Closing Bell - Closing Bell Overtime: Thomas Peterffy On The (Lack Of) Market Volatility; Oscar Health CEO On Weight Loss Drug Demand 11/7/23

Episode Date: November 7, 2023

Major averages notched another positive session. Vital Knowledge’s Adam Crisfulli on the market action. Earnings from Gilead, eBay, Robinhood, Lucid, Rivian, Cava and Klaviyo. Mizuho’s Dan Dolev on Robinhood and Toast’s quarter. Interactive Broker’s Thomas Peterffy on market volatility and elevated rates impact on trading. CNH Industrial had a rough day; CEO Scott Wine on the softness the company is seeing in the global economy. Oscar Health CEO Mark Bertolini talks the company’s strong quarter and what’s ahead for the ACA and health insurance because of rising rates. 

Longest win streak for the S&P in two years, as well as major averages, eeked out gains. That is the scorecard on Wall Street today, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Fort is off today, ahead on today's show, and we have got a big one. Key reads on EVs, e-commerce, and eating. When we get results from Rivian, Lucid, eBay, Kava, and Robinhood, among others. We'll bring you all of the numbers as soon as they cross. Plus, we will speak with two CEOs whose stocks are moving in the opposite directions.

On the back of earnings, the head of heavy equipment maker, CNH, which sank today in trading, and the CEO of Oscar Health, which got a healthy boost. And Interactive Brokers Chairman Thomas Pederphy will discuss how his customers are navigating this up and down market. But as we await those earnings, let's talk about today's market action. Stocks digging out of an early hole, adding to big gains on the month. The Dow and S&P 500 notching seven-day win streaks. This is the longest for the S&P 500 since 2021, as we mentioned just a few moments ago. The Nasdaq outperforming today, logging its eighth winning day in a row. CNBC's senior markets

commentator Mike Santoli joins us from the New York Stock Exchange to break this down. Mike, the fact that we continue to, it's not the rally we saw last week, but the fact that we do continue to end in the green here, how key is that as we have seen Treasury yields continue to come off? Yeah, doing just enough, Morgan, to kind of stay on a positive slope, obviously leaning on the old favorites in mega cap to keep the S&P 500 positive. All, you know, I think to the good at this point in terms of evaluating this rally, you're not seeing a really fast instinct to take profits broadly. That said, you know, you had about a 50-50 day in terms of up versus down stocks today.

So it is a little bit lumpy. But in the context of a market that was very pessimistic and was using a lot of that skepticism as rally fuel, it's just sort of a measure of how defensive people got into the end of October. People did get heavily short and underexposed to stocks as we finished out the month. So this is, to some degree, just sort of a mean reversion move. Okay. I mean, I asked you this question yesterday, too, but the Russell 2000 did finish the day fractionally lower. The Dow Transport's also down about half a percent today.

How much to make of that right now and what it's signaling about the economy overall. Yeah, at this point, you know, we're sort of just giving back a portion of what was picked up in the in the relief rally last week in those two sectors of the market. It's definitely true that you don't see a lot of high conviction, economic enthusiasm at work in the market. And those two things would benefit smaller stocks and transports. What it is mostly is let's make sure we participate in a market that might have some year end lift to it and doing that through the mega caps. I'm not really too alarmed on the two day underperformance of the cyclical groups, but obviously you have to monitor it because all year it's been sort of the Nasdaq 100 setting the tone. OK. We saw some pretty notable moves in other markets like oil as well. So stay close because we're going to talk a little bit more about that in just a few moments.

In the meantime, Gilead earnings are out. Angelica Peebles has the numbers. Angelica. Yeah, Morgan. Gilead out with a beat on the top and bottom lines. Adjusted EPS coming in at $2.29 a share. That's adjusted compared to the estimate of $1.92 a share. Revenue also coming in above estimates at $7.05 billion versus $6.802 billion.

And that is coming off of surprising strength of its COVID drug, the Cluri. The company is saying that even though sales are down about 31 percent from the year ago quarter, that the sales were about double what the street was expecting. And if you remember, there was that big covid surge over the summer. And also there is strength across the rest of the portfolio in the HIV world. Their treatment, Biktarvi, was meeting estimates, although there was a little bit of weakness in that and their preventative treatment toBY. And then their breast cancer drug, Tredelvi, was about in line with estimates with the sales there coming in at about $283 million. And they are also increasing their full year adjusted earnings guidance. They're now expecting $6.65 a share to $6.85 a share. Back to you, Morgan. Okay, Angelica, thanks. Shares are up about 2% right now on that beaten raise.

Let's get to our first guest. Joining us now, Vital Knowledge founder and president, Adam Crisafulli. Adam, it's great to have you. The earnings are about to come fast and furious here. So I'm going to start with a quick, broader market question for you. And that is the fact that we have seen treasury yields come under pressure. Some of that softer economic data, some of that's been some disappointing earnings that also speak to the macro environment. Is this a good thing for stocks if you see treasury yields coming down for these types of reasons, or is that actually bad? I think that's the single most important question in the market right now. You're seeing equities celebrate the decline in yields, but I think when you peel back the onion a little bit and you look at why yields are falling, like you just said, a lot of the reasons are not good for equities.

So you have disappointing economic data. You have this morning export figures out of China, Taiwan, German industrial production. You've had weeks of pretty underwhelming earnings reports, including from some pretty important cyclical companies just today. You had Emerson, you had CNH Industrial, who you're going to talk to a little bit later in the hour. You had Air Products, so some big industrial companies. You're also seeing on a more positive front, you know, disinflation, which is positive as well, plus some decent auctions. You had the Treasury announcement last week where they're tweaking certain terms of their auctions.

So all those factors are contributing. But the biggest one, in my view, is you have seen, you know, I think a change in the growth trajectory for the worse. And that's really giving a bit to equities. And so stocks for the time being are celebrating it. But eventually, there's going to have to be a reckoning on what's happening with growth. And that's going to be more negative for stocks. OK. In the meantime, Rivian earnings are out. Phil LeBeau has the numbers. Hey, Morgan, these are better than expected numbers for the third quarter for Rivian and a change in their guidance.

We'll get to the guidance in just a little bit. Smaller than expected loss in the third quarter of a buck 19 a share. The street was expecting a loss of $1.32 a share. Revenue basically in line with expectations. Maybe a hair better than expected at $1.337 billion. The numbers within the numbers in the third quarter, Rivian's free cash flow, negative $1.06 billion. The loss per vehicle continues to come down. It's now down in the third quarter to $30,648.

It was over $32,000 in the second quarter, more than $130,000 in Q3 of last year. They end the third quarter with $10.25 billion in liquidity. And a couple of important notes. First of all, Rivian and Amazon jointly announcing that they are ending the exclusive arrangement with Rivian building electric delivery vehicles for Amazon. Remember, Amazon is an investor in Rivian. This will allow Rivian to continue delivering these vehicles to Amazon, but also to other commercial operators who may want one of these vehicles in the future. And in terms of guidance, they are raising their 2023 production guidance to 54,000 vehicles from 52,000. And they're cutting their EBITDA loss

for the year to 4 billion, was 4.2 billion. Last quarter was the guidance and their guidance in terms of CapEx. They're going to be spending 1.1 billion in 2023, as opposed to the previous guidance of 1.7 billion. Real quick, guys, don't forget, RJ Scaringe, CEO of Rivian, he's going to be talking with us tomorrow morning on Squawk Box. Lots to discuss. Again, better than expected numbers in Q3 from Rivian. Guys, back to you. Yeah, better across the board, it sounds like. Phil LeBeau, thank you. Shares are up 4% right now. Robinhood earnings are out. Kate Rooney has the numbers. Kate. Hey, Morgan. So Robinhood with a miss on revenue for the quarter, reporting an earnings loss as well

this quarter thanks to a legal fine. Also saw a drop in monthly active users. Robinhood, the loss per share, that was $0.09. We're not going to compare that with estimates. It's not a comparable number, but this comes after the company reported a profit last quarter. That was a surprise, but it's back in the red when it comes to earnings. For the third quarter, revenue, that was shy of estimates, came in at $467 million. It was up 29% year-over-year. Robinhood's top line was fueled by higher rates that helped offset some of the slower trading

activity the company has seen. Net interest revenue almost doubled year-over-year, up 96% to $251 million. Then transaction-based revenue, that's pretty much trading fees, was down 11% year over year. Options did make up the bulk of that part of the revenue line item, $124 million. Equities was down 13%. And then cryptocurrencies saw by far the steepest drop, down 55%, bringing in about $23 million when it comes to revenue. Despite the drop in volume, Robinhood saying that it does plan to offer crypto trading across the EU. We have not heard that from them before. That's new.

And then monthly active users. This was a miss, guys. $10.3 million. Street was looking for $10.8 million. I caught up with the CFO of Robinhood, Jason Warnock. He talked about that revenue miss. He said September trading volumes fell off quite a bit versus earlier in the quarter. He said that was really the difference on the revenue front. He did talk about higher rates helping offset that. And then

on the MAU miss, monthly active users, he said they have seen less engagement on the platform. That could be explained by some of the lower trading activity. But it's not hitting other metrics. They saw more assets under custody, for example. And then the legal accrual. So this had been disclosed in a 10Q, guys. The company has been vague on the specifics. Wernick telling me that they're a fairly young company. He said, we grew incredibly fast along the way. They had a number of issues come up where regulators have engaged with Robinhood, said they've invested a ton in compliance and regulatory, but these are lagging issues, as you put it. He said they're at a point where the company can move on. That was disclosed, but it's hitting hit the revenue number.

But you can see down more than four percent here after hours. Morgan, back to you. All right. Kate Rooney, thank you. Five percent now. We've got another EV maker. Those earnings to bring you Lucid. Phil LeBeau has the numbers, Phil.

Morgan, it's a loss of 28 cents a share for Lucid in the third quarter. Now, the street was expecting a loss of 35 cents, but it's unclear if this was gap to gap in terms of the comparison, in terms of what analysts were expecting versus what Lucid is reporting. So we'll leave it at 28 cents a share, a loss in the third quarter. Revenue light of expectations, 138 million. The street was expecting 184 million. Important change in guidance in two figures. First of all, 2023 production.

The previous guidance was 10,000 vehicles. Lucid now lowering that to a range of 8,000 to 8,500 vehicles. CapEx spend, they're being a little more judicious with their CapEx spend going to a range of $1 billion to $1.1 billion for the year. Previously, they said $1.1 to to 1.3 billion. Just got off the phone with Peter Rawlinson, CEO of Lucid. He says he considers this cut in production a judicious move, a prudent move, as they try to align their deliveries with some challenging conditions. But they believe that they can use this as a base and to grow from here. He told me we've got some work to do. We need to be prudent about preserving our capital. So again, Lucid cutting its full year production guidance to a range of 8,000 to 8,500 vehicles. Previously,

they planned to build 10,000 vehicles. Morgan, back to you. All right, Phil, thank you. Shares are down three and a half percent right now. It's a tale of two automakers, EV automakers. Adam Crisafulli, still with us. A lot to digest there, Adam. So I will start with some of the earnings that, do we have eBay now? Okay. We do not yet. Adam, the earnings we just got, whether it is Lucid and Rivian, whether it's Robinhood, and the fact that they posted a loss and a decline in monthly active users. I could go through the list here. Your thoughts on what we're getting this afternoon. Yeah, I think the EV industry is at a very interesting inflection point right now. You've heard from pretty much all the OEMs. So these are the last two OEMs to really report numbers.

And EV results have kind of missed across the board. And the entire industry seems to be retrenching a little bit as far as production capacity. Sales haven't been as robust as I think some people have been hoping. So it looks like you have a bifurcation of these two companies. So Rivian is coming through this downturn a little bit better, whereas Lucid is struggling a bit more, cutting production by a meaningful amount for the full year. So, you know, it's going to be interesting to see how this whole industry plays out, like I said, with Ford, GM, Celantis, all now dealing with the new UAW's labor agreement,

and you have kind of a softening sales environment for this type of vehicle. Okay, we do have eBay earnings. Those are out. Contessa Brewer has those numbers for us. Contessa. Yeah, Morgan, it looks like we're looking at revenues right in line with the consensus expectations of $1.5 billion. EPS comes in with a slight beat here of $1.03, just a slight beat. They were expecting a buck a share. A couple interesting items of note here. First party advertising products. This is promoted listings. They're saying that that's up 39 percent. It delivered $345 million. Also, the company bought back 651 million shares of common stock and declared a 25 cent dividend that's payable in December and a strong full

year outlook. There you can see the stock is down 4 percent. The operating expense and the margins for the operating expenses coming under pressure here. All right. Contessa Brewer, thank you. Adam, I want to go back to you because it sounds like at first glance eBay put up a pretty good report here. But when you start talking about a decline in margins, when you start talking about higher operating expenses, and we're seeing this throughout the earnings season, the fact that margins seem to be coming off for a number of companies across industries, what to make of that? And I ask because we are in this disinflationary environment.

Supply chains are starting to ease for many companies. But you're also seeing that pressure on sales as the pricing power maybe starts to erode as well. No, definitely. It will be interesting to dive through the expense details in this company because in tech, at least, the large caps, especially in internet, they've really outperformed this quarter on the expense front. They've really flexed their muscles aggressively. Meta, Amazon in particular, really slashed costs and allowed margins to expand. So eBay is sort of the outlier if indeed expenses are coming in ahead of expectations. It'll be interesting to kind of see what they're seeing on that trend. I think overall, companies were very aggressive this year in slashing operating expenses. They

had a lot of tailwinds as supply chains normalized. You had the latest New York Fed supply chain index hit an all time low earlier this week. And I think that started to kind of hit a trough and maybe even creep up a little bit. D.R. Horton on its call today talked about how, you know, they had a huge downward move in lumber costs. That's kind of come to an end and that might even be creeping back up again. So I think some of the biggest cost tailwinds that companies have enjoyed for multiple quarters, both operating and on gross margins, that might be kind of petering out a little bit to certain companies. OK, Adam Crisafulli, thanks for kicking off the hour with me as we have some big moves in earnings after the bell right now and post an overtime action, we'll call it.

Let's get back to Mike Santoli now for today's market dashboard. Mike. Yeah, Morgan, just to situate the S&P 500 rally and then the sort of two day sideways move within the longer term trend. Take a look at where it sits within these 100 and 200 day moving averages. You see that sort of defines the range right here. 4,400 or thereabouts is that 100 day. And you'll notice that kind of capped the market since September or so, just that level. So we'll see if it can get any more behind it. We did pull the slingshot back a little bit farther, as you can see. And then we spent a few weeks underneath that 200 day average, just as we did in March. You did kind of pull back after the initial burst.

Higher didn't give up more than half of the rally, and then it resumed higher from there. So we'll see if we have anything like that. Let's call it 42.75, 42.50 would be a similar type of a pullback if we were to get it before you'd have to say that anything really changed about this rebound potential. Now, we've talked a lot about the move lower in crude prices, energy stocks today. Look at the dynamic between the XLE, so the energy sector of the stock market,

compared to that's crude oil, that's gasoline, wholesale gasoline prices, that's natural gas. This is a three-year chart. So you see they were all kind of clustered together there in the initial move higher after the invasion of Ukraine last year when we did get oil bursting above $100 a barrel. And you see how equities have really just gone more sideways and held up relative to the commodities. Now, you could say they're making it up on volume because they obviously are producing a bit more. And also, it's more of a kind of an area of the market a lot of people like to lean on because it looks a little bit cheaper. Maybe they like the longer-term story.

But it's really unclear how much the stocks can withstand the downward pressure from the commodity prices for long from here, Morgan. Yeah, it's really fascinating to see WTI, U.S. crude futures, at their lowest levels since July, breaking below 80, as you just mentioned. And yet the equities are hanging in there. We're going to see a little bit later this hour. Mike Santoli, thank you. Klaviyo earnings are out. Pippa Stevens has those numbers. Pippa.

Hey, Morgan. The stock a little bit under pressure here in extended trading after Klaviyo's first report as a publicly traded company. The company losing $1.24 per share. We're not comparing that to estimates given the recent IPO. Revenue coming in at 176 million. That was ahead of estimates for 167 million. Now, in terms of the Q4 revenue guidance, it is slightly ahead of expectations and they're forecasting revenues to be about 35 percent higher

year over year. The company's saying that its customer count now stands at 135,000 relative to the 109,000 in the third quarter of 2022. Once again, that stock down about 3%. Morgan. Okay. First report as a public company. Pippa Stevens, thank you. Kava earnings are out. That's the second report for Kava as a public company. Contessa Brewer has the number. And is this a delicious report for this Mediterranean fast casual restaurant? They are reporting now a six cent profit per share. The street was expecting a loss of a cent per share. We're not sure if that's comparable at this point, but it looks like the revenues came in beating estimates 176 million versus the the streets anticipation of 172 million. Same store sales for Kava, growth of 14%. They say that it was up from guest traffic and also better menu and price

and product mix there. And so that's why you're seeing, you can see it just turns, the shares just turned negative down half a percent, but that's why they're saying that they saw that same store sales growth of 14 percent, Morgan. All right. Contessa, thank you. Shares moving between gains and losses right now as investors digest those results. But after the break, we're going to take a closer look at this afternoon's fintech earnings movers, Robinhood and Toast, both moving sharply lower on the back of results. And later, Interactive Brokers Chairman Thomas Pederphy gives his outlook for the market after the impressive run over the past week. Overtime is back in two. Welcome back to Overtime. Robinhood falling after reporting its third quarter earnings

just moments ago, losing nine cents per share with revenue missing street estimates. You can see those shares are down about seven percent right now. Meantime, restaurant payments firm Toast is also sharply lower after missing on the bottom line. Those shares are down 13 percent. Joining us now here on set, Mizzou host, security senior analyst Dan Doloff, who covers both of these companies. I want to start with Robinhood with you because we did have this loss. We had had a profitable quarter last quarter. Monthly active users coming in below expectations. It looks like revenue is missing, even though those were up 29 percent year on year. And a lot of talk about higher rates offsetting the weaker volumes. But overall, we're continuing to see some of the

activity on this platform sag. Is that the right way to think about this? I actually would think it looks better than meets the eye, or basically the results are actually better than people think. So if you think about those mouths, I think they declined about 500,000. They went from 10.8 to 10.3. The decline is more muted than the decline between the first quarter and the second quarter. I think it went from 11-something to 10.8. So you're seeing like an abating of the decline. To me, that means the first derivative is turning positive.

So I would actually be less negative on the results. I'm looking at, you know, those, like, first derivative trends, and they don't seem as bad. You know, they give you, like, every month they give you the trending updates, so there's not that much surprise here. They're kind of losing the element of surprise because everybody kind of knows what they're going to report. So it's more about these sort of intricacies. Okay. Is it a buy here, then, as the stock sells off, a hundred percent. You own Robinhood for the future. You don't own it for like one quarter or two quarters. You own it because you think it could be like the next

Charles Schwab. And I wholeheartedly believe that's the case. It's going to take time. There's a lot of haters, but I think they're doing something right. Okay. Interesting. Okay. Talk to me about toast then, because we're talking about food service with Toast. And it looks like we had a mixed report there as well. And that stock's falling pretty dramatically in response. Yeah. And well-deserved, I think. The fall is well-deserved. I mean, I downgraded Toast a couple of months ago, mostly on kind of their inability to get into the enterprise. And long-term, because of a Zenpick, because it's hitting restaurants and eventually it's going to hit Toast. What's happening today is they missed on volumes. They're missing on, they're guiding down below the street on volumes for the fourth quarter.

So that's not, that's never a good thing. And the net ads, which is kind of that key yardstick, is okay, but it's not better than what people thought. And I think all these things taken together, there's nothing to get excited about in the third quarter. All right. How much of this is a toast-specific story, especially when you start bringing up things like Ozempic, versus an industry-wide story? And I ask that knowing we're going to get shift four results tomorrow as well, and they're looking to take on toast in a more meaningful way. I think that's a great question, and two things I have to say.

I think it's more toast-specific and vertical-specific than anything else, because we've done research. If you look at their volumes pair the growth in their volumes per restaurant it's actually coming down that growth which means that they're it's difficult for them to get into the enterprise so that's idiosyncratic toast specific the macro is fine it's not amazing but I don't think it's all macro there has to be something idiosyncratic there Dan Doliff it's great to have you here on set thanks for joining me for a real-time earnings reaction we appreciate. We're also going to talk more about the payment sector tomorrow when Shift4Payments CEO and founder Jared Isaacman joins me here on Overtime exclusively.

The company reporting its results tomorrow before the bell. Up next, we'll ask Interactive Brokers Chairman Thomas Petterfee for his outlook on stocks into year end and how the big move in rates is impacting his business. Welcome back. Time now for a CNBC News update with Courtney Reagan. Court. Hi, Morgan. With elections underway in 30 states today, the Federal Cybersecurity and Infrastructure Security Agency says so far there have been no threats to election security. They reported that they have not seen any specific or critical threats to disrupt election infrastructure on election day or election day operations. A man died Monday after an altercation during duly Israeli and Palestinian rallies in Thousand Oaks, California. Paul Kessler allegedly fell backward and hit his head on the ground during the scuffle. But according to the Jewish Federation

of Los Angeles, he was hit in the head by a pro-Palestinian protester with a megaphone. Police say they are still trying to piece together what happened, but said a suspect in the altercation has been cooperative, was briefly detained, but that no charges have been filed at this time. And President Biden is scheduled to meet with United Auto Workers President Sean Fain on Thursday. The two are celebrating the restart of the Stellantis manufacturing plant and a new historic contract between Detroit's Big Three automakers and the labor union. And if you want to hear more, UAW President Sean Fain joins Last Call tomorrow night. Morgan, send it back over to you. All right, Courtney Reagan, thank you. Meanwhile, the S&P 500 notching its longest win streak of the year, now up nearly 5 percent in November, which just started

less than a week ago, while yields have come down meaningfully following last week's Fed decision. Joining us now is Thomas Pederphy, founder and chairman at Interactive Brokers. Thomas, it's great to have you on the show. Thank you very much for having me. I do want to start there more broadly and just get your take on the markets, this big surge we've seen in stocks in recent days and drop in yields alongside it as well? So the big surge in the stock prices goes hand in hand with the dropping yields. So it is since the Fed meeting that yields went down almost 50, the 10-year yield went down 44 basis points or 43 basis points, while the stock market went up 5%.

So it's completely interconnected. We would think that prevailing treasury rates are the result of large money flows in a very robust market. But that, unfortunately, is not the case. Long-term treasuries are, to an ever greater extent, financed in the short-term repo markets. And their prices are determined by the treasury futures markets. And futures are very highly leveraged at about 100 to 1. So all in all, we have a potentially very volatile situation where highly leveraged treasury futures are driving the long-term treasury markets on the one hand, and they are also driving the S&P 500 and

QQ futures on the other. The stocks follow the S&Ps and QQs. It is a very, very large leverage is used. And these connections are kind of flimsy because there is not a lot of money on there behind all this. So it is kind of worrisome to me. Interesting. So what I'm curious about is what this means, the volatility we're seeing in the bond market, higher rates from the Fed in general, what this means for interactive brokers, especially since you do really compete hard on things like margin loan rates and also what it means for your clients and their investing behavior and whether the risk-reward dynamic or equation for them has shifted in terms of where they're putting money to work so our clients are very well aware of the flimsy nature of these connections because we have many of our clients are are basically professionals so they are taking a hands-off attitude in preparation of a coming potentially explosive volatility. And while that is happening, many of our professional trader customers

are in the short-term options using mostly vertical spreads to reduce cost. So they may take, they usually are on the QQs or the SPY options, and they may take a position where they go along 4.30 call and go short 4.32 call. So if the market goes up to 432, they make the $200. Okay. I do have to ask about the competitive landscape. We did just get earnings results from Robinhood. Revenue missed estimates, as we've seen muted trading volumes continue to weigh on that particular business. I realize it's not necessarily apples to apples comparison with interactive brokers. But how does it speak to what we're seeing across platforms right now where retail traders are concerned and where trading activity in this volatile environment is concerned? Well, to tell you frankly, I never quite understood Robinhood's business proposition, because they have 10 million customers or 11 million customers, and they keep reporting losses. We have Interactive Brokers has two and a half million customers and we have about three

billion dollars of profits a year. So I just don't see that. I don't understand. All right. Well, Thomas, I appreciate your time and your insights today. Thomas Petterfee. Thank you very much. After the break, machine maker and global economic bellwether, CNH Industrial warning in its earnings report this morning about softening and market conditions. We're going to talk to CEO Scott Wine about the parts of the world where you may be seeing red flags. Stay with us. Welcome back.

Shares of global industrial firm CNH International hitting a 52-week low today after the company lowered its full-year guidance in its third quarter earnings report. The move comes as the company sees softening market conditions in South America. Joining us now is Scott Wine, CEO of CNH International. Scott, it's great to have you back on the show. Hello, Morgan. Good to see you. Thank you for having me on. So, lowered guidance. You also announced a restructuring plan, as you've seen demand for farm machinery slow.

It's essentially been a perfect storm. You've got higher interest rates. You've got lower commodity prices. And then you have this normalization that's happening after all the supply chain bottlenecks in order backlogs and dealer inventories. Does it get worse before it gets better? Well, Morgan, actually, the fundamentals in agriculture still remain really good. You know, the problems that we had, if you call that I talk about disappointing results, but really was driven by the South American market, specifically Brazil. And I was down there recently and just talking to the farmers, you know, they're they've had a lot of the input costs they've had this year are much higher than they expected. And then it's soft

commodity prices, you know, grain, corns, whatnot have come down. They're're just reluctant to sell so they're actually a little bit short on cash right now because they're not selling their uh their grains and that's not going to last forever they're ultimately going to sell and ultimately buy equipment but you know the fundamentals in south america specifically are as good as they've ever been um it's just a weakening time in the market right now and you know we're truly really trying with higher interest rates to protect dealer inventory. You know, we took down dealer inventory sequentially in Brazil. So they're they're very lean from that standpoint. So when the market recovers, we'll be very well positioned to increase our sales where we've got our highest market share positions in South America.

So we think fundamentally we're in good shape, but trying to react to a slowing market as quickly as we possibly could. OK, if we look beyond South America, I mean, take me on a trip around the world since you do sell into so many major markets across the globe in North America. It looks like industry volume was up 19 percent year over year. What are you seeing across the continents right now? And what is it saying about the state of the economy? Well, you know, I mean, thankfully, we trade more on the ag cycle than we do economics. So if there was a recession necessarily, we would trade more on where the ag cycle is going. And right now, the fundamentals in cash crop ag are still relatively good, specifically in North America. I was just with the CEO of Titan Industries, our largest dealer today,

and they were just talking about how many of their product categories they're still trying to be able to catch up with the demand that they're seeing from their customers. So, you know, we feel like North America is still quite sound. Dealer inventories are in better shape. So there's really not as much room to channel fill, but we think fundamentally the demand is good. Asia Pacific, Chen Weiter and our team over there are doing an outstanding job, and that's been reasonably good year to date. Europe, you know, we're seeing a little bit of slowdown in Europe, but certainly it's just a slight slowdown, not a dramatic downturn. So I think we're in reasonably good shape there. And then our business in South Africa has also been relatively strong this year as well.

OK. You also grew margins and you did announce and you've already been cost cutting, but you announced a broader cost reduction strategy. You're going to reduce some of your headcount as well. How meaningful is that going to be to the story moving into 2024? Well, you know, we talked earlier in the year that, you know, if 22 was about price, 23 was going to be about cost. And we've been really aggressively moving after that. As you know, we spun off our truck and engine division a couple of years ago. And we've had a couple of years now as a standalone ag and construction business. And, you know, as we've done that, we just see an opportunity to be more efficient in a market that might be slowing. So I

don't want anybody to think we did this in reaction to a slowing market, but just how can we be better for our customers, more agile, and really create a better work environment for our team, although it'll be a little bit smaller team going forward. But, you know, we see this as an opportunity to just be a better company and it is the right time to take this action. Yeah, you're also going to pull away from the dual listing and just be a U.S.-listed company next year. And then, of course, you continue to

invest in Precision Agriculture, which is a great story. And you need to come back so we can talk a little bit more about it. Scott Wine, thanks for being with me today. Thanks, Maureen. The Dow and S&P are off to a strong start this month. But up next, Mike Santoli looks at what lackluster equity fund flows could mean for the market. Welcome back to Overtime. Michael Santoli returns to look at where public investors are putting their money. Mike. Yeah, towards safety, I guess, is the way to think about it. It's a short version, Morgan. Money market funds have pulled in just an enormous haul. It's like three and a half trillion dollars cumulatively over the last five years.

This is a breakdown of net flows by asset class. Goldman Sachs putting this together. So you see that blue line just taking flight. Now, what I think is interesting, yes, government bonds also steady infill. We know why. Rates went from zero to five percent. There's an opportunity generationally to actually get some income off perceived safe cash. What I find interesting, though, is the equity line, which is a small net withdrawal over this

period, even after the market has started to recover from the low of late 2022. So it just shows you that there hasn't really been a burst of new enthusiasm towards stocks, even as they've found their footing. I'm not a big cash on the sidelines believer. In other words, I don't think that this big pile of money market funds is somehow poised to rush into stocks. And that's going to determine whether the market goes higher. A lot of that money market money is actually replacing bank deposits, which were never really destined to go into equities. But I do think that shows we don't have a lot of over bullishness or excesses that we've had to work off over the course of this year, even if, in fact, you know, the economic and

market environment get tougher. That's interesting. I just to go back to your money market comment, Mike, if you were to see if you were to see bank deposits and the and the yields that are paid on that become more competitive, do you expect that you start to see some of those money market flows reverse course there? I wouldn't say reverse course. It probably would slow things down. That's the job of the banks at this point is for those yield-sensitive depositors is just to kind of give them one fewer excuse to go away. Now, what would do it is if the Fed starts cutting rates at some point in the next year

and they cut them by a couple percentage points, those money market yields are going down hard. So it's not necessarily something you can count on over the long term. Okay. Mike Santoli, thank you. Oscar Health, one of the big winners on Wall Street today after better than expected earnings. Up next, company's CEO breaks down the numbers and tells us how soaring demand of weight loss drugs like Ozempic could impact the insurance industry. Welcome back to Overtime. Shares of Oscar Health soaring nearly 16% today after the health insurance company posted Q3 results, lifting its full year earnings guidance and saying it's on track to achieve profitability by 2024. Joining me here on set, Oscar Health CEO Mark Bertolini.

Mark, it's great to have you here. Great to be here, Oscar Health CEO Mark Bertolini. Mark, it's great to have you here. Great to be here, Morgan. Strong quarter, well-received, medical expense ratio was down, premium revenue was up as you raised rates. I guess walk me through, because you're taking market share, so walk me through how you continue this growth and how that profitability is achieved next year. Well, we took sort of a timeout in 2023. We had grown really strongly in 21 and 22, and we needed sort of keep things flat in 23 so we could get the organization in shape to be able to move toward profitability and to expand its lines of business. Being just in the ACA is a bit problematic in the long run, so we thought, you know, how can we get the company situated where we can generate

the kind of capital we need to grow? So we spent time looking at our expenses, where we spent our money on our projects, where we generated capital, and we've got the team sort of focused on making the company profitable this year. It's not been profitable prior to that. So we've now had three quarters of profitability in 2023.

So in 2024, we'll move the whole holding company into profitability and start to implement a strategy. You are expanding your footprint though in the ACA exchanges. So walk me through that versus when you talk about building out other businesses and other lines of revenue, what that mix is going to look like. Sure. So we're 165 new counties, 11 states. We're growing off of our current provider relationships, our provider contracts, where we know we have good cost structure and where we can get good rates in the community to be able to serve more people. So we're picking up 500,000 more lives that we can serve this year.

We'll grow by about just short of 20% in membership and over 20% in revenue for January. That's the guidance we've been giving people. That's sort of the ACA business. And we believe the ACA is here to stay. It'll have 18.8 million people in it next year. And when Texas starts talking about building its own exchange, I think we've got a product that's going to stick around for a lot of people. We love that. We think the whole market ought to be individual and digitized. So our organization, our platform is very digital forward. And we believe the individual market can happen for small group employers and middle market

employers through a product called individual consumer health Reimbursement Accounts. And so we're building out that platform as we speak. We're going to hopefully launch that in 2025 as we build it out through 2024. And then we want to get into the Medicare Advantage space, but using health systems to sign up their patients versus insurance companies signing up patients and then sending them to health systems. We believe that getting the middleman out of the middle, if you will, and allowing the people providing care to provide the service as well is a really powerful idea.

What does that do? What does that enable in terms of, I guess, not only more effective service or care, but also the cost of that care? The cost of the care will be less expensive when you take out a lot of the middlemen in the process. Today, the insurance companies are making about 6% on revenue, which is a fairly high number. And if you look at the history over the last decade, insurance companies have grown their profit. About 60% of their profit growth has been in Medicare Advantage with 20% of their membership. That's been sitting with the insurance companies

and not with the health systems which are now struggling to make ends meet with inflation, rising wages, et cetera. If we can move that margin potential to those health systems, they'll be able to provide better service at the site of care. What does that do long-term to healthcare inflation, which is still rising? Yes. That's a tough problem. I mean, let's talk about GOP1s. Yes, I'm glad you brought it up. Designer drug in a lot of ways, not for diabetics, but for a lot of

people who want to be thin. And I think we need in this country to have a dialogue around the idea of if we're going to make people better, we need to make the whole quality of life and their lifestyle better, not just having a magic drug to make that go away. Now, for diabetics, it's a really important drug. It's helping save a lot of lives, diabetic type 1 or 2. But when we start extending it to other parts of the population, we just want to get skinny and look good in the beach in the summer. That's not really

a great idea unless we can make some lifestyle changes. It will drive up costs if we extend the use of this drug beyond the diabetic population. Okay. Well, if you do look at the diabetic population or folks that are in a position to meaningfully benefit from it and maybe perhaps be able to use it as a form of almost preventative care, what does that adoption rate look like within insurance? Because it isn't covered in many, many cases. So I guess what does this look like in terms of folding it into the care mix? I think it is covered in a lot, some states mandate it. Okay. We provide coverage for it. We provide coverage for diabetics as well for people that are diagnosed for the need for it.

And so we believe it's an appropriate drug for diabetics when it's diagnosed as part of their care pathway. All right, Mark Bertolini, it's great to have you on. CEO of Oscar Health. Thank you, Morgan. Yep. Well, Disney investors are hoping tomorrow's earnings report can help spark a stock comeback. Find out the key numbers to watch when overtime returns. We'll be right back. We have a news alert on Spirit Aerosystems. Phil LeBeau has the details, Phil. Morgan, take a look at shares of Spirit Aerosystems moving considerably lower. Why?

The company just announcing it plans to raise $400 million, $200 million through additional shares, $200 million through debt. Don't have to tell you the story about Spirit very much, Morgan. You've heard it before. They've got a number of issues there, and they're raising more money as they try to grapple with these problems that are front and center when it comes to making fuselages for Boeing, Airbus. They've got to fix a lot of things, and that's what the $400 million will go towards. Okay. Shares down 15% right now, Phil LeBeau. Thank you. Disney is the big name on tomorrow's

earnings calendar, which is also packed. It's down two and a half percent so far in 2023, and it's down nearly eight percent since Bob Iger retook the helm as CEO. Julia Borson has the key items to watch in the report. Julia. Well, Morgan, investors want to know what the future of Disney will look like. This is the first time Disney will report under its new structure, which breaks out sports, giving investors new insight into ESPN. We're also looking for an update on streaming profitability for signs of strength in the ad market, plus the future of linear TV after Disney's battle with Charter. And we're also looking for a sense of consumer spending at the theme park division. Now, Disney shares are down 24 percent since Nelson Peltz called off his activist campaign against Disney back in February.

This quarter, the company is expected to grow revenue 6% and earnings 134%. So, Morgan, we're going to talk about all this and more. Disney CEO Bob Iger, we have an exclusive interview at 4 or 5 p.m. Eastern. That's right. Tune in to this hour tomorrow. Julia Borsten, thank you. That is going to do it for us here at Overtime. Fast Money begins now.