Closing Bell - Closing Bell Overtime: Tech Tumbles To Start Month; Nvidia Sheds Nearly $300B In Market Cap 9/3/24

Episode Date: September 3, 2024

A rough start to the trading month as tech and chip stocks sent the market lower. We have you covered from every angle. Plus, Moor Insights & Strategy’s Patrick Moorhead on reports of the DoJ subpoenaing Nvidia and former United CEO Oscar Munoz on what’s next at Boeing and Southwest. 

That bell marks the end of regulation and good thing. Vanguard and MSCI ringing the closing bell at the New York Stock Exchange. Morgan Stanley Investment Management doing the honors at the NASDAQ. And weak manufacturing data helping to send stocks sharply lower to start this shortened trading week. With the chips having their worst session since March 2020. Nvidia falling more than 9%. The NASDAQ shedding more than 3%. That is the score caught on Wall Street, but winners stay late.

Welcome to Closing Bell Overtime. I'm John Fort. Morgan Brennan is off today, and we will be all over this market. Sell-off throughout the hour. What comes next? Also ahead, earnings results from GitLab, PagerDuty, and Zscaler. A rough day for the software space. We'll bring you those results as soon as they cross.

And former United Airlines CEO Oscar Munoz joins us to discuss the major pullback for Boeing, which is weighing heavily on the Dow today. But let's get straight to today's sell-off. Joining us now is Adam Crisafulli, Vital Knowledge founder and Charlie Babrinskoy, Vice Chairman and Head of Investment Group at Aerial Investments. Guys, happy September, I suppose. Charlie, what's the message in this big move, you think? I mean, it takes us back to where we were two or three weeks ago on the major averages, but it's a fast way to get there. Yeah, I think there is some truth to the idea that the market had assumed we were going to have this wonderful goalie lock situation of falling rates and a pretty strong economy.

And both of those things seem to be built into the market. And then we got some data today that wasn't so great. And frankly, I think people are looking forward to Friday. And we're on a little bit of a razor's edge that if the number is too good, then the market, the Fed might slow down its rate cuts. If it's too weak, it may look like the Fed is late to the game and has missed an opportunity to get a soft landing. So this is a little precarious. We don't think that people should invest for the short term. We think long term value stocks are cheap.

But I have to admit the next week or so is going to be bumpy. B think long term value stocks are cheap. But I have to admit the next week or so is going to be bumpy. Bumpy is a good word for it. Adam, a month ago, right, we got a Fed meeting and then we got some jobs data and so forth that freaked the market out for the for the first full trading week in August. Here we are in September, starting perhaps with a freak out as well, but we've got jobs data coming in just a couple of days. So what are you noticing in investor behavior here? What do you think people should do? So, I mean, I think the clear takeaway is that this market is much, much more sensitive to downside growth risks than they are to upside inflation ones. I think, you know, the great big inflation monster has been conquered. We can quibble about

the pace of disinflation. But the big focus by far is on growth. And we've seen these big sell offs whenever there is the hint of a growth scare. So you saw with jobs, like you mentioned, back in August, we saw it to a certain extent today. Like you said, you know, we're rolling back to where we were a couple weeks ago. But the market is very sensitive, very concerned about the outlook for growth. And I think the ideal scenario would be, you know, resilient growth, ongoing disinflation. And even if that means the Fed moves a little slower than, you know, 50 basis points on the 18th, they only go 25.

That to me, in aggregate, is the ideal scenario. You get 25 basis points, and they continue to using resilient growths, ongoing disinflation. So today certainly was dramatic price action. I think in totality, and we're coming off of the July end earnings season, you have a couple of names to go. But July end season with decent economic gain in aggregate points to resiliency, and we are seeing disinflation. So I think those kind of main drivers of the August rebound are still in place. But obviously, we're going to have to watch these upcoming numbers very closely. Charlie, you mentioned investing for the long term, I believe. I mean, either that or I'm just

hearing Charlie Briminski of the past echoing in my ears. A lot of retail investors these days are using options a lot more than they have in the past. Let's talk about the kinds of mistakes that investors tend to make if they get jumpy, particularly because the markets have been so volatile and you can lose a lot of money, even if the major indices at the end of whatever your time horizon is haven't moved that much. Yeah, John, one of the things we advise, first of all, we don't think nonprofessional investors should use options on individual stocks. What they tend to do is they've seen that something has gone up for the last couple of years. And so they say, oh, I can buy an option and get leverage if it continues to go up. And the old adage, momentum works until it doesn't,

is really, really true. So we we are a little nervous about the overall bullishness of retail investors. We sort of agree with the Wall Street Journal article that people have gotten a little complacent here, particularly about large cap, the S&P, which just seem to keep going up. So we would recommend the again, you can get beaten up pretty badly with the bid-ask spreads in the option market. We don't think retail investors should be playing that game. So what game, Adam, should investors be playing? Are there areas where you think value is peaking out, or at least opportunity, when we get volatile moments like this? Yeah, so, you know, again, I think kind of going back to the August playbook, I do think that those core drivers of the market rebound remain in place.

So resilient growth, monetary policy easing and solid earnings. And so industrial cyclical names are most levered to the continuation of those themes. And I do think you'll see that moving forward in September and October. I want to mention Zscaler results are out. We are going through them. Initial move looks to be lower, and that's after a rough session that saw that stock down quite a bit. Charlie, what are you looking for in the jobs number at the end of this week? And to what extent do you think that has influence toward whether the Fed ends up going 50 basis points or 25 for a cut? Yeah, I'm looking for what I think I see, which is reasonable growth, but not overheated growth.

And that is a number something like 200,000 jobs. It shows that we're not heading into a recession or we're certainly not there yet. And yet it's so we would get a 25 basis point cut. We do need the Fed to to acknowledge that we have basically beaten inflation, which we have. So we we still have a real shot at that soft landing with lower interest rates and reasonable, not overheated growth. I think that can absolutely still happen. But the market today shows that when there's signs it's not going to happen, it can get ugly. Indeed. Charlie Brinskoy, Adam Crisofulli, thank you. Now let's bring in senior markets commentator Mike Santoli and maybe put some of this pressure in the markets into context. Mike?

Yeah, John, pretty good jolt to the downside, although it really just gives back a little bit of the second half of August rebound rally that we had. Here's the S&P 500 now on a year-to-date basis, still up about 16 percent. Kind of interesting. We came just barely to the cusp of the all-time highs from July, didn't get there, and now we've backed off. Mentioned in the last hour, where does it take us to? Right essentially where we were August 15th. We kind of jumped higher off the August 14th level. We were in that growth scare. We had that little rebound off the lows. And then people got excited. We got confirmation. The economy looked good.

Retail sales, Walmart earnings, all the rest of it. There's also a big gap in the chart. If you care about technical stuff, it's like 54, 60 or thereabouts. That would maybe satisfy some people who think that has to be taken care of before we can resume higher. So really not that dramatic looking, although it did happen in a hurry today. Now, take a look at the defensive turn under the surface of the index. This has been very pronounced for a while as yields have come down. That's been changing leadership and as the growth stocks have gotten hurt. So low volatility stocks really outperforming high beta.

And look what it dates to. It dates basically to early July when we got a really good benign CPI number. People started positioning for Fed rate cuts. Maybe the soft landing was on. But you see that defensive group really piling it on. Another way of looking at this is dividend stocks. So those that have higher than average dividend yields relative to semiconductors, which, of course, have been the multi-year upside leaders for this market. This is here you see a year-to-date basis, the dividend ETF. Now just eclipsing the semiconductor ETF, which is market cap weighted and dominated by NVIDIA, John. Mike, give us a forest for the trees moment here.

Back to that first chart. I mean, we've gotten what? 18, 19 percent, at least before today, on the S&P so far this year, which is highly unusual. Also, the VIX today up about five points, touching 20. What does that sort of move toward 20 on the VIX mean in the context of the crazy gains, relatively speaking, that we've seen for the S&P this year? On face value, this bump up toward 20 in the VIX means the market is just kind of clenching up a little bit in advance of some possible further volatility over the next 30 days. Now, 20 isn't a super elevated level, but it's definitely slightly above average and

shows you that the market is kind of on alert at that level. It does price in well more than a 1% daily move implied in a 20 VIX. But we were also, as you see this wild move from back in early August, that was really much more of a dislocation. The trading mechanics were getting fouled. So we're still in the routine zone in terms of both returns and pullback. You mentioned it's not a really usual type of year-to-date gain, up 16% or so. But actually, in up years for the market,

20% gains are kind of the average. So, yeah, the long-term average is more like 10%. But it's actually in an up year when we've been up this much in the first half. It's not unusual to get toward 20%. We'll see if we have it in us. All right. We seem to have a lot of different things in us market-wise. Mike Santoli, see you again in just a bit. Mentioned Zscaler earnings are out. Let's get to Steve Kovac with those numbers. Steve? Yeah, John, and the shares are

falling here despite beats in the top and bottom lines. It looks like the guidance is what's really weighing things down here. But let me give you the results for their fiscal fourth quarter here. EPS was a beat, 88 cents versus 69 cents adjusted street was looking for. Revenue also a beat, 593 million, that is, versus 567.9 million they were expecting. And then, like I said, it seems to be the full year guidance really hurting the stock here. It's down about 5.5 percent. There, for the full fiscal year of 2025, which starts the quarter we're in now. They're showing an EPS range of up to $2.87. Street wanted $3.33.

That seems to be the big one there. Revenue is also at the high end of their range, kind of in line with Street estimates. At the high end, they're saying $2.62 billion versus $2.63 billion expected for the full fiscal year. You see shares down now, John, about 6.5%. I'll send it back over to you. All right. Steve, thank you. For more on Zscaler, we can look ahead to the CEO, Jay Chaudhry, joining us in an exclusive interview tomorrow here on Overtime, 4 p.m.

We're going to get some more detail even after that call. Meanwhile, software maker Asana's earnings also out. Julia Boorstin has those numbers. Julia. That's right. Asana reporting a smaller loss than anticipated, a loss of five cents versus the eight cent loss that analysts have been expecting. Revenues of one hundred and seventy nine million dollars, pretty much in line with expectations, just a million ahead of expectations. But the stock is dropping. And after I was trading now down about 12 percent on third quarter guidance, that's lighter than anticipated. The company guiding to revenue in a range of 180 to 181 million. That's below the 182 million estimated. Also forecasting a loss of seven cents per share

for the third quarter versus the estimate that analysts have been looking for of a loss of four cents. The other thing I just want to point out here for Asana is the company is announcing a new CFO appointing Sonali Parekh as a new chief financial officer. And the prior CFO, Tim Wan, who's been in the role since 2017, will remain there as an advisor to support the transition. Stock now down 14%. John? Yet another new CFO. We're seeing a lot of those.

Julia Borsten, thank you. Also, this reminded me of what Pure Storage CEO Charlie Giancarlo told us about the enterprise buying environment not picking up as much as he expected. That seems to be reflected in some of these technology results. Well, after the break, much more on today's sell-off and the overtime earnings action. We're going to break, much more on today's sell-off and the overtime earnings action. We're going to break down Zscaler's quarter with an analyst and discuss

the read-through for the rest of the software space, plus Intel getting wrecked along with the rest of the chips. But the company did announce new core processors today, and the initial reaction from experts seems to be positive. We'll have the latest next and later. Is today's ugly market action a bad sign for the rest of September? Longtime market watcher Nick Colas lays out his take on the sell-off after overtime is back in tune. PagerDuty earnings are out. The stock is taking a beating. Steve Kovac has the numbers. Steve? Yeah, John, and the shares are down about 14% here after hours on these results. It looks like the guidance is coming in a bit light.

But first, let me give you the results for this quarter. EPS was a beat, though, 21 cents versus the 17 cents adjusted the street wanted. And revenue, let's just call it largely in line here, $116 million compared to the $117 million Street was expecting. And then both the Q3 guidance is very light here. For EPS, $0.16 to $0.17. Street wanted $0.18. And then full-year guidance is also light, especially on the revenue front, about $7 million short at the range the Street was looking for there.

You see shares off about 13.5% now, John. Yeah, cutting that guide, continuation of that enterprise guidance story we were just talking about, Steve, thanks. Thanks. Well, moving back to, we told you about the SMH ETF, semiconductors having the worst day of the year, one of the stocks under pressure there, Intel, closing down nearly 9%. That's despite some generally positive reaction from analysts around the company's Lunar Lake announcement, the core ultra processors. Futurum Group's Dan Newman writing, while Intel's news cycle has been complicated in recent weeks, the client business, that's PCs, has been on a strong trajectory and its tech and autos bodes

well for the AIPC wave. And Ben Beharin, a name over time viewers know well, calling it maybe the most critical product launch in the company's history. This chip is going to be shipping in laptops thin and light at the end of this month. The question here as it stacks up against AMD and Qualcomm's offerings is can it stanch any market share loss on the PC side, which would provide cash flow and help them to keep the business running as they try to get things in line with manufacturing? We'll see. GitLab earnings, meantime, are out. This one, perhaps in the green.

Julia Borson, how does it look? Yeah, GitLab shares surging on better than expected top and bottom line results. Earnings of $0.15 per share, beating estimates of $0.10 per share. Revenues of $183 million, ahead of estimates of $177 million. The company guiding to third quarter revenues in a range right above expectations, $187 to $188 million. That's just ahead of the estimate. Also guiding to earnings in a range well ahead of estimates of 15 to 16 cents versus the 11 cent estimate. And then if you look at the full year company guidance, the revenue guidance is ahead of expectations and the earnings guidance is well ahead of expectations. The company guiding for full year earnings per share, 45 to 47 cents.

Analysts were expecting just 36 cents. Shares now up nearly 10 percent. John, back over to you. All right, Julia, thank you. Now let's move back to Zscaler. Shares there getting hit right now, down about 6% after fourth quarter numbers came out. Comes after a brutal day for software stocks, not as brutal as chips, but still not good. The IGV software ETF falling 2%. The cloud ETF down a little more than that. Joining us now is Evercore equity analyst, Peter Levine. Peter, generally speaking, there seems to be a guidance issue

in enterprise software spending. And yes, it depends on what your expectations were. Some of these companies seem to be doing pretty well. Where would you put Zscaler? It was, I would say, slightly below expectations. I think revenue folks were looking for something closer to 21%, and then the billings guidance was important, and that came in lighter than expected. But with Zscaler, 34% growth, they exited their fiscal 24. But we also have to understand how much of this is macro versus some of the go-to-market changes they implemented last year. So is there anything here that challenges your thesis about this company? I think this is just what management always does. They're extremely conservative.

They've kind of highlighted that in prior quarters. So I'm not surprised to see Scalar be a little conservative. But again, I think they're just taking more of a conservative approach on some of the go-to-market changes. And again, I'm sure some macro risk as well is being factored into that. So when you look at your model, how rich is the valuation here? It was set up for perfection. So any stock trading at these levels, if you're not hitting precisely, I think, high expectations, it's going to be a tough pill to swallow. But I think fundamentally, I don't think anything changes. I think longer term for Zscaler, I think it's a great company. It's great tech. And again, I think for folks that know the company well,

realize that I think this is more of a conservative guide. But again, unfortunately, the guidance came a bit lighter than I think folks would have expected. Yeah, I guess perfection is relative. It was at 250 back in February. Peter, thank you. Peter Levine. Well, again, we're going to hear more on this from Zscaler CEO Jay Chaudhry. That's tomorrow in exclusive here on Overtime, 4 p.m. Well, Boeing having a brutal session as well, weighing heavily on the Dow today after a rare downgrade to sell. You can see it was down a little over 7%. We're going to talk to former United CEO Oscar Munoz about troubles at the planemaker. And later, market expert Nick Colas is going to weigh in on the big pullback for tech

and outlines the one event in September that he says matters more for the market than anything else. Come back for that when Overtime comes right back. Welcome back to Overtime. Boeing shares taking a dive today down more than 7%. It comes after Wells Fargo downgraded the aerospace giant to underweight, slashing its likely need to clean up its balance sheet and raise $30 billion in new equity in order to fund new plane development. Joining us now is former United Airlines CEO and CNBC contributor Oscar Munoz. Oscar, good to see you. So, you know, you dealt with Boeing for a long time. How dire does this look and how important is Boeing overall? Well, Boeing's importance to the airline

industry is clearly an important one. It's important to the U.S. manufacturing complex, right? It's one of our biggest things we make in America. So it's critically important, which is why we're talking about it here. With regard to its future, there's no question about the significant sort of hurdles that it faces. Certainly their balance sheet is one of them. New product development, which you mentioned is another. You know, the backlog of a lot of customers who are not happy, you know, with the lack of aircraft that was going to sustain their growth. So there's a lot of cleaning up to do. And then you've got DOJ and the government that's already lurking, has been

lurking around. So all of that has been known. The key has always been to find the right leadership, the right leader to make that work. And I think they've done a very nice job of finding Kelly Ortberg, who we all know in the industry, who has both a manufacturing background, as well as had good financial acumen and a level of following on the street. So, yes, lots of problems. People will always have opinions. You know, everyone has their belly buttons, as they like to say. And I think Wells Fargo, from what I quickly read,

I mean, it's not out of the question that they should raise those concerns. What it doesn't account for, of course, is the leadership angle. There's a very rightful organization there that is just dying, dying to prove the world wrong and get things right. And they will need some time, at least the conversations I've had with all the right people involved at that corporation and on that board, that support and that backing is going to be there. And so I wouldn't count them out yet. But, again, it is going to take some time. And as I always like to say, there's proof and there's promise, and there's going to have to be a lot of proof every quarter. Yeah, the proof is the question, how long we start to see convincing proof that affects the stock.

I want to move on to Southwest. Very seldom do I talk to a former CEO who loves activists, especially when they're targeting leadership. In this case, why do you think Southwest's leadership might have this under control, despite the concerns that investors have? Oh, you know, I don't know that anyone has anything under control. I just know the reality and practicality of running an airline and making the kind of changes that need to be made to make it more contemporary, which I think Southwest and Bob Jordan, their CEO, has shown some level of commitment. We have yet to see the plan, back to proof, not promise. And I think Elliott's going to be in that same place where, hey, we're going to show you

our gun. When you open up the coat and there's a gun in there, we're just going to do that and say, look, I've got this, just to keep everybody's feet to the fire. And I think it's an important distinction for what you read in the press about special meetings and all that. That's just part of the tactic process. I think everyone is looking to see what is Southwest going to do, how are they going to do it. We'll all be the judge of that as investors and make the vote. My hope, my constant thread of conversation that I've had while speaking publicly about this is that there's a place in the middle. Replacing 10 board members with an okay roster of folks, that's not going to make the changes required. Replacing a CEO and a chairman in a highly tradition corporation of over

30 years and a culture that is not going to change necessarily swiftly. They'll change much more efficiently if they have leadership that they know and understand that culture. So my thought is that somewhere in the middle, these groups should be able to solve. And I'm the only CEO in America that has survived a proxy battle in the airline industry. And we came to a wonderful sort of middle ground. And look where United is today. Oscar, tell me about your take on the airline industry overall right now. It was a really rough summer for a number of airline stocks. I think there are questions about both

the external, the macro environment and the degree to which travelers might have some fatigue in spending and costs there. And then also overall on the cost side for the airlines themselves and pressures they might be facing. Is there turbulence ahead? Well, there's turbulence ahead for certain segments of the industry. I think it's been well documented here over the past sort of six months to a year. The former, what we call low-cost airlines, Southwest being one of them, have facing all of these upward pressures that the bigger airlines, United American, Delta, have been able to force a stall by the fact that they fly internationally, higher margins, more high-end customers,

where the low-cost or budget airlines have not had. So that pressure has caused, again, cost pressure on the lower, on the higher margin ones has eroded those margins, and it put them in a little bit of prediction, a little bit of a concern. Predicament, thank you. That's the word. But the state of the business, and people are flying. I was just in Europe for an event, came back, full flights, every airport I see. The weekend went really well. There was a little mishap out of

EWR New Jersey with some FA radar screen that kind of slowed up some of the aircraft. But other than that, all the overall good. People are building their systems. And so I am, again, I'm always a bullish person. And I think we're going to be fine with the industry. But those lower end products will have some issues. Yeah, we'll see how it works out. Oscar Munoz with a take on many things, including the airline industry. Thank you. Well, now we've got a news alert on Starwood Property Trust. Our Diana Olick has the details. Diana. Hey, John. Yeah, Starwood Property Trust has just announced a public offering of common

stock, 17 and a half million shares of its common stock in an underwritten public offering. According to the release, it says the company intends to use the net proceeds received from the offering to originate and purchase additional commercial mortgage loans and other target assets and investments. The company may also use a portion of the net proceeds for other general corporate purposes, including but not limited to the repayment of outstanding indebtedness under the company's repurchase facilities. Starwood Property Trust is, of course, an MREIT. That's a mortgage REIT and provides financing for commercial real estate development. And again, 17.5 million shares. Right now, the stock is down about 3%, John.

All right, Diana, thank you. Well, let's get a CNBC News update now with Bertha Coombs. Bertha. Hey, John. In his first one-on-one interview since taking control of more than 500 square miles of Russian territory, Ukrainian President Volodymyr Zelensky told NBC's Richard Engel today that Ukraine plans to indefinitely hold that land. He says it's integral to the country's victory plan and is necessary to try to force Putin to the negotiating table. The pro football season is about to begin,

and the American Gaming Association is predicting a record year of betting with people wagering $35 billion this season, they predict. That would be a 30% increase over last season. One big reason, more places to bet this year. Sports betting is now legal in 38 states and Washington, D.C. And Game of Thrones fans can soon own a piece of the epic eight-season HBO show. Fans can now bid on costumes, props, set pieces, even the Iron Throne and Jon Snow's sword. The items listed at Heritage Auctions range from $500 to $20,000. I got to think that throne is going to go for a

whole lot more than that. All right, Bertha, thanks. You can bet on the Iron Throne or bet on the gridiron. Well, after the break, a curveball for a shaky market. Mike Santelli is going to look at the Treasury yield curve and something on the verge of happening that hasn't in years. And check out the action in energy today. Oil falling hard, erasing gains for the year as OPEC signals a production increase in October. Energy stocks plunging as well with Apache, Phillips 66 and SLB getting hit the hardest. We'll be right back. Breaking news on NVIDIA.

Let's get to Seema Modi. Seema. John Bloomberg is reporting that NVIDIA has received a Department of Justice subpoena in an escalating antitrust investigation. We know there's been growing concerns that given NVIDIA's dominance in artificial intelligence chips that it could potentially invite antitrust concerns and therefore regulatory interests. I would also point out that the DOJ antitrust chief Jonathan Cantor joined us on CNBC just a month ago. And

at that time, we pressed him on how he was looking at the semiconductor industry. And he had said at that time that he was thinking about AI chip competition. We have reached out to NVIDIA. More when we get it. John? All right. That's stocked down about one and a half percent in overtime, Seema. Thanks. Let's get back to Mike Santoli soon with a look at the year curves path to disendurance. Right now, let's get to Mike Santoli. Mike? I am here. Yes. And we are just about at that point when the yield curve ends, perhaps two plus years of negative territory and goes back positive. Now, this is the 10 year minus two year yield. Right. Commonly known as the as the main Treasury yield curve. You see it just about back up to zero. This is happening as both

yields go down. But two year yields go down faster than 10-year yields as the market prices in the prospect of Fed rate cutting. Now, what does this mean as a signal? It's up for debate. Many had said when it went negative, the clock starts to tick in advance of a recession. Well, that happened in mid-2022. It seems like whatever signal was there has not quite come to pass. Others will say, well, actually, it's when it goes back positive that you have to start worrying. That's when a recession in these shaded areas seems more imminent. Well, I don't know. We kind of chopped

around that flat line for quite a while in the mid-2000s. I would also argue 2019, when it basically goes to a bottom and then starts to rebound, even if it never went negative, that's the same cyclical signal. And I don't think,-COVID we were on the verge of a recession right there. That's what that very narrow shaded band is. So that's the setup at the moment. We'll keep watching for whether we get back into positive territory on that yield spread. Meantime, the demand for bonds among retail investors is pretty voracious. So here's the inflows into the iShares aggregate bond ETF. AGG is the symbol. Three-month rolling average, just according to Strategas. It's pretty much at a record. So it shows you people are looking to capture those yields that we see right now.

It probably helps explain why a lot of corporate and treasury issuance has been easily absorbed by the market. Now, whether this is a signal people are getting too excited about bonds or not, that remains to be seen. But it shows you capital markets are flush. People are very happy to accept these lower level of yields, John. Well, maybe we'll worry when we see another front page Wall Street Journal story about that. Mike Santoli, thank you. Well, stocks sliding, as we mentioned, to start September. Up next, we'll discuss whether history says this tech sell-off will intensify

or whether it's a buying opportunity when overtime returns. Welcome back. Nvidia shares getting slammed in the regular session, now getting dinged again in overtime after Bloomberg reported the company received a DOJ subpoena, an escalating antitrust investigation. Joining us now on the news line is Patrick Moorhead from More Insights and Strategy. Pat, good to have you. So what do you make of this antitrust stuff with NVIDIA?

I mean, it seems they're clearly the product leader in AI, and so they're winning fair and square. What's to investigate? Yes, this is completely expected. And NVIDIA has over 90% of the data center GPU market share. When you combine that with the Lina Khan administration, I would say the new rules for what can be proved as being a monopolist, and that is it's not what you have done, it's what you might do. I like to call that pre-crime, which is pretty new for the past six or seven years out there. Okay, pre-crime, but eventually a judge is going to have to weigh in, I imagine, at least,

you know, with the U.S., it seems like being a monopoly isn't illegal. Abusing monopoly power is, right? That's exactly right. And that gets into the new rules. I mean, if you look at 10 years ago, you had to show damages to consumers, to companies, to innovations. And now it has shifted over the past decade to what you might do. It would be very hard to look back at the marketplace, at history, and demonstrate where NVIDIA has abused its monopolistic powers, because that history really doesn't exist here.

Okay, let me sneak in at least one about intel here in this lunar lake launch i'm seeing some surprise out there about uh the the stats that intel was rolling out on how this chip performance for thin and light laptops in ai and with battery life overall stacks up versus what amd and qualcomm have said how did you feel about it? So Intel is going to win at some of those metrics. It's going to lose at some of those metrics. Intel showed the ones that it won on today, and it will be until, I would say, the end of September before we have some independent numbers. But categorically, they have improved their lot in the notebook life against Qualcomm and Intel. And sometimes we forget, given the challenges Intel has had and what it looks like shooting

itself in the foot many times, it still has 80% market share in the PC market. And this wouldn't be bad, I imagine, for margins and for revenue if they can get that client business a win. I guess we'll see how your test and those of others shape up when we get those laptops shipped at the end of this month. Pat Moorhead, thank you. Thank you. Up next, how today's sell-off mirrors the market pressure from almost exactly a month ago on August 5th, and if it spells trouble for the rest of September. Be right back. Welcome back. Had some big moves in the regular session, but some big moves happening right now in overtime as well. Zscaler is falling down 9.5% despite beating on earnings and revenue. Full-year earnings guidance was well below estimates.

PagerDuty reporting a mixed quarter, missing on revenue, beating on earnings per share, also coming in light on full year revenue guidance. You see it's down 12.5%. Asana beating on the top and bottom lines, but again, guidance was light. It's down more than 15.5%. GitLab, though, topping estimates on earnings and revenue. Guidance above expectations. That's why it is up 11.5%. Well, today, of course, a rough start to September,

with the major averages posting their worst day since August 5th. The NASDAQ was the biggest laggard, down more than 3%. The NASDAQ 100 had its worst day since July. Joining us now is Nick Colas. He is co-founder of DataTrek Research. Nick, welcome. So what are the chances that the jobs report shifts the narrative here again, just like it did a month ago? Or is it different with Fed and jobs further apart this time?

No, I think you're right. It's going to be a very important number on Friday because it'll inform, I think, what the Fed ends up doing on September 18th as they evaluate their first rate cut. The market wants to see 50. The market wants to see a big start out of the gate. But the jobs number may not cooperate with that because if we look at the initial claims data for August versus July, it was actually a little bit lower. So perhaps the labor market's a little bit better in August than it was in July. And that pressure to do 50 comes off. And markets may not like that very much. I think we're seeing a bit of that volatility today. Does the market really want to see 50 if it's for bad reasons, though? Not for bad reasons, but it would like to be reassured that the Fed is on their side.

You know, starting with 25 is a perfectly decent start. And very often that's the way things work out. But if you start with 50, then it shows some intent. It shows some seriousness on the Fed's part that they're there for the economy, that they're there ultimately for equities. 25 says, OK, we'll start the way we usually do and see how it goes. But we we started to think that maybe we wouldn't get 50 this time because even though the data was iffy for a little bit, then it got better as we got through August. Right. A chance that happens again. Well, it's funny because Fed funds futures are still putting the majority odds 63, 64 percent on 50 in two weeks. So the Fed funds futures market clearly thinks we're going to see 50. And I think a piece of the recovery in August was the fact that the market,

the equity market felt, OK, if 50 is going to be the answer, then recession comes even further off the table. And that's a reassuring sign for equities, obviously. You say small caps, along with financials, industrials are buys here. Why small caps? And we saw them get hit so hard today. Yes. I mean, small caps have been a wild ride, obviously, for the entire third quarter of the year. You know, had a monster July, had a disappointing August, and we're seeing a bit of a more further sell-off. But there's still leadership because they're cyclical stocks and they require benefit from lower interest rates because many of these companies don't make any money yet. And so they need access to low-priced

capital in order to keep growing. And that comes through debt markets. So lower interest rates definitely helps them. Financials, better economic conditions, that's very clear. And I think it's also interesting to note that technology is the one lagging group in Q2 so far. The only sector of the S&P down in the third quarter so far is tech. Everything else is up. So that kind of tells you where leadership is shaping up. If you're feeling seasick with U.S. volatility, can you go anywhere international except India? Oh, that's a tough one. India is our pick for EM. You can do, say, IEUR, the MSCI Europe Index, but most of your gains there are coming from currency, not from the underlying stock market. But with rates coming down in the U.S., as Mike Santoli talked about, you are seeing a weaker dollar, and that's benefiting you as a

U.S. holder of European stocks. So there's some gains to be had there. But just remember, it's the currency side that's helping, not so much the stock side. All right. Good to know. Nick Colas, thank you. Thank you. Now, up next, why a record bank buying spree by credit unions is becoming so controversial and leading to questions about whether there's a lever playing field in the banking industry. When Overtime returns. Welcome back to Overtime. A record bank buying spree is causing controversy, and it's not the mega banks at the heart of this M&A.

Leslie Picker, credit unions. It's credit unions, exactly. So they are gobbling up community banks at a record clip. Credit unions were established about 150 years ago in rural America to create community-based lending for those without access to traditional banking. Now, throughout the last century, credit unions have operated as non-profits, exempt from most taxes. However, recently, they've scaled to the point where they're buying billions in assets from community banks, a record trend that's become controversial.

Critics say credit unions tax exempt status gives them an M&A advantage and their scale no longer justifies the $21 billion in annual taxpayer subsidies that they enjoy. There's just something wrong with what are essentially non-profit organizations buying tax paying commercial and profit making organizations. And I think it's time to re-evaluate tax exemption that credit unions now have because they're no longer these self-serving or membership-serving organizations. They're growing and expanding, and they're essentially commercial banks masquerading as nonprofits. However, the credit unions say their tax-exempt status allows them to charge less for loans and pay more on deposits than traditional banks. Their advocates say doing away with that tax-exempt status would have a sizable

impact on GDP, jobs, and credit access. The National Credit Union Administrator, which regulates the industry, told us that regardless of size, credit unions tend to abide by their mission. Generally, credit unions do pay more on their shared deposits and they pay and they charge less on the loans that they make to consumers. I think that that's a good thing for the American consumer. Still, the M&A trend continues. Harper says he's aware of 12 more potential deals that are in the works, John. Of course, not all of those will necessarily get approved, but there's still very much a big interest in doing more of these deals. Legit argument that they're more consumer friendly.

In that case, maybe consumers shouldn't be worried about them getting bigger. Well, that's the point that the credit unions are making, that they shouldn't be worried. Now, I think the next question should be if they are starting to look more like community banks and even in some cases, some regional banks, their credit unions that are the size of Silicon Valley Bank, should they be regulated as credit unions or should they be regulated as banks? Should they go through the same kind of stress test? Should they go through the same kind of Community Reinvestment Act, for example, whereby there's a bit more scrutiny over the types of communities that they are lending to. And so that's kind of the next question. As

they get bigger, how are they kind of protecting and safeguarding consumers in the way that banks have become accustomed to, you know, over the last few decades? Have we had the equivalent of a savings and loan crisis in credit unions? So it's interesting you bring that up because it was actually in the 1980s when there were those dueling recessions and a couple of significant failures among the credit unions. And that was actually what got the regulations to be rolled back so that kind of the definition of this community-based lending got a little bit more lax. They're able to now do cross-border transactions, which we've seen in several cases. So it actually was in those recessions where these credit unions failed and people were

concerned about their viability. And that's why they did decide to kind of roll back the regulations. News you can use. Leslie Picker. Thank you. And you think about the session that we had, folks. Dow was down about six hundred twenty six points. The Nasdaq taking it on the chin. And then in this overtime session, lots of movers, mostly to the downside, but not all. And there's a lot more to come on CNBC and ahead for now. It's going to do it for overtime.