Closing Bell - Previewing Nvidia's Earnings; Collectibles Soar To New Heights 8/25/25

Episode Date: August 25, 2025

Mike Santoli sets the market theme as Big Tech faces a pivotal week, with bond market reactions from Rick Santelli and market outlook from Courtney Garcia of Payne Capital Management. Plexo's Lo Toney breaks down the high-stakes Big Tech developments. Plus, more on the government's Intel stake and Trump's emerging activist investor strategy with Axios' Dan Primack. BCA Research's Peter Berezin delivers a reality check on AI as more of a stock market phenomenon than economic driver. Collectibles reach new heights with a Jordan/Kobe card selling for $12.9 million, and Eunice Yoon reports on China's blind box craze from Beijing.

But that bell marks the end of regulation. NASIS Farmer, rigging the closing belt, the New York Stock Exchange. Inspire MD doing the honors at the NASDAQ and markets split today following Friday's big gains. The NASDAQ lower by, well, let's see, the NASDAQ or the Dow? The NASDAQ lower by, what, 350 points, turning lower late in the session, the Dow down by 350 points. And while big cap tech gains, the small cap Russell 2000 down nearly 1% out of that, helping boost the NASDAQ today, the Google parent stock hitting an all-time high, and we've talked a lot about a market rotation. Here's a good example. The three biggest winners in the S&P 500 so far in

August, Paramount Skydance, Intel and United Health. But if you go back through years, all three of those stocks have dramatically underperformed the broader market. Well, that's the score caught on Wall Street, but winners stay late. Welcome to closing about overtime. I'm John Fort. Morgan Brennan is off today. I mentioned Intel, the stock's recent run, driven in part by the government taking a 10% stake in the company. Coming up, we'll discuss whether the administration could use this model for other companies, and I'll get you ready for a big week in tech with Nvidia earnings just 48 hours away. Let's start with a look at the push, pull between growth and value. The recent tilt toward value shows signs of cooling after a strong move late last week.

Let's bring in senior markets commentator Mike Santoli with a closer look at what it could mean for the broader market. Mike? Yeah, John, and all this could mean is, that Friday's move in favor of value and in favor of small cap over large was just so extreme that we're just relieving a little bit of that excess today. But there was a pronounced outperformance today by growth stocks. About two-thirds of a percent over value is measured by the Russell 1000 indexes. And it's just to me one of the ways that this market is trying to, you know, even when it gets out a little bit far ahead of itself, it tries to rotate around and gather its feet back under it in order to make sure that it stays supported. We'll see if that is the case.

Kind of a noisy session after, you know, Friday was literally everything up and the average stock and smaller stocks and value stock's up even more. Today it was kind of a pick and choose where you had semiconductors in particular outside of Nvidia and Broadcom pretty weak. That includes Intel. So I do think the market's figuring out whether this was sort of an up-up and away move and we get this indication of an easing bias from the Fed or if it was It was just maybe people caught a little bit short on Friday and waiting to see the next couple of shoes to drop, such as NVIDIA and the PCE inflation at the end of this week. Mike, is this rotation really rotating, though? I mean, it seems like NVIDIA is still way up, healthy, and that a number of the larger stocks still doing fine.

Without a doubt. I mean, there are some clear momentum winners that have not flagged. I would say NVIDIA is in there. But look, if you look at Microsoft, really pronounce weakness in Microsoft. It barely was up on Friday when everything was up, and it's down a half percent today. So I do think you can look and say that there has been a general cooling off of the large mega-cap winners. It isn't necessarily just purely, you know, at their expense that other stocks are doing better. And I always like to get away from the idea that it has to be the seesaw, one thing up and the other thing down.

It could just be, you know, general participation where some things go up or down more than the average. Now, I've been away a week. You know, what's cooled off a lot to my eyes. Is that an isolation or something that's happening with a lot of these stocks that have had really, really toward runs? That's basically been the reversal in the high momentum stocks, which was the story of much of last week. And Palantir is right out there on the whip end of that trend. So I don't think there's much more to it than that. If you look at things like Robin Hood, the retail broker that's kind of moved in sync with Palantir has also backed off.

And then I know some folks squinting at the moves in crypto, both over the weekend and today, where it's not really kind of grabbing this rise in risk appetites that we saw on Friday and running with it higher. Sometimes crypto acts with a little bit of a lead on equity, so we'll see if that continues here as well. Okay, but then there's SOFI at the same time. Always something it seems running in this market. Mike, we'll see you again in just a little bit. Now let's turn to the bond market in the wake of Friday's speech by Fed Chair Jerome Powell. Rick Santelli is in Chicago tracking that action for us. Rick? Yes, John, you nail it pretty much every tree. trader is looking back to see how today shapes up against the big moves on Friday with respect

to stocks moving higher, interest rates moving lower. And then you want to benchmark the previous days closed to see how much ground you have made up relative to that settlement. So let's look at a three-day chart that goes back to Thursday on a two-year note yield. You could see the big drop that we had on Friday and we can't even get into the previous day, last Thursday's range. Now, if you look at a year-to-date of twos and tens, and this is really important, the low yield close for the year in twos is 365, 7 basis points lower than we're currently trading. But the low yield close for tens is 4%. 28 basis points away.

The reason I bring it up, we all know the curve steepening, but that really does underscore how the two-year is definitely shaping up for an easing cycle. And it certainly looks like with an 80% probability, we're going to get it on top. September 17. And finally, the dollar's having a great day despite the notion of the doveish feeling of Friday. It's recouped pretty much all of what we saw on Friday. And if you open that to the three-day chart, you can see we're not only above Thursday's range, but as I said, we've recouped pretty much the entire drop, which means the dollar's really overperforming today up three quarters of a cent. John, back to you. All right. Rick, thank you. Now let's get back to

the markets. The interest rate cut euphoria might have cooled off today, but can stocks get back to rally mode? Joining me now is Courtney Garcia. She's the senior wealth advisor at Payne Capital Management, also a CNBC contributor. Courtney, good to see you. So the markets have been running largely for a while here. Can you continue buying in? And if so, what? You absolutely can keep buying in here. I mean, we have continued to see that the economy is on good footing. Inflation is actually coming down that people are really hoping that interest rates are going to start to come down here, which is very positive for the stock markets. We've got a really strong earning season. When you look at profit margins, they were up 13 and a half percent last

quarter, which is particularly impressive, considering that you're already starting to get some of those inflate tariff impacts in there. So I think we're really just showing that the consumer's on good footing, companies are good footing, the economy's on good footing. And if rates do, in fact, come down, that likely can mean that you're going to start to see the markets do even better. especially if you start to see some of that cash come on the sidelines, which has not been happening. But if interest rates come down, you're probably going to see that at some point here as well. No labor market concerns after that jobs report that took so many by surprise? Well, I mean, I think we still have a pretty tight labor market.

And I think really what you're saying is you're not seeing a lot of layoffs, even though hiring has been slowing. But I think, you know, we want to get some more of these reports to come out to figure out what is the actual trend that's happening. But I think at this point in time, we do still have a really tight labor market. wage inflation has actually been supportive for the consumer right now. So I don't see anything that's really supportive that we'd go into recession or something that would be any reason to get out of the stock markets right now. So Nvidia this week, is that just about Nvidia or is there something riding on this for a number of other stocks in the AI trade or the tech

trade in general? Yeah, well, the biggest thing with Nvidia, right, is just how much of a component that is to the overall markets. Because when you look at your day-to-day investor, there many people invest in ETFs of the S&P 500 or the NASDAQ or these broad market indexes. And a lot of you actually own multiple of those and realize how much overlap you have. But that actually really can start to move the overall markets, especially when you factor in those ETSs that are going to be following that index. So when you see a big move in something like an NVIDIA, which is a large part of those indexes, that's where you can see some of those moves.

So I do think the outlook for NVIDIA is pretty positive here. You're seeing the hyperscalies are continuing to spend on it. AI, as long as they're spending, that is going to be good for the bottom line of NVIDIA. But obviously, that's going to be one of the big reports we're watching this week. Let's bring in Mike Santoli again. Mike, we talked in the past about how much investors are going into stocks through ETFs and the impact on the market.

We could also talk about leveraged ETFs, I guess, and some of the magnified impact that we can see there. But how has that played out in this market? Are there elements of that that investors should look out for? as we enter invidia earnings season? I think in individual lanes in this market, it's been pretty dramatic. I mean, I do think we have to keep in mind, though,

that most of those leveraged ETFs are basically just a repackaging of a trade that can happen in another fashion, which is basically, you know, options or some other margin buying, and so maybe that would occur otherwise. I think there is a little bit of an exacerbated one-day effect that we have in this market

and have for a while, what is a fair contingent of traders who come in flat in the morning and we play that day's game and we go home flat and the next day, there's not a lot of continuity to it. So there is that happening in the options market. I'm not sure that that's really muscling around, you know, the $4.4 trillion in market cap in Nvidia or the overall NASDAQ 100, but you can sort of see it in some of the heavier turnover parts of this market, maybe in the more speculative side. And I look at it as sort of a more more. of a mosaic. Like, okay, we have that activity going on over there. Are we also seeing heavy flows into the big cap indexes? Are we seeing really a lot of valuations get stretched

in the non-AI companies? And it's not a clear picture right now that everybody's out over their skis. Mike, when I think about August and late August, I tend to think about tepid volume in stocks. Are we seeing that? Is that playing out as normal? You know, Friday was a pretty decent volume day. And you might expect that because there was probably some pent up trading going into Jackson Hole, people feeling as if that catalyst had to clear before they were going to implement whatever they wanted to do as a strategy. So there was heavy volume on Friday. But before Friday and then today, it absolutely has cooled off. I'm not one to really feels as if that diminishes the overall message of the market, if it's a low volume day. But it's worth keeping in mind. And we did sort of

sag at the end of the day in terms of the broader market. It just was not quite enough buying energy after Friday's binge to keep things going. We'll see if that carries through tomorrow. Courtney, finally, you say municipal bonds are screaming by here? Why is that? Yeah, and this is something you know, I think right now investors are looking at all the speculative areas of the market, which Mike very smartly pointed out here. But I think you want to also be thinking long term here. And munies are really interesting right now, especially if you're in a high tax state. So think New York, California, where any income that you're getting right now, you're also paying tax on it. So when you look out at the longer end of the curve here, it's like the 30-year munis,

you're getting over 4.6%, which is the tax equivalent yield of like between 7.6 to 8%. And that kind of tax-free income, which is a much more safe investment, is a really good thing for people to be looking at, especially as you're starting to take profits from these things that had these huge run-ups this year, that's a really good opportunity to just start to balance out your portfolio. Well noted, Courtney Garcia. Thank you. Mike. We'll see you again in just a little bit. And well, now it's been a good earning season for big tech so far. Six of the Mag 7 names reporting. Only Tesla missed estimates, but there's still one domino left to fall.

We're going to continue the March to Nvidia's earnings when overtime's back in two. Welcome back to overtime. Check out shares of Invidia, one of the big winners in the S&P 500 today. Goldman Sachs and Stiefel both reiterating buy ratings. Stiefel hiking its price target from $202 to $212.12. Both firms say the company's well positioned ahead of earnings on Wednesday and for driving more growth. on NVIDIA ahead of its earnings. Let's bring in Plexo Capital Founding Managing Partner and CNBC contributor, Lowe, Tony. Lo, good to see you. So China, probably the big change over the past quarter for NVIDIA. How much of an impact do you think that has? And, you know, how much of the demand for NVIDIA's technology do we already understand? Yeah, you know, China definitely,

with the export restrictions, I mean, that reduces the ability to meet that demand. And then you also have some local competition from folks like Wi-Way that are gaining traction. But, you know, the core growth is truly outside of China. And that's led by the big tech, hyperscalers, as well as even some of the sovereigns. So I think on the upside, you know, there's, you know, the ability to potentially see a little bit of easing on the policy side. but China does remain a drag on the downside. How much of a moat do you think Nvidia has against some of this competition? We talk about horsepower of chips and others trying to catch up,

but with Kuda and with some of the racks that Nvidia is building out, there really is a comfort level that developers have with it. They're setting into ways of working that they might be loath to change. Yeah, exactly. Exactly. And I think, John, that is one of the key points that I always try to raise with folks when they think about the entire AI ecosystem and stack. You know, there's three main layers. There's the infrastructure layer where Nvidia plays. And then you have the models, OpenAI, Anthropic, in the middle layer, and then on the top, the applications like perplexity. And I think one of the things to point out is your note around the developers. You know, you've got about three million developers. that actively use the development program or application on NVIDIA. And boy, yes, it makes it really hard because, you know, it's integrated in with all of their existing tools.

They've done a – Nvidia's done a great job with that. And it's just part of their development life cycle. And so those things create a really nice moat that gives NVIDIA a definite competitive advantage. I remember my days as a younger tech reporter 20 years ago thinking, Boy, how many iPods would Apple have to sell to grow into this valuation? Is that even possible? And now, of course, I realized I was thinking about that all wrong. Along came the iPhone and the App Store and all of that stuff.

What's the potential Nvidia equivalent of that? We tend to think, okay, well, how many of these chips would Nvidia have to sell as they grow into this valuation? But there are other areas, other technologies, perhaps even acquisitions on the horizon for the company, no? Yeah, I think that Invidio will continue to exercise its dominance, and it does really have opportunities to increase up the stack as well. When you look at the competition, there's competition from folks that just focus on chips, and obviously the hyperscalers like Amazon probably being the most aggressive in developing its own chips. But I think when we always, to your point around thinking about the mobile revolution, when we look backwards and think about what our predictions were, we often tend to underestimate them in hindsight. And I think that's what we're likely going to see when we think about the future of AI. Let's talk about the hyperscalers.

We were talking to Matt Garman just a couple of weeks ago here on overtime, the CEO of AWS. And as much work as they're putting into developing their own chips, he was very careful. to say, oh, we work a lot with NVIDIA, I talk to Jensen all the time. What does that say about the allocation needs of these hyperscalers still for NVIDIA, even as they seek to build out their own chips that allow them to perhaps have a cost advantage down the line? Yeah, John, that's right. And I think today the approach that a hyperscaler like Amazon is taking, and by the way, Amazon has been probably the most aggressive in the development. and production of their own chips, and they have an important role to play in an important

market position to keep and are looking at cost advantages at scale. So I would say today, Amazon is kind of taking a little bit of a premium approach and buying the Nvidia chips when it's a mission critical or a super heavy compute that needs to occur within AI. And then for their own chips, it's kind of, you know, like a lower end approach, a lower cost approach. A lower cost approach for folks that want to use their own chips. Like, let's take a look at Open AI versus Anthropic. OpenAI is pretty much in their partnership with Microsoft all in on Nvidia. Then you have a model producer like Anthropic. They're taking a little bit more of a balanced approach and kind of, you know, not tying themselves to any one hyperscalor or chip.

All right. We'll watch it all, though, Tony. Thank you. Thank you. Well, coming up, a lot of talk recently. about alternative asset classes. We'll tell you where Kevin O'Leary and friends just put millions of their dollars. Could it offer bigger returns and be more fun than the stock market? And CSX left out in the cold

when Norfolk Southern and Union Pacific agreed to get together. Up next, we'll tell you what Warren Buffett has to say about the possibility of more railroad deals. So be right back. Welcome back to overtime. Shares of CSX taking a leg lower this afternoon, as our Becky Quick reported Warren Buffett

said Berkshire Hathaway is not in the market to buy another train company. But Buffett did say he met with CSX's CEO about ways the company could work with BNSF, which is owned by Berkshire. Well, it's time for a CNBC news update with Kate Rogers. Kate. Hi, John. President Trump said today the Department of Justice is going to sue California over the redistricting effort led by Democratic Governor Gavin Newsom.

Last week, the president praised the redistricting effort by Republican state legislators in Texas. Newsom responded on social media writing, quote, bring it on. A federal judge this afternoon said she will keep Kilmar-Abrigo Garcia in the U.S. while she weighs his challenge to be deported to Uganda. Release Friday Abrigo was taken into custody again this morning at an ICE check-in appointment. The judge says she'll take time to consider whether officials are violating his due process rights. And Cracker Barrel released a statement today after controversy erupted over its logo rebrand, which tanked the stock last week.

In a statement, the company wrote that it could have done a better job explaining the changes to customers but said its core values and traditions have not changed. The company added that the image of founder Uncle Herschel, which was removed from the logo, will remain on menus and elsewhere in restaurants. John, back over to you. Okay, thanks. Maybe they could have put Sidney Sweeney on there instead. Well, coming up, Intel shares have soared this month as the CEO met with President Trump

and agreed to give the government a 10% stake. Could this be just the beginning of the Trump administration's ownership plans? The latest from the White House coming up. Welcome back to overtime. Stocks down across the board after Friday's big Powell-driven rally. The NASDAQ, the least bad of the bunch, still fading late in the session to close lower. Momentum names losing some steam today, too, big declines for recent IPOs, bullish, Figma, and Circle. And furniture makers getting hit with President Trump announcing he's considering new tariffs on furniture imports,

RH and Wayfair, the biggest decliner. Well, on Friday, Intel announced the U.S. government is taking a 10% stake in the chipmaker. Today, it warned of adverse reactions from that stake. Megan Cassella has more on the deal and why the White House might be eyeing even more equity stakes in public companies. Megan. Hey, John, that's absolutely right. The company warning and an SEC filing today that this deal with the Trump administration could hurt its international sales or could lead to backlash from customers, suppliers, investors, or others.

Intel saying that, quote, given the scarcity of recent U.S. precedents for transactions like this one, with the U.S. government becoming a significant stockholder of a company, it's difficult to foresee all of the potential consequences. But the president here making clear today that he would like to replicate this model, he told reporters he will make similar deals if given the opportunity. Is this the new way of doing industrial policy? Yeah, sure it is. I want to try and get as much as I can. Now, in the case of Intel was interesting, but I hope I'm going to have many more cases like it. The question now, John, is who might come next? It could be companies that depend on regulatory approvals, including for things like export licenses.

We saw that with NVIDIA and AMD. Or it could be those in strategic sectors like chipmaking, areas that the government deems crucial to national security. But under this administration, I will say that's already a long list. It already includes metals, lumber, pharmaceuticals, drones, among many others. So just not clear at this point who might be next on the docket, John. Indeed. Well, Megan, stay with me. Joining us now is Dan Primak, Axios, business editor.

Dan, good to see you. So from your understanding, what's the upside and the downside here? I mean, I could imagine an argument that the taxpayer ought to see some more tangible benefit from the rescue of certain companies if they're being bailing. out. But what if this does lead to some decrease in business from international customers feeling they can't trust Intel? I mean, for Intel, I mean, for starters, Intel didn't need to, quote, be bailed out, or at least not in the same way that, say, automakers needed to or savings and loans did years ago, right? Intel was still a big company. It had a lot of challenges, but it wasn't talking about going bankrupt tomorrow if it didn't get some sort of bailout

for the government. And remember, Intel had been granted most of this money already via the Chips Act, but it chose not to take it, namely because it didn't have a place to put it, particularly into its foundry business because it didn't have enough customers for that. And there doesn't seem to be any strategic piece to this deal, right? The White House has already said it's not going to lean on big tech to provide Intel with business. So for, you know, for Intel, the risk is obviously some of the things that Megan just talked about. There's obviously dilution here, right? The grants weren't going to be dilutive.

The risk, you know, the bigger picture risk here for the White House is this whole concept of picking winners and losers, whether this becomes a good deal or a bad deal, it sets interesting precedents and potentially problematic ones for lots of other companies. We don't yet know how this deal came to be, were their threats, were their promises. We still need to wait on that. Well, but Dan, we do know that the president posted about Lip Butan Intel CEO before this meeting took place, saying that he needs to not be the CEO anymore, and then reversed himself there. It certainly appears that he was putting some kind of pressure on the company, no? It does. And also, though, it also appears that this deal didn't go through all that much

vetting, right? You know, one day he thinks this guy shouldn't be running the company. A couple days later, the U.S. government's going to take 10% of a company run by someone who Trump doesn't think should be running the company. Even if you give kind of the most generous understanding of this here that Trump had a change of heart, it's still a giant taxpayer investor. for a relatively short period of time that this was being considered. Megan Casella, what is the administration's rationale for why this kind of structure in putting taxpayer capital into companies is better than what's been done in the more recent past? They really emphasized with this one.

The president said it repeatedly today that they did not pay any money for this deal. They're repurposing largely the Chipsack grant money that was passed under the Biden administration and using that. They say they paid zero and that Intel decided to give them equity. They've also been emphasizing today that they're not actually intruding into the company. We heard Kevin Hassett say this morning on CNBC that there's no government intrusion here that just because it's equity doesn't mean there's actually control of the board. So they say that in this instance, it's not picking winners and losers, as Dan said. But of course, in the very recent history, Republicans would be very much against something like this.

And John, we just haven't heard that much pushback from Capitol Hill on this. heard a little bit, but the White House at least trying to take this tack of saying they were taking an opportunity. This is good for the U.S. and for the budget as well. And then it's just a matter of who would come next. Hassett also said that this could be sort of the first step towards setting up a sovereign wealth fund, something the president has long said would be good for the country. And that's why Hassett said he believes more transactions are coming. Dan, I think back to maybe it was the revelations around Ed Snowden and the idea that kind of sent shock through Silicon Valley's infrastructure business that the U.S. government might be putting some

sort of tracker into hardware that's being sent overseas in a way that compromises the security of equipment. I imagine that's a nightmare scenario for an Intel foundry, the idea that somebody who's getting a chip made there might have it compromised in some way, and that could certainly be the sort of storyline that you would hear the Chinese putting out about a foundry like intels now? You mean now that the U.S. government has a piece? Sure. The risk that Intel lays out today in its 8K are real risks, particularly for its international business. I think it hit the nail on the head with that. The U.S. government, obviously Intel is a U.S. company. So maybe

this isn't that much more than that. It was already, you know, based in Silicon Valley. But sure, this is a real risk in other countries, other companies are going to have a skeptical lie. Megan Kassella, is there other assurance that the administration is put in forth that this kind of industrial policy won't cross too far outside of the free market capitalism that so many of us have gotten used to. Not really. That's the interesting question right here. As the president, you heard it in that soundbite, just sort of full-throatedly embracing

this and asked whether this would be the new model for industrial policy. He said, yes, sure, it is. And so the question is not only for these companies who might be next, but it's also how long might this sort of model remain in place? How far will these rules go? Will they be challenged in any way? And so it's just yet another thing that brings so much uncertainty to these businesses because while the administration is taking some steps to say this is a special circumstance,

they're also fully embracing it and saying that they will do it again and again if given the opportunity. Yeah, a lot of test balloons being sent up for sure. Megan, Dan, thank you. Well, still ahead, a top market strategist on the emerging risks that could threaten the ongoing AI stock boom. But first, Eunice Yunn has a look at the mania of new. mystery boxes sweeping through China right now. LaBubo is a global hit in part because of Pop Mart's blind box packaging. More on the Chinese craze in just a few minutes.

Welcome back to Overtime. A signed card featuring Michael Jordan and Kobe Bryant sold for nearly $13 million at an auction over the weekend, the most ever for a sports card. Investor Kevin O'Leary was one of three people behind the winning bid. He told CNBC this morning he sees collectibles as an asset class institutional investors are jumping in on. Well, I think it's getting institutional in nature in terms of hedge funds, high-nesty. worth. I don't think this piece will come to market again during my lifetime, Andrew. It's going to be a part of an index that I'm going to continue to grow along with my partners. We look at it no different than our Bitcoin holdings, our Ethereum holdings, our gold holdings.

Well, speaking of collectibles, our Eunice Yun is looking at a multi-billion dollar collectible craze sweeping across China in this week's China Lens. Even China's greatest sage is getting in on the blind box craze. We're here at the main Confucian temple in Beijing, and the shop here is selling a range of blind boxes. So I just bought this blind box with strawberry ice cream and a blessing from Confucius. Let's see what he says. Here we go. And Confucius says, I'm a top student.

The mania over these mystery boxes is catching on across the economy, with everyone from travel agents to supermarkets offering their own versions. Beijing-based Pop Mart is at the forefront of this phenomenon. It's the company behind LaBou. The elf-like monster, created by a Hong Kong Dutch artist and sold only through Pop Mart, is driving the collectibles company's mega profits. Almost all of these characters are sold in blind boxes. You have no idea what you're going to get. Ron Yue enjoys the gamble. The 23-year-old student spends $55 a month on blind boxes.

The moment you open the box, if it's a version you want or a limited edition, you get so excited, she says. And it's something I can afford. Prices average from $9 to $30. So how many do you have? About 150. The boxes got more popular during COVID times. Popmark marketed them online and then sold them at Venet. machines like this one. Young Chinese, feeling down because of the pandemic controls and

slow economy, turned to budget-friendly splurges for a pick-me-up. The idea cut on. Nearby, an outlet of retailer miniso offers blind boxes, too. Blindbox wash, blind box tape, blind box stationary, blind box pen. The staff tell us curiosity about what's inside convinces customers to try their luck and keep buying. Oh, not Harry Potter. Can I try that again? And the Chinese government has conflicted messaging about the blind box craze. On the one hand, the government has expressed pride in the rise of Chinese soft power.

But on the other hand, John, they've been warning about the dangers of addiction. Indeed. Now, I got to bring this back to the Luboo thing. because even though I haven't actually held one in my, you know, in my carbon-based hands, this seems like the kind of thing that keeps happening in our culture. Decade after decade, we haven't gone completely digital with this stuff. How does the blind box and Laboubu thing tie together? Do you have the origin story?

Well, it's just the Pop Mart, the company behind Labubu's marketing, is the one that really came up with the packaging, right? So that's what really helped the allure for the Lubbubu. People like the Labubu. They think it's cute. But at the same time, I think it's just the idea of what is described here as the emotional economy. People like to kind of get a charge out of just opening the box and then not quite knowing what they're getting, paying a price that isn't crazy expensive. And then maybe they get a limited edition that nobody else has.

Kind of like playing the market a little bit. The person who had 150 of the blind boxing, I mean, that seemed kind of unusual, no? Unfortunately, I will, fortunately for Potmart, it's not unusual, but yeah, maybe for her. I mean, she says that it's, it's, you know, something that she can afford. But, yeah, if you think about it, 150 toys times about $10 each is kind of a lot of money. All right. Funko pops, and now Labubu and all of these blind box things. Eunice, thank you.

Well, up next, we'll discuss whether there are signs AI investors are getting impatient because the technology is not yet transforming the economy the way many believe it will. And we have a deal in the energy space. Crescent Energy buying rival shale oil and gas producer, vital energy, and an all-stock deal worth more than $3 billion, including debt. Over time, we'll be right back. Welcome back to overtime Netflix. A big winner today after its film K-pop Demon Hunters took the top spot at the box office this weekend.

It's the first time ever a Netflix film has done that. Films been dominating over the past few weeks on Netflix's streaming platform before the company put it into theaters for sing-along screenings this weekend. But I will note Netflix doesn't report BOT's offices to ComScore. So in ComScore's official rankings, I believe Weapons is going to be listed as the number one flick. Well, turning back to the markets, the NASDAQ posted losses after its big Powell-driven rally on Friday. Those moves come after a drastic rotation out of tech stocks. A new note from BCA Research is questioning whether AI will really have the broad impact many investors are banking on.

Joining me now is the author of that note, Peter Bereson, Chief Global Strategist at BCA Research. Peter, is it too early, perhaps, to say that AI, Gen A.I. Isn't having that much of an impact, or do the numbers tell us the truth here? Well, you don't see that in the aggregate productivity data yet. If you look at output per hour worked, it has grown over the last few years, but it's basically grown as fast as the conventional budget office projected five years ago. So we haven't really deviated much from the underlying trend that we were at prior to the launch of Chad GPT.

So if we were to look back at things like PCs at the World Wide Web when it was first getting adopted, would we have seen a faster adoption curve? you think than we're seeing for Gen A.I. Now. Well, Robert Solo very famously said in 1987 that you can see the computer age everywhere, but in the productivity statistics. What he meant by that was that computers were being widely disseminated, and yet the productivity numbers remained fairly ho-hum. Now, ultimately, productivity growth did rise,

but it only started to rise in the mid-1990s. And so the same thing could happen with AI. It could just take a while longer for AI to have that broad-based positive impact on productivity. And unfortunately, investors may not be patient enough to wait that long until those productive numbers improve. And the profits from that productivity ultimately manifest itself. There are already rumblings, though, about AI having an impact on recent college graduates trying to find employment. and the types of new hires that companies are and aren't making. It seems like existing employees, perhaps sticking in place,

learning to use this stuff, not as many new hires happening. Is that dynamic showing up at all in this data or no? I mean, you're seeing some productivity gains in some sectors, but again, it hasn't been broad-based. Now, I am optimistic. I am optimistic that productivity growth will eventually increase due to AI. But again, it might take a while. And for investors, it's not enough for productivity to rise.

You also need the profits to increase. And what we saw during the dot-com period is that productivity ultimately did rise around 1995. But it wasn't until 2005, the profits from the Internet finally appeared. That's a long time for investors to wait. We're going to see that sort of a delay between the productivity and the profits. How should investors think about that, though? I mean, Nvidia investors are certainly seeing profits. But, I mean, a lot of other companies are having to pay to make those profits happen.

How does the whole enterprise of AI get shown, proven to drive profits kind of across industries versus just to individual companies? Well, I may not. I think that's the risk for investors. The thing about companies such as meta or Microsoft is that they benefit from network effects. You know, people use Office because others use Office. People use Instagram because others use Instagram. With AI, that's not the same.

I don't interact with other users when I use ChatGPT. I interact with the AI itself. So you don't have that network effect. Nor do you have the same economies of scale. With software, you spend a lot of money creating a great piece of software, and then replicating that software is next to nothing. With AI, it's different. With AI, you need the data centers.

You need the Nvidia chips. In some sense, AI looks a lot like airlines, where you have a really important industry, indispensable for economic growth. And yet, the product is kind of commoditized with AI, you know, the same neural net transformer architectures. These programs are very, very similar. You have high cap-tax requirements. They just never make a lot of money. That's the risk for AI investors. All right.

Well, we'll continue to watch and see how this plays out, whether it has the kind of economic effects that the stocks are getting right now. Peter Bereson, thank you, from BCA research. Well, up next, Mike Santoli looks at what the six-month high in the U.S. Economic Surprise Index could mean for the economy and for the market. And don't forget, you can catch us on the go by following the closing bell overtime podcast on your favorite podcast app. We'll be right back. Welcome back to overtime. Is the economy actually picking up steam? With all the talk of soft landings and sticky inflation,

the market could be signaling that growth is gaining traction. Let's bring back Mike Santoli to break it all down. Mike? Yeah, John, certainly the evidence is mixed and it's maybe nuanced. Maybe it's kind of eye at the beholder, but there is a case to be made that the economy maybe is on a modest upswing at least. Now, the soft labor market indicators that got Jay Powell to kind of lean in direction of a rate cut in September are definitely in place.

But this is the city U.S. Economic Surprise Index, essentially how economic numbers are coming in relative to forecast. And it's inched higher. You see this is the latest little bump to the upside. It's basically at a six-month high. And it hasn't been coming out of a major trough. You see here, that was the growth scare, the summer and fall of last year. Also, you had expectations if it was going to cut.

It didn't do it in a timely way. And then we sprang above zero out of that. So here we have a more moderately paced economy, but it has been on the firmer side, again, relative to expectations as interest rates of state pretty steady for the last year. Now, take a look at how the market is positioned for all of this. Cycical stocks, as broadly defined, relative to defensive stocks, have been racing to the upside. That's this blue line right here. It's cyclicals over defenses.

On the bottom here is the ISM manufacturing indicator, which has basically been bumping along that 50, level, which represents kind of the difference between expansion and contraction. So what are the explanations here? Well, Morgan Stanley, who's put this together, perhaps says that some of the AI thrust of CAPEX is really being manifest in parts of the cyclical sectors. So they're not really about traditional manufacturing, as they were as the ISM measures, or maybe just real weakness in the defensive parts of the market, like Staples and health care, undergoing their own challenges, making cyclicals look better in contrast.

But it does seem as if the hurdle is pretty high for growth to stay pretty good and rates to stay in check to satisfy the way the market is basically priced at the moment, John. Mike, are we in a period, though, where we're still in search of economic truth, perhaps more than usual? I think about the labor number revisions lately. Also, this question I have of how much inventory there really is sitting in the country kind of shipped in ahead of expected tariffs and waiting for the holiday season. Absolutely. Very noisy. There's all these leads and lags. Pull forward of demand on the consumer side in the spring after the terrorists were announced. You have radical reductions in labor supply, obviously in part due to the immigration crackdowns. It's definitely clouding the numbers to a fair degree. Right now, and also everyone's models, when you look at, you know, $200, $300 billion annual rate of tariffs being collected, it's coming from somewhere. And it should create friction in the system. It should create some kind of a slowdown. I think that's there's a decent debate, but I'm still struck by the fact that you have firms like Bank of America Merrill Lynch and Morgan Stanley that have been basically projecting no rate cuts for this year, mostly because they see a little bit of a pickup in real economic growth. So I do think it's

sort of, you know, pick your model, pick the variables that you choose to focus on, and you can make the case almost in either direction. Should we? Could we expect the surge in economic activity that we expect in Q4 to kind of flush the system clean and give us some amount of clarity? I think there is an expectation over the next several months when we have tariff rates settle out when you basically do get clear. Maybe the Fed does initiate another round of modest interest rate cuts when maybe it will clarify. Look, post-pandemic, we have had a little bit of a better footing for trying to project what the economy's going to do. And I think the hope is that it could get further clarify. All right. Mike Santoli, thank you. And once again,

to start the week, we have the major averages all lower, though the NASDAQ. did better than the rest. We'll see where we head from here with Nvidia earnings just a couple days away. That'll do it for overtime. Fast money starts now.