Closing Bell - Yields Spike, Hit Stocks; AT&T CEO On Fiber Acquisition 05/21/25

Episode Date: May 21, 2025

Stocks drifted lower and yields moved higher as investors digested cautious signals across the markets. Barbara Doran of BD8 and Scott Chronert, Citi U.S. Equity Strategist join to break down the day���s pullback and explain why defensive positioning remains in focus. Snowflake and Zoom Video report earnings, while Urban Outfitters offered a fresh read on the retail consumer. White House crypto czar David Sacks joins to discuss the stablecoin vote in Congress and the evolving AI landscape. AT&T CEO John Stankey on the company’s acquisition of Lumen’s fiber business for nearly $6B. Our Phil LeBeau on a surprising stat: the average age of a U.S. car has hit an all-time high of 12.8 years, signaling deeper trends in consumer behavior and the auto industry. 

That bell marks the end of regulation. API Group bringing the closing bell for New York Stock Exchange, Vanguard, doing the honors at the NASDAQ in a broad-based sell-off on Wall Street today as yields jumped after a rough bond auction at 1 p.m. The Dow off nearly 2 percent, the S&P and NASDAQ also off about one and a half. Real estate, healthcare, discretionary were your biggest laggers. Communication services seeing the smallest losses as Google helped lift the sector, also known as Alphabet. The real story though is in the bond market with higher yields across the curve. The 30-year crossing 5% that's hitting the highest level since October of 2023. The 10-year yield back above 4.5% of February high. And that move in rates taking the home builders

and home related stocks down again today. That sector ETF falling more than 3%. Also retail in focus today. Target, TJX, lows all lower on earnings. Target, the big loser as EPS comes in 19% below consensus. The company slashes guidance, the stock was down more than 5%. Financials also taking a hit on economic concerns with all but two names in the

sector ending lower. Well, that's the scorecard on Wall Street. Welcome to Closing Bell Overtime, where winners stay late. I'm John Ford. Morgan Brennan is on assignment. As Bitcoin soars to a new all-time high, we're going to talk to the Trump administration's AI and crypto czar David Sachs This says Congress is grappling with the idea of a US dollar Stable coins kind of stuck in the Senate. Meanwhile, it's all red across the board today Major averages posting their worst session since April 21st a spike in yields putting pressure on stocks after the poor 20-year bond Auction earlier this afternoon the 10-year went back above 4.6 for the first time since February.

30-year hovering above 5%, as I said. Here now to break down today's sell-off, Robert Duran, BD8 Capital Founder and CIO, and Scott Cronert, Citi U.S. Equity Strategist. Guys, welcome. Scott, this 20-year auction lackluster was probably a kind way of putting it. But how much is that all wrapped up in the questions about exactly what's going to happen to the deficit here

and therefore what that means about the value of the dollar and the US's ability to pay its debts? Well, I think we're still pouring through the what's and wherefores on the ongoing budget negotiations. But at this point, it sure looks like we're stuck with a deficit somewhere in the neighborhood of 2 trillion, which is 6%, 6.5% of GDP, which is consistent with where we've been. So not as much effort and action in reining in the deficit as may have been expected or hoped for, if you will, which I think kind of plays into the tricky bond auction

today and the backup and yields. And so I think that's a dynamic that we've been expecting to be factored in as we go through the summer months. It's part of where we've kind of held our target at 5,800 coming off of the moratorium day lows, if you will. So we still think that there's a valuation headwind to be navigated.

The interest rate effect today plays into that. The weaker currency is a fallout of the above. And I think that that probably needs to be presumed to persist for the time being until a lot of the dust settles in terms of deficit particulars, if you will. Yeah, speaking of valuations, Barb, one of the headlines today catching a lot of attention

was OpenAI paying $6.5 billion for this design startup from Johnny I, the former design chief at Apple under Steve Jobs and even before that, this startup they're buying hasn't really done much of anything yet and I can't figure out whether this is bullish for the overall AI trade because it shows that money is still sloshing around out there or if it's kind of negative for the AI trade

because of the way that the money is sloshing around out there. It's always a good question because are we getting into meme stock territory? Is it really overdone? But I think this actually is a positive. I mean, it shows that there is so much opportunity, there is so much going on in this space that you will make this kind of purchase and spend that much money for a company that doesn't have revenues.

Because you're looking for any of the players, the competitors in this space, are looking to compete against the best, and the best keep making acquisitions and keep upping their game. So I think this actually is a real positive and very encouraging sign in terms of what's going on AI and the sustainability of this trend. Meanwhile, Scott, perhaps in slightly less exciting,

but more essential territory, you think Amazon, Walmart, Procter and Gamble are worth a gander here in this market? What in particular makes them interesting? Yeah, so here's where we're going. In our work in turning back to the tariff discussion, consumer discretionary is an area, along with consumer staples,

that we think is in the crosshairs of essentially a 10% effective tariff rate broad base as a starting point for the tariff discussions. That's been reflected in the stock prices for many consumer names. We're underweight. The sector have been going into this year, so pretty consistent on that. What we're seeing unfold here in the markets is sort of a renewed emphasis on, OK, got that. We've got tariff issues. We've got deficit issues.

But where are there growth opportunities and pockets of growth opportunities, even in consumers? So what we've done is screened for companies that have a lower correlation between sales and traditional macro influences that also have been demonstrating a, let's call it a growth capex playbook that gives us confidence and conviction in a longer term structural growth dynamic. That's where those three names come into play. We think that's an underlying theme

that can continue to be played across sectors, but particularly within this consumer cohort, which, again, to emphasize, is smack dab in the middle of where tariff concerns are probably gonna show up most real time. I wanna mention that green on your screen. Snowflake and urban outfitters are out. Those stocks initially up about 5%.

Zoom up as well. That's up about 2%. We'll get you those numbers as soon as they're ready. Bob Durant, ahead of the numbers, it's kind of hard to ask you about this, but snow and zoom, particularly interesting if you look at a five-year chart here, because they were stratospheric

back in that 2021 time period, have come down quite a bit, but people are trying to recalibrate where the value is. How do you think about those? I'm sorry, are we ready with Snowflake? Indeed, we are. Hold on, let's get to Kate Rooney with those numbers. Kate.

Hey, John. So a beat on the top and bottom line for Snowflake in the quarter. Earnings per share coming in at 24 cents adjusted. That was a three cent beat versus estimates on revenue of $1.04 billion, also stronger than expected. As well, it looks like guidance in some key sectors is strong too, stronger than expected. Q2 product revenue guidance coming in ahead of expectations, a little higher than a billion dollars. Q1 product revenue was also stronger than expected, $997 million versus street estimates of $962 million. And then remaining performance obligations also better than expected, $6.7 billion versus

$6.59 billion the street was looking for. Shara's reacting positively. You can see more than 7% higher after hours. John, back to you. Yeah. All right. Kate Rooney, thank you. And don't miss Jim Cramer's exclusive interview with Snowflake CEO Sridhar Ramaswamy.

That's coming up 6 p.m. Eastern on Mad Money Now, Barb. Now that we've had some more meat on the bone there with some of the numbers, how should investors think about these kinds of stocks that have been brought down to earth from a few years ago but are building something here? It's interesting because Snowflake and Zoom, where the two names that you mentioned, are very different in that regard. I mean, Zoom had run up, they were at the right place at the right time

when we had the shutdown and COVID hit, and they really, and thank God for them, it's all how we connected. But so they really saw their business just explode on the upside. Of course, post-COVID and things normalizing, then the demand dropped off, and they've been trying to

reorient themselves and find their pathway to growth. I mean they're innovative, they're good, but they really have only been growing at about two, three, maybe four percent. So it'll be very interesting to see what's going on there. They've been good at integrating their AI, etc. Snowflake is a different story. I mean they had run out because of the promise of what they do and it's they have a scalable they've got a great product. However, there's tons of competition whether it's data bricks or the hyper scalers themselves and so it's a big market. It's a big pie, but

it's a big question how much they can grow because they're also very expensive there are almost 160 P E on next year's earnings. So they must have been really had some great top line growth and great commentary. And like you said, Databricks is waiting in the wings. Now Urban Outfitters is ready as well in the retail front. Courtney Reagan has those numbers, Court. Hi, John.

Yeah, this looks like a pretty strong report relatively here for Urban Outfitters reporting $1.16 per share. That is ahead of expectations on revenues of 1.33 billion. That is also above expectations here. Comparable sales increased overall 4.8%. The strongest at anthropology up 6.9%, 3.1 at free people, up 2.1 at urban outfitters.

The subscription business that they have newly also saw net sales increase by almost 60%, 59.5%, driven by an increase in active subscribers. saw net sales increase by almost 60%, 59.5%, driven by an increase in active subscribers. The quote here from the CEO talks about an increase in profitability across all of the brands. There is no mention in the release of the impact of tariffs, at least not now, and there is no guidance that's being provided, but shares are moving higher

on what we do know here to the tune of about 5% for urban outfitters. Back over to you, John. All right, Court, thank you. Scott, last word to you here. How, if at all, do you think about stocks like that? It's not Target, it's not Walmart, it's very much in the category of stocks

potentially affected by tariffs, but they're not saying a ton about it at this point, perhaps because we're in these 90 day windows and we're not sure where we're gonna be in the back half of the year. Yeah, we're still in the windows, right? And so we can dial in on 10% as a starting point, but I think your point's spot on.

What ends up happening here in our view, consensus earnings growth expectations for 25, in our opinion, are still on the high side at roughly 265. We're down to 255. What happened during the Q1 reporting period is more companies putting out some initial thoughts and views, but not really dialed in on the ultimate effect. So what we have to be prepared for is as we go into the balance of Q2, the Q2 reporting period, we'll probably see earnings expectations continue to trickle down. I think the market has gotten itself fairly prepared for that. And so I'm going to come back to the starting point and the discussion is show me the growth.

And so where companies are able to define a growth angle that is over and above what we're dealing with in terms of the broader tariff and policy concerns along with the rising rate backdrop. I think they're gonna get rewarded for that and that's a theme that we're gonna continue to harp on here for the balance of Q2 and probably over the summer months. All right, Scott Kroner, Barbara Duran, thank you. Well, we've got some more after the bell news to tell you about. AT&T announcing a deal to acquire Lumen's mass market fiber business.

The price tag on that is $5.75 billion. Lumen is higher 20% right here in overtime. AT&T about unchanged, maybe fractionally higher. I'm going to be joined by AT&T CEO John Stanky in just a little bit to talk about that deal. Zoom earnings are out meantime. Pippa Stevens has those numbers. Pippa. Hey, John, Zoom is in the green here

after a bottom line beat. Adjusted EPS coming in at $1.43. That was 12 cents ahead of estimates. Revenues of 1.17 billion was in line with analyst expectations. Enterprise revenue did come in ahead of estimates with margins also better than expected. In terms of guidance for the second quarter,

the EPS guide is slightly better than estimates with revenue essentially in line. And once again, here the stock is up 3%. John. Pippa, thank you. Also higher Bitcoin today, near $110,000 per Bitcoin. This as a stable coin bill, tries to work its way up through the Senate

and through Congress. Up next, we're gonna talk to the administration's crypto czar, David Sachs. Also, the AI czar. So lots of questions about getting the chips and power that AI is going to need. And it wasn't all red on the screen today. There were some names closing higher, including CF industry, CME, Netflix, Canada Goose, and GE Vernova. Netflix and GE Vernova hitting all-time highs along the way. Overtime's back in two.

[♪upbeat music playing.♪ [♪upbeat music playing.♪ [♪upbeat music playing.♪ [♪upbeat music playing.♪ Welcome back to Overtime. While markets moved lower today, Bitcoin rose to an all-time high, getting up as high as 109,500 before pulling back a bit.

A number of factors being given credit for crypto's 40% gain in just the past six weeks, including a de-escalation of the trade war and the renewed spotlight on the national debt. As Bitcoin hits those new highs, investors are still awaiting the stablecoin bill. See whether it will make its way through the Senate, joining us now to discuss that bill and much more.

White House AI and cryptos are David Sachs. David, good to see you again. I actually want to start on AI here because Jensen Wong talked to me earlier this month about these chip curbs, mentioning it again from Computex in Taipei this week. The idea that maybe they're not working, that we ought to just compete, get China, everybody else into our ecosystem.

When America competes, America wins. What's your thinking, the administration's thinking on the usefulness of some of these chip curbs? Well, John, good to be here. So on the chip curbs or export controls, I think there's strong bipartisan consensus in Washington not to let China have our most advanced semiconductors because there's a potential dual use to the technology. But I think that Jensen's right with respect to the rest of the world. We want the rest of the world using our semiconductors, building on the American tech stack as opposed to creating an opportunity for Huawei to come in and create a Huawei Belt and Road. So I think we need to

revise the export controls with respect to rest of world, but I think we have to keep them for China. And what do we do about power? Elon Musk was on our air with our David Faber just yesterday talking about what he's trying to build out with quite a few black wells and the challenge of getting enough power to actually make those AI factories happen. What kind of policy is going to

really benefit that in a way that's sustainable? Well, John, I think the president has spelled it out. We need to unleash the American power industry. We need a lot more electricity in the United States. We need to make it easier to permit. We need to drill baby drill, as the president said.

And we've got to build baby build. We've got to build these data centers. So I think the Trump administration wants to get all of these regulations out of the way. They want to alleviate the bottlenecks. And I think that's just the direction we just got to keep going in. Now let's talk stable coins. There's this bill trying to make its way through the Senate.

What's your take on the concerns, certainly on the Democrat side of the aisle, that there aren't enough safeguards here to keep maybe the president himself and his family from benefiting from this kind of legislation? Well, so first of all, we have significant bipartisan support for this. I think 15 Democrats voted for the bill

to pass this key procedural threshold of cloture, which means there'll be no filibuster against the bill. We have every expectation now that it's going to pass. I think the reason it's going to pass is because stablecoins offer a new, more efficient, cheaper, smoother payment system, new payment rails for the US economy. It also extends the dominance of the dollar online, and it also creates billions of dollars or trillions of dollars in demand for our treasury. So I think for all these reasons, the stablecoin bill is going to pass, and it's going to pass

with significant buy parts and support. How long do you think before stablecoin would start to really have that dollar support effect you're talking about? I mean, I think it'll be immediate. So we already have over $200 billion in stable coins. It's just unregulated. And I think that if we provide the legal clarity and legal framework for this, I think

we could create trillions of dollars of demand for our treasuries practically overnight, very quickly. I understand that you have argued that it was important in this trip through the Middle East just now, making some of the deals, particularly around AI that the administration did, to get in there very quickly. that you have argued that it was important in this trip through the Middle East just now, making some of the deals, particularly around AI that the administration did,

to get in there versus China, Belt and Road style doing it as well. What do you say to the criticism that there's some moral ambiguity around the dealings with the likes of Saudi Arabia, given some of the headlines we've had about that regime's actions over the last few years? Well, I don't buy it. I mean, here's the thing.

These countries are extremely resource rich. They're energy rich, and they have the largest sovereign wealth funds in the world. If we don't partner with them, they're going to be forced into China's arms, and they want to partner with us. They want to build their on the American tech stack. They don't want to be building on the Chinese tech stack. So I think it's in our interest to partner with these countries and to have them be the piggy bank

for our AI efforts, not China's. So back to the AI question, what kind of scale do you think is necessary for AI to be successful policy-wise in the US? And is your sense that the administration is thinking about that as they're addressing big tech in ways that they don't want Europe to necessarily hit us, but it's unclear how much M&A and how much size

is going to be allowed here? Well, I think we want to win the AI race. That's the bottom line, John. And I think we're going to do what's necessary in terms of building, in terms of creating more power, in terms of supporting innovation. I think we're going to do all those things. America has to win the AI race. If we don't, it'll be very bad for our economy.

It'll be very bad for our military. So I think we're going to do what's necessary to win this race. All right. David Sachs, AI and crypt czar in the Trump administration now. Thank you for joining us here on Overtime. Thanks, Ron. Well, coming up, Apple's iconic designer takes his talents to open AI for some big bucks, really big bucks.

Apple falling a bit today down two and a third along with the broader market, but Netflix holding up better than most on a down day. What this stock's recent rise tells us about where people are spending their money. That's next on Overtime. ["Overtime"] Welcome back to Overtime. Apple shares falling today along with the broader market.

The company's former design chief, Johnny Ive, reaching a deal with OpenAI. OpenAI is gonna buy Ive's startup for $6.4 billion. So this move may be taking OpenAI into the AI hardware business, whatever that means. It's an as yet undefined category. And that's for Apple, some taking this as a negative with Ive taking his talents to another high profile name.

Though he left Apple years ago, Apple is on a six day losing streak. That's its longest decline since March of 2024. Now let's turn back to the broader markets. Senior markets commentator Mike Santoli with us now to look at where investors are putting their money to work in this market and what it might be telling us. Mike?

Yeah, John, obviously this big move higher in bond yields did unsettle the equity markets broadly. Consumer cyclicals taking a hit, but you know, the investors have been finding places to hide out even within consumer. And I think this chart is instructive. It's a two year of Netflix versus DoorDash. They're considered basically these kind of consumer utilities

with scale, with pricing power, in the right kind of places in terms of where incremental spending is happening. Obviously, over this span of time, and the S&P 500 might be up like 40% or something. So huge outperformers, but also what I find interesting is a very similar cadence in terms of how these companies have appreciated being considered somewhat category winners.

Now, different sort of rhythms here in terms of online brokers or retail brokers. Schwab relative to Robinhood. Robinhood, if you look back there, has had this massive surge in the last, let's say, year, year and a half or so, whereas it started over here in late 2021, shortly after its IPO.

That was the prior peak. That was the SPAC and the unprofitable tech, speculative tech boom. We sort of crashed from there and now kind of met Schwab where it sits and interestingly, Charles Schwab has started to outperform other financials as well. It's a little more of the slow and steady. It's a little more bank-like.

It's a little more kind of mature retail investors, but both have been working lately. We'll see if that survives, if we had a deeper sell-off here, John. I'm really interested in that first chart that you put up, Netflix and DoorDash, it's sort of the binge trades, right? Binge eat and binge stream.

DoorDash, like Zoom, which is out today, was one of those pandemic darlings, but DoorDash hasn't lost nearly as much, or rather it's gained it back versus some of the others. And I wonder to what extent there's something to learn from that, the different trajectories that some of these pandemic darling stocks have taken. A lot of people thought that DoorDash would fall off

once people could get back outside. Yeah, I guess one of the lessons is there are some times when enduring consumer behavior changes create a profitable scale of business like DoorDash and they have consolidated and they've, you know, look, Uber has also performed very well and Spotify has also performed very well. So it seems that when you have these kind of

platform companies which are basically interfaces, they're apps, right, and they procure either the content or the delivery service on the back end, they've all worked reasonably well lately. So in terms of Zoom video, I think it probably is a little more likely to be commoditized or couldn't necessarily be scaled in a profitable way to get people to pay for the service in huge numbers

and at a huge margin. Then I've got to ask you generally about this market and the way it reacted to the bond market today. Is that now, at least until we get more headlines, the tail that's wagging the stock? It is, John. I mean, I do think that we always have a little bit of a kind of a mini crisis of self-doubt

in the equity market when you get to a new threshold in a hurry in bond yields. And that's what's been going on right now. And the idea that it's happening, not just because, oh, the economy's about to accelerate, or even because inflation expectations are surging, I think that has unnerved the equity market a little bit. But this was also a stock market that came into this week likely to be in search of an excuse to pull back a little bit. So it's not clear to me that this is somehow going to just feed on itself into a downward spiral. We'll see if any buyers show up in treasuries at these high yield levels that might actually allow the market to kind of gather itself here. Yeah, got to write your narratives in pencil, not in pen.

Mike, thank you. Well, it's time for a CNBC News update with Pippa Stevens. Pippa. Hey, John, a judge today dismissed trespassing charges against Newark Mayor Ross Baraka, where he reprimanded federal prosecutors for arresting a public figure as, quote, a preliminary investigative tool. Meanwhile, New Jersey Congresswoman LaMonica McIver didn't enter a plea at her hearing and was released on her own recognizance. The Justice Department charged Baraka and McIver after a visit to an ICE detention facility in Newark.

Israeli military today said 108 trucks have been allowed into the Gaza strip since Monday when Israel lifted a nearly three-month blockade amid international pressure. But a spokesperson for the UN said aid has yet to reach those in need because of the security situation. And rap star known as Kid Cudi is expected to take the stand tomorrow in music mogul Sean Diddy Combs' sex trafficking trial. Earlier today, a former assistant to Combs, George Kaplan, was called to the stand by prosecutors who offered to

grant him immunity if he answered questions. Kaplan claimed that one of his duties was to clean up baby oil and liquor bottles in hotel rooms for Combs. John, back to you. Pippa, thank you. Shares of Lumen Technologies jumping in after hours, trading up now about, let's see, 12% after reaching a deal with AT&T, selling its fiber optics unit for $5.75 billion. Coming up, we're gonna talk to AT&T CEO, John Stanky, about the deal.

AT&T stock is up 20% so far this year, still pays an attractive 4% dividend. And take a look at shares of CoreWeave, soaring 19% today after announcing a $2 billion debt offering. The company's saying it intends to use the capital in part to pay off, sorry, yes, to pay off outstanding debt. We'll be right back. Welcome back to Overtime.

Stocks selling off late in the session. We close off the lows with still a percent and a half losses for the major averages. A weak bond auction at 1 p.m. Consider the catalyst as yields spiked, stocks fell. The 10-year yield hitting 4.6%. Alphabet one stock bucking the downtrend, the only mag-7 stock in the green today. That follows the company's I.O. event,

where the stock didn't respond yesterday, but hey, today's a new day. Target closing 5% lower after a drop in sales and cutting its outlook and checking in on the names that reported results at the top of this hour. Snowflake and Urban Outfitters, both nicely higher. Snowflake up seven and a half, Urban Outfitters up a little more than nine. Zoom with just a fractional gain. Now let's turn to Washington.

President Trump meeting with a group of House Republicans that are threatening not to support his budget bill unless more changes are made. Our Eamon Javers is at the White House with the latest details. Eamon. Hey there, John. President Trump just began an event here with the Florida Gators, which is how we know that the off-camera event with the House Freedom Caucus, that conservative Republican group you're talking about, is over, or at least the portion of that meeting involving the

president has come to an end because the president has gone into his next session. We don't know how that meeting ended. We don't know if they came to any agreement. What we can share with you are some of the things that the House Freedom Caucus were looking for. These are the most conservative and fiscally conservative members in the House of Representatives, and they're looking for deeper spending cuts as part of this deal.

They also want a faster phase-out of green energy tax credits, and they want faster implementation of work requirements for Medicaid. They're very concerned about the impact on the deficit of this bill. The White House for its part wants these guys to buckle down and vote for the bill. They want to pass it as soon as today. There's real questions about whether or not that can happen and a lot will depend on what went on in that meeting. We know that Speaker Johnson was here for the meeting. He's eager to move forward as well.

Whether he has the votes or not, we should find out fairly shortly, John. Back over to you. All right, Eamon Jabbers, thank you. You bet. Well, we've got shares of AT&T that are, let's see, fractionally higher now after announcing it is buying Luhmann's mass market's fiber business for nearly $6 billion.

CEO John Stanky is going to join me next in a first on CNBC interview. And later, find out why stocks are not getting too spooked yet about the government's high debt. Be right back. Welcome back to Overtime. And TNT shares slightly higher here in overtime after the company announced plans to acquire Lumen's mass markets fiber business for just under $6 billion. That stock, Lumenoming up about 14%. That acquisition would involve about a million fiber customers and 4 million locations across 11 states. Joining

me now from AT&T headquarters and first on CNBC interview is John Stanky, AT&T chairman and CEO. John, good to see you. So questions about this deal. First of all, how it makes money for AT&T. The street knows that fiber is a big part of your strategy overall. What's the penetration of fiber customers within these Lumen areas? How different is that from what AT&T fiber tends to have within its areas?

And how much is closing the gap going to be a benefit for you? Well, John, it's good to see you and I think you hit one of the key areas that we think is really attractive here and these are under-penetrated fiber areas and they're undeveloped. So it's gonna be a combination of us bringing our distribution, our great products,

our know-how of how to penetrate these markets and bring them out from the mid-20s into what we see in our footprints over 40% typically and probably a terminal penetration closer to 50%. So this transaction makes sense just on running the fiber business better, but there's also an under-penetrated dynamic for us on our wireless business. We're undershared in many of the major metropolitan areas that were picking these assets up,

Seattle, Phoenix, Denver, Salt Lake City. And so we expect that by doing this well, we can certainly help our wireless business as well. And that's gonna be really good. But we do have to invest and that's gonna require us to put some money into it and make sure that we hire people and put some great infrastructure on the ground. So should investors view this as a new kind

of bundle opportunity in those areas where Lumen has fiber customers and AT&T wireless is under penetrated, perhaps also a churn reducing opportunity based on what you've tended to see when customers have both fiber and wireless from you? You hit the nail on the head. Where we have fiber we win and when we have fiber we do a better job of putting both products together as we shared with you four out of every ten AT&T fiber customers or wireless

customers. And so when you look at our penetration in these markets on both products and services there's a lot of upside on this. This really is a story about growing on that asset base and driving new revenues and opportunities in these markets. Starting just over 20 years, under 20 years ago, we got the smartphone for the first time as the sort of chief sales device for the wireless network. Right now, I think we're waiting for what might be a new cycle around AI in the smartphone. In the meantime, is it really going to be maybe fiber that's a seller of the wireless

network as we wait for AI in the smartphone? Well, I don't know that I'd go that far. I think that what we clearly see and what we're building the company on is a belief that the need for more data, that workloads on the networks are going to increase and AI is going to be one of those big drivers of those workloads. And so when you start thinking about things like machine vision, taking video and analyzing video in a variety of different ways, whether it's through robotics, it's through autonomy, it's through security. We think those workloads are going to continue to grow and fiber becomes a really important

part of that story coupled with wireless because it's fiber that has that symmetrical bandwidth right back up into the network that makes it so effective at shipping video up and fiber becomes not only a great way to service somebody's household or business but it's also really important to distribute wireless networks out deeper so that you get radiating points closer to customers that increases bandwidth at the handset or whatever camera might be connected to a wireless network and that's why this infrastructure is so critical moving forward. Makes sense so tell me more about how this infrastructure is so critical of moving forward. Makes sense. So tell me more about how this deal is structured. You say you plan to sell part of Network Co,

which is what this will be to another partner. Are you thinking like 49%? How much financing from the outside might you be looking for? Yeah, so as you know, we have some different arrangements today. We're gonna bring the asset entirely in-house as we go through. We're taking sole responsibility for the regulatory approval and to close the transaction. We will bring it entirely on AT&T's balance sheet the day we close.

And then we will market a portion of the infrastructure, the infrastructure into a shared venture. We have a gigapower venture today. You should think about it possibly being something very similar to that where we have an equity partner who chooses to come in and participate in the network company economics and allows us to take some of that asset off the balance sheet and also have a partner who brings additional equity. And this is what makes it so very efficient to us. It allows us to continue to be focused on the three-year guidance that we gave at our investor day in December. We don't change any of that dynamic. We don't disrupt any of the long-term financials that we've reported.

They're they're de minimis in terms of their impact on those things. It allows us to use cash efficiently moving forward and continue on our shareholder returns, but it still drives incredible investment returns for us and puts us in a position in the market where we're not only number one in fiber like we are now, but that gap keeps getting bigger. And ultimately wind up with 60 million fiber homes by the end of 2030 and beyond that, we could be talking about 60 million fiber homes by the end of 2030. And beyond that, we could be talking

about 70 million fiber homes. OK. Well, finally, on the consumer, which is credit strapped in a lot of cases right now. I know they're not going to give up their phones anytime soon, but do you see them trading down? Look, I don't see them trading down. I see probably what happens in a tempered economic cycle if we were to enter into one

as we tend to see consumers choose to hang on to their handsets a little bit longer and maybe defer buying the new one. That's been something we've seen in the past. And we see them obviously making some discretionary choices on buying up in a cycle. But typically we see current ARPUs remain pretty stable with our customer base and we're blessed by having a very, very robust and solid customer base. And I think that's why we've been as resilient as we have in more tempered economic cycles.

All right. Thank you, John Stanky, AT&T's chairman and CEO. Well, stocks selling off today, but up next, Mike Santoli is going to look at why large-cap stocks have been able to hold up well despite concerns about the government's fiscal mess. Plus, Hinge Health could price its IPO any minute now. We're going to bring you that news as soon as it happens. And you can catch a first-hand CNBC interview with Hinge Health's CEO, that's tomorrow, 11 a.m. Eastern, on Money Movers. 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. Welcome back. We've got a news alert affecting some of the healthcare names. Bertha Coombs has the story. Bertha? John, this afternoon the Centers for Medicare and Medicaid Services saying that they are going to expand their auditing of Medicare Advantage plans.

That auditing between 2018 and 2024, they say, has fallen behind and they are going to put new resources to speed that up. This afternoon we are watching the Medicare Advantage players sell off. UnitedHealth was already lower today. But this afternoon, we're seeing extended losses for them, as well as peers, Humana and CVS Health.

Met Met Oz, the CMS administrator, says, we're committed to crushing fraud, waste and abuse across all federal health care programs. While the administration values the work of the Medicare Advantage plans do, it's time CMS faithfully execute its duty to audit these plans, he says. This is somewhat surprising, John, because many people thought of him as a real advocate for Medicare Advantage. He had been when he was on his show previously.

One of the things they're going to be doing is they're going to be spending more on technology, and they're going to boost the number of coders from the current number of 35 to 2,000 by September. Back over to you. Yeah, significant overtime move. Bertha, thanks. Well, stocks may have sold off today, but they've been able to stand their ground as government debt comes under scrutiny. Mike Santoli is back to explain more.

Mike? Yeah, John, so this might just stand as one buffer against the federal deficit situation. So here's a compare and contrast between the US government debt to GDP over a long span of time. This goes back to the mid 1980s. That is the blue line here. And then the S&P 500 public companies,

their net debt to market cap, which has gone nothing but down. Part of that is the index is dominated by these massive, hugely profitable, cash-rich companies in technology, but also there's just less leverage in general in the private sector. One other way of expressing a government deficit is a private sector surplus, after all. One result of that, corporate credit is actually looking very firm at these levels. Even though treasury yields are going up, the spread that you have to pay if you're

a company above treasuries is relatively low. This also goes back to the mid-80s. And you see, you know, spreads have kind of perked up a little bit, but they qualify as what would have been rock bottom levels before. So, you know, the corporate sector is in a better position than you might otherwise expect. It doesn't mean that the cost of money on treasury yields can go to the moon and equities will remain kind of complacent about that, but it's worth noting the offset. All right. Sounds good. Mike Santoli, thank you.

Yep. Well, age ain't nothing but a number, at least when it comes to cars, but the average age of cars hitting new highs. Up next, find out why Americans are holding on to their cars longer than ever. And we are still awaiting the pricing of Hinge Health's IPO. We're going to bring you that number as soon as it's announced. Over time, we'll be right back. Welcome back to Overtime. This 2011 Honda Odyssey belongs to an overtime producer who we'll call Paul, because that's

his name. It has more than 120,000 miles and as you can see from the duct tape, has been Paul's ride or die. And he's certainly not alone, because more Americans are keeping their cars longer, and the average age of vehicles in the U.S. is about as old as this Honda. Wall Street's paying attention.

Bank of America upgrading AutoZone from neutral to buy, hiking its price target from $3,900 to $4,800, citing in part consumers holding on to and repairing existing vehicles. Phil LeBeau has the details. Phil? John, I want to show you a chart. This comes to us from S&P Global Mobility, which every year analyzes all of the vehicle registrations in the United States.

By the way, there are about 289 million vehicles on the roads in the United States. By the way, there are about 289 million vehicles on the roads in the United States. Check this out. The average age now is 12.8 years, up two months compared to last year. That is a record high. And by the way, 32% of all the vehicles in this country, more than 92 million, 32% were built before 2010. So why are people driving their vehicles longer, even if they are 10, 11, 12 years old, or even older than that? A couple of things new model average price right now is just under $49,000 close to an all time high. The average new model auto monthly loan payment $741. That's just a few dollars from a record high. And then you

say to yourself, okay, well then I'll go into the used market. Well, guess what? Used auto loan payments, right now the average is $533. $500 or more for a used monthly payment, there was a time when that was closer to $350, maybe even $400. Bottom line is this, as you take a look at shares of Carvana, one reason why Carvana has taken off is because demand for used vehicles, and we're also showing you CarMax, but demand for used vehicles, it's not slowing down.

More than roughly 40 million used autos were sold last year, and as S&P Global Mobility points out every year when they do this report, John, people are looking at the numbers and they're saying, if the reliability is there, it may not look that great compared to the newest model out there. But I'm happy driving a 1517 20 year old vehicle. John back to you. Paul, Paul's car is kind of our avatar here. In this

conversation, Phil, we're in a situation people are holding on to their homes longer. John Stanky was just telling us they're likely to hold onto their phones longer. They're holding onto their cars longer. There are implications here for insurance, aren't there? And for repair costs, if what you've got isn't worth as much as maybe what people used to have,

and you're paying more on it for longer? Well, there is that possibility, but also keep in mind that a number of people have been driving vehicles that are far better made than they used to be. Look, John, 30 years ago, if you said to somebody, I've got a 20 year old vehicle, they'd chuckle. They'd be like, come on,

are you really driving a 20 year old car? If you're driving something that was built in 2009, 2010 right now, the reliability, anytime you get past the mid right now, the reliability, anytime you get past the mid-90s, the reliability dramatically improved on the vehicles that were sold. And that's why people are more comfortable driving these vehicles. And you showed AutoZone, we'll hear from them next week when they report their quarterly

results. People are taking a vested interest in saying, what can I do preventative for keeping my vehicle rolling longer? Duct tape, fill the bow. Thank you. You bet. Before we go let's get you set up for tomorrow's big slate of retail and software earnings. Before the bell we'll get results from advanced auto parts, BJ's wholesale, Raff Lauren and analog devices. Right here on overtime we'll break down numbers from Intuit, Autodesk, Workday, Ross Stores, and Uggmaker, Deckers Outdoor. And on the economic front, investors will be digesting the weekly jobless claims report

as well as April's existing home sales data. It was a rough day for the markets today, but we'll see what tomorrow holds. For now, that does it for overtime. Fast Money starts now.