Closing Bell - Retail Check In, Consumer Strength, and a Bet on UNH’s Comeback 05/26/25

Episode Date: May 16, 2025

Unlimited CEO Bob Elliot and Truist Wealth’s Keith Lerner break down the macro setup in the market panel, while CNBC’s Kate Rooney reports on why Main Street is continuing to buy the dip.John San Marco of Neuberger Berman weighs in on retail earnings and a resilient consumer. Deutsche Bank’s George Hill makes a case for sticking with UnitedHealth despite its drawdown this week. Plus, our Robert Frank reports on the future of the estate tax, and Morgan Brennan highlights $17B space company Trimble for this week’s Manifest Space.  

Well, that's the end of regulation a celebration of Asian American and Pacific Islander month ringing the closing bell the New York Stock Exchange Titan acquisition doing the honors the Nasdaq another update on Wall Street with a major averages higher on this Friday and for the week Their third positive week in for tech the real standout here this week with an asset of 7% semi-stock sword Nvidia arm micro micron and AMD all up more than 13% in the past five trading sessions Media in the spotlight is charter communications and Cox communications agreed to merge in a thirty four point five billion dollar deal and Relief for United Health today moving higher as insider buyers stepped in stock up six percent But still shedding more than eighty one billion billion in market cap for this week. Two other names making a comeback today Coinbase jumping as one Wall Street analyst says the

recent sell off was overdone and Pfizer clawing back a bit but still down 9% on the week. And that's the scorecard on Wall Street but winners stay late. Welcome to Closing Dollar Overtime. I'm John Fort with Morgan Brennan reunited. It feels so good. A big week for the markets and your money. The S&P 500 was higher every day, the NASDAQ up 7%. We're going to get our panel's take on whether things have gone too far too fast. Plus, retail earnings will be a big influence over stocks next week. Results coming from Home Depot, Lowe's and Target, among others. We'll hear from our

portfolio manager who thinks the consumer will remain resilient in the face of tariffs. We begin this market and a positive week for investors with the S&P 500 higher. Fifth positive day. Longest daily wind streak since May 2nd. Tech and discretionary are among the top S&P 500 sector winners week to date. The Nasdaq is also higher by 7 percent% but let's break all of this down with unlimited CEO and CIO Bob Elliott and Truce Wealth Co-Chief Investment Officer Keith Lerner.

Great to have you both here. Keith I'm going to start with you because this really is a stock market that feels like it's continuing to trade on the optimism around trade tailwinds but you say that the biggest story in your view isn't the uncertainty we've seen here, instead it's what we're seeing in tech. Why? Yeah, well great to be with you. I mean, it was a big story to see the de-escalation, right, of terrorists, because all of a sudden the market was pricing in a 60% chance of recession. Now you've brought that down to maybe one in three and the market's repriced up.

But I do think a big story that kind of got pushed aside during all this tariff uncertainty is the AI theme. Remember, the big theme of this bull market that we were all talking about last year and early this year is AI. And what we saw during this earnings season is that tech spending remains very healthy and that even if the economy slows down, you'll likely see that tech spend continue. And if you look at tech earnings, those forward earnings estimates continue to move higher. And they account, you know, tech and communications accounts for about 40% of the overall market.

So I think that story is reemerging as we move past some of this tariff uncertainty. Bob, what's the bond market telling us? We've been talking about bond vigilantes. There's been a lot of focus this week on this reconciliation bill which didn't make its way through the house in the first attempt but it's certainly back in focus as we go into the weekend and next. Well I think the big question coming into the administration as a whole and really over the course of the last couple of weeks has been whether this the administration would pursue you know a fiscal set of policies that were going to be tight and lead to negative growth impacts, whether it be through tariffs or through implementing

a fair number of pay-fors for the TCJA extension. I think we've seen a lot of information in the course of the last week that has shown that the administration's pretty committed to pursuing much more expansionary policy ahead. You know, you're looking at a deficit based on the bill that's currently trying to get out of committee that would expand the US government deficit by one, one and a half percent of GDP in the next year.

That's quite expansionary. And then on top of it, we've basically gone from a place where tariffs would be a one and a half to 2% drag on the economy ahead to one in which there's going to probably be some modest challenges as a result of it. And so that's a pretty radical set of policy changes from contractionary to much more stimulative. It's happened over the last week and probably if anything the bond market isn't reflecting the magnitude of that shift with its move so far Interesting guys hold tight retail investors this week have kept buying

Despite the market conditions through the dip. It's paid off this week Kate Rooney is with us with the numbers Kate. Yeah, John So as you mentioned individual investors have been buying the dip. It's paid off this week. Kate Rooney is with us with the numbers, Kate. Yeah, John, so as you mentioned individual investors have been buying the dip. We've seen throughout all of this market chaos. Right now at least it is paying off. So the average retail portfolio is up about 15% in recent weeks. That's according to JP Morgan. It's pretty much in line with markets overall comeback and they are driving an outsized portion of overall market action, usually retail participation. It's around 12% of the total.

Recently, it went as high as 36%. That is the highest level in history, at least as long as JP Morgan has been measuring it. It is triple the long-term average, and then institutional activity at the same time has been what they called subdued. And Vanda Research noting a similar recovery for retail portfolios and points out over the long term, if you just for prices there, retail investors have outperformed both the Q's and the S&P. Part of this comes down to muscle memory.

So the year of COVID is a good example. Retail investors were buying the dip in droves and then they ended that year up about 30%. That was more than four times the overall market performance. Part of that success does come down to risk appetite the top three stocks It's pretty consistent and right now It's still Tesla Palantir and Nvidia also got the cues and a lot of the mega cap tech names Profit-taking though is kicking in at this point lowest net buying this week since April and then Vanda also points out that traders are now Cutting back on single stocks. They're turning a bit more to ETFs, guys.

All right, Keith, thank you. Keith, I want to kick off there, stay with the retail investor here and what the retail investor should do. So we got policies where government spending and the investor class is going to be keeping more of their money if this gets pushed through. But it seems that there's still this question

of whether the working class impacts from tariffs that we heard about from Walmart this week, things like student loan resumptions have just been weighted toward the second half of this year and into 2026. How should investors position considering both of those things? It's a good point. I will say retail has done well. I mean, they bought the dip. They didn't look at as much of the risk. They just showed it as a discount as they were going shopping. And now what you're seeing is CTAs and other trend followings are actually repositioning it up

and that likely has somewhat further to go. So listen, I think right now the technicals are the strongest part of this market, likely has somewhat more to go. But I will say, as we continue to move up, you know, the risk reward and out view is becoming somewhat less favorable because now we're pricing in a pretty favorable outcome.

At the lower it was, we were pricing in a recession. Now we're pricing in smooth ceiling ahead. And again, I think this market squeezes higher, but I think the risk reward is becoming somewhat less positive. So I want to say it's green light, red light on this market, but on the margin, this isn't a place that we would be more aggressive at this point. Okay. So for getting more expansionary, Bob, is that good for gold or bad for gold? Well, I think one of the key supports to gold that we've seen over the last couple of months

has been this rising geopolitical tension, whether it comes from what's happening in the Middle East or the US conflict with China. And so we've seen a little consolidation here in gold as a function of some of that risk premium coming out, and that's to be expected. But what I'd say is more structurally, if you're looking at say a three or six or 12 month horizon, we are returning back to a bit of a party on set

of policies from this administration, very different from what we saw in the first few months. And that is very beneficial to gold, weak for the dollar ahead. And so probably, you know, if you're looking at the short-term price action and you're a little cautious on gold, now is probably a time to buy the dip

much more than it is to pull back. Okay, Bob Elliott and Keith Lerner, thank you both for kicking off the hour with us. With all of the major averages higher, the Nasdaq finishing at about 59.58, up about 7 tenths of a percent today. We've got one key bellwether group for capital market conditions

that's showing some positive signs back to new highs. What's that telling us? Well, let's bring in senior markets commentator, Mike Santoli. Hi, Mike. Hey, Morgan. Yeah, so the market is kind of rediscovering the sort of bull market muscles here. The broker dealer index, that's the XBD, has made a new high.

Remember, the S&P as a whole is still a few percent below its former highs. And in the process, it's diverged with the regional banks, which had tracked for most of the last two years. So on some level, you can see this as a bit of a Wall Street versus Main Street split. People still uncertain about whether there's consumer fatigue and we have wait and see on the economic numbers coming in and obviously finality on tariffs.

But the financial conditions, capital markets conditions, even deal volumes, looks like they might be percolating a little bit here as the overall stock market has improved and the wholesale credit conditions have been good. Now take a look at a couple of other proxies of potential deal volumes on the come here. Of course we saw a couple of prominent IPOs. You do see the IPO ETF here, not quite back to its highs,

but definitely has a steep recovery since those lows in April. These are some stale, fresh IPOs, I should say, because there haven't been that many deals, but they are up to two years old. And then you see PSP is private equity firms, publicly traded private equity players, also following here. So again, the market is gearing back up to this idea

that maybe we're gonna have that animal spirits phase that everybody thought was coming in the months after the election. We went down on the tariff panic and it's almost as if people have decided we might get a do over. Yeah. This takes me back to what Kate Rooney was just telling us too. I kind of want to get your reaction there because we have talked about this, this idea

of retail investors buying the dip or staying invested, investing more. How does this, what we're seeing here, how does it speak to leading indicators, if you will within the market and when it comes to the mix of investors and who's doing what and then who follows suit? Yeah, it does suggest that there has been this interesting mismatch between, and I agree with the general tone of Kate's numbers,

which is that there's an instinct to buy every sharp pullback among retail. And it's sort of the risk appetites have rebuilt in such a rapid fashion that the old favorites are working again the Robin Hoods and the Palantir's what I would say is though retailer traders were also buying at the highs in February pretty actively it's not as if they wait for the dips and retail is also slow to wanna recognize or realize losses. So it takes months and months of grinding declines like we saw in 2022 before that dip buying instinct

goes away. So I feel like as long as we're in a bull market when the breaks are just, you know, kind of temporary and event driven, they're gonna be redeemed for their buying interest. And I would say in terms of IPOs, it's interesting to me that the fintech companies are kind of rushing to get through that window again.

And you even saw a couple of mergers this week. So it seems like there's sort of the pent-up demand for transactions and for people to kind of gun this market a little bit. We'll see if the macro and the headlines allow it. All right, Mike Santoli, thank you. Well, the House Budget Committee dealing President Trump's agenda.

A big blow today. Five Republicans voting against the proposed legislation. Let's bring in our Emily Wilkins from Capitol Hill Emily. Hey John, well yeah, it's Trump mega bill. It might be down,

but it's not out yet. Lawmakers are confident that they can get to a solution and get the holdouts to yes over the weekend, so confident that they have already scheduled another markup for Sunday night at 10 PM. And really the issues that we are seeing here, it's a lot of the fiscal hawks. They have concerns that these cuts don't go far enough, that some of the cuts that they want to see don't begin soon enough. Take a listen to Chip Roy. He

was one of the, as you said, five nos, one of those was procedural. So really there are four hard nos here. And this is why Chip Roy said that he was going to vote against the bill. We are writing checks. We cannot cash and our children are going to pay the price. So I may know on this bill unless serious reforms are made today tomorrow Sunday We're having conversations as we speak but something needs to change Majority leader Steve Scalise who was a part of those conversations struck an optimistic note with reporters He said look there are still things that need to be decided on but he said a lot of it actually has to do with the Timelines it's less about the policy, but it's more about certain things like when work requirements for Medicaid will kick in,

or when clean energy tax credits that were put in under the Biden administration are going to expire. This is what he told reporters. You know, it's timing implementation. How long, how quickly can we move some of these reforms and get them implemented? So, you know some of them we're working on answers some of them We need to get answers from the Trump administration But we've got a pretty clear idea of what the final pieces are and we're working through those right now The clean energy and the work requirements aren't the only things that lawmakers are going to have to figure out remember that state and local the only things that lawmakers are going to have to figure out. Remember that state and local cap deduction that is still a point of contention. It might not impact the vote that we're going to see

on Sunday night, but if Speaker Mike Johnson wants this vote on the floor by next week before Memorial Day, he is also going to have to figure out how to get those lawmakers from high tax states on board because right now that current cap of 30,000 is not cutting it for them. Guys? Okay, Emily Wilkins, it's gonna be a working weekend. Thank you. Coming up, a big week of retail earnings reports are on deck. We've got Walmart's report. What's concerning to some as it warned of higher prices. What will we hear from Home Depot, Lowe's, Target and more? And will we continue to see the split between consumer wants and needs this year? So far in 2025, consumer discretionary is the worst S&P sector, down 5%,

but Staples up 5%, one of the best, over time is back in two. Welcome back. Let's check in on shares of Galaxy Digital. Mike Novogratz's firm begins trading on the Nasdaq via direct listing. It opened at 23.50 a share, ending slightly below that level. That follows the IPO of eToro earlier this week. That price at $52 per share traded as high as 74. It's right in between there now to end the week at 64 15 and take a look at core weave This is up more than 60 percent this week following its first earnings report as a public company

It has more than doubled since its IPO in late March the stock ripped higher today as it disclosed Nvidia has a 7% stake in the company higher than it had previously Disclosed nice move this week has a 7% stake in the company higher than it had previously disclosed. Nice move this week. Well, let's turn to retail. Home Depot, Lowe's and Target all reporting next week, bringing another batch of data on the U.S. consumer. Yesterday, we heard from Walmart, said the company would be raising prices

on a range of goods to offset the cost of tariffs. And that comes as the retail ETF XRT touched its highest level since February. Joining us now is John San Marco, portfolio manager at Newburger Berman where he runs the next-gen connected consumer ETF. John, happy Friday. So what's the follow-through, the read-through, if any from Walmart? It's kind of in a class by itself with the big grocery and its heft, but is it tariff related or should the concerns about names like Target that haven't done as well as Walmart continue?

Yeah, thanks for having me on and happy Friday. My thoughts exactly, I think Walmart is in a bit of a class by itself. The heft you mentioned, the value orientation, the amount of momentum they had coming into some of this tariff and driven chaos and chaos in retail driven by other factors. So it's a really difficult environment to manage and you wouldn't necessarily know that reading Walmart's earnings reports and listening to them. I mean, they did sort of reveal some of that in a decision to not guide 2Q earnings.

And I guess they didn't change the full year earnings, but I think they very much recognize how difficult the environment is. And in that environment, who better to be than Walmart and some others. Yeah, in my view, TJX has also been in a class of its own when it comes to discount retailers, but it's also, if you look at the chart,

kind of priced that way. So what should investors expect as they approach that and how the stack might react after earnings, even if it does well? Yeah, if Walmart being built for low prices is the perfect DNA for the environment, or the best possible DNA for the environment. TJX being built for flexibility is really the part of their essence that works really

well in this environment. I try to put myself in the seat of a TJX competitor who has to make firmer decisions further out in time about what items are going to to call what they're going to be terrible character when they had shores how the consumer will be behaving and i think it really that that thought process really revealed that he gave always advantage but but their ability to make decisions closer to the demand are getting a closer to the season

uh... you know it never a bigger advantage than today where, where it is very tricky out there for their competitors. John, do you see it as a shot across the bow this week from Walmart when their CFO came out and basically said, we're going to have to push prices higher because of tariffs? I mean, there's been a lot of hesitancy from companies coming out and saying it so bluntly, for lack of a better term. But when you have Walmart doing that that does that now give license to other retailers and other consumer facing companies to do the same?

Yeah, I think it would I think it would be a very difficult reality to deny You know the facts are the facts You know that retail generally and Walmart very much also are operating on on thin margins and you know many of these terribly even you know even at the the escalated level are you know incredibly meaningful the to be an old that that don't have it i don't have a back to the retailer to absorb them and so you know i think you've seen some some of the cost negotiated away and and and and put up stream on the suppliers retailers can't bizarre will end up eating some of that costs negotiated away and put upstream on the suppliers. The retailers chances are,

we'll end up eating some of this, that's lending itself to the earnings uncertainty we have today. And as you pointed out, Walmart, I thought a bit of an unusual move made it very clear that prices are likely headed higher. And yeah, I think your question is spot on. If you're a competitor, maybe you let out

a little bit of sigh of relief to hear Walmart say that. And I would expect competitors will follow suit very quickly if they're not already taking some preemptive pricing. Okay. John San Marco, thanks for joining us. Thank you. Well, we just talked about it. The company is going public and their performance is this week,

but adding to the IPO momentum, Voyager Technologies officially filing for an IPO just moments ago as well. Now it's planning to go public on the NYSC under ticker V-O-Y-G. This company provides software and technology focused on space exploration and increasingly

the defense market that it's targeting. It's developing a commercial space station, Starlab, and as I mentioned, it's beginning to rack up some more defense-related contracts and deals as well. This is a name that manifests space. Listeners will know from my coverage of the space industry over the years. It's run by Dylan Taylor and it's worth noting after several years of many space companies, commercial space companies going public via SPAC and direct listing, it is taking a more traditional route of IPO and we've been expecting this one to come.

So we'll continue to monitor it. Well coming up, United Health shares bouncing back today as company insiders were buying shares. Should you also be buying at these lows? We're gonna ask a bullish analyst. And we're taking time out with the CEO of Twilio as his company gets cozier with Microsoft. Stocks up 10% this week. Be right back.

We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. Well, it's time now for CNBC News Update with Courtney Reagan.

Hi, Court. Hi, Morgan. The Supreme Court has rejected the Trump administration's bid to resume deportations of Venezuelan migrants under the Alien Enemies Act. Lawyers for the migrants said the government was ready to remove the men without judicial review, which was in violation of the justice's prior order. But the nation's top court also said the administration was free to pursue deportations under other provisions of U.S. immigration law.

Authorities say a manhunt is underway for 10 inmates who escaped from a New Orleans jail after one was captured in the French Quarter. They say the inmates were discovered missing during a routine head count earlier this morning, but it was unclear how they escaped. Jail records show at least four of the inmates are charged with murder or attempted murder. And the Indianapolis 500 is on track to sell out this year for the first time since 2016, which marked the 100th running. The May 25th event, dubbed the greatest spectacle on racing, is expected to draw 350,000 on

race day. Indy 500 officials are lifting a local TV blackout on the event. So the people in the area can still watch if they're not able to attend in person. Feels like the right thing to do. Morgan, back over to you. Courtney Reagan, thank you. Thanks. Well, companies are communicating with customers in all kinds of ways across phone calls, emails, and texts, especially as the economy zigs and

zags us here. Today, John takes time out with a CEO whose data platform is competing to make that communication more effective with the help of AI. Well, Cosema Shipp-Chandler is CEO of Twilio, which you might appreciate as the technology that enables the text that Uber sends whenever you're anywhere in the world to let you know a ride is close. Also software that marketers know for SendGrid email marketing. A co-ship Chandler took over for founder Jeff Lawson

about a year and a half ago after a career that started in financial management. He told me he learned to battle past no after an experience early in his career at GE. He wanted to join the prestigious corporate audit staff, a widely known path to management, and his boss said no. He wanted to join the prestigious corporate audit staff, a widely known path to management, and his boss said no.

My manager at the time just wouldn't support me. He said that I wasn't mature enough, wasn't ready in terms of the raw skills of it, and that was a real psychological blow. It was a failure. There's no other way to really kind of frame it. And I took it to heart and I listened to the feedback and I worked really, really hard to get better in some of the areas in which he said,

there was an opportunity and I did. And then he made it into the program and eventually ran it as an executive. Now at Twilio, Ship Chandler is working to increase the productivity and output of the product teams while also dealing with the disruptive opportunity of AI. This week at Twilio's Signal Developer Conference, he announced a partnership with Microsoft and an upgraded customer engagement platform where AI can communicate across video, voice,

email, and text. You get thousands of voice AI companies that are building different capabilities in vertical realms, many of those, vast majority of those, frankly, building on Twilio. So that's exciting, of course, but I think this is really unlocking the next wave. I think it's going to start with voice because it's so natural, like the same way that you and I are kind of having the conversation today. It's emotive, you capture context, but those same workloads are going to migrate over to email, to text communications, and I think being able to have the platform that can unlock the full breadth of these capabilities

across virtually any channel, whatever the context, being able to change channels in the middle based on our busy lifestyles, that's really, really exciting. So the timeout takeaway, fighting for the wheel. There are a lot of software companies competing for others to pick their AI agents to access data, engage with consumers, solve problems. In fact, these task completing agents, rather than question answering AI models, are emerging as the productivity drivers

that customers might actually pay up for. So investors should watch out to see whether it's the big hyperscalers or marketing specialists like Twilio that end up driving customer engagement and maybe getting them to yes. Morgan. Okay. Well, it's the stock story of the week. United Health getting crushed. It was $600 a share in early April. Less than half of that now. So is it a value or a value trap? We're going to talk

to an analyst who is still bullish on that name. You're going to want to hear why. That's next. I'm closing below for time. bullish on that name, you're going to want to hear why. That's next on Closing Bill Overtime. Welcome back to Overtime. Markets wrapping up a strong week. The S&P closing higher all five sessions. The Nasdaq, the biggest winner, up 7%. The Dow now positive for the year. All the Mag 7 names, nicely higher, particularly big gains for Nvidia and Tesla, both up more than 15% and regaining key market cap levels, three trillion for Nvidia, one trillion for Tesla, and check out the industrial sector after a more than 5% gain this week.

It's now the best performing group year to date. It sure is. We also wanna check on gold. That's down more than 4%. It's the worst week in nearly four years. Losing some luster perhaps. Bond yields also falling. The 30-year had been near 5%.

It's off that level today. But let's turn to the stock story of the week. United Health, is stock moving higher today? Yes, higher, up 6% as insiders bought on the dip. But the stock is still ending the week lower, off by more than 23%. It's the worst performer in the S&P and in the Dow. The move comes after a slew of

bearish headlines, including reports of a possible criminal investigation. The CEO stepping down, the company suspending its forecast, but some on Wall Street are still sticking with United Health.

So joining us now is George Hill from Deutsche Bank. He has a buy rating on the stock. George, it's great to have you on. And let's start right there because this has been painted this week as the collapse of America's largest health insurer, at least from a stock perspective. Why would you buy now?

So Morgan, first, thanks for having me. And I think if you look at United's business, like United's business, broadly speaking, is pretty well managed. They've had a very difficult two year run in the Medicare advantage business both in the provider business and in the insurance business they managed those two businesses a

little bit separately. A lot of the headwinds in this business have been driven by the government providing lower payments to the insurer as well as an increase in utilization that we've seen post covid we think the company eventually

moves past these headwinds and this would seem to be an unusual time where the stock is trading in evaluation. It's just it's not you don't you don't often get the chance to buy United shares at 13 or 14 times earnings given where the stock is

historically traded. Simply speaking we don't think the business is broken we think these these issues are manageable. You know it's interesting because you compare this you use the analogy of General Electric and I should say

General Electric before it was spun out into three separate companies which are now performing pretty well. But I was the reporter here at CNBC that was covering that implosion as it was happening over the course of years. So how are you comparing the two and what are the lessons that we can learn from GE?

It's an interesting question. And this, of course, kind of comes out of conversations with a lot of investors. And it's kind of the big F, right? Like, you know, history, history doesn't repeat itself, but it rhymes. And as investors were kind of worried, you know, what I would call peak fear on United Healthcare shares, the conversations that I had with investors were like, remember what happened to GE? Remember when they lost the ability to manage earnings?

Remember when the financial business unraveled? Remember when the insurance business unraveled? And they lost investor confidence and the company couldn't ever get back its premium multiple that it had versus its peer group. It could never kind of put the businesses back together, especially the finance business, first the financial crisis.

So we just kind of called that out as a cautionary tale because United's actions over the last several years have looked a lot like GE's through that period. A lot of acquisitions, United has really plunged head first into the risk business, both in Medicare Advantage and in care delivery. At this inflection point, it's really important for investors to dig in and do they understand

what United's exposure is to these risk business? Do they understand the impact of these acquisitions? So George- Yep, I'm sorry. Paint the optimistic picture for us then, because you talked about the government having lower payments. I don't know that the government is looking to pay more anytime soon under the Trump administration.

And then this increased utilization, people being sicker, I guess, even doing more outpatient, what is it demographically or adjustment-wise that UnitedHealth can do, especially under the broader cultural scrutiny that they face, to get ahead of that? So, John, the great news is we they face to get ahead of that. So John, the great news is we already have visibility to the higher payments. The government has already published what we call the rate notice for Medicare Advantage

for the payment year of 2026. It's gonna be up 5% and change. So after several years of flat rates as utilization, to your point, continue to increase, United's gonna get some relief next year as it relates to rates. The to increase, United's going to get some relief next year as it relates to rates. The flip side, and this was what we think has been the big issue, we're going to talk a lot about risk.

Beginning in 2024, the government changed the risk model. It basically changed the way Medicare beneficiaries are measured for how risky they are, and they started kind of lopping off these codes. It looked like a reimbursement cut if you're a United Health Group. The last year of the implementation of that is in 2026. If you look back at the last several years, we've seen a big increase in utilization. We've seen a big increase in medical cost inflation. United should start to lap all of these things in 2027.

So the blue sky... Well, what quarter should investors expect to see the evidence this is happening uh... i mean i would expect to see on the two four analyst a investor day this year the guidance around twenty six look better i'd expect to one twenty six results to start to look better and what will be looking for is in january twenty twenty six

the government will start to give us the look at what 2027 rates look like. That'll be like, that'll tell us whether we keep being pointed in the right direction or whether we're gonna start to head in the wrong direction. Okay, George Hill, thank you. Thank you. Well, up next, Professor Santoli gives us a history lesson

and what it could say about the possible risks of an AI bubble and later Why lawmakers in Washington could be on the verge of handing ultra wealthy taxpayers a windfall as part of President Trump's big beautiful budget bill Welcome back to overtime. The Nasdaq a major winner this week on track for its best month since November 2023. A pop in AI names help boost it but is AI blowing bubbles. Let's bring back Mike Santoli for a history lesson.

Mike. Well, John, if it is, it's very early in the process. At least as suggested by this chart, which matches up the NASDAQ composite since the release of chat GPT. That was back in November of twenty twenty two, along with the initial phase of the Web boom in the NASDAQ. That started when the release of the Netscape Navigator Web browser in December of nineteen ninety four. You see was really in sync. This is a bespoke chart they've been tracking for a while. Really in sync until this last sell-off in the broad market. Now it's maybe getting back on the beam.

And as you can see here, this chart only covers to the end of 1997 for the former cycle. And from the end of 1997 to the eventual peak of that NASDAQ bubble, it tripled over two plus years. So obviously, nothing says they're gonna match up, but it's at least noteworthy that they have followed one another in terms of the percentage gain, the cadence of this boom so far. I guess it's notable that at that point as well for the web,

it's not like it had kind of filled out its potential or anywhere near it really I guess you could argue it didn't even start to do that until a decade later. It's true I mean, I guess we can quibble a little bit and say that today things arguably move a little bit faster You have people hundreds of millions of people already using, you know, the the chat box and things like that Also, and this is one of my pet things this this run here in the NASDAQ into the middle of 95, I actually think that was the Microsoft Windows 95 launch. It really was. It made the market just ramped into that July launch. And it was because that was the public recognition of maybe internet capabilities that could be in your hands. People lined

up at midnight to buy a shrink wrap box of operating system software. All right, Mike Santoli, thank you. Well, Nova Nordisk, the maker of Ozenpic and Wegovi, ousting its CEO and investors, don't like the move. You could say it's weighing on shares. That's straight ahead. Plus, it's a space-related company you've probably never heard of, but it has a $17 billion market cap,

sky-high stock gains over the past month. We're gonna hear from the CEO of Trimble when Overtime returns. ["Overtime"] ["Overtime"] ["Overtime"] ["Overtime"] Welcome back to Overtime.

We are showing you shares of Novo Nordisk, a big loser in today's trade, down more than 2.5%, the maker of weight loss drug Wegovi and diabetes treatment Ozempic, announcing its CEO is out after eight years on the job because of market challenges. Company says it's searching for his successor.

Novo's stock has lost more than half its value in the past year, facing increasing competition in the lucrative obesity market. Novo's chief rival there, Eli Lilly, seeing its stock pop today, shares down just 2% in the last 12 months, Morgan. Well, Trimble is one of the biggest software players you may not have heard of. A $17 billion stock in the S&P 500 that's up 25% in the past year. Now it got its start nearly five decades ago

with the nascent technology that would become GPS. Trimble has been evolving ever since. It's on the forefront of precision agriculture, then the industrial internet of things. With 150 acquisitions along the way, stocks up more than 23% just in the past month as well. Now I sat down with CEO Rob Painter at the Space Capital Summit just earlier this week.

I think of Trimble as the application layer in the space economy. We're not the infrastructure company sending the signals from space. We're turning those signals into actionable intelligence here in the real world in the physical world and industries such as construction and transportation and agriculture. Construction is the fastest growing market, but Painter sees secular adoption across markets as digitization and now increasingly AI are must haves. So through the use of AI,

indexed against the base we have of customers and users at Trimble today, we manage over a trillion dollars of construction through our systems. We have tens of billions of freight that move through Trimble today. We have millions of users, customers of our software, and hundreds of thousands of instruments and machines

in the world operate on Trimble. So in an AI context, with this unique corpus of data that we have access to at Trimble, we think we're going to be able to create differential outcomes for our customers. How are you navigating what I will call rapidly evolving trade policy? Yeah, so there's opportunity and uncertainty.

Uncertainty certainly in the form of understanding, okay, where's the policy going to land? This morning, we learned about some of the policies changing in a good way. So that's a good thing for us, but hey, there is some uncertainty, and so that can cause some pause in some of the buying cycles from customers. At the same time, there's a great deal of opportunities.

So we look in markets such as Germany that are talking about a half a trillion euro spend on infrastructure, which is new for a market like that to be talking about. We look here in the US, data centers continue to be very strong in market for us. If we're going to re-shoring and manufacturing in the United States, that's a positive catalyst for us. We still have the infrastructure bill, the bipartisan infrastructure law. It's a positive for construction.

And then I go back to the fundamentals of this market being large, global, underserved, and under-penetrating, and it's fundamentally digitizing in a manner that creates a lot of opportunities for our business and for our customers. So for my full interview with Trimble's Rob Painter, sign up for Manifest Space, the podcast. You can scan that QR code on your screen

or you can download wherever you get your podcasts. Up next, why the wealthiest Americans could have a big win in the budget bill backed by President Trump if Congress can pass it. And speaking of podcasts, don't forget, you can catch us on the go by following the closing bell overtime pack podcast on your favorite podcast app. We'll be right back. Welcome back.

We have a news alert for you. Moody is lowering its credit rating on the United States debt one notch to AA from AAA due to increasing government debt and interest payments, but improving the outlook to stable from negative. Moody's doesn't think the current fiscal proposals being considered will result in material reductions in spending, but it's also saying it doesn't expect significant impact from tariffs on economic growth. They do expect the US debt will rise to about 134% of GDP by 2035. Yeah and speaking of debt, President Trump's big beautiful budget bill

facing a major roadblock in Congress today. But there could be a windfall for the wealthy if it does end up becoming law. Robert Frank explains. Robert? John, good to see you. Well, the House not only extending that estate tax cut from 2017, but also perhaps making it more generous. Now, under the House plan, the exemption for the estate tax would jump from 15 million from the current 13.9 million for single files and 30 million for couples. It would also be indexed for inflation and it would be made permanent. That permanence is what taxpayers and advisors were really looking for here.

Now with such an exemption, the estate tax is of course less effective. The number of people paying the estate tax has fallen from 16,000 to just 4,000 since 2007. Now back then the exemption was only $2 million, which is also why the estate tax right now only raises about 20 billion dollars a year in revenue. That's below where it was Back in 2007 you get a full breakdown of all the tax changes that will impact high earners My inside wealth newsletter that's cbc.com slash inside wealth cbc.com slash inside wealth guys Yeah, be sure to check that out with the QR code on the screen and just type it in Robert cnbc.com slash inside wealth, cnbc.com slash inside wealth. Guys? Yeah, be sure to check that out with the QR code on the screen and just type it in.

Robert, how different is the generational wealth picture now considering taxes, just how much one generation can pass to the next kind of with the death tax or even without it coming up versus where we were generations ago? Yeah, the estate taxes become fairly irrelevant, not just because that exemption is so high, but also because the wealthy have such highly paid estate tax attorneys and accountants that have found so many workarounds that basically, you know, the wealthy don't have to pay the estate tax. As Gary Cohn said during the first administration, only morons pay the estate tax.

So it's really become irrelevant and much easier to pass assets to the next generation without paying a tax. It's part of what's tricky about this, and I guess a political quagmire, is that the estate tax is in some ways similar to the carried interest tax. And what I mean by that is you have a lot

of small business owners that have grown their businesses that take advantage of it. It's not just the ultra wealthy, right? You're right. And Morgan, that's exactly why they set this rate so high. So the big argument was family owned companies and farms, family owned farms. So if your farm is worth 30 million or more, it's not really a family farm anymore. It's a it's a mega farm. It's an operation. So I think by setting it that high, you're getting rid a lot of those concerns that have been dogging the estate

tax or the death tax as it's been known for years. All right, Robert Frank, thank you for bringing us the latest. Well, next week's earnings calendar features a ton of retail and software names. There are no big results on Monday, but Tuesday brings Home Depot, Palo Alto, Toll Brothers, Target Lowe's, VF Corp, TJX, Snowflake and Zoom Video are the highlights on Wednesday. And the headliners on Thursday are Advanced Auto Parts, Ross Stores, Intuit, Workday and Autodesk. And of course we also get some conferences and investor days, including JP Morgan on Monday

and Computex where Jensen Huang from NVIDIA is gonna be speaking. Everybody pays attention where Jensen Wong from NVIDIA is going to be speaking. Everybody pays attention to Jensen because there's so much riding on this AI trade. But interestingly enough, Snowflake had some really interesting things to say a quarter ago when we heard from the CEOs here at our Ramaswami here on overtime. Big upside surprise for them. Also, we always tend to hear from Intuit and they'll be reporting out of tax season with probably more emphasis on this,

not just small, but medium-sized business push that they've been pursuing. Given the overall economic conditions and a company's search for efficiency, I'll be interested to hear how they're doing. Yeah, Snowflake, I think, is also a good example of what we're seeing take root across the tech sector, and particularly in software right now.

And that is a big opportunity, a massive opportunity for these companies to do more work with the government amid the efficiency and productivity and cost-cutting pushes. And even on the national security and military side, as war fighting becomes increasingly digitized and more focused on things like AI. Shridhar has also been pushing hard on the use of AI within the company, getting engineers to adopt it and actually turning Snowflake itself into more of a

DevOps kind of developer equipping software company. See if that shows up on the bottom line. Meantime a strong day and a strong week for markets. The S&P finishing the week up 5 percent. Nasdaq up 7 percent. That's going to do it for us here at overtime. Fast money starts now.