Closing Bell - Closing Bell Overtime: Tech Sets Up For Wild Week Ahead; Bitcoin Conference Underway 7/26/24

Episode Date: July 26, 2024

A strong Friday couldn’t erase weekly losses for the S&P 500 and Nasdaq. Branch Global Capital’s Greg Branch and Citi’s Drew Pettit break down the market action. Goldman Sachs Chief US Economist David Mericle previews next week’s Fed decision and the current state of inflation. Madrona’s Matt McIlwain on next week’s big tech earnings and why he’s raising a red flag on Apple. Morgan sits down with Norfolk Southern CEO Alan Shaw in an exclusive interview. 

Well, that's the end of regulation. Bitwise Asset Management ringing the closing bell at the New York Stock Exchange and the New York City Department of Transportation doing the honors at the NASDAQ. It was a rollercoaster week, ending on a high note with all the major averages higher today after the latest inflation reading was in line with estimates. The Dow and the Russell 2000 both locking in gains for the week as well. That's the scorecard on Wall Street. But the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. But coming up on today's show, we're getting you set for one of the most consequential weeks of the year.

We will break down the tech trade ahead of results from Apple, Amazon, Meta, and Microsoft. With an expert who says one of those names in particular could see headwinds. Plus, Goldman's chief U.S. economist joins us with his read through from today's inflation print and how it could impact next week's Fed decision. And is Bitcoin's rally just getting started? We will head down to the Bitcoin 2024 conference in Nashville to find out. But first, fresh inflation data giving a boost to the major averages today, reversing some of the losses from earlier in the week. Every sector in the S&P in the green today. Let's bring in our market panel, Greg Branch from Branch Global Capital Advisors and a CNBC contributor and city research director of U.S. equity strategy, Drew Pettit. It's great to have you both here. Greg, you're on set with me. I'm going to start with you. The fact that the Russell 2000 outperformer again this week, finishing up three

and a half percent on the week, third straight week of gains for the small caps. Do we have legs here? I don't think so. And I don't think so, meaning that the catalyst to reversing or abating some of this small cap outperformance is likely three things. The first is earnings. Leadership is going to be leadership. And we're already seeing that from the communication services and the information technology sector, where we're seeing 150 basis points of net profit margin expansion, where we saw Alphabet put up 30 percent,

where we're likely to see some of those other names put up earnings that far surpass earnings that we've seen from a broad perspective from other sectors. And that is the expectation. We came into this quarter with communication services looking to put up 20%, with information technology looking to put up around 17%, the top two expected numbers in terms of consensus. The second thing that I think will come into play in terms of this rotation of small caps abating is that we're likely to see a slowdown and we can argue or debate or presume the magnitude and the duration of it and it's probably softer than many of us imagined weeks ago but it's still likely to happen and so the Fed's announcements thus far abate some of the balance sheet risk to smaller names. But it doesn't remove any of the hazard in terms of top line growth or bottom line growth. That's likely to be consumption driven. And so we have to go

through that slowdown. We'll see leadership reemerge from an earnings growth and margin perspective. And then when they do start to cut rates it will be much much slower than the pace at which they raise rates okay so it will take time for some of those hazards to pass us by okay so you're not buying it a little bit of pun intended drew i want to get your thoughts on on this rotation we've seen how sustainable it is and on a day where the s p jumped one percent it looks like we're closing right around 54.59 here. How does this set up for next week, which is going to be the busiest week of earnings for the season?

Look, I think the setup for growth is going to be a lot more difficult heading into next week. So mega cap growth specifically here. So look, we can't deny the price action there has been really aggressive. Yes, the fundamental momentum has been very good. But at some point, you just have to have a little bit of caution when prices move that far ahead of fundamentals. You know, to us, we think growth takes a bit of a pause here. This rotation could have some legs for now, but a lot of these

structural winners likely kick in. But look, just to make it real simple, they have to beat and raise. You can't just have one or the other this quarter, especially for the MAG-7 names that haven't reported yet. Okay. So, Greg, you're basically saying, and you write this, this isn't the great rotation. It's an overstretched rate cut rally. What would you be buying then, if not small caps? So I think I agree with Drew here. The key, the secret sauce is what's going to deliver on 20% plus earnings growth. And when you're banking on 20% plus earnings growth, what you want to see is something tethered to secular tailwinds,

generational secular tailwinds in the case of AI and cloud, et cetera. Or you want to see some structural supply, demand, and balance. And so I'm not saying that we haven't picked at the small cap ocean or basket. What I'm saying is that we're doing it selectively and we're looking for that structural supply, demand, and balance. We're looking for a generational secular tailwind. So when you look at shipping, for example, we've talked about how the shipping rates for a 40-foot container from Asia to Europe is five times what it was a year ago. Well, there's small cap ways to play that in Zim and Mattson. And yes, they're up a bit this year, but the earnings growth in that sector should be fairly powerful and aggressive throughout this year in 2025, because

it takes some time to bring on the capacity. We can talk about, for longer-term trades, the rotation into green energy, electric vehicles. And while copper has gotten most of the attention in those areas, there's lithium, there's uranium. And so names like Arcadium and NextGen, both under $5 billion. Obviously, the decreased risk of financial duress, particularly given what they have to invest to acquire and develop their properties, better access to capital, more widespread access to capital, and at better terms, obviously, advantages those companies. And at the same time, we have access to that supply, demand, and balance.

Because as we all know, the surge in demand for those precious metals far outstripped the projected supply over the next 10 years. Yeah. Drew, what's going to matter more here? Is it what we hear from the Fed and signaling a prospective rate cut in September? Or is it going to be the mega cap tech earnings or is it something else altogether? Oh man, I don't want to punt on this, but it's all of the above. The rotation doesn't have legs if it's just the Fed. If it's just the Fed, we're going to go back to mega cap growth alone and the market's going to look like it did in the first half. So the rotation needs the Fed and good economic data. We had both this week with GDP beating expectations too, so don't forget that. And then, look, you can't have the mega caps not participate. If you're a buyer of this market, which we are, and we're fundamentally constructive, those secular trends can't be a head fake.

So again, not punting, but it is all of the above. Okay. Drew Pettit and Greg Branch, thanks for kicking off the hour with me. With all the major averages finishing more than 1% higher today, let's bring in CNBC's Senior Markets Commentator, Mike Santoli. He's putting this week's big swings, and they have been big, into context. Mike. Yeah, good to try, Morgan. Here's the S&P 500 along with its 50-day

moving average. We basically closed right on it. If you look at the last time, we closed below this upward-facing 50-day average back in April. It's right at the end of the first quarter, and I find some similarities here to this sort of box that we traded in for a while. An initial 5% or so decline. That's what we've also had from the highs here. And then you sort of have a failed rally. You chop around, try to kind of rationalize sentiment and positioning, all that stuff.

By the way, both in the first quarter and at the end of the second quarter, proceeded by weeks in a momentum kind of blow off top in NVIDIA and the rest of those stocks. And then it segued into this other period. So just as a mental model of how these things sometimes go, that could serve pretty well. Now, since July 11th, that was the day of the June CPI report. That was very benign, very friendly, got the September rate cut expectations really at a high level. Here's been a picture of that rotation since that date. So

here's banks and here's homebuilders, rate sensitive, maybe in terms of banks under-owned and doing OK in a soft landing scenario relative to Nasdaq 100. And then the top 50 stocks in the market. So big versus small has been upside down in the last, let's call it, couple of weeks plus. And so that's one view of how this rotation has played out, even if it's been net negative in terms of aggregate equity market value at this point. Finally, take a look at semis. They led on the way up. They're leading on the way down.

I have it drawn here with the 100-day moving average. Why? It's a four-year chart. In uptrends, it has served as decent support. Now, when that average curls over, bear market, no good. But you do see it kind of attempting to create a little bit of a place for dip buyers to come in over time. One thing I'll say is that overshoot to the upside was really extreme this time. So it might take a little more of an equal and opposite type of response to the downside before you have a resumption of any uptrend, Morgan. Oh, I always love when you put things like this into context.

It's going to raise a question for me. That is Dow theory, which is comparing the Dow Industrials versus the Dow Transport. So I realize a lot of folks have said, ah, this isn't relevant anymore. I look at charts like this. It raises the question, should we be talking about something like chip theory now? Yeah, that's been proposed over time. And I don't know if it maps exactly, but it is similar in the sense that rallies in the broader indexes that are not accompanied by at least participation by semiconductors, if not leadership by that group, have sometimes been more fragile

than others. So I guess you can sort of go back and rely on that. Dow Transport is a little bit of a wonky index at this point. You know, it's all the price weighting. It's got the rental car companies in there. Nonetheless, I do think that semis have served as a decent kind of bellwether and a nose for the trend over time. Yeah, Dow Transport's had a good day today, too, led in part by Norfolk Southern, which we're going to talk about a little bit later this hour. We're going to see you a little bit later this hour, too, Mike. So thank you. Don't go too far. Well, now to what we'll call the disaster stock of the day.

Shares of Dexcom tanking 40 percent, their biggest one-day decline on record. This comes after the diabetes management company reported disappointing revenue for the second quarter and offered weak guidance. Joining us now is Wolf Research Analyst Mike Polar. He has an outperform rating on the stock. Mike, I'm just going to go right into it here because it came up on the call and it's raised some questions. And that is when you have a company saying that they are short a large number of new patients that they anticipated here for their glucose monitoring, for those products around diabetes. Is this the impact of GLP-1s, or is it something else? Thanks for having me.

In bridging their guidance reduction, missing on users was a piece of it. I figure it's about 30% of the overall revenue guidance reduction mix. Revenue per, let's call it pricing, was likely the remainder. I don't think it's GLP-1s, and I understand the question. Here's why. We are seeing evidence that patients with type 2 diabetes that do not yet use insulin therapy, so these are folks that could be using GLP-1s, CGM product starts for that patient category accelerated quarter over quarter. So that would be a suggestion that

GLP-1s are not disrupting the category. The other bit of evidence we have here, Dexcom and their competitor Abbott have, over the last couple quarters, presented data around patients on GLP-1s and their use rates of CGMs. And what we find in type 2 thus far, patients with type 2 diabetes, the folks that are using GLP-1s are actually using CGM more often, more frequently, more consistently than patients with type 2 that are using oral medications but not yet GLP-1. So I don't think it's GLP-1s. I do think it's more so channel mix and pricing. And that, to me, is the greater frustration today. Okay. So you have a buy rating on the stock. Do you buy, given the drastic pullback we saw here today? And perhaps just

as importantly, how much is this a harbinger for more results we get from medical device makers and health care companies that are yet to come? So I will say there was some comforting news from another diabetes technology company this morning, Insula, ticker POD. They pronounced positive results. So that made me personally feel better that we're not going to have some contagion through to the rest of the group the rest of reporting season. As it relates to Dexcom, the stock today, a lot of damage has been done. So my estimates, my peers' estimates have been reset dramatically. So the expectation, the bar is now quite a bit lower. And on that lower bar at 60 or so dollars per share, I'm seeing a multiple 30 times earnings, low 20s times EBITDA.

These are multiples that align with a company we really like, a stock we really like, Boston Scientific. So we are fans of Boston Scientific. I see Dexcom here trading at Boston Scientific's multiple on newly lowered numbers. And so I think that peer comparison helps provide a floor here for the multiple. And I think this reset to numbers has been pretty severe. It'll take time to recover, but I suspect the bar is unlikely to get walked further down. So look, a lot of pain today, a frustrating day for the company, for shareholders, for analysts.

But I think this is an opportunity to add to positions. All right, so maybe the Band-Aid was ripped off here. Mike Polark, thanks for joining us. Thank you. Well, if you thought this week was wild for the tech trade, just wait. Next week, we'll get results from Meta, Amazon, Apple and Microsoft. And our next guest is raising red flags about one of those names in particular.

So stick around to find out which one. And will today's inflation print impact the Fed's decision or its language at next week's FOMC meeting? Well, Goldman's chief U.S. economist is going to join us to weigh in. Overtime, back in two. Welcome back to Overtime. A rough week for big tech stocks after Google and Tesla disappointed investors. Magnificent 7 index down 4% since Monday, despite today's gains. Next week, we're going to hear from Microsoft, Meta, Amazon and Apple in a big test for the market.

Joining us now is Matt McElwain, Madrona Managing Director. Madrona was a Series A investor in Amazon. He joins me on set. It's great to have you here. It's great to be here in person. So, I mean, where to start here? We have a majority of the MAG7 reporting next week. Google put up strong numbers, but not strong enough for investors to feel confident. How much read-through, whether it is Google, whether it is IBM or Service Now, how much read-through do we have to what to expect from some of these other names when we get their earnings? Well, I think IBM and ServiceNow had good numbers, and particularly on the application side and using AI as an accelerant

to their application businesses. So now let's think about the other companies. I'm most bullish on Microsoft. I'm optimistic that the combination of their cloud business, the AI pull-through, you know, Office Copilot 365, there's a lot of momentum for Microsoft. I think they have a strong quarter. It's their fiscal year end as well. Amazon, I'm cautiously optimistic. Again, the cloud has been re-accelerating. There's goodness there, but they don't really have an application strategy yet in the cloud. They've got some things that are emerging like Amazon Cube. They got a new CEO for AWS, Matt Garman. And so what we don't know, though, is how strong has the consumer world really been? We saw a decent GDP print this week, so maybe we should be a little bit more optimistic,

but I'm cautious. Okay. How about Apple? Because Apple, I know, has been sort of later to the AI party or at least announcing their AI strategy, but it's been playing a real game of catch-up ahead of this print. Well, Apple's the one I'm skeptical on. And what's interesting is they've actually bought three of our AI companies over the last eight years. So there's a lot of magical things about your Apple devices that are powered by ML and AI. But is Apple intelligence, the thing they launched last month, enough to power a refresh cycle? I think in the short term, the answer to that is unlikely. Plus, you have the

China headwinds we heard more about this week. And you don't have any other catalyst for them to really grow. I mean, they've been having struggles with their revenue growth over the past several quarters now. And there's nothing like a refresh cycle. I think it's still several quarters off. And so they could disappoint and they could also guide conservatively. OK. I mean, the big question here is you have so much money by all of these companies going into this next era of AI. What does it take to actually see the return on investment? Well, right now it's a awesome, you know, I'm a venture capitalist and this is great to see literally hundreds of billions of dollars going into all of these large companies, building the infrastructure out,

investing in the chips and the infrastructure, the models that are being built. And that's great for startups. I also think in the long run, it's great for them. But the ones that can figure out how to actually capture value, I mean, even let's think about ChatGPT and OpenAI. Over 80% of OpenAI's $3.5 billion in revenue is application revenue on chat GPT. It is not the infrastructure. So how are you going to monetize it? What's the most important model in AI? It's the business model. And that's what these companies have got to figure out. Microsoft clearly in the lead there again. Amazon trying to figure it out. Not at all clear to me where Apple goes in that direction. Now, the other one that's the sleeper that people don't fully appreciate is all that Meta's doing,

because Meta has found ways to monetize AI through the advertising parts of their business. Apple really doesn't have that largely. And Meta's also done a great job. They just put out a market leading model this week, Lama 3.1. And I think there's more to that. And Mark is driving that company forward now that he's gotten fit. Yeah. And of course,'s more to that. And Mark is driving that company forward now that he's gotten fit. Yeah. And of course, we're going to hear from him in a conversation between he and Jensen Huang from NVIDIA on Monday night as well. So one more thing to watch next week. Finally, as we do have this conversation and given the fact that you are a VC, we had two high profile IPOs exit strategies. Are we going to see more of a pickup in companies either going public or

being acquired since that's been challenging? I think the public markets are still cautious into the second half of the year. M&A is absolutely going to pick up. We're seeing quite a bit of things happening right now in terms of exploratory M&A, and there's more weight on the private equity buyers. They have got their act together. They have market maps. They know categories that they want to go after. The strategics have a couple headwinds on them. They've got tons of cash. They've got tons of capital to put to work. They need to find new ways to grow. But their challenge is that they've got the government headwinds, the regulatory headwinds. And in some areas, I think there's some degrees of infighting of can we build this

ourselves or do we have to go outside and buy? We'll see how it all shakes out. Matt, it's great to have you here on set. Thanks for joining me. Thank you, Morgan. My pleasure. Well, is the Fed making a mistake if it doesn't cut rates next week? That's what our next guest says.

There's a solid rationale for pulling forward the first cut. We're going to hear that case next. And later, Bitcoin rallying hard today as a major crypto conference gets underway in Nashville. We will bring you the highlights of the event and talk about where crypto prices are heading from here. Stay with us. Welcome back. The Fed's preferred inflation gauge, the June PCE index, rose two and a half percent from a year ago in line with estimates. Well, signs of slowing inflation pull up the Fed's rate cut timeline. Well, joining us now is David Maracle. He is the chief U.S. economist at Goldman Sachs. It's great to have you on the show. Welcome. Let's start right there with the inflation print we got this morning. It was in line with expectations in the market. There seems to be an expectation

that we're going to get a cut in September. But this week alone, we've seen more chatter about the argument materializing that the Fed should continue, should consider cutting next week. Where do you fall on that? I'm sympathetic to that. I don't think that they will. I think what they'll use the meeting for next week is to tweak their statement to imply that a cut is closer at hand. I don't think they'll say it's definitively coming at the September meeting. I would expect that they'll want to wait until we see the July inflation data. But as long as the July inflation data are acceptable at that point, they'll indicate to us that, yes, they are going to go ahead in September.

I don't think it makes a huge amount of difference. But, you know, I would say, to my mind, the inflation story has been pretty convincing for a while. We have rebalanced the labor market, normalized inflation expectations already by the end of last year. There have been some ups and downs this year, but there's always noise in the inflation data. I think there are also some seasonality problems, and maybe we've been overreacting a little bit to those month-to-month up and downs. But I assume most of the committee is now pretty close to being content that it's OK to go ahead. Yeah. The Fed has a dual mandate. And up until recently, there hasn't been much focus,

at least publicly in commentary we've been getting from officials, about that mandate. That seems to have shifted in recent weeks as we've started to see softer labor market data come in. We also know labor market data tends to be one of the last indicators that the economy is slowing or that we're rolling over into a recession. Historically, that's been the case. You've written about it. But why is this time different? I would describe the labor market data as mixed. I wouldn't describe them as weakening. You know, we did just have a quarter where GDP grew at a 2.8 percent base. The last couple of payrolls reports have been north of 200,000. My guess is going forward, we'll only need about 150,000 jobs a month in order to stabilize the unemployment rate. So my base case would be that everything will be fine. I do think

it's fair to say, though, that the signals are mixed. For example, the household employment numbers, even after adjusting for the fact that they're undercounting the immigration boom, they're still weaker than the payroll boom. They're still weaker than the payrolls numbers. The unemployment rate is up almost half a point on a three-month average basis. So, you know, I think it would be fair to say, even if your base case is that everything will kind of work out naturally, because if final demand is growing at a good pace, labor demand should too. I'm not at all really worried about the inflation outlook. So I would say if they're going to cut, yeah, just get on with it. But, you know, again, I don't think they're going

to do that next week. I do think they'll do that by September, though. OK, we do get this jobs report next week as well and all of that labor data. How much does that matter? Does it matter more now? I think it matters more just because how you're supposed to read these mixed signals is a little bit unclear at the moment. I think the historical lesson is put a lot more weight on the payrolls numbers, which are a lot less noisy, a lot more reliable. But the gap between household employment growth and payroll growth, even after all of the kind of definitional differences and the undercounting of immigration in the household survey, you know, it's still big enough to be a little bit striking and a little confusing. So maybe we'll get an employment report that will resolve some of those gaps and clear things up a little bit. But yeah, I do think given the upward trend in the unemployment rate in particular,

this one will probably get a bit more attention and should get a bit more attention than your typical report. Okay. No summer slowdown here, at least not yet. David Maracle, thanks for joining me. Thank you very much. Well, time for a CNBC News Update with Bertha Coombs. Bertha. Hey, Morgan. Two U.S. intelligence and law enforcement officials tell NBC News that this morning's attack on the high-speed rail system in France appears to be coordinated and sophisticated given the timing and the scope of damage. The officials who were briefed on the initial investigation say it seems that the people who carried out the attacks are anarchists and leftists, but stress the investigation is just beginning.

The latest shingles vaccine could delay dementia. A study published in Nature Medicine found people who got the new vaccine lived an average of 164 days, so that's just shy of six months, longer without dementia, a dementia diagnosis, than those who received the previous version. The study's authors say more research is needed to understand just how the vaccine reduces the risk. And Deadpool and Wolverine is already breaking box office records, Disney said. The comic book film broke the Thursday preview record for an R-rated movie selling an estimated $38.5 million, and it could break more records. Analysts expect the movie to earn at least $160 million, which could unseat the first Deadpool as the biggest R-rated opener of all time in the U.S. Tough to beat Ryan Reynolds

and Hugh Jackman together. That's true. You got to wonder if the box office is back, too, given the fact that we've had a couple big showings here in recent weeks. You know, people wanting air conditioning during this heat wave. That always drives the summer box office. That's a good point. Bertha Coombs, thanks. After the break, we will hear from the CEO of Norfolk Southern as that stock gets a major bounce on earnings, turning positive for the year. And speaking of major bounces, check out two of today's huge winners. Coursera getting an A-plus from investors. Get it? After beating on earnings and revenue, driven by demand for its generative AI courses. And Newell Brands is jumping after saying its turnaround efforts

are working. You can see that stock finished up 41 percent. Huge move. We'll be right back. Welcome back. Check out shares of Norfolk Southern soaring, finishing the day up 11 percent. It was the best day for this name since March of 2020. The Eastern Railroad reported an earnings beat and perhaps most notably reaffirmed its full year operating ratio forecast. This is a key industry metric and one that coming off a successfully thwarted activist proxy fight, investors had expected to be revised or cut. I sat down exclusively with Norfolk Southern CEO Alan Shaw earlier today and I asked him about it.

We laid out aggressive targets for the year and despite a weak freight environment, we've overcome that with accelerating our productivity initiatives. And at the same time, we're offering a great service product and we're growing in our most service sensitive markets, intermodal and automotive. And so we're growing and we're driving productivity. And that gives us a lot of confidence to reaffirm our margin guidance for the second half of the year, which is effectively a 400 to 500 basis point improvement in OR year over year. It's interesting to hear you say that you're growing intermodal and auto. Auto, I mean, the car makers had a very rough week with earnings. We know what's happening in that industry right now. Intermodal ties back to what we saw with GDP yesterday and the buildup in inventory, but these

are very economically sensitive areas of goods that you transport. How are you able to grow them right now? Service. Yeah, and that's the essence of our strategy. We're improving service, we're reducing costs, we're growing revenue, and we're enhancing safety. And we said we were going to use service as an enduring competitive strength. And we've got a franchise that's built for growth. So since railroads like Norfolk Southern move so many goods from so many industries, I also asked what his read on the U.S. economy is as data points do point or data, I should say, points to signs of slowing. We participate in a broad cross-section of the U.S. economy. And so you look in the consumer

markets, the consumer is still purchasing durable goods, but not at the rate it had in the past. And our customers are seeing signs that there might be a peak season this year in terms of consumer demand in the fall. And so they're starting to ship goods to stores and build inventory. Commodity prices are weak, whether that's in energy, whether that's in grain, whether that's in metals. And so that's putting some pressure on us. And so how we overcome that is

really accelerate our productivity initiatives. And we've got a clear line of sight and a roadmap over the next 18 months to drive revenue growth, continue to do that, and to drive productivity. Well, I also asked, with a settlement announced and regulators releasing findings, if the impact from last year's East Palestine derailment is largely in the rear view. There's still some litigation, but largely, basically, yes. But looking forward, there's something to monitor across the entire freight landscape, and that is the labor talks at the East Coast and Gulf ports. There is a risk rising of a worker strike there. So eyes are focused on that as we look to that deadline in September and already starting

to see some container ships being diverted, some of that volume being diverted to other ports. Meantime, we have breaking news on Bill Ackman and Pershing Square. Leslie Picker has the details. Leslie. Hey, Morgan. Yes, there is a notification on the New York Stock Exchange website that Ackman's closed end fund, PSUS, that's a ticker, has been postponed. That IPO was supposed to take place, I believe, Tuesday of next week. We called the NYSE for comment. They said no comment. I have also called Pershing Square for comment, and I have not yet heard back yet. But of course, Morgan, this comes a day after a filing yesterday disclosed a letter that Ackman had sent to a select group of investors in his private fund, essentially asking them to

put up more capital to ensure that this IPO was a success. Initially, they had targeted $25 billion for the closed-end fund. In this letter disclosed yesterday, they said the target would be closer to about $2.5 billion to $5 billion, depending on how the roadshow went over the next couple of days. But they did have commitments from some well-known investors. And also, interestingly, in this filing, it said that the company disclaims certain aspects of that letter and what was sent to private investors. So amid all of this backdrop and all of this kind of behind the scenes that became public yesterday, the New York Stock Exchange website does have a notification suggesting that this closed-end fund,

its IPO has been postponed at this point in time, Morgan. All right. Volatility in the markets and volatility for Pershing Square, it seems like. Leslie Picker, thanks for bringing us the latest. Up next, Mike Santoli digs deeper into today's key inflation report to find out whether there is an emerging red flag for consumer spending. And check out shares of 3M having its best day ever, finishing up 23% after reporting much better than expected Q2 earnings, raising the low end of its full-year profit guidance. The quarter also marks the first results under new CEO Bill Brown. Huge mover for the Dow today. Stay with us.

Welcome back. Mike Santoy returns with a closer look at today's PCE report and one potential red flag that he is watching. Mike. Yeah, Morgan. So the same report that gives us the PCE inflation report also records personal income and spending. From that, we get a derived personal savings rate. It's kind of a residual, right? Income minus spending. It's down to a residual, right? Income minus spending. It's down to 3.4 percent at the latest report. Of course, you see the massive surge during the

forced saving of the pandemic. This is not quite as low as late 2022, but it's definitely been on the downslope for the last year or so, kind of comparable to where we were here in the mid 2000s. Now, it's not necessarily the case that people are so stressed that they can't save enough. Probably a little bit of that around the edges. Some people also view this, by the way, as a little bit of a consumer confidence indicator. In other words, if you're not keeping too much more aside of your earnings, then maybe it means you think your wages are going to keep going up. Nonetheless, there's a little bit less dry powder out there. Your accumulated savings are still higher in nominal terms than before the pandemic, but that's also being depleted. So

something to be alert for. If not a red flag, maybe a flashing yellow one. But it is interesting, though, Mike, because we've gotten a lot of reads, mixed reads on the consumer just this week alone from some of the high end luxury retailers. I mean, Lamb Weston was getting a lot of attention in the middle of the week as well. Even Visa with investors selling that name. And then in the middle of all this, sort of flying below the radar, you had the Philly Fed basically saying the share of delinquent credit card balances has reached the series high. So I guess how to make sense of all of these conflicting messages? Yeah, I mean, there are certainly incremental stress points in the consumer, various parts of the market.

And the pie doesn't seem to be growing as fast in terms of spending. That's clear. That's what I think a lot of those companies are indicating right now. They push too far on price. They have to backslide on that a little bit. I think you could still fall back on the idea, though,

of something close to full employment with 4% ish nominal wage growth that's still as of last month. That's still OK. So if you're saving three point four percent of something that's growing in aggregate, three point nine percent, it's not terrible, but it's definitely I guess you're saying a depleting reservoir of spending power. OK, soft landing, soft landing narrative still intact. Yes. All right. Mike Santoli, have a great weekend. Take care of you too. Well, the race for fully reusable rockets, that's the holy grail of launch. It's heating up. Up next, the CEO of Stokes Space on competing

with Elon Musk's SpaceX and other rocket companies. And check out shares of NASDAQ, ticker NDAQ, pulling back in overtime after the company announced a secondary offering of more than 41 million shares held by an affiliate managed by Toma Bravo. You can see those shares are down about 2 percent right now. We'll be right back. SpaceX's workhorse Falcon 9 cleared by the FAA to restart launches, even as an investigation remains open after a rare in-flight failure. The two-week hiatus is unusually brief, thanks to the rocket's rapid launch pace and, quote, unprecedented levels of flight data from over 300 consecutive successful launches of the Falcon 9. The scenario also, though, shining a light on SpaceX's dominance of the launch market. A number of companies are building rockets to compete, but once the fully reusable Starship comes online, the economy's fourth space will change

drastically. It's that future, one built upon rapidly and fully reusable rockets, that four-year-old Stokes Space is focusing on as it develops Nova, its own fully reusable medium-lift rocket. When you marry those two things, the reusability of the vehicle and flight frequency, you very viably get orders of magnitude lower cost compared to what's being done today. And so that's the interesting and compelling case to be made. Because those economics are so strong, to me, that's the inevitable future of the industry, and everything else is short-sighted. So if you're not working toward that, then I think you're facing a dead end.

Well, Stokes CEO and co-founder Andy Lapsa says Nova is on track to attempt its first flight to orbit late next year. Its cutting-edge engine was test-fired for the first time just a few weeks ago. And so far, Stoke has been pulling off a feat that's rare in the space industry. It's been meeting milestones when it says it will. We're still using our pitch deck. We had basically a program plan laid out at a high level in that seed deck in 2020 when we raised that round. And I still pull that back up and say, look, this is what we said we were going to do. And we've hit every single thing we've said

on time and on budget in order for the whole space economy to be successful. Even SpaceX needs a viable alternative for them to be successful. So there needs to be an alternative and people are understanding that more and more. And then the second thing is people are understanding that, hey, this world is moving fast and full and rapid reuse is the thing that unlocks the ability to compete and win and really unlock the overall economy. You really are seeing more investors come to the space space. And it's a bigger part of more and more of my conversation. So for more of this one with Stokes Spaces and Elapsa, check out the latest episode of Manifest Space, my podcast. You can scan the QR code right there or find it wherever you get your podcasts. Well, up next, former President Trump set to speak tomorrow with Bitcoin's biggest event of the year.

Up next, what to expect from that speech and whether it could mean a big bounce for Bitcoin. Welcome back. The largest Bitcoin event of the year is underway in Nashville as the cryptocurrency bounces back from its recent slide. Mackenzie Sigalos is at that conference with the highlights. Hey, Mackenzie. Hey, Morgan. So in past years, the price of Bitcoin is often what people were buzzing about at this conference. But in 2024, it is all about former President Donald Trump and his keynote address that's happening tomorrow. Now, Trump's attendance here is really part of a larger trend of lawmakers, especially Republicans, embracing this industry and promising to foster innovation with pro-crypto regulation.

You've got Senator Cynthia Lummis speaking here, along with her colleagues, Senators Tim Scott, Bill Hagerty and Marsha Blackburn as well. But Trump's got some pretty high expectations to meet here at the conference. Now, some are hoping that he'll call for the Federal Reserve to hold Bitcoin as a strategic asset, for instance. And sources tell me that he's being advised on a potential shakeup at the SEC and who could lead the agency instead of Gary Gensler, who's famously come down hard on crypto. Trump's also hoping to rack up campaign donations while he's here.

He's holding a fundraising event with tickets topping out at around $844,000, hoping to add to the $4 million in crypto donations that the campaign says he's already raised since coming out in support of the industry. Morgan? All right. Mackenzie Segalos, thanks for setting the stage for us. For more on the conference and crypto, let's bring in BitGo CEO Mike Belshi. BitGo is a digital asset security company. And Mike joins us from the conference in Nashville as well. Mike, I want to start right there. We've seen Bitcoin rally here into the weekend. How much of this is hinging on the commentary we get from former President Trump and this idea of potentially a strategic reserve? Well, people always try to pin the most recent events as the trigger of whatever's going on with the Bitcoin price. But of course, the markets are complex and there's a lot of factors that feed into the price. I do think there's general strong optimism about potentially having regulatory clarity here in the United States. We're the biggest economy. We've got the best markets. Of course, we should have a venue for digital assets to participate. And there's optimism that that will come in November.

OK. So, I mean, can we say it's on the ballot? Can we also say that as of right now, it's a partisan issue or does that change? It's not a partisan issue and it's never been a partisan issue. And we know this. You know, there was a bill on the Hill just the last couple of months called Fit 21. You know, it had support from a tremendous amount from the Republican side. Seventy one Democrats voted for it as well. Frankly, if you are for power to the people where you want people to have the same power with their banks, of course you like Bitcoin. And that's the Democratic side. And if you're in favor of freedom and open markets, of course you like Bitcoin. And that's the Republican side. So we may have a presidential

leader who individually doesn't like digital assets as much, or maybe he doesn't understand it. It's certainly harder for older people to understand. Then that's fine. But it doesn't mean that there's a partisan issue. I think there's a few people in Congress that don't support digital assets, but there's tremendous support. Like I said, 71 Democrats supported FIT21, which is the crypto infrastructure market bill. Meantime, shifting gears from Bitcoin to Ether, we had Ether spot ETFs begin trading on the exchanges this week. It wasn't necessarily the strongest debut, but the fact that they even exist now, how does this set the stage for Ethereum? And do you expect

inflows to be similar to Bitcoin or should be just treated as something different altogether? Probably should be different altogether. Look, Bitcoin and Ethereum serve very different purposes. I mean, Bitcoin clearly fitting the bill for store of value to some degree payments, although there's more to come in the future. Ethereum more on smart contracts. And, you know, the initial ETF offering doesn't include Ethereum staking, which is a big part of that if you're going to be holding stake, holding Ether for a long period of time. Without that, it's a little bit hard to see how the Ethereum ETF is as compelling. Other than that, it hits kind of traditional markets. So I'm not too surprised that the Ethereum ETF isn't as strong on offering. Remember, the Bitcoin ETF is the strongest ETF of all assets ever introduced, right? And that was introduced by BlackRock. Of course,

Fidelity's got one too. But we've never seen an ETF with that much power, that much support in such a short period of time in the history of ETFs. OK, we've got 30 seconds left. How much does liquidity matter here? Liquidity is everything. Liquidity begets more liquidity. So, look, building markets, it's something that takes decades of time. The crypto market's been around for a relatively short period of time. We'll see this continue to grow as the markets get more stable, more mature. And of course, that will enable more people to come in more efficiently and we'll see. All right. Mike Belshi, thanks for joining us. We'll be watching the conference and next week is a busy week.

So rest up this weekend. We had all the major averages finish higher. That's going to do it for us here at Overtime. Fast Money begins right now.