Closing Bell - Closing Bell Overtime: Strong Consumer Data Lifts Stocks; Nuclear’s Make Or Break Moment 8/15/24

Episode Date: August 15, 2024

A strong session for stocks after strong consumer data and results from Walmart – we have you covered on this rally. Bespoke’s Paul Hickey and Citi’s Scott Chronert break it all down. Former Saks CEO gives his take on the spending levels and what’s ahead for the consumer. William Blair’s Jed Dorsheimer breaks down AMAT earnings. Plus, our Pippa Stevens is in Georgia at the first built-from-scratch nuclear reactors in 30 years, reporting on what’s next before PSEG CEO Ralph Larossa talks his company’s plants and what’s going to power growth for the utility giant. 

That's the end of regulation. Humankind Investments ringing the closing bell at the New York Stock Exchange. The New York Bankers Association doing the honors at the NASDAQ. Retail sales, jobless claims data getting cheered by the bulls today. Stocks making sizable moves higher, adding to solid gains on the week, basically closing at session highs. The S&P 500 is now positive for the month. We've regained all the lost ground of recent weeks.

That's the scorecard on Wall Street. The action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Port is off today. Well, coming up on today's show, former SAC CEO Steve Sadov joins us with his reaction to the blowout retail sales print and strong results from Walmart and what they say about the resiliency of the American consumer. Plus, the CEO of utility company PSEG, which is up 30 percent this year. It's trading at

record highs. He's going to break down his company's bet on nuclear energy and the big opportunity in powering AI data centers. Plus, we're awaiting results any moment now from semiconductor equipment maker Applied Materials after a big boost for that stock and the whole chip space in today's session. Let's get straight to our market panel. Joining us now, Paul Hickey from Bespoke Investment Group and Scott Cronert from Citi. Great to have you both here. Paul, I'm going to start with you on this one because the S&P, as I just mentioned,

has made up the losses of the recent pullback. How does this fare against other moves, similar moves we've seen, recovery moves? And how does it signal us for the rest of the year? Yeah, so it's pretty amazing, Morgan. You mentioned the move in the S&P so far in August. We're basically flat on the month now. Earnings season came to an unofficial end today with Walmart's report. We're basically

flat during earnings season. So not much has happened, right? It's basically full of sound and fury, signifying nothing at this point. And what we see here is our big important takeaway here is what you saw in this volatility in the VIX over the last two weeks. You've seen some amazing moves. You saw one of the largest upside moves in history over a five-day span, followed by one of the largest downside moves in the five-day span. And when you look at those downside moves historically, when you've seen moves of this magnitude, a year later, the S&P was always positive each time. In the shorter term, you saw some more mixed returns.

You know, things tend to sometimes settle out. You can see more rockiness. But over the long term, we've basically cleared the decks of some of the weak hands here. And you set the stage for a stronger foundation going forward in the market. And so I think that's a positive long term. We don't know what the next couple of days are going to be. No one would have predicted what we've seen in the last two weeks. But longer term focusing, we think there's still some positives here. OK, I should note Applied Materials is out. We're going through those numbers. We're going to bring them to you momentarily here. In the meantime, Scott, I mean, you make the argument that growth is defensive in this market right now.

What do you mean? So going into last year's last week's sell off in the last Tuesday, Wednesday, you know, we we looked at this metric that we use and increasingly focus on, which is implied growth expectations. And those levels had gotten quite extended going into the Q2 reporting period. So it was consistent with our view that going into the summer months, you had to expect a pullback. And we had been characterizing that risk in the 5% to 10% range. We got down to 5,200, which was roughly that 5%. But importantly, what you did was took some of the edge off of these very extended implied growth metrics that in turn set the stage from our perspective for a better risk reward. So as we're navigating volatility and as we're navigating ongoing recession risk, our preference as of last week has been to focus on this mantra

of growth being defensive across an economic valley that's still ill-defined with a better valuation setup and a still quite strong fundamental setup. Okay. Applied materials results. We have them ready. They're out. Seema Modi has the details for us. Seema. Morgan, these are third quarter results for applied materials coming in at $2.12 adjusted, which is a 10 cent B.

The street was looking for $2.02. Revenue also surpassing expectations at $6.78 billion. Operating margins coming in higher and guidance is above what Wall Street was indicating, yet the stock is lower by 1%. Perhaps that guidance not as high as investors were hoping for. The stock has had a terrific run this year, Morgan, up 30% so far this year. You'll see shares down about 1% in OT. On the conference call, which begins at 4.30 p.m. Eastern, we'll be looking for three things, Morgan.

Chips funding, CapEx, and its exposure to China. Okay. Be sure to bring us those headlines as you get them, listening to that call. Seema Modi on AMAT right there. Paul, I'm going to go to you because tech and consumer discretionary leading the gains for the S&P sectors today, most of which were in the green. How does applied materials now set us up looking forward when chips

have been such a strong part of the equation? They've been a strong part of the equation, but they've seen a big sell off. I mean, you look at applied materials, it's up almost 25% off its lows in the last two weeks, but it's still down 18% from its highs. So I think it gets back to that point that Scott was mentioning about the edge. We've taken some of the edge off of these overbought conditions that we saw in mid-July. You look at what the Russell 2000 saw in mid-July was the most overbought reading for a U.S. index ever. And when you've seen even readings close to those levels by the S&P, the Dow or the Nasdaq, what you tended to see was short term weakness as you work off that edge. But longer term over the next year, you don't get these extreme overbought

conditions for nothing. There's a reason for it. And there's a reason why investors are bidding stocks up. So I think going forward, it's a it's a again, as I was saying, positive long term backdrop, tech and consumer discretionary leading the way today. I think those two sectors going forward can continue to be strong, but not just the mega caps techs, you know, smaller and mid cap tech stocks or even other tech within the S&P 500 besides those, you know, Microsoft, Apple's and Amazon's. So I think in that respect, broadening out of the rally, there was some doubt cast into that trade in the latter half of July and early August. But I think going forward, those are the names you want to be looking at. OK, Scott, you talked about navigating things

like recession risks right now. It does seem like particularly in the market today, you talked about navigating things like recession risks right now. It does seem like particularly in the market today, you've got more soft landing optimism. The disinflation momentum continues here. You've got some dovish Fed speak. You've had better takeaways from high profile earnings recently as well. Does that dynamic continue to play out here? And when you look at earnings estimates for the second half of the year, can we continue to achieve those? You know, I think what we're learning as we go along is that we're getting closer and closer to Fed pivot point.

Right. So we're nearing the end of let's call it two years of a hawkish Fed narrative that's embedded in our psyche. And we're getting closer to the point where we're going to see that first Fed rate cut. Presumably it's in September. City House view is 50 basis points. I know the discussion is back and forth between 25 and 50. But in either event, what we have to prepare for is it's going to get noisy in here. When you get to Fed pivot point, typically easing Fed comes with more concern regarding the underlying macro setup. Now, we've been very clear that be careful on comparing Main Street to Wall Street. We think fundamentals are still in good shape.

I think this noise level is going to continue pretty high. The premise to our 5600 year end target is that we want to be in this equity market. We want to be better buyers on pullbacks, as we've just experienced. But all told, I think the game from here is going to be navigating ongoing fundamental issues around economic concerns one day, maybe not the next, but combined with an easing Fed backdrop that I think is going to pave the way for continued earnings growth into 2025. All told, Q2 earnings were better than expected. We did get the beat and hold that we were looking for in terms of the full year setup. Well, we think we're still positioned for ongoing second half growth with

an improving fundamental backdrop heading into 2025. Okay. Scott Cronert and Paul Hickey, thanks for kicking off the hour with me. Thank you. With all the major averages finishing higher on the day, basically at the highs of the session here and the S&P turning positive fractionally on the month now. Let's get over to CNBC senior markets commentator Mike Santoli for a look at consumer stocks, which helped to drive the gains today. Mike. Yeah, for sure. Very much a relief, Morgan, for a lot of the consumer discretionary stocks, which had been on watch for a potential breakdown. They've sort of surrendered the leadership position. This is the equal weighted consumer discretionary of the S&P 500, a two year chart. And you see it had started to flag relative to

the overall equal weighted S&P, just kind of stayed ahead of it with today's little outperformance pop. Industrials here, I put in there because that was the sort of the twin leadership out of the October low of last year and cyclical tone to the market. Industrials continue to really hang in there. And that's even against some weak components within industrials like, you know, freight and and airlines and things like that. So still looks OK, although consumer, it's definitely not decisive today that we're going to see any kind of reacceleration. Now, on the consumer staple side within that sector, what you're seeing perform the best for the most part are the stocks that look most like consumer discretionary. That would be Walmart and Costco. Yep, they're still consumer staple stocks, but obviously have a discretionary component. And they account for basically all the upside. These two stocks together are like 25% or so of the market cap weighted staple sector. And this is the equal weighted staples you see

done absolutely nothing over the year to date so far, Morgan. That's fascinating. I do wonder, though, and you just talked about it, Walmart, Costco, we're talking about discretionary within Staples, but they're also so big into grocery, how much that's driving the momentum for those names and what it means for Target when we get those results, since of the big box retailerswind for the Costco's and Walmart's, not just that their necessities, but that they always just institutionally they deal in value and they basically compress price as much as they can at all times. I do think that Target, the stock, got some relief today, mostly because of what Walmart had to say about general merchandise sales. Maybe finally the pressure is lifting on some of those areas. But for now, if it is a late cycle economy, if pricing power is scarce, if the consumer is at least sort of slowing down, it would seem to still advantage those companies that have that kind of

scale and don't need the pricing or the discretionary splurging that some other stocks do. Yeah. And of course, we're talking about retailers here who are actually cutting prices on many of their goods in the midst of this as well. Mike, we'll see a little bit later this hour. Mike Santoli still ahead. Much more on today's after hours action. An analyst breaks down the three main issues facing applied materials and what he wants to hear from management on the call. And let's talk about high energy. PSEG is up 30% this year. It's trading at record levels.

The utility company's CEO joins us with what's behind those powerful gains and what could drive future growth. Overtime, H&R Block earnings are out and Steve Kovac has those numbers. Steve. Hey there, Morgan. Yeah, and shares are up better than 5% on these results. Now, we can't compare any of the EPS to revenue, but let me just read off that right now. EPS was $1.89, revenue $1.06 billion. But it really seems like the stock is moving here on the 17% dividend increase announcement and a $1.5 billion buyback announcement. And this report marks the end of their fiscal year and giving new guidance for the next fiscal year that's starting this quarter,

predicting here another year of revenue growth and EPS growth. Morgan, shares almost 6 percent. All right, Steve Kovac, thank you. Applied Materials shares bouncing around here in overtime after reporting a beat on the top and bottom lines just moments ago, giving mixed guidance. You can see shares are down fractionally right now. Journey's now is William Blair analyst Jed Dorsheimer. Jed, it's good to have you on. Your initial takeaway from these results, which do seem pretty strong with commentary about the role that AI will play over the long term here in fueling demand. Yeah, thanks, Morgan. It's, you know, we got in line, basically in line out of these guys. And, you know, it's been a strong stock. We have a market perform on it right now. I think the key message,

given the commentary from Intel and expectations around TSMC, is what does wafer front-end spending look like for semi-equipment? And here, there's going to be a lot of eyes, including ours, on China and what the health of that region looks like and whether or not there's a bubble or that's going to be sustainable into 2025. Is AMAT in a position to, I guess, for lack of a better term, de-risk its business or its portfolio away from China or does still so much of it hinge on that? No, I think that would be very difficult for most semi-cap equipment companies. I mean, that's an area, Asia in particular and China also. I just, I think that would be too difficult. Okay. The fact that we had CHIPS Act funding denied to applied materials,

how much is that going to matter? How much does that put CapEx into focus, for example? Yeah, not as much on the CapEx side, because that was for an R&D center. But we will look for commentary in terms of what that means from Applied on the call. And certainly, it's going to have an impact on jobs and going into an election cycle. You know, I'm sure there'll be, you know, many talking about that from an actual impact to to apply. We're going to have to see. I don't think it'll have a huge impact, though. Do we fully know the impact? I mean, you touched on it just a moment ago, but do we fully know what Intel making cuts and having its own issues is going to mean for applied materials and for

others in the space yet? Yeah. So to be fair, I don't cover Intel. However, I think just from a pure WFE perspective, Intel's cuts take down overall spend by about six to seven percent. So it is a material impact. And when you look at where that is being made up, largely that's coming from China. So that's why the eyes are going to be on, you know, do we have TSMC that's able to step in and make that up or or is it mostly going to be China? Right now, it's looking like China. Got it. Read through to other names, whether it's the semi semi cap equipment names or whether it's some of the semiconductor stocks, the chip makers as well. I mean, listen, we got in line, in line on a name that's increased and expectations have creeped up quite a bit. So my guess is you probably I don't think you have any wild reactions. Of course, we've got to see what's I got to join the call here in a minute.

We'll see what they have to say. But right now, I would not expect any any large moves in the in the sector as a read through. OK, Jed Dorsheimer, thank you for joining me. Thanks for having me on. Call kicks off in about 12 minutes. Shares are down about one percent right now. It's been a hot summer in America and a hot summer for investors in utility company PSEG, which is trading at record highs. We will talk to the company's CEO about keeping up with energy demands and the role nuclear is playing now and into the future. And up next, retail roars back. Walmart jumping along with a number of other consumer stocks after strong results and a blowout retail sales print. Former Saks CEO Steve Sadov joins us with a number of other consumer stocks after strong results and a blowout retail sales print.

Former SAC CEO Steve Sadov joins us with his list of winners and losers in this consumer environment. Stay with us. Welcome back. Investors are regaining confidence in the consumer following a strong retail sales print this morning. That's up 1% month over month. And after Walmart reported a beat and raise quarter, Tapestry also reporting solid results with sales powered by Coach. But the picture isn't as clear across the full consumer landscape. Take department store Dillard's. Reported weak quarterly results today, a shopper struggled with high prices. Starbucks earnings were well below estimates. The company noted a 3% same-store sales decline, and hospitality industries facing real challenges as well. Airbnb, for example,

giving poor guidance this earnings season. So joining us now with his read on the consumer is former chair and CEO of Saks, Steve Sadov. Steve, it's great to have you on. And I'm going to start right there. Key question, are consumers spending less or are they just spending differently? I think the answer is they're spending differently. They are spending a bit less in nominal dollars, but that's because inflation has come down. If you looked at the beginning of last year, the consumer was growing at about 7%, but the inflation rate was at 7%. Today, you saw a print that was about a little

less than 3% versus a year ago, but we saw an inflation print that was 3%. So what's happening is the consumer is spending at about the rate of inflation, but they are spending differently. You've seen the shift to experiences. You're starting to see a shift back away from restaurants were killing it relative to at home. Now you're starting to see groceries coming back relative to restaurants. They're sort of converging. So I think you're seeing different behaviors as opposed to a fundamental shift in the consumer strength. So we know we're talking a lot about things like revenge travel.

You just mentioned experiences, people eating out at restaurants. Are we at a place where we can say we're normalizing post-pandemic now with behaviors and consumption? I would say we're reverting to the norm. We haven't totally reverted. So, for example, in categories like home improvement, where you had a big win during the pandemic and you've seen the Home Depots of the world that have been suffering at furniture stores during this period, they're being affected by the housing market and the lack of high mortgage rates and lack of consumer buying home. But I've started to see a closing of the gap from this reversion effect.

So, for example, travel. Travel is still strong, but it's not nearly as strong as you saw, let's say, early last year. You're still seeing people wanting to go traveling to Europe. You're starting to see it reverting. I'd say we're getting close to the point of medium back to the norm. So the strong results we got from Walmart today, the commentary from CEO Doug McMillan on the state of the consumer, what was your takeaway and what is the read through then to other retailers? Well, I'm a little bit concerned.

I thought that the Walmart numbers were superior. Really, they did a fantastic job and they showed that their business is very strong. And the consumer at 2.7% or so is healthy. Walmart is winning. They're executing not just in terms of the low-end consumer, but higher-end consumers are going to them. Their marketplace is strong. They're innovating in areas like fashion and apparel. And so I think that there's a lot of share growth going on. Remember, they're very heavily grocery. They've done a lot of price reductions. And then you see their strength in their discretionary businesses like the apparel emerging. So they're a share winner, but I think they have a very strong business.

But I'd be a little bit hesitant to assume because Walmart did well, all the retailers are going to do well. You mentioned the Dillard's numbers. Dillard's was very disappointing. So you've got all of the department store sector brands. Macy's will report next Wednesday. I don't have any idea how Macy's will be doing, but I wouldn't assume that because Walmart had really good numbers, that means that everyone in the retail sector will do well. I saw electronics did pretty well today. You're seeing the last couple of months, electronics have reemerged, doing much better. You're starting to have an innovation cycle

with some of the AI-based computers, with telephones. So I would expect to see some of the electronics retailers holding up quite well. But I would just be careful. You know, I saw it when markets had a remarkable day today in the retail sector. I'd just be a little bit careful assuming that, hey, we're off to the races. Yeah. And we were having a conversation on this show just earlier this week about, as you see Macy's closures, what it's meaning for malls in America and how those are being repurposed and retrofitted for some very unique things, including, for example, housing and health care. Now, in the wake of all of this, we are seeing more. We have seen some more M&A as well, including your former place of employment,

Saks with Neiman Marcus. You're seeing we talked about tapestry as well, which we mentioned just a few moments ago. Do you expect that we're going to see more consolidation? Well, this is an industry that's been ripe with consolidation historically. So I would anticipate that you will continue to see consolidation. There's a lot of efficiencies that can be had. And as you're going into the future, you have so many requirements in terms of investment in technology, artificial intelligence, data analytics, and infrastructure that there's benefit to scale. And you're seeing the marketplaces take over. So the winners having large marketplaces. So I would expect to see some consolidation. The example of Tapestry and Capri, Sachs and Neiman's are good examples of that. And then I would expect beyond the consolidation,

you'll start to see more and more closures. Historically, we've probably had about a thousand more store openings than closings each year. This year, we're seeing about the same number of openings and closings happening. And you use the example of Macy's. Tony Springs is doing a really good job of trying to right-size Macy's and focus on the A-level, A-B stores where they have a lot of capabilities. But in these smaller malls, what I call the C and D malls, you're seeing a lot of them. That's where some of the Macy's will be closing. And that's where some of the malls are really troubled and you'll have to repurpose them. Steve Sadow, we covered a lot. Thanks for joining me. Thanks. Well, coming up next, breaking from tradition.

The Fed's policy path has been fundamentally different from prior cycles in one key way. Mike Santoli returns with a chart you need to see. Plus, one space stock we told you about months ago on this show. It just popped 50 percent in today's session. We're going to tell you what it is when overtime returns. Welcome back. Let's bring back Mike Santoli for a look at why this Fed cycle is different from all other Fed cycles. Mike. Yes. Well, the economic cycle, Morgan, is different in so many ways, obviously, because of the pandemic, the response to the pandemic and the eruption of inflation

to crazy heights for the first time in a generation. So this is from Jim Paulson, Paulson Perspectives. It shows the change in the Fed funds rates or how much the Fed changed rates after inflation peaked, after the CPI peaked. So the main one you want to focus on here is the current cycle. Inflation peaked in 2022. And yet still after that, the Fed had almost four percentage points of tightening left to do. And of course, this kept rates steady for more than a year now. You see these other cycles and they were already kind of in cutting mode by the time you got there. Well, you could say, well, of course, this time we started with rates at zero. So you had more to do. And there obviously was this asynchronous way that inflation came out of the end of the pandemic. And by the way, too, this is the first bull market

that we're in right now for stocks that started when the Fed was still hiking, the first one in memory anyway. So lots of weird stuff. The upshot to me is that there's a lot of air under the Fed funds right now that inflation has gone below 3 percent on an annual rate based on a couple many of the measures. And so, therefore, you don't need the economy to slow to have the justification to trim rates. That's been the premise all along for the bull case for why the Fed pivot should be bullish this year. What you didn't necessarily want is the economy to be really failing and the Fed having to chase it lower with interest rates. It's really fascinating. When I look at this chart, I mean, obviously it makes you can see how it makes the case potentially, potentially data dependent for a 50 basis point cut in September, even if you don't have an economy that's falling off a cliff

and why it's just as important what the cuts behind that look like. But it also raises questions about the R star, the neutral rate and what that should look like, too. It does. And that's a moving target. And I think that, you know, Powell, Jay Powell in particular, is just not very dogmatic about, you know, getting precise about what the neutral rate is. You could probably say it's certainly higher than it was in the 2010s. But whatever it is, it's a good deal lower than five and three eighths, which is where the Fed funds rate is right now. And I agree on 50 basis points. It's certainly, you know,

a fair point that you have five hundred and, you know, thirty five basis points to work with. So 50 off of that is not necessarily the biggest move. Not sure it matters terribly much necessarily if the economic numbers hold in there. But we'll be talking about it for several weeks to come. All right. This is a fascinating chart. Mike Santoli, thanks for bringing it to us. Well, a tale of two new space stocks today. AST Space Mobile rocketing higher after the company confirmed an early September window for its first ever commercial satellite launch. Date still to be decided. Developing a space-based cellular network, AST's first five Bluebird satellites will be launched by SpaceX. They will feature the largest ever commercial communications arrays to be deployed commercially in low Earth orbit. B. Reilly subsequently raised its price target,

saying AST SpaceMobile remains the, quote, clear leader in the race to enable true direct-to-device broadband connectivity. Shares finished the day up 50%. Meantime, Taron Orbital, it's a different story. Today agreeing to be bought by stakeholder Lockheed Martin. Taron Orbital, which makes satellite buses for commercial and government customers, including mostly Lockheed, had been facing a cash cliff. The deal puts its enterprise valuation at nearly $450 million, with Lockheed acquiring Taron Orbital's outstanding common stock at $0.25 per share, well below the previous bid of $1 per share back in March that was made by Lockheed originally. Taron Orbital went public back in 2022, valued at $1.8 billion. Yesterday, it's a microcap stock now, but yesterday, shares closed at 40 cents and, as you can imagine, plummeted from there on this news.

Well, power has been very profitable for utility PSEG, whose stock is hovering near a record high. Up next, the company's CEO on the outlook for energy prices and the impact soaring demand for AI data centers is having on his business. And speaking of energy, Pippa Stevens looks at the future of nuclear power in the U.S. Hey Morgan, I'm three hours east of Atlanta where the first nuclear reactors in the U.S. in decades are now connected to the grid. We got an inside look and we'll have all the details coming up next. Welcome back. It's time now for a CNBC News update with Bertha Coombs. Bertha. Hey, Morgan. President Biden supported calls for new elections in Venezuela today while speaking with reporters, joining leaders from Brazil and Colombia in the wake of the contested results of last month's vote in which both the opposition and Nicolas Maduro claimed victory. The U.S. has rejected Venezuelan leader Maduro's victory claim. The

White House has called on the Maduro government to release data on the election vote. Russia propagandists are still working to influence Americans ahead of the November elections, according to Meta's latest adversarial threat report. The social media giant said it dismantled five Russian propaganda campaigns in the last three months from groups based in the U.S. and Vietnam. And longtime host of the Hollywood Squares, Peter Marshall, has died. Marshall helped define the smooth, professional, but never too serious game show host on over 5,000 episodes of the iconic series that ran on NBC from 1966 to 1981. That earned him five Emmy wins. Marshall's wife said in a statement that he died at home. He was 98. He was a lot of fun to watch. Back to you.

Definitely. Bertha Coombs, thank you. It's a historic time in the energy industry as the first new nuclear reactor in the U.S. in 30 years just recently came online in Georgia. Pippa Stevens is there with more on what this could mean for the future of nuclear energy in the U. Georgia. Pippa Stevens is there with more on what this could mean for the future of nuclear energy in the U.S. Pippa. Well, Morgan, this really feels like a pivotal moment for nuclear. Proponents say that this plant, Plant Vogel, is a success, showing that the U.S. can build this type of infrastructure and that it could jumpstart a domestic supply chain. On the flip side, people point to how expensive nuclear is and this plant wound up doubling in cost and how long it takes to come online. Now, Southern Environmental Law Center called the price tag astronomical, estimating

that a third of next year's utility bill hikes for consumers will be because of Vogel 3 and 4. That's on top of already elevated prices during construction. But the industry is working hard to highlight safety protocols, and a lot of innovation is happening, including with these new streamlined design reactors with fewer components. There's also small modular reactors like the ones Bill Gates is investing in, but those are still years away. Now, studies show that support is on the rise for nuclear energy,

but Morgan, public perception really does on the rise for nuclear energy. But Morgan, public perception really does remain a hurdle for the industry. What does it take to bring the costs down? I guess, why are we seeing this shift in the demand for nuclear right now? How much is geopolitics, for example, factoring in? Well, the company says that the reason why it costs so much was because we hadn't built a reactor in such a long time. And so we really gave up all of that knowledge and given how technical and specialized the plant like this is if you haven't done it for decades then you you really are you know playing catch-up along the way and he

also told me Chris Womack the CEO told me that unit 4 came online in half as much time as unit 3 and was also significantly cheaper therefore really demonstrating that it was that lack of doing it for such a long time but on the geopolitical front we are seeing these same ap1000 reactors being built in other places like in poland in china in bulgaria among other places and so the industry says well we should really be building these at home now that we have these two online. But of course, more public-private partnerships is what utility execs are saying would really kind of help here, given how expensive these are. And given that they're going to be online for 60 to 80 years, they say that there has to be some support at the federal level, including streamlining permitting, things like that,

which Morgan, I know, you know, we hear a lot about from energy executives across the space that the red tape is really prohibitive. All right. Pippa Stevens, great reporting. Live shot of the day for sure. Thanks for joining me. Well, nuclear and broader energy demand for a range of services, including AI and data centers, is helping push utility stocks to record levels in recent days, including the stock of our next guest, PSEG. Well, joining us now is PSEG Chair, President, and CEO Ralph LaRosa, who is at his company's nuclear power plant in Salem County, New Jersey,

one of three that the company operates. I love this, that we're going to be talking about nuclear here. So, Ralph, it's great to have you on the show. We just heard about PIPA reporting from Georgia, and that's exactly where I want to start with you. The economics of nuclear. And after so many years of hearing how expensive it was, how costly it was, why it makes sense and is a compelling argument now.

So, Morgan, I think Pippa did a really great job of reporting there, and she hit on all the key factors. It is expensive. It does take a long time to bring new plants online. We're not in the business of building new reactors. We are operating the three reactors that we have behind me here, and we're operating them as safely and as low cost as we possibly can to make sure we're feeding the grid. But we have had discussions with folks about, hey, do you want to put a new SMR-type reactor here at our site? We would certainly host that, operate and maintain it for somebody. But to put that capital use with our company is not something our shareholders would be looking for us to be doing. Got it. In terms of the grid, how resilient is it? And what are

you seeing in terms of the demand on it, especially as we do start to talk more about things like AI data centers and the electrification of everything? Yeah, Morgan, it is absolutely rising. There is no doubt about it. We're seeing it across the entire industry. Just for us here in New Jersey, we have seen about 800 megawatts of new data centers that have come online in the last year and a half, two years. So it's slow here, but it has started to pick up. Governor Murphy and his economic development team are really behind AI and developing those types of jobs. And with that, you need data centers and infrastructure. And so we're seeing that demand start to pick up here in New Jersey. What is it going to take from an infrastructure perspective to actually build out those future power needs?

Yeah, you start with the transmission system. And we have done that over the last 20 years since the blackout back in 2003. So we're well positioned as a company to do that. And I will also have rebuilt many of our substations and switching stations after Super Storm Sandy. So you start with those core basics. You make sure you have enough generation. We do have enough generation in PJM grid. We're 2 or three percent higher than what their reserve margins they would like to have online. And so between that and having enough transmission and distribution, we're in a pretty good place. But it's going to be close. You know, if you start adding in electric vehicles, electrification of individual homes,

we're going to continue to have to invest in those in those wires and continue to bring new clean generation on the grid. How meaningful is something like the IRA to your business? How much of that money has already been deployed? That is absolutely key to us. That provided the stability that a company like ours would need to stay in the nuclear industry. We're in a deregulated marketplace. These plants behind us are merchant. Without that backstop of the federal government, we would have been looking at closing these plants five, six years ago in that recent past. And because of the backstop that we had first at the state of New Jersey, and now what we see at the IRA from Washington, we're able to count on

that backstop and as a result, run these plants and start to make investments for the long term. We're going to increase the capacity out of the two Salem units that we have. We're changing the operating fuel cycle at our boiling water reactor, the Hope Creek plant. And as a result, we're going to be putting more power on the grid. And that IRA enabled all of this. And finally, we were having a conversation yesterday about some of the hidden costs of homeownership and some of the areas where inflation has been sticky. Yesterday, we were talking about insurance, auto insurance, homeowners insurance. But

utility costs have gone up for many consumers, too. And I realize that looks different across states because of the regulatory environments and how much those shift across states. But what are you seeing in terms of pricing and how do you mitigate those costs at a time where you have everyone, including the Fed and the U.S. government, focused on inflation and bringing them down? Yeah, you know, we are seeing that across the board. Sometimes it's being driven by generation and higher costs of generation in different parts of the country. I can talk to you specifically about here in New Jersey. We've done a really nice job of balancing those factors. We look back over 20 years and the average part of your take-home pay that we would use in a utility from an expense standpoint has remained pretty flat, anywhere from 2% to 4%, 4% for medium income and about 2% for low income because of the

programs we have in place. That's been over 20 years. So we've worked with our regulators to do that. We're in the middle of a rate case here in New Jersey. It's our first one in six years. We have not raised the distribution costs over that entire period of time. It's about a 9% increase that's spread over these six years. So we're pretty proud of the efficiencies that we've had in place. And again, working with those regulators, we've been able to keep the prices down here.

All right. Ralph LaRosa of PSEG. Thanks for joining me. Thanks for having us. Up next, the inside details of a massive hack to trade scheme that's targeting the U.S. economy. It's orchestrated by an oligarch tied to Russian President Vladimir Putin. And check out Cisco. It's one of the drivers of the Dow's rally today after beating fourth quarter earnings estimates, announcing it is laying off 7 percent of its employees as part of a new restructuring plan. Those shares had a strong day. Stay with us. Welcome back to Overtime.

We have a news alert on Autodesk, and Steve Kovach has the story for us. Steve. Hey there, Morgan. Yeah, you see shares here of Autodesk. They're down a little more than 2% after hours. This is following a headline that crossed over at Bloomberg saying they have some new documents or previously unreported documents showing that executives excuse me, that executives there have ignored some of the accounting issues. You might remember a few months ago, back in April, this spring, the company said there were some accounting issues. It delayed one of their annual reports.

And since then, there have been just a lot of questions around what's going on. It launched an investigation in there. And it sounds like some new documents showing, adding to the more evidence that the executives there knew what was going on and hit it. It looks like we see shares down better than 2 percent, Morgan. Steve, thank you. Thanks. It may sound like a script to a Hollywood movie, but a young Russian oligarch tied to the Kremlin who hacked his way to a nearly $100 million fortune. It's a real life spy thriller.

Eamon Javers has been investigating the story. He joins us with more. Eamon, you were been investigating the story. He joins us with more. Eamon, you were working on this project for months. And then just as you were wrapping it up, this hacker was part of the recent prisoner swap that we saw with Russia. So when did you guys realize that something was going on here? You know, Morgan, the timing on this was really crazy because we were always scheduled to release it on that Friday, August the 2nd. We had a new documentary out that day. We have a new podcast out about all this

called The Crimes of Putin's Traitor, which is out today. You can find it on all your podcast platforms and you can listen to it on your ride home from work this evening. But look, we were scheduled to release this on August 2nd. Earlier that week, we were doing our final little fact checks and Googling everything, make sure we're all buttoned up.

I entered Vladislav Klyushin's name into the federal prison database to check some information on him there. He was in a U.S. prison and suddenly the entry came up blank. And that's when we knew something was afoot early that week that he was possibly being traded. His lawyer told us that he had no idea where Vladislav Klyushin was. He was no longer in the custody of the Federal Bureau of Prisons. Then fast forward to the end of the week and we see this major announcement between the United States and Russia about this prisoner exchange. Klyushin, the guy we had spent months profiling for this documentary and podcast, now is one of those people who was traded. Yeah. And if we just take a step back, Klyushin was doing insider trading. He was making all this money. You've done all this reporting on what that looked like and some of the

hack attempts or I guess hacks, executed hacks, including, for example, on it sounds like Tesla shareholders. I guess just just walk me through what exactly we're talking about in terms of this scheme. And now that he's back in Russia, whether this starts back up again. Yeah. I mean, that's the big question here is how much insider trading is going on right now from Moscow. What Klyushin was doing with the blessing, if not encouragement, of the Putin government was operating a cybersecurity company in Moscow that really wasn't a cybersecurity company. It was a front for hacking. And there you see Klyushin in a tan shirt getting a bro hug from Vladimir Putin as he was returned to Moscow earlier this month.

They were hacking into American companies, stealing financial information. They were stealing the SEC filings before those were made public. And then they were trading on that in the market. They hit Tesla shareholders. They hit shareholders of dozens and dozens of prominent American companies to a $93 million fortune. The victims here were anybody who invests in U.S. markets because they didn't have access to that information. So they were on the other sides of these trades that these guys were doing from Moscow and profiting from the stolen information.

It's fascinating. Well, I can't wait to listen to it. Eamon Jabbers, congratulations. It's good to have you on the show to talk about it as well. You can listen to the premiere of Eamon's podcast, The Crimes of Putin's Traitor, by scanning that QR code right there on your screen right now. Well, strong retail sales fueling today's rally. But there will be another important reading on the state of the consumer tomorrow. Details when Overtime returns. Welcome back to Overtime. There are no big earnings on tomorrow's calendar,

but there are a pair of key economic readings. Investors will be watching closely. The July housing starts and building permits report and the preliminary August reading of consumer sentiment. Mike Santoli rejoins us now to talk about this. I mean, we had a strong showing on the consumer side here today. So how does this set us up for tomorrow? Is it really just a sigh of relief or an afterthought at this point? Mostly a sigh of relief. I think we're sort of rebuilding confidence in this off-landing scenario. I think we're a little bit past looking at University of Michigan inflation expectations within the consumer sentiment number. But of course,

we're going to give it a glance. Housing starts here. We have some rate relief. We'll see if that starts to respond right there. Also, it is a monthly options expiration. Sometimes that sort of holds the indexes in place, and we do have a little bit of resistance between us and the all-time highs. S&P and NASDAQ higher for the sixth straight session. Can we continue? Yeah. Well, we could, but I'm never going to say we will.

All right. Mike Santoli, thank you. That does it for us here at Overtime. Fast Money begins right now.