Power Lunch - 199K Jobs Added, 2 Sides of ‘Gemini’ 12/8/23

Episode Date: December 8, 2023

The U.S. added 199,000 jobs in November, more than expected and contrary to signs the labor market may be “cooling.” We’ll break down what it means for the Fed and markets.Plus, Google unveiled it’s new AI tool “Gemini,” and the stock soared. But now we’re learning more about what it can really do. We’ll speak to an analyst about what it can do for the stock. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch alongside Kelly Evans. I am John Ford. 199,000 jobs created in November. That's more than expected. And contrary to other signs indicating the job market might be cooling. Wages are also higher, which doesn't necessarily help the inflation picture. We're going to break it all down what that means for the Fed and the markets. Plus, Google shows off its Gemini tool. The stock soars. But now we're learning more about what Gemini can actually do. We're going to talk to an analyst about what it might do for the stock.

Let's get a check on the markets, though, as we saw mild gains after the stronger than expected payroll numbers this morning. That's still where we are this hour. The NASDAQ strengthening somewhat, up one-third of 1%. The Dow up 80, the S&P up 11, just four points shy of 4,600. Bond yield sprung higher, but not too much, about five basis points around 423. If you look at the weekly numbers, NASDAQ and S&P are on pace to extend their winning streaks to six now, although the Dow is down about a tenth of one percent. S&P's got a little margin there, NASDAQ, a little. more safe. And speaking of good weeks, let's check out Bitcoin around 44,000 right now, up 13% this week

and 160% this year. And we start now with that better than expected November jobs report. Almost 200,000 jobs created versus 190,000 estimated. The largest jobs increased coming in health care where 77,000 jobs were added. The unemployment rate also fell unexpectedly to 3.7%. Let's get some reaction from Karen Kimbrough, chief economist at LinkedIn. When you see these numbers, how much do they line up from what LinkedIn is actually seeing on the platform? Job openings were down, which some people feel like is a good sign that the market is cooling, but wages still hanging in there and people are still getting work. Yeah, absolutely. So the signals on our platform are exactly what we're seeing in the data.

We've been saying for a while that health care had a lot of momentum, I mean, easily 18 months. We've been just seeing job growth in the healthcare space. We've been seeing a lot of momentum in construction since earlier this year, like February 2020. So a lot of what we're seeing now is exactly what we've been seeing for a while on our platform. One of the more interesting things, though, as you point out, much stronger than expected kind of labor market.

I mean, we were looking for maybe 170,000, 180,000. So this beat our expectations. but we're seeing a little bit of stabilization in the tech sector. You know, it's been struggling for a while, a lot of layoffs in that space. And now what's happening is a bit of momentum, actually a little bit of increase in hiring in the last couple of months in that space. So that's something that we're watching going forward. Are you seeing other signals that employer leverage is strengthening?

I seem to remember there being some reduction in the availability of remote work, for example, as more employers are saying, hey, we really want you back in the office. Are those signals there as well? Yes. So as you may remember, and you point out, there was a point in which it felt like the job seeker or the employer had a lot more leverage that may be starting to shift. Employers definitely want to see folks back in the office. They're now negotiating not for five days a week, but just three days a week come into the office. But we still see a lot of preference by job seekers for those remote roles. They apply to those in greater quantities than they do for the on-site role. But hybrid seems to be the place where we're

sort of jelling where really there's a kind of consensus that hybrids where we're going to be going next at least. Now, really interesting point you make about the leverage because one of the other aspects of the leverage is whether or not people are moving jobs. And what we're seeing is a lot of people are still kind of staying in the job that they've had for a while. There's not as much churn as there was two years ago. So the true test of what the leverage is is when we start to see quits rates maybe pick up again. And that may be much later into 2024 before we see that. And a lot of people are still telling you, Karen, as well, that they're looking for a new job next year. What does that tell you?

Yeah. So many people are now starting to say that they plan to look, 40%. Say they plan to look for a job next year, especially millennials and Gen Z. And so members on our platform are signaling that, like, you know, I've been in this job for a couple of years. I like it. I want to stay put in case there's a recession. But as people start to think maybe there's no recession, maybe the soft landing is a reality, they're going to start to explore options for next year. So I think the true test of what happens is when we start to see that churn pick up. But in the meantime, what I will tell you is for those who are job-seeking now, they're applying for more roles than they were in the past. And that's a sign of job-seeking intensity,

that people are starting to feel a little bit more motivated to go out there and get a job than say a year ago or two years ago. So that job-seeking intensity by the job seeker is really picked up. I'm also curious about the labor market mismatch. You know, there was a report yesterday about New Jersey's rising unemployment rate. And one of the issues there is that finance has had some layoffs in areas like health care that are still hiring are not going to absorb the people leaving that industry per se. You've also seen some changes, maybe tech information, media slowing. How much is the mismatch behind kind of the labor market today?

I think this whole labor market in the U.S. is really a story of different industry. industries peaking and troughing at different times. You know, remember the tech boom that was happening in 21, 22, and now there's a lot of softening in the past 12 months or so. At the same time, like retail is now starting to soften a little bit. There are fewer jobs there, not by a lot, but just fewer jobs there. And health care remains strong. So to your point, finance has been a little soft, professional services like consulting. Those have also been a little bit softer in the past. So everything is sort of happening at different times. And to your point, that means you get a little bit of a mismatch. All right. Karen, we'll leave it there. Thank you so much

for digging through the data a little bit more with us. Karen Kimbrough with LinkedIn. Stocks are little changed with the S&P on pace to snap. Well, it looks like it could make a six-week win streak. We'll see how today shakes out after this morning's jobs report. Former Boston Fed President Eric Rosengrin did weigh in on what the jobs data means for the market. Take a listen. From the market's perspective, it's probably a bit stronger than they were hoping for. Embedded in the bond pricing right now is some pretty significant rate cuts over the course of next year. I'd be very surprised if those are ratified if we continue to get the kind of data that this report shows. So he's saying maybe not so fast on those rate cuts for more on what today's jobs data means for the Fed and for the markets going forward.

Let's bring in Dryden Pence, Chief Investment Officer with Pence Capital Management, and Michael Santoli, our senior markets commentator here on set with us. Welcome to both of you. Dryden, what do you think? You have to worry now about the Fed staying in the picture? Well, I think we're of the opinion that it's really kind of switched from higher to longer to how low, how fast. And we think that probably the Fed is only going to maybe do one or two cuts next year. And that we think that we're going to be in this higher regime.

If the market is pricing in five or six cuts, I think they're going to be wildly disappointed. I think it's going to be maybe one, maybe two, because the economy is still quite strong. And we think that that's going to be the dynamic that's going to be surprising people. Okay. Michael, what would you add to that? Because we see the market not necessarily coming around to Dryden's take yet, but Chair Powell will have a big opportunity next week to either say, no, we really are going to be higher for longer or not, as he's been hinting more recently. Yeah, or maybe he just uses the opportunity to say we have a balance in policy, we see balance risk between inflation and potential weakening growth. To me, it's about which market we're talking about counting on and needing rate cuts.

To me, the stock market right now is not at this level because it's assuming we get 100 or 150 basis points of cuts next year. Really? It's because we have peak fed, peak yields, peak oil, and all those things that suggest we have a little more of a sustainable moment in the experience. expansion. At some point, maybe Powell will have to kind of, you know, forcibly snap the market's attention in a different direction. But right now, I think the Fed enjoys the luxury of kind of waiting, seeing, and letting things evolve. To me, disinflation, and especially when we got that on November 14th, the CPI report, confidence in the disinflation trend means good economic news can be good economic news.

And that's where we are until further notice, unless we see some stickiness in inflation. Yeah, Dryden, I mean, the way that I, took this jobs report this morning and correct me where I'm wrong here. It's like we're driving on a flat road now. And as Mike was saying, if you break, that's a good thing. If you accelerate, you're not necessarily going to lose control of the vehicle. But do you feel like that is where we are or were there enough danger signals in the number here to suggest that the Fed might have to do something at the market's assuming it won't? Well, I think the point is, is we're going to switch to this regime where good news is good news.

and that I think the Fed does engineer the soft landing. And as they do that, you're going to see the, from a market standpoint, you're going to see earnings continue to grow. You're going to see some more stabilization. You'll probably see small caps do well. So I think the point of the matter is, is everybody's been thinking that the Fed got it wrong, and this may be one of those cases where they've got it right. So we get this moment where they do stick the soft landing.

And I think that that's going to be really good for the markets in 2024 and 2020. So, Mark, when's the next test? Is it these post-holiday season earnings? It might even be, you know, next week's inflation number. I mean, you know, anything can disturb things because it's important to remember where we came from six weeks ago and the advantages, so to speak, that we had six weeks ago, which is markets were hated, they were oversold. People thought that the economy couldn't handle that level of yields. Yields were spring-loaded to actually move hard to the downside just for mechanical reasons because they got overdone, and oil all of a sudden fell out of bed. So all those things have managed to feed the

where you have risk appetites rising. Maybe we get a little more confidence in fourth quarter and the attainability of fourth quarter and first quarter earnings. That remains to be seen. Right now it's a little more of an equilibrium point where it's like, okay, maybe people aren't totally overaggressive over their skis and loving the market, but soft landing, I think, is now the central consensus. Do you think the upside's capped? Because either the economy gets hot enough that the Fed has to do more or it cools down enough that we start having those discussions again. Yeah, I mean, that's very plausible that we might be capped. at that level. I mean, I keep going back to the idea, though, that we were at 4,800 on the

S&P almost two years ago. The economy is 15% bigger, nominal terms right now. Earnings are at a higher level. And so the market can do what it wants to do, as you know. But, yeah, I do think that it doesn't feel like there's kind of blue skies to the upside, only because you never really have a moment when you say the soft landing is here. You're still kind of in that, well, some cycles look late or some parts of the economy look like they're rolling over again. So I think we're still going to be in that mode of wondering what hits next. And Dryden real quickly, you're kind of wading it out in some of the defense stocks. Is that right?

Well, yeah, we like the defense stocks. We like Raytheon because it's, you know, war is profitable. And we've got two going on. And they have very key places. We also like Boeing because we think that they're now with a backlog of almost nine years worth planes. They're back having the 737 fly. And they're going to be selling, you know, 38 to 50 production. every month. So they've got really record demand and they're going to get back on track. So we think that it's kind of the soft landing for the Fed and it's the takeoff for aviation as we go forward. And I think Mike's point was really important. People have forgotten that we've got 4.5 million more people working than we did at the height of pandemic. If you take just the wages and salary,

we've added in aggregate demand the equivalent of the country of Italy, the eighth largest economy in the world. And so I think that's this underpinning that people may be underestimating that's kind of working us through this. Fair enough. Gentlemen, thank you, Dryden Pence. Michael Santoli, we appreciate your time today. Let's get now to Rick Santelli in Chicago for a look at how the bond market is reacting

to this jobs report. Rick. John, what a wild day. You know, I thought it was going to be all about employment and to some extent it was, but in many ways, University of Michigan stole the spotlight. If you look at a one-year inflation rate on a chart of 10 years, you can see what I'm talking about.

A couple of things to glean. First of all, just the volatility on the right side of the chart. Last month, 4.5, this month, 3.1 on one-year inflation outlook. Look at the choppiness there. And just generically, we're still higher than we were pre-COVID. That's a 10-year chart. Now, if you look at one of the big issues this week, it's been the short maturities are leading the way. They took over.

When we were going down, tenure was leading. Going up, two-year is leading. This is a one-week chart. As we stand now at what, 471, we're up 11, 12 basis points on the day. We're up 17 on the week. Now, let's contrast that with a 10-year chart. Ten-year chart's still aggressive, but it's up eight on the day, only up three on the week. And that's an important factor here, because divining what's exactly propelling the long end and the yield curve in general

is going to save many traders' strategies, a lot of money in the long run. Was it stronger than expected data that pushed rates up on the 10-year note, or is it more technical features reversing a historically large, short position that we ended up taking care of when we traded down to 410? That's the big question, and we're going to get some answers because next week we have both debt issuance and inflation data. Kelly, back to you. It will be a fun one for sure, Rick. Thank you very much, Rick Santelli. Meantime, let's take a look at the biotech space where shares of Bluebird Bio are resuming trade. The stock is down more than 30% even after getting a key drug approval.

Angelica Peebles is live in our newsroom to explain. And Angelica, we really have to kind of dig in here and give everyone the full scoop of what's been happening today. Pretty extraordinary. Yeah, Kelly, there's a lot going on today. So the FDA approving two treatments for sickle cell disease. One is from Vertex and CRISPR. And that is a treatment that uses gene editing. And then the other one that you mentioned is from Bluebird Bio.

And that's also a gene therapy. but it uses a different technology than gene editing. And shares are getting just slammed today, as you mentioned. And one of the things we noticed is that that gene therapy comes with a black box warning. So that's the strongest warning you can get warning people of the risk of cancer. And of course, that's not great. And also the list price is about a million dollars above the other one, Cass Jebby. So Bluebird is charging $3.1 million per patient, whereas virtually,

Texas charging about $2.2 million per patient forecast Jevy. And at the same time, Bluebird has faced a lot of challenges with cash. They had a going concern about a year ago. And they had actually pre-sold something called the priority review voucher. So they were expecting that upon the approval of this treatment, they would get a voucher that they could, it's like a fast pass, and they could then sell that to another company. But it turns out that they did not get one upon this approval. So investors probably have a lot of questions about the competitive competitiveness of its therapy and also the cash situation for that company here. Angelica, so is this a case where getting a rare case where getting a drug approval is as bad

as not getting one? You know, it's hard to say. Of course, it's a good thing if you have a drug. This is now their third approval in about a year and before they had none. So they have now, they now have three therapies that they could go out and sell. But it's a third approval. It's a they've faced questions because of these concerns about cancer, about how many people would actually want this treatment over the gene editing treatment. And now with that price tag coming in even higher and this risk of cancer that the FDA is flagging, they're going to face even more questions. So it's helpful to have something, but I do think that investors are going to wonder just how helpful this really will be for the company.

That's fascinating. Angelica, we'll continue to follow it, of course. we really appreciate your reporting on this today, our Angelica Peoples. Coming up, we'll have more on these drug approvals. In fact, we'll be speaking with the CEO of Vertex Pharma in just a couple of minutes here on Power Lunch. But first, Google unveiling its Gemini AI model. The markets loved it yesterday. Now we're learning more about what it can really do. CMBC.com's Jennifer Elias joins us with details about Project Elman,

and we'll talk to an analyst about what Gemini Cloud could mean for the stock. Stay with us. We're back in a moment here on Power Lunch. Welcome back. Google shares popped earlier this week when the company showed off its new AI models termed Gemini, but now we're learning the demonstration they showed wasn't exactly how it would work in the real world. CNBC.com's Jennifer Elias, also learning of internal plans to use Gemini to learn all about you through the data it has on each of us, which is a lot. The goal is to get Project Elman to be your life storyteller. Jennifer joins us now from San Francisco.

Pretty cool if they don't creep us out in the process, huh Jennifer? Right, exactly, John. Imagine you want to use chat, GPT, but instead of asking it about random facts or help summarizing text, you can ask questions about your family, friends, your pets, memories you might have forgotten from big milestones in your life, essentially a chatbot and storyteller for your life. Well, we've learned that a couple teams at Google have been working on just that

with the help of its newly launched AI model, Gemini, which it launched this week and purported to be its most powerful AI model. Project Elman is what is called, and we found that that is an internal Google proposal to use AI to help users get a bird's eye view of their life stories via data from their searches and Google Photos, according to internal documents that we viewed. Google Photos has more than 1 billion users and 4 trillion photos and videos,

so the idea would be to use large language models like Gemini, to ingest search results, spot patterns, and users' photos, create even a chat bot that answers, quote, previously impossible questions about person's life. So a team also demonstrated Elman Chat with the description that, quote, imagine opening chat GBT, but it already knows everything about your life. It also hoped to be able to summarize users' behaviors like eating habits, social interactions, work, and other items the users considering purchasing, all from folks. photo data and search data.

Google told us this is an early experiment and that it would take users' privacy as a top priority should it decide to roll out such features. But that's what we found, John. Yeah, Google's not going to make a trillion dollars telling people their life story, though. And it's interesting, the stock this year, Alphabet stock, has mostly told the story since February and that Microsoft and Open AI, you know, initial announcement of Google saying, not so fast, we actually do have an AI story to tell here. So is the idea that they're going to show these consumer applications for AI as sort of a marketing ploy to raise the profile of Gemini

while they really drive profitability and revenue and enterprise? Yeah, that's what we understand. I mean, again, it's not certain that this actually becomes productized, but you have to understand there is a arms race right now with Apple, as you know, to create more personalized items. So that includes photos. As you know in the last few years, all the tech giants have released some type of memory kind of product where they can surface more personalized memories from your life, from your media, from your phone and your devices. And I think that eventually kind of hopes to bring productivity to consumers. And essentially then if they have certain data that they claim to have that can be used in other ways, potentially. All right. They know a lot about us. Jennifer Elias. Thank you. They do. Thanks, John. And now, despite the recent backlash, my next guest says Google's Gemini does level the playing field across the broader gen AI landscape and believes this launch will provide some tailwinds in the new year. Joining us as Ron Josie. He's managing director and senior tech analyst at City. Ron, welcome. So you're looking past the lack of hype or something like that. What is the substance here?

Look, Kelly, I think 2023 is going to be defined largely as Google playing defense or call it catch-up. Catch-up to make sure they've got a large language model. They have barred that search is being innovative and things along those lines. And what we heard yesterday or earlier this week with Gemini is we see a now new foundation model that seems to be on par, if not a little bit better than what we're seeing maybe from GPT, chat GPD, out there with GPD4. And frankly, if we can get to those levels of at least call it even, maybe a little bit better, then we can see a greater focus on offense or call it innovation in terms of new projects. And so we just heard, you know, new ways of maybe servicing your own information on Google to make things easier or better.

I think you see something similar. And frankly, if you can drive engagement, then you can bring advertisers. At least advertisers can ramp spend even more and you sort of go back there. But, I mean, long story short, I think 20. 2023 is about getting to par, and 2024, hopefully, is building on top of that. And that's what Gemini helps them do. I guess when I look at the two stocks, and having very little technical expertise might be a help here because I look at Microsoft. I see a clear business use case. I haven't used it myself, but I've heard from some who have. There's an obvious application. You can kind of immediately put together some revenue and some earnings numbers from that. I look at Google's and it's way more amorphous. Yeah, and I think that's the case for most call-ad advertising-based models.

And search might be arguably the best business ever created. You search for something and you get an ad for it from a Google perspective. They were able to build on top of that with their call-it-Google Maps, with YouTube, of course, the purchase in 2027, I believe, you know, in all the Chrome and Gmail and everything else. And so one of the things that Google has done is just try to be more as relevant in our lives as possible. Bard was the first shot at that, and Bard's getting better every day. Search is being rebuilt, call it, or at least recast from our perspective, and that's that SGE that's now live in over 100 countries.

And so search is evolving. I think Google's trying to do that. And now at the very least, with Gemini, understood that it's not fully rolled out yet, and Ultra's coming here at some point. But at the very least, it gives us a view that, okay, maybe we can see them, call it, gaining back engagement or at least monetizing a little bit better as as advertising tools improved from AI right in addition to consumer-based tools so agree with you on being amorphous but that's sort of the challenge with broader internet segments I guess Ron lay this out for me from a strategic

perspective to me it looks like Google won at least in 2023 by not losing search share to Microsoft which Microsoft wanted to grab using AI that was the big announcement in February and now the question is, it's in third place in cloud behind AWS and Azure. And they actually gain share in areas where they're behind, whether you're talking about smartphones at the high end with Android where they're trying to build in kind of the nano version of Gemini or in cloud overall, since Google Cloud is going to be a big part of the go-to-market for this, right? Yeah, John, I mean, it all starts with innovation.

And I don't know if we could have this conversation if call it Gemini was not at least on par or somewhat better than GPT-4. And so I think you hit nail on head. I'm full agreement that everyone was worried that we would lose. Google would lose share because of what Bing was doing, because maybe even chat GPT. And what we saw was share is relatively stagnant. And I think the reason why is there's this halo effect around Google, product halo effect, where we use search, we use Chrome, we use Gmail, we use photos, we use maps. And the list goes on and on. And so when it becomes a part of our lives, it's really hard to disrupt that. Now, that's search. That's their question. more business around advertising and ads and usage and engagement. When it comes to GCP, they're a distant number three from AWS. And we all know the benefits that I think Azure is seeing from OpenAI. And so I think the big question is what happens here in 24 and beyond when maybe these optimizations attenuate, as Amazon likes to say a little bit more, and we get into using more

Gen AI into the enterprise. And, you know, what Azure is doing, they're clearly seeing the benefit. I think AWS is better positioned here. GCP, they've had a few good announcements with vertex and duet.a.i or duet AI. So we should see that. I think Gemini can only help. But, you know, it's funny. It's a number three player here in GCP on cloud.

Growth slowed down quite a bit here sequentially, decelerated in three Q. And we're looking to see that at least stabilized before we can start talking about, you know, the benefits of Gen. AI for GCP overall. Yeah, for now. One of the things AI can't tell us is who's going to win the AI wars. Ron Josie from City, thanks. How smart is it really? Not smart enough to trade yet. The FDA just approved two breakthrough gene therapies that could help cure sickle cell disease. Coming up, we're getting here from the CEO behind one of those treatments. Power lunch is back in two. Welcome back, everybody, a major medical milestone today as the FDA approves a drug to treat sickle cell anemia. What makes it historic is it's the first drug using gene editing therapy called CRISPR.

Investors looking at it, depending on the stocks, as a sell-the-news event. As the companies involved, Vertex is down about 1%. Crispar, seeing a decline of almost 9% today, bigger drops elsewhere. Joining us now is Dr. Reshma Rehima Kawal Romani. She is the CEO of Vertex, along with our own pharma reporter, Angelica, to dive more into this blockbuster news. Angelica, kick things off for us. Yeah, well, it's great to see you today, Reishma. We've been talking about this for a long time, but I want to start with the price because I think a lot of people will wonder, you know, about why this drug is $2.2 million per person. So explain how we got here and what the feedback has been from payers so far. It's good to see you, Angelica, and good afternoon all.

It's a historic day for patients living with sickle cell disease. This is a medicine based on CRISPR-Cast 9 technology. It's a gene editing medicine that holds the promise to be a one-time curative treatment. Sickle cell disease is a devastating disease. People who have this describe it as a Mack truck hitting them and the truck going up and down and up and down again. It's the kind of pain that people describe as worst in childbirth. And this is a medicine that holds the potential to do away with all of those VOCs or venoeclusive crises. We believe that The price of a medicine should reflect the value that it brings, and the value that this brings is a one-time therapy for potentially a lifetime of cure.

And we've seen some other companies that have offered sort of a money-back guarantee. Are you offering any specific arrangements with payers? And what has the feedback been so far? I have to tell you, we have talked to patients, physicians, payers, both in the private and on government side, there is unanimous enthusiasm for this medicine for patients with sickle cell disease because it's widely recognized that sickle cell disease, unfortunately, has been marginalized and there has not been innovation in this field for many, many years. And equally, the potential of Kastjevi has been recognized. So the feedback has been unanimous and positive.

And, doctor, if you could just sort of talk a little bit about this. It's a one-time treatment, as we understand. It carries a $2.2 million wholesale price tag. But do we call it a cure after people receive this treatment? Are they cured effectively? You know, as a physician, I don't use the word cure very lightly at all. But if you ask our patients, I think they would describe it to you as a cure. What this medicine does is it takes a patient's own stem cell.

We take it to our labs and we edit it in a very precise way and then return the patient's own cells to them. And with that return of their own cells with this edit, we give them this opportunity to live a life without these veno-eclusive crises. That's exactly what the power of this CRISPR gene editing therapy is. Rache, let me address at least what for me is the elephant in the room here, which is that sickle cell affects disproportionately African Americans, Hispanic Americans in this country, and yet at least initially, this procedure is going to be available in high-end hospitals where those populations tend not to have access. So how many people at these prices and at this level of complexity who are afflicted with

sickle cell are going to have access to this treatment? Sickle cell disease is a disease of black and brown people. And it is a disease, as I said, that has not had. a lot of innovation, and this is the first potentially curative approach. We have specifically opened what we call authorized treatment centers or ATCs where our patients are. Approximately 80% of patients with sickle cell disease live in 25 states, and we have specifically opened our ATCs exactly in those states where our patients are most present. With regard to the accessibility of this therapy, we're working very, very hard to make sure that all eligible

patients have access to this therapy. And just to give you some context with patients who have severe sickle cell disease, the cost of care, just the medical cost of care, not taking into account the humanistic burden is between $4 and $6 million over the lifetime of a patient with sickle cell disease. Incredible. I guess, Dr. my quick last question would be, what's next?

Whether your company or others, you know, if you can do this for gene therapy, then how many other potential cures are out there on the market? The reason today is so historic is this is the leading edge, the wave of a movement from chronic therapies to potentially

curative therapies and the first CRISPR-based therapy to be approved in the U.S. For Vertex, what's next? We have programs in pain and in type 1 diabetes and in a particular kind of kidney disease. And, of course, our work continues in CF. Much more to come. Thank you so much.

We really appreciate you joining us today, along with our Angelica Peebles, and for all your reporting, Angelica, on this issue as well. There's a lot more to talk about on this topic. The CEO of CRISPR will join Closing Bell overtime for an exclusive interview Monday at 4 p.m. Eastern. Love that show. Let's get to Bertha Coombs now for a CNBC News update. Bertha. John, an appeals court ruled today, New York can keep enforcing state laws that ban firearms in sensitive locations such as schools and government buildings.

However, the panel rejected a part of the law that required people applying for concealed carry permits to turn over a list of their social media accounts. The U.S. Circuit Court's ruling is one of the first broad reviews of new gun measures since the Supreme Court. gun rights expansion last year. And in Kentucky, a pregnant woman filed a lawsuit today demanding the right to an abortion. She is seeking class action status for her lawsuit so other women can join. She claims Kentucky's near total abortion ban violates her right to privacy and self-determination under the state constitution. And Tulsa police are sharing video of a man allegedly firing 17 shots toward the department's helicopter. Police say the chopper was flying over the area because of reports of shots fired.

That's when they encountered the man who apparently turned his gun on them. A helicopter was not damaged and no one was hurt. Scary, John, back to you. Yeah, Bertha, thank you. Coming up, a regulation situation. Microsoft's partnership with OpenAI now facing antitrust scrutiny from lawmakers here and abroad, we'll get the details when power lunch returns. Welcome back. It's time for tech check, and regulators in the U.S. and the UK are now reportedly

taking a closer look at Microsoft's partnership with OpenAI. Dear Jabosa has more details out west. Deirdre. So, Kelly, in a world of increasing regulatory scrutiny, Microsoft's deal earlier this year with Open AI, it seemed almost perfectly manufactured. Microsoft got a stake in the generative AI darling in exchange for an exclusive cloud partnership, OpenAI, got the compute power it needed, and an established enterprise tech giant with a Rolodex of Fortune 50 companies. And it made Microsoft more powerful than ever in this AI arms race all while bypassing the FTC and the DOJ. About a month ago, when I saw Lena Kahn speak at Wycombinator on her West Coast listening to her, it seemed like the Microsoft Open AI deal would be safe from scrutiny, as the FTC focused on

big tech's core businesses, like whether Amazon e-commerce was hurting competition. In fact, Kahn was directly asked if she would look into Gen AI deals and she said that they were thinking about it. Most of the founders that I spoke to after that talk took that to mean that there wasn't going to be action anytime soon. But now, Bloomberg is reporting that Kahn's FTC is actively examining that very investment and whether it may violate antitrust laws. We reached out to the agency and got a no comment. The report, though, says that this is preliminary There isn't yet a formal investigation. So this may not go anywhere, but it is interesting to think about what it tells us about U.S. regulators.

They're often criticized for being slow and fighting yesterday's regulatory battles. This could signify a shift to quicker, more nimble FTC, despite several significant setbacks during Kahn's term. It could also tell us that these huge multi-billion deals that Mega CapTech has been striking with AI startups won't be as easy going forward. Now, we covered the structure and the questions around these investments a few weeks ago in a tech check weekly deep dive. We called it mega caps, mega deals. You can find that and others at CNBC.com slash TC Weekly or just follow the QR code on your screen. Guys, the term to watch out for is relevant merger situation. So not an all-out merger or an acquisition, but a relationship that effectively impacts competition for the rest of the market.

So that would be something that that. the regulators would be looking for in that Microsoft opening idea, which you covered a lot, John. All right. Deirdre, thank you. Kelly, all that idea to me just basically makes no sense. Have they heard about Gemini, Bedrock? I mean, there's competition. It's a running theme on this show. Anyway, shares of Lulu Lemon hitting a record high as the street shrugs off after than expected guidance.

We're going to speak to an analyst who's doubling down, raising his price target on it, stretching into it. Power lunch, we'll be right back. Welcome back. Shares of Lulu Lemon up 6% all-time highs worth about a third of a Nike, a little bit more than that, after beating both on the top and the bottom lines the latest quarter, but also warning of a tepid holiday outlook. Our next guest raising his price target to $540 from $450 a share, saying demand growth remains solid. Let's welcome in Brian Nagel, senior equity research analysts in retail hardlines and broadlines.

at Oppenheimer. Brian, does Lulu's ability to hold price and still get decent revenue outweigh the necessity to grow at this point? Well, good afternoon. Look, it's an interesting question. I mean, I think they're doing both. You know, and that's what's really quite amazing about this story. And I think it just speaks to the power of this brand and frankly the power of the products they put out there. I mean, you know, here we are in a, you know, somewhat challenge. We can discuss that somewhat challenged macro backdrop in Lulu Levin. which is a higher-end, arguably more pricey brand, is selling products really effectively and at full price.

You know, and I think that just speaks again to the power of this brand. And I think that's one of the reasons we're seeing this stock now performs so well. So how have they done it? I mean, I remember a few years back there was this whole, you know, who should be wearing these stretchy pants and who shouldn't phenomenon. It seems to get to the next leg. Maybe they need more of a Nike. level of marketing where they're endorsing athletes and, you know, telling people what they're all

about. I don't have that feel from them. Is that just not necessary for a premium brand now? Well, look, the way I would say, this may sound a little funny, you know, I've studied Lulu Lemon now for a while, and I know the company very well from an analyst standpoint, but it's growing up. You know, they're kind of finding what they are. They're more effectively speaking to a much broader audience. You know, so like you were saying, John, I mean, not that long ago, Lulu Lemon was a brand, a yoga brand, really geared towards a niche market, and that niche market being higher income, primarily women who likes yoga. Today, if you look at, if you come with a fresh set of eyes and look at Lulu Lemon, this is much more of a lifestyle brand.

Sure, they still have their core yoga product, but they're doing more everyday wear. I spend a lot of time in their stores. You know, it's incredible what they're doing with outdoor. You know, the bumper jackets now in seasonal colors in the front of the stores, what they've done in men's. Men's is phenomenal, but it's becoming much more of a lifestyle brand. They're just basically finding out who they are. And by the way, Brian, where does the stock go from here real quickly to 492 today? Well, look, I mean, I took my price stock up to 540. I know that seems high. It's at a new all-time high today, but frankly, I mean, given the underlying potential of this brand, this company, I think it goes a lot higher over time. Fifty-two percent gain

this year. Merry Christmas. Brian, thanks so much. We appreciate it today. Brian, Hegel says it can keep going higher. Speaking of Lulu, those shares and that rally, I mentioned, giving Ryan Reynolds and the Mountain Goats a boost in our CNBC stock draft standings. His team up 34% for April, good for third place, but they got nothing on Charlotte Flair. She continues to lead the way, thanks to her picks, Invidia and Meta. She's up 56% with two months left in our contest. Lucky.

All right. A head on Power Lunge, a furniture flop. Chairs of R.H. plunging in an earnings miss. We're going to trade it. and other movers in three-stock lunch. Coming up back. Welcome back, everybody.

It's time for three-stock lunch, and today we're taking a look at some of the big movers. Starting with Honeywell, which is down after the company announced its purchase of air conditioner-maker-carrier. I've got to mention this as a Syracuse girl at heart. Their security business, it bought for nearly $5 billion. Here with our trades today is Adel Zaman.

He's a partner at Wall Street Alliance Group. Adele, welcome to the program. Would you be a buyer or a seller of Honeywell? We'd be a buyer of Honeywell because, you know, this goes back to the broader conversation we've been having where the gains in the market have been concentrated in the magnificent seven. And now we feel that companies like Honeywell, which have been lagging the market, this is the opportunity of the breadth in the market is improving for these companies to start to participate.

And Honeywell is a great company. You know, they have a very strong, very well-diversified industrial company, a solid balance sheet, pays a great dividend. We feel that now the breadth in the market is going to improve. So laggards like Honeywell will start to do well. All right. Up next, Paramount shares jumping 14% today after multiple reports that say Skydance and Redbird Capital are pursuing a takeover of national amusements, which owns a majority of Paramount's voting shares. Addo, what's your trade on Paramount? This would be a resounding sell because, you know, Paramount, the stock's up,

It's popping based on the sales potential. And then last week, it popped based on the collaboration with Apple. Although both these scenarios, if they play out, it'll potentially be good for the company. But the stock in the past one month is up more than 30%. And we feel that without these occurrences, as the business stands by itself, this is a very difficult business to make money. And cable TV is a very tough business in this environment. How dare you? No, I do love the passion people have about Paramount one way or the other. What about RH, formerly restoration hardware? The shares are down 13% now after a third quarter miss and narrowing their full year revenue.

What's your trade? Another, I'm afraid, Kelly, another resounding sell, because in this environment where the consumer is being very careful about what they spend on, they're not looking to buy expensive furniture right now, right? with people like me who've locked in a low rate, rates being up, we are not looking to move our homes. And when you're not looking to move your house, you know, the need to buy expensive furniture is just not there. And we feel that Mr. Buffett, who Berkshire sold out of the shares earlier this year, was right on the money over here. So for us, we feel that, you know, this company is going to continue to suffer, I'm afraid. So we'd be a seller. Well, we don't work for R.H. So we won't take it so personally.

Adil, thanks for joining us today and for giving us those trades. We appreciate your time. He might be selling, but investors have been buying the major indices near session highs across the board. That's going to do it for Power Lunch. We'll see you in a couple hours, John. Thanks for watching, and closing bell is up after the break.