metal was lower. And, and then we also saw some of the names that had been on vertical charts recently, such as IRN, that kind of name, pulling back in recent days. So I do think there's been a bit of her entrenchment.

Obviously, the news that's come out today, none of these are positive stories. But I don't think it really disrupts too much the idea that maybe there's a little more defensiveness going on and maybe a little more focus on the companies that are delivering. These companies all slipped up a little bit today, but the ones that didn't got rewarded richly earlier in the session. Yeah, and of course, we got a lot to your point, a lot of bread on the screen right now with these overtime earnings reporters right now. That being said, what are you seeing on interactive brokers overall in terms of the names that are trading hands the most and are receiving the most enthusiasm, if you will? Well, I mean, certainly the perennial leaders are always, you know, Invidia and Tesla. InVIDia, we saw a lot of buy interest over the last week. The others have sort of been two-sided. What stuck out to me with the last report was just how many names that had been real high flyers, almost, you know, vertical or parable?

type of moves. And we saw people continuing to buy them on the pullback. I mentioned IREN, Oaklo. These are the sort of names. A lot of very thematic names have been in vogue. And even though these stocks have had pullbacks, we saw customers continue to be active in looking for buy-the-dip opportunities. I recently threw out the phrase, death taxes, and dip buying, sort of the three things that are inevitable in the current market. And we're still seeing that, even in stocks, that have had pullbacks after very, very solid moves. All right. Steve Sosnik, thank you.

Thank you, John. Well, coming up, Netflix falling about 5.5% right now in overtime after missing on earnings. Mark Mahaney's going to join us with his thoughts on the quarter. And could Netflix be a bidder for Warner Brothers Discovery? That's stock soaring today. We're going to have more on that. On the other side of this break, overtime's back in two.

Welcome back to overtime. Shares of Warner Brothers Discovery surging. More than 12% today after the company said it's exploring a full strategic review, including spin-off options or sale of the company. Warner Brothers saying it received unsolicited interest from multiple buyers. Our David Faber reporting that Netflix Comcast, which is parent of CNBC, are among the interested buyers. Wall Street analysts have been weighing in on the price of a potential sale,

putting it at anywhere from $21 to $30 per share. Warner Brothers merged with Discovery back in 2022. So perhaps a whole new wave of consolidation here very quickly after the last one, John. Yeah, splitting apart, coming together on Netflix reporting third quarter earnings moments ago, those shares are down well off the lows, but still down more than four and a half percent after reporting a big miss on earnings, lower margins than anticipated. Joining us now is Mark Mahaney from Evercore ISI. Mark, are you yet able to tell how much of this really?

is just about this Brazilian tax dispute. And that sounds like the kind of thing that really is a one-off and doesn't get to the fundamentals of the business. But is there something I'm missing there? I don't think you're missing anything. I think that sounds, well, maybe missing one thing. This was a one-off. It's what, 620 million charge. And so if you adjust for that, they would have handily beaten by about 6, 7 percent, the street for operating income. And they probably would have done, I don't know, $7.30, something like that. So you would have had your kind of typical beat. Having said all that, I think the street would have looking for a little bit more revenue upside. Now, this is a subscription business, a very large subscription business.

It's hard for any one kind of spurred in consumer growth or active customer growth, reduction in retention to really move the needles much in any one quarter. But still, and what is really the strongest content slate the company has probably ever had in the back half this year, you would expect just a little bit more kind of revenue flow through. It may well be that that happens going into next year, which I think is that. actually what's going to happen. But I think that's the real context behind this, which is everybody knew they had a really strong content. Let's show a little bit of revenue upside. And I think the stock's already starting to come back up because people realize this is all one-timeish,

that the Brazilian charge, and they actually would have beat earnings handily if you'd adjusted for that. Okay. Okay. So six, seven percent, you say, I can't let that go. But at the same time, And this is a period that we're moving into where Netflix is not reporting subscriber growth. Is there more volatility in the stock and perhaps more exposure to bad news, even if it's a one-off, because of that lack of signal that investors might be used to? Okay, well, one, I wasn't planning. I wasn't intending the six-seven reference, but thank you. And then secondly, I actually think it's probably less volatile, not disclosing subs.

I just think it is. And I just, you know, like a massive subscription business that beats its subs or misses its subs by, you know, a couple of hundred thousand, like it's less than a well under percent. And the vote of stock would really aggressively react to that number. So I think it actually reduces volatility to no longer disclose subs. I think they should disclose subs. Don't be, you know, I'm going to be clear about that. But I don't think it's, I think reducing it probably does the sum level reduce of volatility. Now, what we're going to need to hear, John, on this call is let's talk about Warner. I don't think, I'd be surprised. if Netflix really made a push for this, but let's talk about it. I'm sure they won't talk about directly, but let's talk about it. And then let's talk about live events and let's talk about advertising and engagement. Three areas we want to focus on this call. Yeah, you took the words right out of my mouth, Mark, and that is M&A. Is Netflix in the market as a buyer potentially, whether it is Warner Brothers Discovery or something else? I don't think so, but I think they're in the market as a bidder. You know, the reports about them bidding on UEFA, the European League soccer

football rights. I think that's the next leg of growth. I think there's two major new legs of growth for Netflix. One is ramping up that ad revenue. And when they had that AB&BBV deal, you know, intro recorder, like you get one of the top 20 global brand advertisers on Netflix, more are coming. The second one is getting more live events and sports content on the site. Look, Netflix is fantastically popular in North America and in other markets, 70% of the population, whatever. But you layer in a lot of popular lives. sports, that'll go to 80, 85%. I think it's a real legitimate leg of growth. And I think every year they get more and more cash, they get more and more firepower to go and economically bid for those

sports rights. So I think investors want to see some of those deals come through. What do you think, and maybe this is over the medium to longer term, but what do you think happens to content spend at Netflix and others, especially given the comments they made about generative AI and this idea of empowering creators? Well, I think content spent at Netflix, I think they've got a really well formula that's worked for them. Keep increasing it every year, but just increase it by less than revenue grows. And, you know, I'm going to help it by a billion a year. I think in five years, we'll be talking about the $25 billion a year that Netflix spends on content. I think that's the right strategy. And it also just gives you more cover with which to buy, you know, different

types of rights. And that is, you know, live sports, live, live events. And then on AI, look, I'm in a camp. I don't think AI is disruptive to Netflix. I think it's actually a huge win. And I just throw simple economics by people, which is, because I've had this debate with a lot of investors or discussion with a lot of investors, if you get more content created by AI, you get more AI content creators. It just, you're increasing the supply of people who are trying to monetize great content. How do you monetize great content? You sell it to the platform, the network that's writing the biggest checks, and that's Netflix. So I actually think it's, you diversify your supply base, basic economics. It's better for the network in the middle, the video entertainment network.

in the middle, and that's Netflix. I think it's a beneficial trend for them. All right. Mark Mahaney. Thank you. All right. Thanks, Mark. We didn't even talk about K-pop demon hunters. There, I said it. Okay, well, Halliburton Share is jumping after its earnings, but the numbers aren't the real reason for the big gain. We're going to explain that. And the Dow, the only major average hitting a record high today. Mike Santoli looks at whether this means the buzz is wearing off some other hot areas of the market. We'll be right back. Welcome back. Western Alliance earnings are out, and Hsu's son has the numbers for us. Hi, Hugh.

That's right, Morgan. So we've got a beat on both the top and the bottom lines for Western Alliance of EPS of $2.28 per share versus the $2.9.9 estimate. Revenue of $9.38 million versus the $890 million estimate. Now, charges and net interest income were in line. The lost provisions were roughly twice what was expected at $80 million. Now, analysts, I have spoken with say they want to learn more about Western Alliance's exposure to two recent loan meltdowns, that for First Brands and the Cantor Group. So as a reminder, the analyst's call isn't until noon tomorrow, but I will be listening to it. Guys. All right, Husson, thank you.

Now we've got a news alert on Draft Kings. That stock is up about 7% after announcing it will acquire predictions platform Railbird as it plans to launch a new platform called Draft Kings Predictions. This has become a hot space thanks to Kalshi and Polymark. the deal will allow users to trade on outcomes of world events, such as elections outside of Drag King's flagship sports betting business. While the Dow taking the lead today, while speculative corners of the market, take a breather. So is this rotation a reset or just a brief pause in the action? Senior marketer Mike Santoli taking a look at what today's moves might mean.

Mike? Yeah, John, way too soon to say that this is going to be a sustainable or consequential rotation, though the Dow did have a little bad about outperformance. You know, the construction of the Dow Jones Industrial Average comes in for some ridicule, maybe for some good reasons. It's pretty primitive. It's price weighted. It's only 30 stocks. However, what's interesting is it basically over the last two years has tracked the equal weighted version of the S&P. So essentially, it does reflect the broad, large cap equity universe adjusted for the outsized influence of, you know, the mega cap, mag-7 type names, actually starting to outperform the equal weight on

this two-year basis as well. Now, we did see that big reversal in gold and gold mining stocks today. And what has been interesting for a while is the way that gold has been moving along with kind of meme stocks and other kind of high-octane areas of the market. So obviously the buzz, that's an ETF. Social sentiment, they call it ETF, basically meme stocks, and then the quantum computing ETF as well. So on a one-year basis, they kind of all landed in the same place. gold got neamed and momentumized. So we'll see if that really does represent a little bit of a flush in those hot money areas of the market. Finally, just want to point to the VIX. We did have a kind of a mini freak out to the upside in the volatility index last week. We got to 25.

It went up way farther than one would expect for a, you know, a two to three percent pullback in the S&P that we got. It's now trending back toward the normal zone, still a little bit elevated relative to where it had been before this little uptick, although pretty much more in line with the actual experienced volatility of the S&P 500 in the last week or two. All right. Mike, thanks. As we look at that, how much does that volatility really tell us about the amount of risk in the market and how much attention investors have to pay to it? It's mostly, it shows you directly demand for downside protection against losses in the S&P 500.

So what I like to look at is the level of the VIX relative to the moves in the S&P and the realized volatility S&P. And over here, we really did start to see a little more clenching up in advance of a potential loss than you would have thought. So you want to see it bleed lower. When you get these spikes on the chart, it usually means that there was a little bit of an excessive. reaction. Of course, it could always get worse, but most times it doesn't. And so I think it's in line right now. It's not saying all clear, and we're going to have a calm rally like we had in, you know, September into October. But it does suggest that there's nothing in particular in a way of a stress point that's unsettling the markets. Okay. Mike Santoli,

thank you. Well, it's time now for a CBOBC News Update with McKenzie Segalos. Hi, Mack. Hey, Morgan. President Trump is reportedly demanding that the Justice Department pay him $230 million in compensation for two federal investigations centered on him. According to the New York Times, he submitted administrative claims seeking the damages through a process that is often a precursor to lawsuits. The first complaint claims the DOJ violated his rights in its investigation into Russian election tampering and possible connections to the 2016 Trump campaign and violated his privacy when searching Mar-a-Lago for classified documents.

A NATO spokesperson says Secretary General Mark Rutt is traveling to D.C. to meet with President Trump tomorrow. The visit comes after the White House said plans were on pause for a proposed summit between the president and Russia's Vladimir Putin to discuss peace in Ukraine. And HBO Max announced a price hike across all of its plans today with its most basic offering with ads going up $1 month to $1099 and its premium plan jumping up $2 a month to $22.99. It's a second price hike for the service in just over $1.00. year. Back to you guys. All right, Mackenzie Sagalos, thank you. Well, the White House saying today, and we just heard it from Mac, that a planned meeting between President Trump and Vladimir Putin is off. That's just days after it was announced. Coming up, we will talk to one of Putin's fiercest critics, Bill Browder, about the geopolitical landscape right now and the role

of corporations and investors in it. Welcome back to overtime. The Dow closing up 200 plus points fading in the final moments of trading to close below 47,000. The S&P up less than half a point, 0.22 points. That's 0.003%. Come on. And then the NASDAQ closed down a small but at least measurable amount. Netflix off the session lows after reporting an EPS missed. The company's saying it is on track to more than double ad revenue in 2025. Intuitive surgical beating on the top and bottom, trading higher by more than 21% right now and overtime. The company raising its full year worldwide Da Vinci procedure growth forecast and its non-gap profit margin forecast. Capital One in the green as well right now, up more than 2.5% after beating on EPS and revenue. Net interest income coming in above expectations, the company authorizing a $16 billion share repurchase and AI software company, Pegas,

systems. Seeing a nice pop here up about 8% here in overtime as EPS and revenue both beat subscription services revenue coming in higher than expected. And we will be speaking with the CEO Alan Treffler in just a few minutes from now. Well, meantime, while AI continues to dominate the market moves on a daily basis, geopolitics continues to dominate conversations on the global stage. From tariff drama with China to the continuing Ukraine-Russia war to the Israel-Hamas ceasefire. So how should investors be thinking about geopolitics when it comes to their investment decisions? Joining us now is Sir William Browder, founder and CEO of Hermitage Capital Management, and head

of the Global Magnitsky Justice Campaign. Bill, it's great to have you on the show. Welcome. Great to be here. So that's exactly where I want to start with you, because not a day and if not a day, then not a week goes by that I'm not speaking to CEOs both on and off camera who don't say that, or do say, I guess, that geopolitics is among the risks that they're tracking. most closely right now. So just want to get your thoughts on the geopolitical landscape, especially as we do see a possible second summit between Trump and Putin collapse here. Well, I mean, basically geopolitics, I think, are probably the single biggest risk for all investors right now. You have the war in Ukraine. You have this huge fight with China over tariffs.

In the longer term, you have the question of whether China is going to take over Taiwan. And then you have all this issue about the United States falling out with traditional allies and what that might do for the U.S. dollars reserve currency status. When you put this all together, it creates kind of a treacherous backdrop. Normally, investors just focus on their business and their, and their relatively narrow set of interests and try and try to ignore what's going on broadly. But I don't think you can do that right now. So what do investors and also corporate America and C-suite executives need to understand about what it's going to take to bring this war in Ukraine to an end? Well, I think that the main thing everyone needs to understand is that the war is not going to come to an end.

And the reason it's not going to come to an end is that the person who launched this war, Vladimir Putin, doesn't want it to come to an end. The reason he doesn't want it to come to an end is that he has put this war into motion not because of any specific beef he has with Ukraine. He's done this war because he is worried after 25 years of being a dictator in power that his people may come to get him, that there will be a million people marching on red square. And the best way to avoid angry Russians, angry at their leader, is Machiavelli 101, create a foreign enemy and start a war. And that's what the war in Ukraine is all about. And very few of the political leaders understand that. And so when you're hearing about President Trump's conversations with Putin and offering up this and offering up that, the simple answer is that Putin doesn't want any of those offers because Trump can't offer him the thing that he most needs, which is guaranteeing that he'll stay in power. That's not something within Donald Trump's control.

And so all this stuff is just sort of dancing around the head of a needle. And I'm afraid that all these headlines that we read lead to nothing. And so everybody needs to kind of prepare themselves that this war is going to go on for a while. Last year, there was a focus on American-made weapon systems like F-16s being delivered to Ukraine. Right now, there's a lot of talk about Tomahawk missiles being included on the battlefield as well. But I do wonder if the leverage to bring this war to an end actually lies in the energy market. And if so, your thoughts on that, as long as Russia is supplying certain countries with oil and gas. Well, I think that there's two keys to ending this war.

And one is, as you mentioned, the weapons that Ukraine needs to hit Russia hard in their refineries, in their military bases, et cetera. And the other is that Russia has one huge source of income, and that is the sale of crude oil. Since the war started, Russia has sold $400 billion of crude oil to China, India, and Turkey. And if we really wanted this war to end, what we would do is to identify the eight refineries, Two in China, four in India, two in Turkey that buy all the Russian oil. There's only eight refineries in the world that are giving Russia this $400 billion. And we think of those refineries is either us or Russia.

You can either do business with the West, buy from us, bank with us, sell to us, or you can do business with Russia with their discounted oil, your choice. And I think if we made that ultimatum to those refineries, they would say, you know, we'd rather do business with the West. And if that happened, the oil would still get out there somehow, but it would be selling a $20 a barrel, not $60. And in six months' time, Putin would be on his knees begging for a ceasefire to end this war. So in light of that, what is the read-through to China here, especially as trade talks potentially percolate? And perhaps just as importantly, what is the read-through to the dollar as maybe today being the exception?

But in general, you've seen a surge in gold. Well, I mean, I think that with China, with India, with Turkey, these are not, you know, you impose tariffs on the whole country. You do this surgically. You say, here you've got some very narrow set of targets out of the eight refineries I just mentioned. Six of them are private businesses. And you say to them, it's your choice. You know, do business with us or do business with Russia? And that actually should not disrupt the overall trade relationship with these countries.

I mean, there are plenty of banks in China that have either been threatened with or targeted with sanctions because they did business with Russia. And we just do the same thing with the oil refineries. Sir William Browder. Thank you for joining me. Thank you. Coming up, how should you be trading Tesla shares ahead of earnings in overtime tomorrow? Well, we'll debate coming up on overtime. Welcome back to overtime. Mixed picture for aerospace and defense stocks today. Take RTX, which jumped on an earnings beat and raise as orders surge. Those shares finished up over 7.5%. RTF CEO, Chris Callio, telling me, quote, in terms of the reconciliation, $50 billion, gold and dome for America, munitions, replenishment. None of that stuff is in our backlog today. Those aren't our backlog numbers. Those are opportunity. Plus, he's seeing more spending by NATO and Asian allies and all of that speaks to a very strong demand. demand picture moving forward. Callio's watching trade talks as well. The tariff impact expected

to hold steady with previous forecasts, but he's optimistic about a Canada trade deal after the EU and UK deals included aerospace. Maybe we see something similar with Canada. On China, quote, we're all just kind of waiting to see what happens. Now, it's a similar story for Lockheed Martin, which beat and raised, but actually slid today, finished down more than 3%. CFO Evan Scott telling me, Lockheed's, quote, experiencing unprecedented demand, results in a record $179 billion of backlog that's equivalent to about two and a half years of sales. Lockheed signed its largest contracts ever in two different units last quarter and just at the beginning of this corner finalized the next F-35 fighter jet contracts. So they're seeing more

international demand for F-35 as well. On supply chain, steady improvement, no material impact from government shutdown, at least for now. And whether it's Lockheed or R-TRA. or Northrop Grumman or G.E.R. Space, which also reported earnings today. Big focus on deliveries and emphasis on R&D as the Trump administration prioritizes U.S. investment. Takeaway, John, strong demand, whether it's commercial aerospace or defense. So far this earnings season. All right. Well, shares of AI software maker Pega Systems are jumping right now, up 12% on an earnings beef. Up next, the company's founder and CEO breaks down the quarter before the call on an exclusive interview. Be right back.

Welcome back to Overtime. Take a look at shares of Pegasystems, now up 13.5% after posting a beat on the top and bottom lines for its third quarter. Subscription services revenue came in higher than expected as well. At these levels, Pegas about doubled off of the April lows. Joining us now is Pegas Systems founder and CEO. Alan Trepler. Alan, welcome. So you started this company when I was in kindergarten well over 40 years ago, let's just say.

Three years ago, the stock traded under $15 a share six and a half months ago at around 31. And we just had this big AWS outage, which is very different from what was happening in the mainframe era when you started this. So tell me, what are your plans for Agentic AI, and how does the kind of reliability that businesses need fit into that? Well, John, great to talk to you. Pega has been always committed to doing mission-critical things for our clients. And we've gone through many technology transitions since your kindergarten days. You are starting in mainframes and obviously now operating very much in the cloud and very much using AI.

But our whole point is to try to use AI, an agentic AI in particular, in a way that's, I think, quite distinguished from the ways our competitors are doing it. And that both makes it more reliable and candidly more performant as well. So how do this quarter's results reflect that? And when you're seeing this acceleration in annual contract value, particularly in Pega Cloud, how should investors interpret that? Well, we introduced a powerful technology called Blueprint, which is actually available on Pega.com. It's available free to any prospect, customer, or investor.

And they can actually try it. And if you wanted to envision the way a business process should work, or you wanted to create a new bank, or you wanted to create a llama rental business, those are all things. You can just type in to the AI, and it will work with you. It will make it so that you can go from a concept to really a fully formed business idea

and then build out most of the application for you. And customers are loving it. It's getting enormous enthusiasm. And it really makes a lot of this AI hype very, very real and very tangible. So we're seeing tremendous uptake of this and a lot of enthusiasm. Alan, you guys at Pegasystems had some struggles about two, three years ago and did some reorganization. That's right around the same time when the world was starting to wake up to the the potential of generative AI and many of the trends that the company you've built seem

to be fitting into pretty well now. Tell tell me, remind me, what were those changes that you made? How is that operationally positioning you now? So Pega has always been known as having a very strong set of decisioning engines and a very powerful workflow capability. But I would say Historically, it could be seen as a little complicated, and you need to define knowledgeable and specialized people to be able to deliver it. When in 2022, we saw the chat GPT and the other pieces start to come together, and they were so advanced,

we realized we could use that in a whole new way. We could use that to completely rethink the way that people conceived of implementing a Pega system. And remember, a Pega System does workflow. It actually runs business processes, creates a system to control them, to actually optimize them. And that is a very powerful engine in lots of businesses. And what AI has done, what this blueprint technology has done, is dramatically simplified and made more powerful the creation of these workflows. Well, Alan, good to see you.

Appreciate you joining us here on overtime well before the earnings call. That stock now up more than 17%. Well, that's terrific. Earnings call is tomorrow morning. I'm looking forward to it. Well, Tesla shares have been on a tear up nearly 90% since early April. Up next, we'll debate whether the stock is running out of juice ahead of its earnings tomorrow. Welcome back to overtime.

Another look at Netflix here. The stock is down now a little less than 5%. well off the lows, the company missing on earnings, hurt by a tax expense related to a dispute with Brazilian authorities. Netflix saying membership growth and higher ad revenue helped to boost its top line. Well, Tesla is the big name on tomorrow's earnings calendar, so let's get you set up ahead of those results tomorrow with Morningstar Senior Equity Analyst, Seth Goldstein, who has a sell rating on the stock and joins us now. Seth, it's great to have you on. Why do you have a accelerating? Well, we think the market's got a little too carried away with enthusiasm for

the Robotaxie, and we're skeptical that we'll see a full launch next year, meaning the robot taxi will be launched without safety drivers in the car and when without any parameters or geo fencing in the areas where they operate. We think it's still a few years away because the product's in early testing, and so yet we think the market's pricing in Tesla surpassing Waymo is starting to take some of Uber and Lyfts market share in the right of Haley market. Yeah, I mean, there's a lot of focus on robo-taxies. There's a lot of focus on robotics, even though it's probably even further away. So what are the metrics you are going to be watching tomorrow when it reports here on overtime?

Well, I really want to hear what the plan is for testing beyond safety drivers. I want to hear what management's timeline is when they think they can start to progress from an early stage testing where they need all the safety metrics with the drivers with geo-fencing to to a more advanced testing where you can remove the safety drivers and just let people take a Robo Taxi ride, similar to what Waymo offers today. So that's really what I'm going to be looking for is the timeline for Robo Taxi testing.

But, Seth, does this stock even really move on fundamentals? I mean, it's back near that $500 share level where it was beginning of the year, end of last year. Its lows were more in the, you know, Trump having trouble with Musk, period. I mean, shouldn't investors be careful about assuming that because Elon Musk doesn't deliver promises on time, the stock's going to go down. I mean, he's got a long history of not delivering promises on time. He is, but I think this time is a little different because we started to see tangible progress on

Roblo taxi. It's gone from a concept to full testing now where it's in multiple cities and they're working on bringing it to full launch. And so if we see this continue to be delayed, if we see any incidents, any safety incident that would cause a pause or a delay in testing, I think there's a lot of optimism in the stock and that would quickly disappear. What is the monkey wrench that could get thrown in your plan here, though, even if they fail to deliver on Robotaxy? I mean, they got robots, they got the power stuff. There are a lot of other things that Elon Musk seems to have the ability to turn people's attention to. Yes, well, there's a lot to like about Tesla, and I still think that they'll be successful ultimately in rolling out robots. I think they'll be successful

with the optimist humanoid robots. But I just don't think it's going to generate the positive and strong free cash flow that you would need to assume and the strong growth rate you need to assume to justify a stock price in the mid-400 range like we see today. So I think if we see a delay in products and if we see optimist production is not able to reach a couple thousand robots, if they're not finding the use cases in the factories, if we see a slowing growth in the battery business, then all of a sudden, you start to see a lot of the growth drivers start to disappear for Tesla, and I think the market would react accordingly. All right.

Seth, thank you. Seth Goldstein. Morgan, we're just mentioning it. Netflix is now down 5%. But it's on this Brazil stuff. Mark Mahaney, certainly of the opinion, that we don't need to pay too much attention to that. Yeah. I'm really focused on what we heard from Mattel, too, in terms of the consumer.

It was a noisy quarter. A lot of stuff with inventory, trade, dynamic. But they talked about growth in consumer demand. They also talked about a good holiday season, which will be interesting to set us up for the all-important fourth quarter here. And that on the heels of Coca-Cola saying that they're seeing improvement is definitely a threat to tug on. Nice moving, intuitive surgical, too, better than 16%. Yeah. Me and time, we had a mixed day for stocks, and that's going to do it for us here at overtime.

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