Closing Bell - Closing Bell Overtime: Rockwell-Nvidia Industrial AI Deal, Bitcoin Mining & Consumer Signals from Nike & Lulu 3/22/24

Episode Date: March 22, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

A record close for the Nasdaq. The S&P 500 settling just below the flatline, though. The Dow snapping a four-day winning streak. That is the scorecard on Wall Street. The action, though, is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Communication services and tech driving the Nasdaq's gains, while real estate and financials were the biggest losers in today's session. Lululemon and Nike sinking the consumer discretionary sector as well, following those disappointing outlooks. But coming up, we will discuss whether that's a warning sign for retail stocks, whether we're seeing some cracks in the consumer.

Plus, what a wild weekend has been for Bitcoin. We will get the outlook for cryptocurrencies when we are joined by the CEO of one of the largest miners, Marathon Digital. Let's get to today's market action with our market panel, Tom Lee of Fundstrat and Jose Rasco of HSBC Global Private Banking and Wealth. Good afternoon to you both. I mean, it was a really, it was literally, it was a record week for the S&P, the Dow

and the Nasdaq, even though we slipped here in trading for the Dow and the S&P. Just the fact that we did reach new highs this week. Tom, I will start with you. How much of this is Fed? How much of this is ongoing AI enthusiasm? How much of this is economic data that continues to surprise to the upside? It's all of the above, Morgan. It's always a good sign when not only is the S&P 500 making a new all-time high and building on four consecutive months of gains, but it's coming when the other important indices like the Nasdaq and the Dow confirm those highs. I think we got a lot of good economic data recently, the economy is very resilient and corporate profits have been also surprising to the upside.

But now we have monetary policy that is confirmed to be dovish and at a time when there's six trillion dollars of cash on the sidelines. So to me, these are all positive signals for stocks to make further gains. And I think sentiment continues to be overly cautious. OK. Jose, how do you see this, especially as we have seen market leadership broaden out as well? You've now got something like 80 percent of the S&P 500 constituents trading above 200 day moving averages. And we did get not one, but two strong IPO debuts in this market this week, too. Yeah, look, we agree with a lot with what Tom said. But I think if you look, the cyclical side of the economy is probably going to slow because rates are high.

And even if the Fed cuts, rates are still high. So the cyclical side, we should see some slowing. But you've got the four underlying secular themes that are going to continue to drive the economy upward. And we think multiples out and the market upward as well. So we're still bullish on U.S. equities. And remember, 94, 95, at the beginning, it was a couple of stocks that led this whole thing on the tech side. And that broadened out. And we have not yet seen the power of the productivity gains we're going to see here from AI and a host of other technologies. Right. And I think that has yet to happen., and that's going to help boost earnings as we go forward. And that's positive for markets.

So, yeah, we're bullish as well. Okay. So, Jose, when I hear you talk about cyclical parts of the market maybe perhaps slowing here, I mean, we do have industrials trading at a record high, materials, some of these other more cyclical sectors. Does that mean that you take a step back as an investor right now and say, maybe take some profits, maybe put your money to work in other parts of the broader market? I think you're going to see that just from a valuation perspective,

right? Growth has outperformed value dramatically this year, right, year to date. And I think that's going to factor into people's decisions. You can dollar cost average your way into some pretty good stories in other sectors, but the growth perspective remains in place and we think that's where you want to be uh remember look at the philly fed from yesterday the number the top line number was not great but if you look at prices paid came down a ton new orders soared and most importantly is the philly fed capex index and that's something that for Tom's ideas and mine is crucial because it's telling you corporate America is still investing

in long-term planning to build a more resilient economy and they want to make sure they're on the front burner of that, not at the end of the train. So I think you're going to continue to see that. That's going to help lift valuations. But clearly there's going to be some rotation of value here as growth has outperformed dramatically. And small cap as well has an opportunity here. OK. It's like you took the words out of my mouth, Tom, because I know that you're bullish on small caps. You came on the show

at the end of last year, beginning of this year, and you said, look, we see potential for 50 percent upside in the Russell 2000. I mean, Russell 2000 is now trading. It had a strong week as well. It finished this week up 1.7 percent. We're now trading at levels that we haven't seen in two years. Do you still stick by that thesis? Is there still room to run, especially if you do see a Fed that at some point later this year begins to cut rates? Yeah, I think the small caps is really emblematic of like the kind of investment you want to make as the fed is cutting rates and interest rates could fall that's really positive for the financials and there's um a pretty big tech component as well but includes biotechs and those benefit from falling rates and easy money so i mean to me the small cap kind of captures a lot of things that can go right. And the PE yesterday, you know, the PE is at a almost a 22

percent discount to the S&P on a price to book basis. It's a 44 percent. It's at 44 percent. So it's a 56 percent discount. These are that's a lot of room for multiples to expand, especially if rates are falling. OK, Jose, we also saw a lot of buying in bonds this week after we had seen yields start to creep higher. That reversed itself. Is fixed income compelling here or do you really put more money to work in equities since the market more broadly or investors more broadly are so risk on right now? Well, look, you have to take into account the auction calendar. Right. And what is going on? We're reissuing about a third of government debt in the next 12 months so there's certainly something to be said about calendar and what does that do to volatility and fixed income and equity markets and that's going to be a factor if you remember no october november period rates backed up on a variety for a variety of reasons one of them was government

spending and one of them was the auction calendar right so we expect that to be a factor here in april uh no question about it so you could see yields back up a little bit, but the long-term direction is still down for fixed income, the curve becoming more positively sloped. And as Tom mentioned, these things are very positive for equities, especially a positively sloped yield curve, positive for financials. And if you look at small cap, the one thing I would focus on there, in addition to the things Tom said, is I think we're going to see a lot of consolidation. We're seeing a cyclical shift and we're seeing a secular trend in economic activity, especially around tech. And you're going to see large companies gobble up small.

I think this is going to happen in many sectors and that M&A opportunity is there. So look for them to gobble up some of those companies where valuations look attractive. That's a great way to grow, right? Okay. We'll be watching for it. Gentlemen, thanks for kicking off the hour with me, Jose Rasco and Tom Lee. My thanks to you both. In a week where the Dow and the S&P 500 are just finishing their best week since December, the Nasdaq since early January. Well, Tesla shares under pressure following a production cut in China and a senator calling for the SEC to investigate the EV makers board. Phil LeBeau has the details.

Hi, Phil. Hi, Morgan. Let's start first off with the production cuts out of China. This report early this morning is really what started the pressure on Tesla shares and remain that way all day long. As you look at Tesla's annual deliveries, we should point out that the expectation has now come down closer to 2 million for deliveries this year after hitting 1.8 million last year. They're cutting their Shanghai production, according to the reports out of China, going from six and a half days down to five days a week. They will be reporting their Q2 or excuse me, Q1 deliveries just after the start of April, usually about April 2nd, April 3rd.

As you take a look at shares of Tesla, this stock has just been really under a ton of pressure since the beginning of the year for a couple of reasons, production cuts and pricing pressure. Put those two together and increasingly investors are saying, hmm, maybe I need to hold off on going long on Tesla. Meanwhile, Massachusetts Senator Elizabeth Warren asking the SEC to investigate Tesla and Elon Musk. Specifically, she says that there is a financial conflict of interest. The board lacks oversight. The disclosures are inadequate, essentially saying it's too chummy of a relationship. In her letter to the SEC, Senator Warren says, by all appearances, it seems the board continues to operate as if Mr. Musk is the techno king who can do no wrong. Well, he has called himself techno

king in the past. And apparently, you know, people are saying, is that all he's doing? Is there a relationship here that is too close? Well, Elon Musk responded on X saying Senator Karen. And he refers to Senator Warren as Senator Karen. Her main economic and tax advisor is FBF, SBF's dad, referring to Sam Bankman Freed. I suspect some of this is coming from him. That's a reference to the fact that in the past, Sam Bankman Freed's father reportedly had done some advising to Senator Warren's staff, though there's no indication that this letter had any influence from Sam Bankman Freed's family. So, Morgan, it's one of those weeks where Tesla shares continue to be under pressure because the EV market overall is under pressure, especially in China when it comes to pricing. Yeah, and that's exactly where I was going to

go with you, Phil. The fact that, yes, we can talk about some of the political dynamics that are afoot with Senator Warren, you know, here in the U.S. in an election year. But really, China is the main driver of what we're seeing in terms of these broader EV dynamics, especially at a time where there is real concern both in the U.S. and Europe that you're going to see some of those Chinese vehicles start to flood these markets as well. Well, they would love to come into the United States, but they're going to have trouble getting in here. Right now, there's a 25 percent tariff. Could they afford that if they wanted to import here anyhow? Yeah, probably. But the fact of the matter is they're choosing to do it elsewhere, primarily Mexico. That's where you will see the Chinese set up stakes in terms of manufacturing. And if they do that, Morgan, then that allows them through the NAFTA agreement to then import into the United States without a 25 percent tariff.

Ultimately, Morgan, I think where we're headed, whether it's the Biden administration after the election or a Trump administration after the election, you will see some kind of a movement to put higher tariffs on specific Chinese vehicles. Basically, if the Chinese have a manufacturing base in Mexico, wouldn't be surprised if whoever is in the White House says, we are going to put a tariff on any Chinese vehicles before they're brought into the U.S. Yeah, it's something the Commerce Secretary has mentioned or hinted at to me as well in some of our interviews and certainly puts, to your point point in the next couple of years, the USMC trade agreement into focus for potential renegotiations

to fill about. We'll see a little bit later this hour with another story. In the meantime, tomorrow marks four years since the market's covid crash low. Senior markets commentator Mike Santoli joins us now with a look at how the stock market has performed since. Mike, four years. Yeah, I mean, first of all, can you believe it's four years? And just the market has performed pretty stupendously. I mean, it's certainly in hindsight, it reaffirms that idea that when things look pretty hopeless and miserable and you can't really figure out how the economy is going to get back on its feet, maybe time to start buying some stocks.

So it really just launched directly after that March 23rd, 2020. We got back much of the gain we had lost from the February peak. A 25 percent or thereabouts total return for the S&P 500 annualized since that point, about 150 percent in total, including dividends. And that's when you got through that 25 percent dip we had called the bear market of 2022. So obviously a great performance. It's a cherry-picked start date, but it really does tell you that the economy has come back with all kinds of help in a much sort of higher energy way than we might have expected way back then. Now, it leads to the question, how is this bull market, if it started at the low in October of 2022,

compare to a typical one? And that's where you see this. HSBC says this orange line is essentially the average path of the last 11 bull market cycles. They're all synced up at the low there. And you see, this has been a pretty unremarkable one point to point. Remember, it was kind of halting beginning to it. We didn't really blast off the way you normally do. And so right now it looks like it's basically on track for an average one. If you sort of looked at the, you know, the range of them, they kind of go like that. And the idea is they usually slow down from here, but they're usually not over by this point. Morgan, it is interesting, though, because I get what you're saying here with how it's tracking.

But if you're talking about this versus the last 11 bull market cycles, how many of those cycles involved a Fed that was still, as the bull market was beginning to gain ground, tightening? Yeah, I would, off the top of my head, I would say not many, although the 1982 bull market, the Fed was still in there keeping things really tight. I also want to stress that the October 22 low was the low of a kind of cute little cyclical bear market, right? It wasn't some generational bottom. 2009 is something that looked more like that. And as we know, after that, the Fed was easy for years and years to come. So to your point, there's been really a lot of idiosyncratic factors here that could arguably have served as headwinds.

And, of course, you always have to say those massive trillion-dollar-plus market cap growth stocks have really carried a lot of this weight. And they've seemed impervious to much of what's gone on in the broader economy. Okay. Mike Santoli, thank you. We'll see you later this hour as well. We'll be sure to check out Mike's column this weekend on CNBC Pro for much more on what investors can learn from that four-year COVID crash low anniversary. All right, well, we have a news alert on Massimo. Pippa Stevens has the details. Pippa. Hey, Morgan, that stock is jumping after the board of directors authorized the company to evaluate a separation of its consumer business. So the separation would include its consumer audio and consumer health products divisions, while the original company would retain the professional health care and telehealth products. The company also reiterated its Q1 and full year guidance. That stock up seven and a half percent. Morgan. Interesting.

All right. Pippa Stevens, thank you. Bitcoin taking investors on a rollercoaster ride this week after plunging from a record high. Up next, the CEO of cryptocurrency miner Marathon Digital on us how that partnership with NVIDIA will impact his business and the factory floor and the manufacturing industry. Overtime is back in two. Welcome back to Overtime. It's been a volatile ride for Bitcoin after hitting an all-time high of more than $73,000 last week. Joining us exclusively to discuss the recent highs and lows is Fred Thiel, CEO and Chairman of Marathon Digital Holdings. Fred, it's great to have you

back on the show. Welcome. Thank you. Good to be here. So I'm going to start right there. This incredible torrid rally that we've seen in Bitcoin, what's spurring it and how much of this hinges on the upcoming halving? Well, I think most of this has been the pent up demand for the ETF. You had some rotation out of miners into the ETF. A lot of these ETFs haven't even really started marketing their products to wealth advisors. You have very few wealth advisors that actually are recommending it to their clients yet. So we've yet to see the real kind of flow from alternative assets and just retirement accounts, pension accounts into Bitcoin. That will come most probably later this year, early next year. But I think right now what you've seen is a rotation. At the same time, you're seeing people looking at the economy, what's going on, uncertainty in the world, and just some jitters.

The other thing that the ETFs now hold a very large amount of Bitcoin. And so there's not a lot of liquidity in the market. So any move one way or another is causing a lot of volatility, which over time will just normalize. Because as the market cap of these ETFs and the Bitcoin overall continues to grow, volatility will decrease and it'll operate more like a traditional asset. But we have a while to go before we get there. OK. And as we mentioned, we have a while to go and we do have this halving that's coming up. I wonder, is this going to be good or bad for Marathon? I guess more specifically,

what does it do to the mining market and how do you position yourself for it? Yeah, great question. So what this does to the mining market is essentially creates a situation where some miners will be under stress. If you think about the mining market in this cycle compared to prior cycles, there hasn't been available credit or an ability for easy access to capital or equipment financing for the non-public miners. And of the public miners, only really the larger miners have had the opportunity to raise capital. And so there's been this race of the large miners growing, scaling very rapidly, and the smaller miners not. So post-having, I think you'll see the smaller miners come under

stress, financial stress, which will enable the bigger miners to consolidate the industry. And we've certainly been very focused on that. We've recently done two acquisitions, and we're going to keep acquiring. We have quite a strong balance sheet. We're ready to go as opportunities arise. But, you know, you have to be very prudent. You have to do these things at the right prices. And I think more stuff will come to market post-havening.

Okay. And it raises the question, how quickly can you build your own capacity to meet forecasts? And perhaps just as importantly, what are the power needs and dynamics of that process as well at a time where power generation in this country is starting to get more attention as we see generative AI needs beginning to pull on it, too? Yeah, so definitely large scale Bitcoin miners that have been traditionally building utility scale sites, 100 megawatts, 200 megawatts, are competing head on with the AI companies. You saw AWS did a recent buy of a large data center operation site for $650 million. So there's direct competition going on. The advantage Bitcoin miners have, and I think especially Marathon, is we're able to operate

with real stranded energy, energy that doesn't have a natural grid connection. So we're able to consume that energy and use it where they otherwise can't sell it. So we rely on a lot of renewable energies, which is also intermittent solar, wind, et cetera. The other benefit we have is we're a load balancer on the grid. These AI loads are not load balancers. They just consume. They don't shut off. We have the ability to shut off at any time when the grid needs it in response to demand response mechanisms. So when energy needs are high in the afternoons in Texas, for example, we can shut down our systems, free up hundreds of megawatts of power to their grid so they don't have to go buy power on spot markets. They don't have to turn on peaker plants, which are fossil

fuel plants. They don't have to do all those things. So there are a lot of benefits to mining over AI. But yes, we do compete. And that's why we're very focused also on international expansion and growing internationally. We're currently operating on three continents, and we'll continue to grow. Okay. Fred Thiel, thanks for joining me. Thank you. Shares of Marathon down today, but higher on the week.

We have a news alert on Supermicro. The company just releasing details of its secondary offering, which closed today. Supermicro is saying it sold 2 million shares of common stock. It received $1.73 billion in net proceeds from that sale. You can see shares down fractionally. But of course, as we know, have had just a mind-boggling run here in recent months as investors have wrapped their arms around the opportunity here in Supermicro around generative AI. Up next, the CEO of Rockwell Automation. Speaking of generative AI and his new partnership with NVIDIA, that could be a game changer for the manufacturing industry.

We're going to dig into that. Speaking of NVIDIA, it is by far the biggest catalyst in helping put the semiconductor ETF on pace for the best quarterly gain since 2001. Stay with us. Welcome back to Overtime. Rockwell Automation shares getting a pop this week on news of a new collaboration with NVIDIA. Joining us now in an exclusive interview is Rockwell Automation Chairman and CEO Blake Moret. Blake, it's great to have you back on the show. And that's exactly where I'm going to start is the beginning of the week. We had this NVIDIA GTC conference and you were name dropped with this partnership. Walk me through what it means and how it speaks to

the relationship between you and NVIDIA as Gen AI makes its way to the factory floor? Sure. Well, if you start with some of the drivers of NVIDIA's importance, you look at what are the sources of massive amounts of data in the world today. You can look at social media, you look at financial transactions, and really the third is machine data. And the equipment that we provide is the single greatest aggregator of machine data. And so it's really an untapped potential to make manufacturing more productive. NVIDIA and Jensen recognizes that. And so we're very proud to be working with them to accelerate this technology. So are you a customer of NVIDIA through this partnership? Are you a supplier? Are you both? You know, primarily we're a user of NVIDIA GPUs today, but the announcement

was also about the integration of our software with the Omniverse cloud through their APIs. So that's a big piece of it. And it's the collaboration in looking at specific manufacturing use cases, such as accelerated compute and simulation and the use of Gen AI, which are all very important for accelerating the adoption of smart manufacturing. So I'll tell you, I was on the factory floor of Sikorsky, which is owned by Lockheed Martin to start the week. And that's a factory that Lockheed has put a billion dollars into, a factory of the future, I think, as they would put it. And you see things like Digital Twin and you see some of this automation there and you see a heavy lift military use helicopter that's

been completely designed digitally before it's ever made its way onto the production line. So how does how does Gen AI actually propel some of these capabilities forward when you are talking about manufacturing? So let's take a few of them. First of all, when we talk about accelerated compute, we recently acquired a company that makes autonomous mobile robots. So these are robots, mobile robots that are bringing material to a factory floor, like at Sikorsky, or taking away finished product and moving it either to the loading dock or the warehouse. Those AMRs already use NVIDIA GPUs, and so it's an opportunity to make them even more powerful in terms of their navigation and their perception of the environment. A second example, and this is one that really rose to prominence during COVID, is simulation. When it was not possible to have people from all over the world standing shoulder to shoulder to commission new lines.

People looked at the technology to do this simulation virtually. And this is an area where our Emulate 3D software has proven to be very valuable and linking it with the Omniverse to be able to get that kind of physical feedback in a digital twin of what's actually happening to be able to prove out these processes is helpful. And then the final is using Gen AI chat GPT style front ends on our programming tools. Okay. So raises the question for me of where are we in this automation adoption cycle? And I asked that knowing that the company also presented this week at an industrials conference and talked about the fact that assuming the pace of orders continues on a normal trajectory, that you expect financial results for the full year to track around the low end of current guidance, both from a sales and an EPS standpoint. So how to think about

adoption at a time where we do have this uncertain macro environment? Yeah, this year is a bit of a reset after industrials, including the automation companies, are recovering from supply chain shortages. We had record shipments last year, 17 percent growth, 28 percent growth in EPS. And this year, we're seeing the remaining effects of some destock on the part of our distributors and on some of the machine builders who bought a little more material than they needed during the depths of the supply chain. We see strong continuing underlying demand and a very good mid and long term outlook. Okay, Blake Moret, CEO of Rockwell Automation. Thanks for joining me. Thank you.

Well, sticking with industrial tech, Trimble is a leader in geospatial technology and also a player in the internet of things. The company was founded in 1978 on a big bet that GPS would have broader applications beyond military. Today, it serves markets ranging from construction to transportation and autos, also agriculture as it stands up a JV with farm equipment maker Agco.

Trimble builds hardware and software and offers services enabled by that space-based tech, putting it, according to CEO Rob Painter, in a unique position to implement generative AI. We're putting GPS on the blade of a grater, a do a dozer or an excavator so we know where the dirt is at any point in time we have this profound awareness of where that of where that uh where that job is in terms of its progress we increasingly have the ability to map that data of the work that's happening in the field with the project plan or with the job cost that comes out of the erp that real-time ability to adjust the amount of machines I'm putting out on that project or the workers that I'm putting to that

work, that profound ability to connect that field in the office, that physical digital. You know, when we talk about generative AI, I think the thing that we'll increasingly see over time is that vertical market knowledge will be important, right? If most large language models are scraping the entirety of the internet, that tells me that everybody has the potential to work with the same set of data. But what's the unique data that we have to work with at Trimble and 46 years into this business with the millions and billions and trillions of data points and customers that we have access to, I think that's what is really unique to be able to unlock the insights. And you're going to see more and more from us in this space. So investors seem to be embracing it.

Trimble has been trading at a multi-year high. It isn't alone. Competitors, depending on end market, include Autodesk, Samsara, Roper, all stocks trading at multi-year or all-time highs, and also all names well known to overtime viewers. You can catch the full interview in which Trimble's CEO discusses the portfolio and the role of space in software applications on my podcast, Manifest Space. You can scan the QR code right there on your screen. Well, stocks on track for a five-month winning streak. Up next, Mike Santoli's back. He's looking at how close this market now is to the rosy price targets of Wall Street analysts. And later, we will discuss whether weak guidance from Nike and Lululemon are raising a red flag for other consumer stocks. Welcome back. It's time now for CNBC News Update with Julia Borson. Hi, Julia.

Morgan, Russia's top security agency said that a mass shooting and explosion at a Moscow music hall has left 40 people dead and more than 100 injured so far, though NBC News has yet to independently confirm those numbers. Meanwhile, Russian state media said the venue is beginning to crumble while fires rage inside. Moscow's mayor announced on Telegram he was canceling all public events this weekend. Some 32 million Americans are under winter weather alerts for the first weekend of spring. A storm system dumped eight inches of snow in some parts of the Midwest overnight, and it is moving towards New England and the Northeast, where more snow is expected, along with powerful thunderstorms and even

potentially flash flooding. And former New York Congressman George Santos announced that he will run for reelection as an independent in November in a post on X. Santos said the Republicans passing a spending bill to avoid a government shutdown embarrassed him enough to leave the party. Santos was expelled from Congress in December after being indicted for fraud. Back over to you. All right, Julia Borson, thank you. Let's bring back Mike Santoli for a second market dashboard. Hi, Mike. Hey, Morgan. You know, Faxit keeps track of all the analyst price targets on all S&P 500 stocks and blends them all together and say, what if all those price targets were met? What would the S&P 500 itself be trading at? Well, that's this blue

line right here. It's what they call the bottom up target price. Nobody really thinks it's a genuine objective, but it's a notional thing. It says if the bull case and all the industry analysts comes true, here's where we are. And this is the actual S&P 500. So where we are right now, it's around 5,600. It's less than 7% upside from here. And that's a relatively narrow spread between that bottom-up potential target and the actual index. You see right here when there's been big buying opportunities, there's been more of a gap. FactSet says that over the last 20 years, this bottom up target has been between three and eight percent too high on average over the ensuing 12 months. So that may leave you a little bit cautious to say maybe we've used up a fair amount

of the upside. Of course, unless you see a lot of price target increases. I will also point out one year ago, analysts were way, way too low with their bottom up price target. Right. That's where it was. So you can basically see not necessarily use this as a guide, but a suggestion that we've used up a lot of the known fundamental news, at least to a large degree, to get the market where it is right now. It's like you took the thought out of my head, Santoli, because I was going to say everybody was caught so flat footed last year. Everyone was expecting a recession last year and then chasing the market higher with those price targets. So you got to you got to think that at least near term history is factoring into the way strategists are approaching this market now. For sure. And the other piece of this is the percentage of ratings that are buys right now is actually not very high relative to history. So it's a way of saying that analysts have remained relatively

cautious compared to how the market itself has performed. We can take that as you like, I guess. All right. Mike, thank you. Have a good weekend. Consumer discretionary, one of the worst performing sectors today, thanks to disappointing guidance from Lululemon and Nike. Up next, retail analyst Dana Telsey tells us whether she thinks this pullback is a buying opportunity. Stay with us. Welcome back to Overtime. Nike and Lululemon sliding today after providing outlooks that were lower than expected. Lululemon saw its worst day in four years. That stock finished down 16 percent.

Both earnings also put the health of the consumer in question once again. So Lululemon saying on the earnings call, quote, there has been a shift in the U.S. consumer behavior as of late, and we're navigating a slower start to the year. Well, joining us now is Dana Telsey from Telsey Advisory Group. It's great to have you here on set. Thank you very much. Great to be here. Is the health of the consumer in question here? I think it is. I mean, when you think about everything that's been going out on now in terms of sales, I term it as squishy. We've got a squishy environment where

it's very up and down. Hopefully an earlier Easter will help. We're having lower tax refunds. That's not helping spending. We have to get these lower rates in there to drive things. But overall, for Nike and a Lulu, it's product innovation that drives demand. I was at Lulu's headquarters in December in Vancouver. I saw the product lineup through 2024. New fabrics, new styles, product innovation. I think it's there. What Calvin talked about with sizes and colors and not having enough, I think they get that course corrected. But definitely disappointing to see.

And I want to see the guidance that they gave with the events and investments and marketing that they're making, more sales to drive leverage, and hopefully beat when they report the first quarter or the second quarter. So the bet would be that maybe perhaps guidance ends up being conservative. Yes. So do you buy the stock on this pullback then? I do. I buy the stock on the pullback because I believe international is growing fast.

I think North America. I don't think it's the state on the pullback because I believe international is growing fast. I think North America. I don't think it's the state of the competitive market. I think this was an issue that Lulu did to themselves. And I think they can course correct. Is it a similar situation for Nike? And I ask that knowing that Nike really talked about upping the innovation ante as well. I think it's different at Nike. I think Nike relied too much on their essentials.

And they really need to put newness front and center. With the Paris Olympics coming up, that should be a benefit to them. But I think with Nike also saying that they're going to have an investor day, usually they're in October, that should be a headwind in terms of the fact that, wait, we have to see what these new numbers are. So I think there's opportunity, but I think more near term, I think Lulu can course, but I think more near term. I think Lulu can course correct faster because Nike has to put more of its newness out there. That's first on the come. What was interesting to me about Nike, though, is the fact that they did report an increase in wholesale,

which maybe perhaps is part of the reason we saw names like Foot Locker trade higher today, too. I mean, that seems so different than what the narrative has been as of late with direct-to-consumer, really, across many different brands. Well, what you're seeing is you need a healthier wholesale. And having wholesale, look what Macy's is doing by closing some of their bottom stores. A healthy wholesale is a good environment. It's a good environment for the brands. It's a good environment for wholesale accounts. And it drives demand. DTC is definitely front and center for all of luxury goods, but for many more wider spread price brands, you need a healthy wholesale channel. And we're seeing new players out there.

Look at Dick's. Dick's has been very effective for a lot of brands. Do we see more M&A across the broader retail space this year? I think we could see some, but it doesn't seem like it's accelerating right now. I think the focus is on navigating and being agile in the face of a very squishy market. Where's the consumer demand? I think there's more confidence in margins and the ability to reduce expenses than there is in being able to integrate other businesses. Look what just happened with Cignet.

James Allen and Blue Nile is taking longer than expected with technology issues in order to drive what was originally expected. So does that mean in the short term, gross margins are going to drive the moves we see in these stocks when we get earnings reports? Yes. Gross margins, the big benefit, and lean inventory levels is helping that. Okay. Dana Telsey, thanks for joining me. Thank you. We covered a lot there. Well, supersonic jets, that could be on the verge of a comeback. After Boom's successful first test flight today, we've got those details next.

And if you love the show, you want even more overtime. You want overtime on overtime. Scan the QR code on your screen. Follow us on LinkedIn, where we'll post exclusive content. We've always got it coming. Overtime will be right back. Welcome back to Overtime. It has been more than 20 years since the Concorde's last flight, but the return of commercial supersonic jets is now a big step closer to reality. Phil LeBeau has the details. Phil. Morgan, Boom Supersonic has been in business for 10 years, and today they made their first test flight.

Now, this was not a supersonic plane, nor is it the one that they ultimately hope to build and put into service later this decade. But this is a tester flight. Essentially, you're looking at an aircraft one-third the size of what they're ultimately going to be building. They did the flight today out in the Mojave Desert. They got to a top speed of 283 miles per hour. We're in the air for 12 minutes. They call it a success, and yes, it is a success. It was a test flight, but it brings up the question, how close are we to seeing the actual boom supersonic overture? That's the name of the supersonic plane that they plan to build. Well, production is scheduled to start in North Carolina at a plant that's being built right now. 2026 time frame there. First flight potentially 27, 28.

And they would like to be in commercial service by 2030. But as you know, Morgan, these things rarely run on time, especially when you're talking about a new aircraft. Nonetheless, for Boom Supersonic, this was a milestone. It wasn't the full size of the aircraft. It wasn't at supersonic speeds, but it did. It's the first step towards them saying what we are planning on building, we believe we can build and it will be successful. What's so fascinating to me about this, Phil, is the fact that Boom isn't the only company that's working on this right now. I mean, you think about the X-59 experimental aircraft that Lockheed Martin has built with and developed with NASA that just had a successful test flight. Rather recently, you've got Hermes, which also works with the U.S. military and is developing hypersonic flight.

I just wonder how close we are to this reality and how big the market could actually truly be for it? I think it's bigger on the military side, at least near-term applications, than it is on the commercial side. Now, Boom would counter by saying, look, we've got orders for 130 planes. American, United, JAL out of Japan have all placed orders. But that's an untested market. And even though you can say, look, we're going to cut down the time to go from New York to London in half or from L.A. to Tokyo in half. What we've seen is that that's such a small market. The question is the economics. Can you make it work? Boom says they will make it work. A lot of hurdles to overcome between now and the end of the decade. All right. We'll be watching for him. Philip. Oh, thanks. We're just hours away from a potential partial government shutdown.

Well, up next, we're going to discuss what's at stake and how it could impact Wall Street. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We will be right back. Welcome back. The House of Representatives approving a funding package that could prevent a partial government shutdown at midnight. But will the Senate pass it in time? Emily Wilkins has the latest details. Emily. Hey, Morgan. Well, yeah, a shutdown at midnight is still on the table as the Senate has yet to pass that $1.2 trillion spending bill. Remember, it takes all 100 senators to agree to speed up the process, the process of votes, and several Republican and Democratic members at this point are asking for votes on amendments.

Now, weekend shutdown would have minimal impacts, but if a shutdown continues until Monday, things could get a little bit rocky. Just consider the IRS, where two-thirds of employees would be furloughed at the height of tax filing season. Now, that $1.2 trillion bill did pass the House, but a majority of Republican lawmakers voted against the bill over numerous concerns, including a lack of border security and funding for programs that provide abortions and support gender transitions. Now, all of this could have an impact on Mike Johnson's speakership. Just before the vote, Congresswoman Marjorie Taylor Greene took the first step to oust Johnson, filing a resolution to begin the process. However, she didn't take the next step to get the vote on

the resolution. Greene told me she hasn't drawn any red lines and wants to give her colleagues time to determine who might bake a better speaker. Also making Speaker Johnson's life a little bit more difficult, his majority is shrinking yet again. Congressman Mike Gallagher will now be leaving on April 19th. His departure shrinks the GOP majority even further and leaves an opening to lead the committee investigating China's government.

And Morgan, we'll just have to see exactly how Johnson maneuvers with what is basically going to be a one vote majority for at least a little bit of time. It's going to be really difficult to get things done in that period. Do we know why Gallagher is leaving early? I mean, it seems like it's been a little bit unusual in terms of how many lawmakers we've had retiring before their term is up as of late. I mean, certainly Gallagher was a notable one. He's a little bit younger. He's kind of poised as a rising star in the party. In a statement that he put out, he said this was a difficult decision, but he made it with his family and in conjunction with leadership. The time that he's leaving, April 19, we're going to see the House go down to about a one-vote majority for a week or so, but then you're expecting a California primary to add

that Republican back. And so Gallagher has just decided this is a right move for him at this time. LISA DESJARDINS Okay. Emily Wilkins, thank you for joining me. Of course, as we monitor that Senate vote, defense appropriations is part of this package. Defense procurement is poised to increase 6%. Defense R&D is poised to increase 6%. Those are key parts of a defense budget that mean quite a bit to investors in defense stocks. In the meantime, just taking a look at markets here, we did have

the Nasdaq finish the day higher, as well as the Dow Transports. What led the Dow Transports higher was FedEx, with a 7 percent gain after express margins showed improvement in earnings that we got in overtime yesterday. Also had another $5 billion share repurchase agreement announced. UPS traded higher in sympathy. Next week, we get UPS's Investor Day as well. Carol Tomei, the CEO of that company, is going to join me for a first on CNBC interview following that report. That's going to do it for us here at Overtime. Fast Money begins right now.