Closing Bell - Closing Bell Overtime: Tyson CFO On Earnings, Inflation, Chicken & Beef; Lucid Motors CEO On EV Demand 5/6/24

Episode Date: May 6, 2024

Stocks built on Friday’s gains to start the week, marking three straight positive sessions for both the Nasdaq and the S&P 500. Evercore’s Julian Emanuel breaks down how he’s advising clients to position. Earnings from Palantir, Lucid, Simon Property and more. A rare and exclusive interview with Tyson CFO John R. Tyson on the company’s earnings, the consumer and tailwinds in the chicken industry. Lucid Motors CEO Peter Rawlinson on the latest quarter and EV demand. Plus, the maker of Taser acquired a drone maker. 

Well, stocks jumping a bit to start the week with the Nasdaq and small caps in the lead. That is the scorecard on Wall Street. But winners stay late. Welcome to Closing Bell. Overtime, I'm John Fort back with Morgan Brennan. It is good to be back. Ahead on today's show, we've got results from Palantir, Microchip, Simon Property, Lucid, and many more. We're going to bring you all of the numbers as they cross. Plus, an interview with Lucid's CEO before he talks to Wall Street on the earnings call. And another potential red flag for the consumer, Tyson, turning in its worst day in months after warning about inflation eating into sales. We'll talk to the company's CFO about today's results and what he's seeing from consumers and customers.

But, of course, we're going to begin with the market. More gains to start this week after Friday's rally. Joining us now is Evercore ISI Senior Managing Director Julian Emanuel. Julian, welcome. So strong day for the Nasdaq and S&P up, what, about a percent plus led by tech. But you say the major indices are already overvalued and the correction has further run. So we think, you know, you've been in a trading range for about three months now. We think that that correction has further to go in time and price. 23 times last 12 months earnings, you're really very fully valued from our point of view. And when you get to that type of valuation, the average forward return is around zero. Now, that having been said,

you look at today's action. And frankly, when you think about the markets on a 12, 24 or 36 month basis, what we saw today and what we've expected will be a part of May is that the names that have been leading have taken leadership once again. The AI names specifically, the momentum names that lost momentum in March and April. This is the beginning of those reasserting leadership. It's just our view, however, that when you think about valuation and you think about earnings estimates, that things are a little bit too fully priced for those names to lead the rest of the markets materially higher in the near term. Well, one might think hearing you say that, that you'd consider the AI names the most overvalued in an overvalued market and have some medium term caution there.

But you say you don't want to sell long term winners into weakness. You want to buy them. So you actually say buy the AI names on weakness. A lot of these names have corrected, you know, and we've seen particularly into earnings. Some of the magnificent seven had really, you know, taken a hit in terms of earnings and others had already taken a hit off of their March and April peaks. And to us, when you think about the next, you know, the longer term, these names are going to continue to be the leaders. The promise of generative AI is going to really boost productivity over the long term

and is going to be a game changer. So we like not only the names that are the enablers of the technology, but there's a number of companies across various industries who've been front forward on implementing AI. Those names are going to be beneficiaries as well. Yeah. And of course, you can get the latest read on AI when we get these Pal rally here in recent days, it really seems like economic cooling, as reflected in recent data, has investors hopeful that this is going to reignite disinflation, spur Fed easing, maybe sooner than had even most recently been priced in or priced out, I guess I should say, of the market. The question is, how many cuts do we get if we get cuts? And can we do this without materially hurting earnings?

Your thoughts. So from our point of view, we think you're likely to get two cuts. OK, if there was a skew away from that central number, we'd say take the under there. Because, again, if you think about it, the yo-yo around expected cuts has just been absolutely incredible. And in a lot of ways, the market has shown its resilience by not correcting more in response to these changes. For us, though, the fact is that when you think about earnings, consensus is still expecting on the order of 10.5% earnings increase in 2024. And if the economy is slowing, as the last week or two's worth of data says it is slowing, whether it's material or less so,

those earnings numbers are just too high. Okay. Julianne, hang on, because we do have those Palantir results out crossing right now, and it's a beat and a raise. Earnings in line, $0.08 adjusted, six straight quarter of gap profitability, but revenue better than expected at $634 million. Palantir raising its full year guidance to between $2.68 and $2.69 billion per LSEG. That's still a little bit lighter than expectations. Palantir also raising U.S. commercial revenue guidance in excess of $661 million. That's a growth rate representing at least 45 percent for the full year.

Adjusted income guidance higher to between $868 and $880 million. Now, CEO and co-founder Alex Karp telling me, quote, our idea that we would have software infrastructure that would take you beyond chat seems to be working very, very well. And we haven't given up our policy of sticking up for the West and humiliating enemies of the West. For Q1, U.S. commercial, this was, again, the big bright spot, driven largely by Palantir's artificial intelligence platform, AIP, the boot camps it's been doing for the last couple of quarters. U.S. commercial revenue up 40 percent year on year to $150 million, was up 14 percent from Q4. U.S. commercial revenue up 40% year-on-year to $150 million. It was up 14% from Q4. U.S. commercial customer count of 69% year-on-year, 19% sequentially. The Palantir team telling me use cases that once took months to build using a customer's data now taking one to five days.

That's leading to faster conversions. In Q1, 136 U.S. commercial deals closed almost double a year ago. New customers, bigger deals from existing ones. Carp saying this despite a, quote, slow, small, and not the best sales force, sees this as early days of a software LLM AI revolution. Also adding that, quote, you have a lot of people kind of repackaging various LLMs. They don't do anything but chat to each other. Enterprises are bored of it. Consultancies are trying to make them useful. It doesn't work because you need an ontology. Speaking to Palantir's multi-platforms and

different various services and software products. Re-acceleration on the government side as well. That's up 16 percent year on year. Should continue. Palantir recently winning the U.S. Army Titan contract, which we covered here on Overtime. Ukraine and Israel using Palantir software in the wars. U.S. government still the largest customer. But Carp telling me, quote, I couldn't be more optimistic for the right reasons, like we have the best products and for the wrong reasons, because China, Russia, Iran are not going to stop acting up. And I think the next five years are going to be marked by violence, disruptions and war. I hope he's wrong. Stocks up fractionally. But again, John, it was really U.S. commercial that was the standout this quarter. Yeah. All

right. In the meantime, Lucid earnings are out. Our Phil LeBeau has those numbers. Phil. John, take a look at shares of Lucid under a little bit of pressure after the company reported a loss of 30 cents a share in the fourth quarter. That's an adjusted EBITDA loss of $598 million, wider than the 515 loss that many on Wall Street were expecting, but a little bit better than the fourth quarter. So we'll take sequential improvement. If you're a Lucid shareholder, you will see some you'll see some improvement there. Now you look at the revenue coming in at one hundred and seventy three million versus an estimate of one hundred and fifty seven million. So better than expected there. Free cash flow, negative seven hundred and fifteen million dollars.

Lucid liquidity now stands at five point oh three billion. And that liquidity is important for the guidance. They say they have sufficient liquidity to get into the second quarter of next year in terms of production. Their production for this year, they are affirming what they previously gave us as far as guidance. 9,000 vehicles approximately this year. SUV production, the gravity begins in the fall. And they are also saying that they plan to start production of a midsize vehicle in late 2026. Don't forget, we're going to be talking exclusively with Peter Rawlinson, CEO of Lucid. You'll hear him first here before we even talk to the analyst. That's coming up in just a little bit. Guys, back to you.

All right. Stay tuned. We're looking forward to it. Phil, thank you. Simon Property Group earnings are out. Diana Olick has those numbers. Hi, Diana. Hey, Morgan. Yeah, strong beat for Simon Property, the mall operator. EPS came at $2.25 a share versus estimates of $1.38. Revenues of $1.3 billion versus estimates of $1.29 billion. There was an after-tax gain of $0.81 a share because of the sale of authentic brands that was completed. Looking at mall occupancy, remember, 50 percent or more of their holdings are in the traditional malls, which hadn't been recovering as quickly since the pandemic as some of the strip malls. But occupancy as of March 31st was 95.5 percent, an 11 percent increase compared to March of last year. Base minimum rent per

square foot, $57.53, compared to $55.84. So a drop, well, actually, I'm sorry, an increase of 3%. And reported retailer sales per square foot was $745 for the trailing 12 months ended March 31st. So, again, a strong beat for Simon, showing that we're seeing some more strength in the mall sector. Back to you guys. All right. Diana Olick, thank you. Julian, going to go back to you on this because

we are starting to see these signs of resilience, right? Whether it is in some of the areas of real estate, going back to the commentary just earlier with you about AI traction and realizing monetization from all the big investments there. It's sort of like pick your poison. Where do you want to start in terms of reaction and all of these different factors that are propelling this market higher, at least for now? Well, if you think about those three names that you just discussed, you're having disparate reactions. And that has been a function of earnings season. It's as much an idea of where positioning is coming into the numbers as it is the numbers themselves.

But I think there are several things to take away here. Number one, the commercial real estate issues are very well known. And the expectation is, is that there's going to be a sufficient amount of liquidity over the course of years, as opposed to months or quarters, to help work through this problem without any enormous disruptions. That certainly has yet to be seen. But then on the others, I would say, again, when you think about the themes that make sense long term, the push towards continued deglobalization and the fact that generative AI is going to be a game changer, it tells you where you want to be positioned and the kind of names that are going to be a game changer. It tells you where you want to be positioned and the kind of names that are going to make sense long term. All right. Julian Emanuel from Evercore

ISI. Thank you. Got some breaking news out of Washington now. Megan Casella has it. Megan. John, new government estimates this afternoon show the Social Security Trust funds that support retiree and disability benefits are set to be depleted by 2035. Now, that is one year later than forecast last year. And at that time, the fund would only be able to pay out about 83 percent of benefits. On the Medicare side, there's a slightly better outlook. The hospital insurance trust fund that covers hospital stays will be able to pay 100 percent of benefits until 2036.

That's five years longer than previous estimates. Now, the Treasury Department says that these upward adjustments are mostly due to a stronger than expected economy as compared to last year's forecast. More Americans are working and they're earning more money and they're therefore contributing more money through their taxes to these programs. Treasury is also assuming a lower long-term disability rate in these programs so both increased revenue and reduced costs here are helping extend these timelines. Despite the improvement from last year, though, it's still clear that these programs will

have to start paying less than full benefits out to about 70 million recipients in just over a decade, unless Congress makes some sort of a change before then. Guys. All right. Thank you. After the break, are more cracks forming in the consumer story? Well, Tyson shares getting hit hard as the company raises inflation concerns on its earnings call just days after Starbucks plunged on soft sales. Up next, Tyson's CFO breaks down what he's seeing from customers. And much more on today's After Hours action, including an exclusive interview with Lucid's CEO

before he talks to analysts on the call. Overtime's back in two. Welcome back to Overtime. Is there any truth in the Wall Street adage, sell in May and go away? Well, let's ask Mike Santoli, who I'm guessing is going to bring some numbers to the table on this. Mike?

Yeah, John, some numbers, some context, maybe some skepticism. What we know is it's not as simple as that. It's not as if you get to May and all of a sudden the market starts to turn negative in a reliable way. Take a look, though, at the last year in the S&P 500. You know what? It actually could form something like that. Here's May into October. No net progress in stocks. And then you start in October and we ramp right up into almost to April. And that's pretty much the historical record, which is most of the gains over the long span of time have occurred between October and April. Although that doesn't mean it's been negative in the middle or that it's paid to be out of the market because eight of the last 10 times that six months from May to October has been higher. Now, with that said, here's another way to look at

sort of historical patterns that's a little more complicated than just a one year situation. It's called the composite cycle path for the S&P 500. So what this does is it includes the annual seasonal patterns, right, every single year. They seem to recur maybe. And then you've got the election year cycle, the four year presidential cycle. And then there's a decade cycle, which we don't have to get into. But if you bring it all together, this orange line is how 2024 should perform. If all of those things were going to work perfectly. Now, look at that on the right side. It only goes up to about five percent annual gain. So it's the shape, not the magnitude of the chart that you're looking at. So that would suggest because of the election year dynamics, maybe there's a vulnerability into May before perhaps a summer rally and then around the election,

et cetera. So, you know, this is kind of for entertainment purposes only, but you have to at least be mindful of the broader climate that we're operating in, Morgan. So, Mike, yeah, no, it's all right. So it's like, according to that sell in the first few days of May, but then don't go away and buy immediately after. And, you know, nobody wants to try to trade that quickly just based on historical data. Right. You don't necessarily want to use it as as an autopilot for how you should operate in the markets. But I do think what it does is if we do get a further correction, let's say we go retest the lows in the rest of May, the lows from last month, you would say, OK, maybe this is just a seasonal bump along the way. And it's not necessarily telling us anything unless macro conditions or corporate conditions have changed very much.

So, again, I always say, like, more information is better than less. But you've got to know what you used to put it to, if any, Morgan. All right. Mike Santoli, good to have you back from Omaha. You as well. Oh, thank you. We'll see you a little later in, Morgan. All right. Mike Santoli, good to have you back from Omaha. You as well. Oh, thank you. We'll see you a little later in the hour. All right. Well, Tyson Foods closing lower by more than 5% today after initially popping on its earnings report. The food giant posted a bottom line beat but came in light on revenue share sliding after commentary on the earnings call around inflation eating into the consumer. Joining us now to discuss the results today is Tyson Foods CFO John R. Tyson. It's great

to have you on the show. Welcome. Thank you so much for having me. I'm excited to be here. All right. There's a lot to dig into here with you. But first, I am going to start with what seems at least based on several different comments we've gotten from analysts to be the thing that put shares under pressure. A weaker Q3 versus Q4. Comments about that on the earnings call and specifically what you're seeing with challenges in pork and prepared foods and higher commodity prices there. Walk me through it and I guess just add a little more context given the fact that you did also boost your guidance for the year. Yeah, well, thank you for the question. And I think the story of Tyson today in our earnings releases, we beat expectations and we raised our full year guidance by about $350 million if you just take it from midpoint to midpoint.

And we see that as evidence of not only the momentum and the performance year to date, but also the outlook for the balance of the year. I think operating income and EPS each up about 60 percent, roughly each compared to the same period a year ago. And we did have some discussion about the back half of the year. I think it's important that we don't really give guidance for, you know, on a quarter to quarter basis, but we talk about the entire second half of our fiscal. And I think that there's a lot of moving parts, but overall, we remain optimistic about what's ahead of us for the balance of the year. Yeah, chicken, which has been beleaguered by oversupply issues for a while now, returning to profit in the quarter and a key part of the reason that you are boosting your full year profit guidance. Walk me through what you're seeing in chicken versus beef and if inflation is impacting

how consumers are choosing their proteins. Well, you're exactly right. Our performance in chicken has been phenomenal. We always talk at Tyson about controlling the controllables and we've got great momentum there. There's also more tailwinds than there are headwinds, I think, in our chicken business. And I think this is as good of a time

to just remind our listeners or viewers about the resilience of the multi-protein portfolio we've got at Tyson. We've seen headwinds in beef that's been more than offset by chicken. And if you just think about the scope and scale of our business, we estimate in terms of our core proteins,

chicken, beef, and pork, nearly one in four servings in the US is coming from Tyson. And it's not just food at home or food away from home. It's both. It's morning, noon, and night. We always say that if a consumer is reaching for protein, we want it to come from Tyson. And there's several different examples of that. On the food service side, you would be hard-pressed to name a QSR that we're not in business with. And on the retail side, we're constantly driving innovation. A set of products we launched recently, some seasoned and marinated

meats of chicken, beef, and pork at the supermarket. The reason that we're doing that is because consumers are now expecting restaurant-quality food at home that's just as delicious and just as convenient. And I think the story of our earnings release today is that the offsetting proteins are meaning that performance is going up. So, John, welcome. Thanks for joining us. You guys said on the call that you're seeing consumers shift from fine dining to quick service restaurants and from QSR to in-home in this inflationary environment. So how does that affect your food service business, which you mentioned you've got some QSR, but you've also got some mid-tier, quite a bit, mid-tier fine dining in there?

Yeah, I mean, it's fair to say that any type of restaurant in the U.S. we do business with, or our protein at least, ends up there. And so we obviously pay attention to what's going on in the various channels in order to be responsive and match supply with the demand. But, you know, we stand to win no matter the economic backdrop, just because of the breadth, the breadth of our portfolio. And then on chicken supply on the call, your CEO, Donnie King, talked about reading beneath the surface on the USDA's chicken supply numbers that hens out there are dying from disease more so that the supply available to you is actually going to be down. So as customers demand more chicken that's raised without antibiotics, where does that take us in the medium term?

Will there just be periods like this or, you know, is genetics work from you guys going to solve it? Well, there's a lot of factors at play as we think about chicken supply. And you are right. We did talk about, you know, based on the data that we see, how that may or may not differ from what the USDA projects in terms of a total chicken supply. But I think against the backdrop of growing protein demand, the number one brand in chicken and the Tyson brand, we feel like we're well positioned to win. And we also talked about in our call today that our performance from a live operation standpoint, which is very critical for the chicken businesses, is doing better than some of the industry data that we see. So we see that as being ultimately favorable for us from a

competitive standpoint. Okay. John R. Tyson, CFO of Tyson. Thanks for joining us. Thank you guys for having us. Microchip earnings are out. Christina Partsenevelis has those numbers. Hi, Christina. Hi. Well, let's start with just the Q4 earnings report. You're seeing it in line, 57 cents on $1.33 billion of revenue. But that revenue number is down about 25% sequentially. When we're talking about the guidance, though, for Q1, it did come in weak. Weak Q1, a range of revenue guidance 1.22 to 1.26 billion, much lower than the street at 1.34 billion. The company's saying that they see early signs of demand stabilization, but are experiencing low business visibility due to short lead times and

just the general macro environment. They also said that they're undershipping to end market demand as customers and channel partners continue to reduce inventory. They did, though, increase their quarterly dividend by 18 percent. So you got a dividend increase, weak guidance and concerns about just demand visibility because they have short lead times and that's contributing to the stock down 6%. Inventories again. Yeah, Christina, thank you. Thanks. And now Lucid sliding after earnings moments ago.

Strong day for it up to this point, though. It's following a rough start to the year for the stock as concerns swirl about demand in the EV market. Up next, we're going to talk to the CEO exclusively before he talks to Wall Street on the earnings call. Up next, we're going to talk to the CEO exclusively before he talks to Wall Street on the earnings call. We'll be right back. Welcome back to Overtime. Time now for CNBC News Update with Seema Modi. Hi, Seema. Morgan, let's start with Trump. The hush money trial has wrapped up for the day following

the testimony from Deborah Tarasoff, who is an employee of the Trump Organization's accounting department. Tarasoff testified how checks to former fixer Michael Cohen were paid and said any check, $10,000 or more, had to be approved by Trump or his sons. For the first time, researchers have identified a genetic form of late-in-life Alzheimer's disease. In findings out of Spain, researchers say there are, quote, profound implications of the discovery, which found that people who carry two copies of the gene suggest it's the underlying cause of the disease.

An estimated 15% of Alzheimer's patients carry two copies of the gene, according to the study. And disgraced Theranos founder Elizabeth Holmes is due to be released two years early. According to NBC News, the Bureau of Prisons set the former CEO's release date to August 2032. Holmes began serving an 11-year-plus sentence in May of 2023 for defrauding investors out of hundreds of millions of dollars. Lawyers for Elizabeth Holmes have yet to respond. Morgan, John, back to you. I, for one, am not surprised.

Seema Modi, thank you. Now let's get a check on Lucid. Those shares are falling in overtime after posting a bigger than expected loss. And joining us now is CNBC's own Phil LeBeau with Lucid CEO Peter Rawlinson. Phil. Thank you, John. Peter, let's get right to that question. A wider than expected loss.

And I think a lot of people are looking at this and they're saying, you know, at what point can investors feel confident that you have bottomed and are starting to build on your operations? Well, I think our finances are actually dominated by our investments, our long term investments. And what really differentiates us here is this special relationship we have with the Public Investment Fund of Saudi Arabia. We're both in this for the long term. This is a long-term play, Phil. We are a cornerstone of their Vision 2030, which will transition their economy away from fossil fuels. Lucid is an absolute central element of that long-term vision. That said, Peter, you know that everybody wants to see an improvement in your production and your deliveries.

You reaffirmed building 9,000 vehicles this year. Do you believe that, A, you're going to be able to hit that, and then, B, you can grow from there? Absolutely. I'm very confident. We just came off a record first quarter, and we are seeing nearly 40 percent quarter-on-quarter and 37 percent year-on-year improvement in our deliveries. In a market where we're overtaking some key competitors, we're seeing that in that marketplace, despite reducing their prices very significantly, the sales of Tesla Model S have reduced dramatically, as have gone up 40 percent as years down. With us on overtime. So if these EV price wars continue, driven, as you mentioned, by Tesla and some of the Chinese players, do you think you have some degree of immunity?

Is that your argument because of the quality of your product? At the higher end, you can still gain share? Or at a certain point, do you have to deliver, over-deliver on the cost optimizations that you've been working on in order to continue to make the numbers you need? That's a great question. You know, it's not immunity that we've got. We've got a special weapon, and that is our high technology. We're the leaders in EV technology. And that means that we can go further than anyone else can with less battery. And that's why we're able to offer the best car in the world behind me, the Lucid Air Pure rear-wheel drive, at just $69,900. Why can no one else do that? Because we can do that with just an 88-kilowatt

hour battery pack. And the battery pack dominates the cost of EV making. So please don't think of us slashing prices to offer the customer a superior, compelling offering. What we're doing is we're using our technology as a key enabler and differentiator, which uniquely enables Lucid to provide such a compelling EV offering. So Peter, it's Morgan to put a fine point on it then. Does that mean that you don't feel you're going to have to take any more price cuts? Well, never say never, but we haven't got anything planned at the moment. We said when we launched Lucid Air in this very studio back in 2020, the vision for the Air was to get it from $69,900. And I've honored that commitment that I made way back then. That was the long-term vision,

to offer this car at that price. And no one else can do that because they haven't got the technology that Lucid's got. Peter, it's Phil again. The Saudi Investment Fund made another $1 billion investment in the first quarter into Lucid. Do you think that's the last of the investments from the Saudi Investment Fund? They already own 60% of the Lucid. Do you think that's the last of the investments from the Saudi investment fund? They already own 60% of the company, or do you think there's a possibility of further investments? Well, we're incredibly appreciative

of that commitment that they've made. They've showed time and again, this is a very special relationship. But absolutely, you know, we have a phase of growth and long-term investment in Lucid. This is a long-term play. But we will opportunistically, as a Silicon Valley tech company, look for opportunistic moments where we seek further investments. All right. Thank you to Peter Rawlinson and to our own Phil LeBeau for bringing

that interview. Well, some new Fed commentary on the economy and the consumer was out today. And after the break, Chamber of Commerce CEO Suzanne Clark is going to join us with her read on the climate for business, plus the latest on the chamber's lawsuit against the FTC over non-competes. And Boeing is getting ready to send its first crewed Starliner to space in just a few hours. We're going to explain why this mission is so important to the company and to America when overtime comes back. Welcome back. A number of Fed officials on the record today, Richmond's Tom Barkin, saying the full impact of higher rates is still to come. New York Fed President John Williams

saying, quote, consumers are continuing to spend and businesses are continuing to invest, but he's forecasting slower economic growth this year. But joining us exclusively with her view on the business climate is Suzanne Clark, president and CEO of U.S. Chamber of Commerce. Suzanne, it's great to have you back on the show. Welcome. Thanks, Morgan. I am going to start right there because we have started to see some softer data, economic data, but we have also seen signs that inflation is really sticky here at these levels. You look out into a year where there's geopolitical uncertainty, there's an election, and then, of course, higher interest rates or interest rates potentially staying higher for longer you have your hand in so many and speak to so many different companies across so many different sizes across so many different industries what are you seeing what

are you hearing i appreciate the question thank you look we welcomed the remarks today they kind of jive with what we've been thinking which is that the fed is data driven they've been pretty clear what they're looking for we still expect them to hit or get close enough to the targets that we see at least a small rate cut before the end of the year. And I think you're right. Some of that is that the job market is still so strong. You know, when you have 2.7 million open jobs, there's a job for everyone who wants it. And that does underpin consumer spending, even when they're feeling pain in the grocery store, right, or pain at the gas pump.

And so we do agree that growth may not be robust, but, you know, we had a better Q1 than people were expecting. And we're glad to see other Fed commentary about sticking with the guidance that they've put out. How does regulatory dynamics factor into all of this and into the CEO confidence that you're gleaning right now? And I ask that knowing that the chamber has been involved in a number of suits challenging different regulatory agencies within the government about overreach, most recently, of course, this FTC ban on non-competes. Oh, my gosh. It's such a big topic.

I'm going to have to take the next two segments, Morgan. Kidding. But just saying quickly, I think you're making the right connection, which is between this regulatory overreach and CEO uncertainty and family uncertainty. In the first term of the Biden administration, we're talking about a trillion dollar impact on regulatory cost. Who pays that? Consumers, small businesses, businesses. And there are direct costs, but there's also, to your point, the cost of uncertainty. And so what does this mean? How

do you make a business plan? What are the new rules going to be? How many will be? We're seeing more rules. We're seeing more economically significant rules. And they're really coming at a furious pace. And if I could just tag on one thought, our concern is that we also have really unelected bureaucrats trying to micromanage business at a really complicated time already to run a business. And that's part of what we believe is happening at the FTC. OK, Suzanne, I'm going to ask another one on the non-compete. So, you know, at least two questions, if not two segments. So putting aside the regulatory piece of it, one way to kill uncertainty on that issue

would just be to agree, right? I spent a lot of time in Silicon Valley. Non-competes are illegal in California. It's a pretty big economy and Silicon Valley certainly still works. So why not just take the uncertainty off the table and say, sure, no more non-competes for small business? Different question, right? The question we have in our lawsuit is, did the FTC have the authority to make this rule? Right. I know, but I'm asking the other question, not the one in your lawsuit. I'm sorry, you're asking the other question. Not the one in your

lawsuit, not about the authority, but about why not just go along with it? What's so bad about non-competes? I think what's so bad about non-competes when they're narrow and when they're time enforced, what the problem with not having non-competes is how do you protect trade secrets? How do you take a C-suite executive or a sales executive out of the market and directly to a competitor? How do you innovate and have technology if your chief scientist can walk down the road? I think in a narrow way, a lot of non-competes have held up in court because they're seen as important to innovation and breakthroughs.

And again, I'm just not sure that it's the FTC's place to be making these rules. You were in China earlier this year. We've been hearing this a lot from companies both on and off the records, the de-risking, the gaming out of how their operations in China play out over the long term. What are you seeing? What are you hearing, especially as we are in

election year and we do know the rhetoric around China is ramping, you are seeing increased tariffs or proposed increased tariffs on certain products that are being imported into this country. And of course, this ongoing decoupling around tech? Again, I feel like these are really complex issues that don't fit soundbites particularly well. But to give you an example, I was glad to go to China. I'm glad we're getting back in the habit of communication, both military-to-military cooperation and communication, but also commercial conversation and commercial diplomacy. I think it's important that the two biggest economies in the world are talking. That said, a lot of what we're talking about is how to preserve our national security,

how to de-risk, how to take things we only supply from China and find other sources, important parts of the conversation, as are these big green areas, whether it's burgers or ball caps, where we should have free trade between two countries that helps Americans at the grocery store, helps Americans when they're out doing their retail shopping. So how do you have a sophisticated answer where you're protecting our national security, not single sourcing supply chains, and yet trading with the world's second largest economy? All right. Suzanne Clark, CEO of the U.S. Chamber of Commerce. Thanks for joining us. Thanks, Morgan. Well, the mouse is the big name on tomorrow's earnings calendar. And up next, Mike Santola is going to look at how Disney has fared against its media peers. And the final

countdown is on for the long delayed launch of Boeing's Starliner space capsule coming up. What this mission means for the company's space ambitions and its rivalry with Elon Musk's SpaceX. Welcome back to Overtime Checkout. Hims and hers health. It is higher by more than 10.5% in overtime after the company soared past earnings estimates, reporting $0.05 a share versus estimates of just a penny. Revenue also came in above expectations, as did full-year revenue guidance. Meantime, Disney due out with earnings tomorrow.

Before the bell, they're switching it up, deviating from the usual post-earnings report. Mike Santoli returns with a look at how Wall Street is valuing the stock relative to its media peers. Mike. Yeah, Morgan. So here you have Netflix relative to the big legacy media stocks over the last year. And it's really an interesting bifurcation with Disney right in the middle. Netflix, of course, the declared acclaimed winner of the streaming wars. And now, of course, it's scaling and everything's working in its favor. You have Paramount and WBD, Warner Brothers Discovery, which are really kind of impaired,

over dependent on the declines in linear TV networks and all the rest of it. In fact, this little pop in Paramount is just because the company is in play. And you have Disney right in the middle. It's considered to be the best of legacy media with a pretty good chance at essentially, you know, returning to growth and being a part of the media future. Take a look at the valuation of Disney relative to Netflix specifically. This is free cash flow yield in the numbers tomorrow. The key metric might be their path to a free cash flow growing back to pre-COVID peak. That's what they promised. They say they're going to cost cuts to do that.

So here is projected free cash flow yield above 4 percent. That's about the longer term average for for cash flow yield above 4%. That's about the longer term average for Disney. And in fact, it's about the market multiple right now, too. What's fun is this is when Netflix had a very, very low profitability before they had scaled. Now they're getting their free cash flow yield higher, but only briefly did the two touch. And then Disney staying just ahead, which basically means the market assumes Netflix is going to grow cash flow faster. But right now, Disney has the valuation advantage if you're looking for a slighter bargain. Morgan.

Interesting. It's also got a more diversified portfolio when it comes to that free cash flow picture. Theme parks are humming. Yeah. Yeah. Mike Santoli, thank you. Do not miss a first on CNBC interview with Disney CFO Hugh Johnston. That's tomorrow at 6.45 a.m. Eastern on Squawk Box,

shortly after those earnings are out. And up next, all the overtime earnings that need to be on your radar with those movers as we count down to the analyst calls from Palantir, Lucid, and Microchip. And check out shares of Micron, one of the big winners on the S&P 500 at 5%, roughly after Baird raised its rating on the company from neutral to outperform,

hiked the price target from 115 to 150, citing stronger memory chip pricing. We'll be right back. Welcome back. Let's get you some more overtime earnings movers. Goodyear tire rolling between gains and losses after a mixed quarter. Earnings topped estimates. The revenue was light. Meantime, international flavors and fragrances looking sweet after beating on both lines. The company is saying it expects full year results to trend toward the higher end of its previously announced range.

And another check on Palantir, still under pressure, down about 6.5%. The company matched earnings estimates and beat on revenues, Morgan. Well, Axon also reporting earnings this hour. The stock moving higher after beating on both lines with revenue up 34% year-over-year, raising guidance as well, and actually you can see it's turned lower now, down fractionally. But the maker of tasers and body cameras for law enforcement also announcing the acquisition of D-Drone, a startup with counter drone technology deployed across 800 locations ranging from airports and stadiums to borders and battlegrounds. A CNBC Disruptor 50 company, D-Drone represents a new revenue stream for Axon. CEO Rick Smith estimates it will increase Axon's

total available market by more than 20 percent. He plans to build on D-Drones capabilities as well. We see a huge area of growth is for public safety to have their own drones, what's called drone as a first responder, meaning you can get a drone on scene well before a police car can get there through traffic. But in order to do that today, you have to have a police officer standing on a rooftop. You're looking into the distance, trying to see a drone. We know that a superhuman array of sensors can track drones and keep the airspace much safer than a person standing on a rooftop. So it's a very natural fit with our existing customer base. And of course, AI is key to this deal.

The deal price yet to be disclosed, expected to close in the second half of the year. Shares of Axon under pressure right now, down about half a percent, but they're up about 27 percent since the start of this year. For more on Ddrone and on how Axon is developing and deploying AI, grab your smartphone because you can watch that entire interview right now by scanning the QR code on your screen and following us on LinkedIn, where we post a ton of exclusive content, including this. You can also check out CNBC.com. We have an article going up. Indeed. And Disney headlining another huge day of earnings tomorrow. We're going to run through all the names you need to watch for straight ahead. Plus, find out what's at stake for Boeing's Starliner space capsule, which is getting ready for launch tonight after years of delays.

Be right back. Welcome back to Overtime. Disney is the big name set to report earnings tomorrow. It's like an earnings matinee. Normally, you'd see those results right here on Overt overtime, but tomorrow they'll be released before the bell. We'll still have a full slate after the bell here, including Electronic Arts, Lyft, TripAdvisor, Reddit's first earnings as a public company, Twilio, Arista Networks, and Rivian. Plus, a milestone, 10 years in the making, the first space flight with people on board for Boeing's Starliner.

Now, the crew flight test, CFT, is scheduled to lift off tonight from Cape Canaveral Space Force Station atop a United Launch Alliance Atlas V rocket. On board, NASA astronauts Barry Butch Wilmore and Sunita Suni Williams. NASA awarded Boeing a $4.2 billion fixed contract to develop Starliner back in 2014, part of the commercial crew program to replace the space shuttle. SpaceX, with its Dragon capsule that's been flying people since 2020, is also a part of that program. Now, Boeing, though, has faced a series of delays in technical issues. It's taken more than $1.5 billion in charges in the process. NASA's administrator, Bill Nelson, says he has confidence in Boeing and that the company has gone to extraordinary lengths

to ensure this first crewed mission will be a success. As a matter of fact, any time that you do a new spacecraft, there are a lot of chinks to get ironed out. This is no different. I don't believe the problems they've had in the commercial aircraft have spilled over into this. If they even have, they have been corrected. Well, CFT, which will go to the International Space Station, a roughly 10-day mission before landing in the desert, kicks off at 10.34 p.m. Eastern tonight. That's the launch window. If all goes according to plan, Starliner could begin the first of six NASA contract admissions as soon as 2025, I think essentially as a backup to SpaceX. And my full conversation with Administrator Nelson is available on my podcast, Manifest Space. Scan the QR code on your screen to check it out. We talk at length about Starliner

and about Commercial Crew and the role of commercial space, John. But also we talk about he's very blunt in his use of a new space race where the moon is concerned between the U.S. and China. Interesting stuff, of course. Always good to see who can actually successfully get those things launched. And speaking of, you know, with all of these small cap earnings tomorrow, given the strength in the Russell on Friday and then today, how much more can that momentum continue? We're going to have to see here tomorrow. Yeah. And it sort of goes back to the conversation we're having with Julian Emanuel at the start of the hour, which is, is the market getting ahead of itself right now? Are earning expectations too lofty? Case in point, Palantir,

which put it a very strong quarter, raised its full year guidance, but that full year revenue guidance still coming in shy of consensus estimates, really kind of speaking to, especially with the AI companies, how investors are thinking about the opportunities there. Yeah, he had some skepticism. All right, that's going to do it for us here at Overtime. Fast Money starts now.