Power Lunch - 25 or 50?, Powerhouse Blueprint: Food Prices 9/16/24

Episode Date: September 16, 2024

The markets are counting down to Wednesday, when we’ll get the answer to the question that’s been on everyone’s mind: 25 or 50? We’ll break down all the rate cut scenarios in play for the Federal Reserve this week.Plus, rising prices for food and groceries continue to be a thorn in the side of consumers. We’ll dive into the economics of it all in the latest edition of our Powerhouse Blueprint. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us on a Monday. The markets are waiting for Wednesday when we will get the answer to the question. Everyone has been asking a quarter point or a half point cut. And right now it's almost 50-50. And I can't remember a recent meeting where it's been that uncertain this late into the decision. I think you had a guest on in the last hour. We said that the Fed's general tendency is to move cautiously. I think that is probably what they'll do this time. And he and many have pointed out. out, usually they only go half a point when it is the onset of a recession. So be that rates may be too high. You read Greg Gibbs piece. Many people have been saying this, but there's still this institutional sense that they should do 25. I'm betting on a quarter, a quarter and a quarter as we go out to the end. Meeting, meeting, meeting. All right. Our trader will have stock picks for us, depending on not just what the Fed says Wednesday, but what it does. Of course, we're also watching moves in pharma. Pfizer is higher after some drug news, and we're looking at the new wave in cancer treatments.

There's a move that some of the pharmaceutical companies are pioneering here to develop really highly targeted specific drugs that can actually go right where the tumors are and bring either radiation into those areas or medication into those areas. And it's a very exciting field, very complicated biochemistry, obviously. Well, and for Pfizer in particular, now that people have kind of looked past its COVID pipeline, I think for Moderna the other day, this was a big issue as well. the company, seeing some pessimism about whether it can bring to market in a Broadway, this combo fluid and COVID vaccine, it is also looking to cancer drugs to be the next big thing. I think Angelica peoples is on site at one of the big European cancer conferences, so we're going to hear a lot more about this. And how about Apple?

It's falling today on concerns about weak demand potentially for the iPhone 6. It hasn't even started selling yet, and they're worried about it. So when Apple sneezes, of course, its suppliers get pneumonia. You can see some of the big moves here. I guess the concern is that this Apple 16 is going to enable AI applications, but that those applications may not be right now ready to go. Contra the Fed, you want Big Bang, whizbang, sort of attention-grabbing if you're trying to drive a big upgrade cycle. And the announcements of the lineup last week made it clear a lot of these features aren't going to come until iOS is updated in October.

So what's the urgency? And there you have it. We've also got some news out of Intel just moments ago. Let's bring in John Fort with those details. John? Hey, Kelly. We've got the announcement here. It's just across the wire.

The Biden Harris administration announcing Intel has been awarded an additional up to $3 billion in direct funding under the Chips and Science Act for what's called the Secure Enclave program. This is about manufacturing leading edge chips for the use of the U.S. government. Intel was already higher for the day, 3 plus percent. Now it's up close to 4%. This is probably not the last announcement that we're going to get from Intel today. As a matter of fact, we're going to have CEO Pat Gelsinger on overtime later today,

broadcast exclusive on this news. But this comes as Intel has been under a lot of pressure over its foundry program. That's manufacturing chips for others. It's something that Intel has not specialized in, In the past, it's tens of billions of dollars that Intel has been spending on it at a time when its core business has been challenged by the shift in attention away from CPUs, which Intel specializes in, more to GPUs that are being used in AI for accelerators. So we'll see what Intel further has to say about this and more when Pat Gelsinger joins us,

broadcast exclusive in overtime. But for now, Intel stock moving higher on this news of an additional up to $3 billion from the federal government under the Chips Act for the secure enclave program, guys. And obviously, I think, John, the concern here is for the military that they're not reliant on chips from China and that kind of thing. You know, Azwat D'Modran was on last hour. He said he actually was buying Intel shares last week, but that more broadly he wanted to hear the company say, we're not trying to be number one. We're just happy to be in a niche and in an area of demand, especially from the U.S., perhaps from the government.

That can be steady and consistent, and that that would be enough for shareholders at this point. Well, Intel's got a long climb to be number one, either in chip design, where Nvidia, clearly on the AI side is far ahead of everyone else. And then on the manufacturing side, where TSM is really the leading foundry to the world and has been for quite a while. So, you know, does Intel want to be number one in 10-plus years? I'm sure shareholders would like to hear that eventually they like to plan to get there. But right now, investors really want to hear that there's a way to get to viability.

in the foundry side with solid customers there and to really keep, keep things going on the design side as they try to balance up the business if they're not going to separate the two, which Gelsinger has said that he does not want to do, at least up to this point. We'll see what more he has to say today in overtime. Look forward to that, John. We'll be watching overtime this afternoon. Meantime, the Dow briefly hitting an all-time high today, 41,734, in what's normally a tough month for the market, September. And with the uncertainty of the Fed decision looming.

Mike Santoli joins us now from the NYSC with more on what we have to describe as some rather bullish optimism here in a month, which is usually not such a pretty month for stocks, Mike. Yeah, Tyler, at least an attempt to look at the glasses half full or at least half full. And there's also an interesting dynamic where the experience of August is maybe being mapped on to September, which is a nasty downside move in the first week of the month associated with a somewhat. disappointing or frustrating monthly jobs report. And then we got some reassurance in both months and also last week in September where the consumers seemed like maybe it was holding together a little bit better. Visa had some positive things to say about activity. And the market

attempts to climb again. Now, you look at the S&P 500. We made a near approach to the former mid-July highs back in August, fell away again. And now we are attempting it. Again, now there's been a lot of rotation under the surface, which does suggest some firming up of the average stock relative to the big growth stocks. Over the last few months, the bank stocks have just really destroyed the NASDAQ 100, which was the locus of most of the strength going back. So this clearly means that people are positioning for an economy to hold together with the Fed cutting rate. So that whole soft landing scenario, whether it has to be 25 or 50, very unclear to me,

although, as Kelly was saying, fast, deep easing cycles typically have been associated with recessions. So you don't necessarily want to see that, or is the spread? so big right now between where rates are and inflation that 50 basis points would be okay. Some of the chatter in the last several days to me seems to be trying to make a 50 basis point cut feel safer than it might otherwise. But of course, it still has a toss up. And there you see the dollar index making near two-year lows. Right. And that's got gold up. It's got copper up. It's having a host of ramifications. Mike, we appreciate it. Michael Santoli. Let's bring in Ken Stern. He's president of Lido Advisors. He expects the Fed to go with a quarter point cut on Wednesday.

to see you. Good to see you. So there's a couple of sort of things in the cross currents here. There's Japan's raising rates, so our dollar is falling. It's 50, 50 on what? The Fed's going to go 25 or 50. Is there anything in this that tells you we could be set up for the kind of big move that we saw in early August or even early September? You know, in other words, to the downside. I don't think so. I mean, I think the market is not going to like either, quite frankly. It's none of the above right now. If it's 25, they're going to argue it should have been 50. If it's 50, they're going to say what else is going to go bump in the night that we don't know about. And that's the issue that we're having right now.

I think with unemployment where it is, I think spending's coming down a little bit, debt's coming up a little bit, but it's not catastrophic for the consumer. So what's the upside for the feds to go 50? That I don't see. Well, people might just say the upside is rates are literally too high. Let's say we're at 5.3% because of the range, and it should be somewhere like 3.5. And that's what the market's pricing in. why not go 50?

Yeah, and that's exactly why if they do go 50, I think the issue is, is they're more afraid of a reinflationary environment than they are of actually dipping into a net negative economic slowdown. I think that's better for them than seeing inflation hike back up. How do equities react in either scenario? A 50 or a 25? And I think we've got to look at a big picture with it, too. I mean, we had a good year in the markets.

It climbed the wall of worry. We had a huge year. We have a big number. Earnings are slowing down, big number in terms of the valuation. Earnings are slowing down. You have 30-some all-time highs on the S&P 500. That's right. And so, again, long-term, I love the trend.

We have favorable fiscal, favorable monetary policy. This is setting up for a really good long-term trend. Short-term, this is not the time to be sticking your neck way out there. I think this is a time to be very cautious. But do we? And I'd be curious for Rick's thoughts on the Senate. in a second. Do we have favorable fiscal and do we still have favorable monetary? Right? If we're talking about the start of a rate cutting cycle when things might, you know,

I mean, maybe that'll be supportive on the margin, but we've seen that tightening in real rates lately at the same time that the fiscal's kind of running out. And there's all this, you know, with the election talk about what this or that candidate's going to do to fix that. So can we count on that support? Right now, I think you're going to, especially in an election year, you know, we always talk about election protection. But I don't think candidates are going to be talking about raising taxes right now. And I think that is the kind of rhetoric that the market actually feeds into and supports. But we do have high valuations. That's what you're saying.

The market has seen all these new highs. I think September and October are going to be true to form the volatility in this silly season will continue. Especially post a corporate earnings window. But yeah. Mike Santoli, jump in here with any thoughts that you might have. I'm curious how you see the next three months setting up in the market. Yeah, there's no doubt we've rebuilt the valuation. But the last time we were here, around 21 times earnings, and when we first got here, let's say, in July, it felt as if investors were positioned more bullishly and they were expecting nothing but good things.

So I think we've actually rebuilt a small wall of worry, if that helps. And I think you can usually hang on to a higher valuation if the Fed is cutting at the same time that earnings growth is broadening out. Now, that's what the consensus says is going to happen. The 12-month forward S&P earnings forecast continues to climb, even as the third quarter. order gets cut. So whether that's unrealistic or not is going to have everything to do, again, with whether we have a soft landing or not. And I think that's why the market's going to have to keep the economy on a kind of a short leash and constantly test the premise that, in fact, we're hanging in there. And that's why I don't know that we're going to run away to the

upside, even if you do get a relief rally of some sort, perhaps post-election. All right. Mike, thanks very much. Ken, stay here. As hopes for a half-point cut remain, we're seeing weakness in the U.S. dollar. a nine-month low against the yen. Rick Santelli joins us now. Rick, you follow currencies. Pretty doggone closely? What do you make of this move? You know what? Whether you're looking at the yen or whether you're looking at the dollar index, the same information is coming through. According to my work, we're hovering on a closing basis, basically at the lowest levels on the dollar against the yen since July of last

year, which is the same for the dollar index. Let's go to the board, all right, and realize, first of all, that we settled last year at 101.18, so we're down on the year. And our most recent on the 27th of August, low close was 155. We're basically hovering right there. But here's the key. At the beginning of the year, we were pricing in quite a few eases. So right at the end of last year, we had a spike down to 167. Then we racketed all the way up. And now look at August and September. one, two, three, four hits, basically right around 100 and a half. This is the key level, not only on an intraday basis, but on a closing basis. And when you take the psychological issue of 100, look back to history.

We only had four sessions in July of 23 that actually closed under 100. To find a sustained close under 100, you have to go to April 22 and before. So what are the point I'm trying to make here is, is that the dollar index is chipping away support, and it certainly looks like it's going to go through. The first part, any close under 100.5, should garner a major test of 100. And if in the same week we close below both levels, I think you're going to see a big hit on the dollar index. And you can see that dollar yang get into the 132 to 133 area. All right, Rick, stick around because we're going to bring back Mike and Ken to talk about this. What does a lower or weaker dollar mean to equities?

It's interesting. I actually think the carry trade is going away, right? I mean, so we're not talking about the carry trade anymore. So what is the pivot? The pivot with a lower dollar, I think that you have to think about the consumer. I think you have to think about international markets. I don't like the international trade right now at all. I think that we're going to stay more domestic and favor domestic. It's going to help domestic stocks. Well, it's usually, I mean, it's interesting you say that because we've had such a period of underperformance of international and emerging market stocks that the question for everybody is do you finally go in thinking if we get a slowdown, maybe that's the one year they outperform?

Or do you just leave it and say you can't afford to have that drag on your portfolio? Yeah, I mean, so many people would say there's such great value international. The value is there. You have to look at modern portfolio theory. You have to do this rotation. And I don't believe that you have to do a rotation. If there's no catalyst, if the trade isn't there, and then you have the factors with the currency and the devaluation of the currency, I don't see the catalyst. Not to take this completely down a rabbit hole,

but I don't know if you saw Mario Draghi's report on Europe's competitiveness. So the question is, are these cyclical forces that can be ballast in a portfolio if the U.S. stumbles? Or are there secular changes that make U.S. stocks outperform over what's now been a 10, 15-year time horizon, and it may not look back. Yeah, and I think that that's right. I think it might be more secular than, I think it might be more secular. Yeah. Rick Santelli, jump back in.

Thought? You know, I think when you look at the Bank of Japan, the Bank of Japan needs to find more ways to tighten up policy and get rates a bit higher. But they're not going to do it aggressively. They are going to lay low. And if you look at the European sector, you nailed it. Germany used to be the manufacturing engine of the world. And through horrible energy policy, their electric costs for manufacturing are triple what they are in the U.S. I don't see much of this changing.

So the issue in Europe where the euro is the biggest effect on the dollar index is actually going to mollify or at least negate some of the other negative issues. So that should give some buoyancy to the dollar. But the wild card really is the dollar yen and the bank of Japan and how aggressively they move rates up. I completely agree with Ken. Here at 140 and a half, not to see more carry trade vibrations in the market is a positive. Well, let's put a pin in all of this, Kent, to bring it about. Bring it back home. Your two themes are baby boomers and technology.

The baby boomers are all the wealth and all the money. We're talking over 50%, why are we discounting it? And when we do have these cyclical trends and we do have economic cycles, their money continues to be spent. And I like it. So when we see the economic slowdown and you see leisure, travel, when you see health care start to take a little bit of a backseat, that's when you want to lean in.

And then technology. I mean, again, we had two weeks ago this huge down, the VAL up, and now we're just kind of looking for a home. I think if we see some more downside pressure with September and October, VAL, coming back, which I do think we'll see again, I'm going to look at that as an opportunity. All right. Ken, thank you very much. Appreciate it. Thanks for coming in. Rick, thank you as well. Quick power check as we had to break on the positive side. You got Oracle. Software Giant Higanoo all-time high, rallying for a fifth straight day. more than 60% this year. Millius' research upgrading it to a buy from hold, saying it now sees a sustainable pipeline for the company. On the negative side, you got Micron. The chipmaker

sliding after Morgan Stanley slashed its price target by $40 to $100 a share, saying Micron's growth is falling increasingly into question. Coming up, we'll get some more tech headlines of the day when Power Lunch comes right back. Welcome back to Power Lunch. Welcome back to Power Lunch, everybody, Apple is falling today ahead of the launch of its latest iPhone. I mean, concerns about the upgrade super cycle. Steve Kovac is here with the latest numbers. Steve, what can you tell us? Yeah, this is an interesting one, Tyler.

So it looks like right now the iPhone 16 may be off to a slow start coming off that first week in a pre-orders that began just this past Friday. A lot of analysts this morning pointing to lower ship times as a signal that demand is weaker than it was last year for the iPhone 15. I'm going to point to Ming Chin Kuo. He's an analyst over at TF International Security. pretty much the best Apple analysts out there. He says unit sales for the iPhone 16 are down nearly 13% compared to the 15 last year.

And it gets a little worse when you look at the pro models, the most important models they sell. The iPhone 16 Pro, down 27% year over year, and the Pro Max down 16%. Other analysts are noticing the same thing over the weekend with those ship times. But Bank of America analysts adding a caveat here, saying Apple may be producing more of those pro models this year, which explains those reduced ship times. Also, overall, these pre-order ship times, they're not a perfect age of new iPhone demand, but they are the best that we have right now, and they do direction tell us how demand can compare to the previous years. And this also raises the question, is the streets narrative about a super cycle holding up? So far, we're not seeing much evidence that this is going to be

an AI-driven super cycle. A lot of that is just because AI is not going to launch on these phones for another month or so, and it's going to be a slow rollout for more features. after that. So the AI rollout could kind of gunk out the true view of demand that we're seeing with the iPhone 16. We're going to get more data on Friday and through next weekend when the iPhone first launches it goes on sale and stores. Was it always Apple's plan to announce the hardware, which they always do in September, ahead of the implementation of new software? Yes and no. So back in June, June is typically when they do the software stuff and say, hear all the new features coming to your iPhone.

Then they come out in September and say, oh, we have this new iPhone that can do even more stuff than we told you about in June. So when they showed us all these AI features back in June, they were a little fuzzy on when it would all kind of roll out. And now we're getting a clearer picture. Some of the features are launching this year, the ChatGBT-T integration we've talked so much about, the ability to make custom emojis, summarizing all your text messages, things like that. But the really cool stuff.

Tyler, did you watch the Jets beat the Titans this weekend? I did not. Okay, if you'd watch that in the commercial breaks, every other commercial was an Apple commercial for the new iPhone 16s, but they barely talked about the phone. It was all about Apple intelligence. So that is the key selling point, at least in Apple's view, what people need this phone for. It's just not ready yet, and it's only going to be ready in a limited way, this fall and later this year. Was that the one with the actress who sort of winks at the camera? Exactly, Bella Ramsey. I thought it was a good commercial, by the way. This to me was like the iPad flattening all over again. I mean, really? She's sort of winked it. She's like, she's like, she's cute. He's like blowing people off and be like, oh, yes, I read this. Right. No idea.

You know, and this whole idea, to me, plays into what people think is like the bad side of this technology as a put. I don't know. I'm probably overreacting. Our colleague, Kifflesfinger and cemvice.com, he made the point was what boss wants you not to read his email and just get a light summary. So, I mean, maybe it doesn't really work that way. But it does show off those features.

More significantly, though, I was surprised to hear that the street thinks this is going to be a super cycle. Is that the expectation? That has been the most bullish analysts, say, super cycle, super cycle, super cycle. Supercycle. You've got to wonder, though, is a lot of that because of this AI thing? A lot of them say, a lot of them say yes, in part. But a lot of them also say it's just a lot of people have old phones and they're ready for a new phone. We keep our phones now three to five years. There's less compelling reasons to upgrade every year like he used to in the early

days of the iPhone. So that's been the narrative around the phone. I don't know, last six years or so. Yeah. And yet like cars, we hang on to them longer and longer and pay more and more. And I'm a huge nerd. I'm going to keep this at least in there because this is a 14. I'm going to keep it another couple years. Yeah. Steve, thanks. Thank you. Appreciate it. FedEx is set to report first quarter earnings on Thursday.

Can they deliver some gains for investors too? We will get that trade next in Market Navigator. All right, welcome back to Power Launch, everybody. Quick check on the markets. The Dow is up nearly 200 points, but off the record, all-time high that it hit earlier today. The NASDAQ is down a half percent, the S&P 500 essentially flat. We are watching shares of Smart Sheet. According to reports, Blackstone and Vista equity are nearing a deal to buy the software maker for $8 billion.

Now to the market's navigator, while almost all eyes are on the Fed this week, one technician believes we really should start looking at FedEx here to explain why and how to trade it. Jay Woods, chief global strategist at Freedom Capital Markets. Jay, FedEx's numbers come out on Thursday. That would be one reason to dip in. but you're going to look at some of the technicals on this stock. Yeah, we have to follow this stock closely. It's the most heavily weighted stock in the transportation average.

The transports are 3% away from an all-tow, 52-week high, and on the verge of a major breakout. For those Dow theorists that want to see the transports go to new highs with the industrials, this is a stock that you have to watch. And let's talk about how we trade it. You ready? Yeah, sure. Take me through it. All right, let's go.

You want to look at this three ways. There are two ways I would buy this stock, one way I would sell it. Let's talk about the daily chart going back a year. This stock historically gaps after earnings. We were down 12 percent three quarters ago, up seven and a half percent, then up 15 and a half percent. So watch the gaps. If you're trying to gamble how it's going to trade into earnings, you've got to be careful. But if it gaps lower, watch the 200-day moving average.

That could be a good buying opportunity. That has been the barometer of health in this stock for a while. It should hold there if it doesn't use it as a stop you get out. If it gaps higher, I want to look at this stock on a weekly basis. Go back five years. The setup is beautiful. It's a nice long-rounded bottom with resistance at 315. We want to see that gap above 315.

You get a 10% pop. That is a major breakout and that is going to take a lot of the transports with it. So you want to buy that gap above 315, use 315 as a stop to protect yourself. But if it breaks out of the transports with it, that pattern, we're talking 350 minimum. Over 12 months, you can see a 400 number in FedEx. So, and then the one side I don't like, if it does trade higher and it just goes slowly, there's no real action it. Watch 315 as a resistance level, and you may want to trim, take some profits, and then wait, use a buy stop to buy the stock on a breakout when it eventually

does get above 315. So there are three different ways to play it, but watch those gaps. It's going to be an interesting deck. Mind the gap. So let's just recap the gap here. Gaps lower? What do I do? We're buying it as long as it holds that 200-day moving average, and if it breaks below, you stop out and you wait for it to get back above it. Gaps higher. What do I do? Gaps higher, a strong gap above 315. You want to be long the name. It's a big breakout on a long-term weekly basis. You want to be in it. You want to be in it for about 12 months. Jay, thank you very much. You look like you're in a nice place out there. It looks like California to me.

Oh, yeah, this is hard work, but someone has to do it. All right, we're glad you there, man. Jay Woods. Appreciate it very much. Kelly. Still able to rattle off those trading points, top of his mind. Tyler, thanks. Rising prices for food and groceries continue to be a thorn in the side of consumers. We'll dive into the economics of it all and where prices are headed here and which stocks to buy as a result of that. That's next in our powerhouse blueprint.

Welcome back. Food prices have been at the center of major conversations. from the Federal Reserve to the debate stage in recent weeks. And they're the focus of today's blueprint, as the latest CPI reports saw food and beverage prices rising 2.5% year-on-year, egg prices rebounding 28%. How do you play pricing pressures in your portfolio? Our next guest sees opportunity in the big players,

as they diversify their revenue away from just food. But he's lowered his price targets for some discount players by upwards of 20% on consumer concerns. Joe Feldman joins us now. He's senior analyst at Telsi Advisory Group. Joe, welcome to you. And let's just start with food inflation. What's the story? Well, we're seeing food inflation has been relatively stable this year on a year-over-year basis, running for groceries around 1%. Food away from home, so like meaning at restaurants,

is running a bit higher. It's more in the mid-single digit, you know, 4 or 5%. So it is still better to eat at home and go to the grocery store to do that. But I think the pressure that the consumer feels is when you look at inflation on a two, three, even four-year basis, when you stack those up, you're facing some pretty heavy price increases that haven't really gone away. Eggs is one area where price increases have been sort of endemic, right? Yeah, that's a great one where you do see it. You know, it does tend to be volatile. Sometimes it goes up, sometimes it goes down.

Last year it was down quite a bit. The year before that was up quite a bit. So there is some volatility in some of those core commodities. Those usually get passed through pretty quickly. The big issue is also just that I think the large CPG players out there are, you know, having to price goods at a higher level, and that passes through to the consumer. The retailers like Walmart, Kroger, they're pushing back and trying to keep prices down for the consumer in the end.

And I think they've been having some success as of late. Why aren't those big players standing up and telling the country what they're doing? They tell Wall Street analysts that in sort of ways like, you know, taking margin or donating margin. That's my favorite. But, you know, if they're doing this and pushing back and trying to lower prices, shouldn't they be standing up and saying like, hey, we're fighting for you and instead they're getting attacked by all the politicians? Yeah, I think that's absolutely right. Well, and I think, you know, the big retailers like a Walmart, Costco, Kroger, they're doing, and Target even doing a really good job telling the consumer, hey, we are fighting for you. We're trying to

lower prices. They just came through their earning season in the past few weeks. And a lot of the discussion was about, you know, starting to finally see some give back from the CPG companies where they're helping to fund some promotions and discounts to bring prices down even further. I think that the big CPG players that are creating the products and the big suppliers, they really see that they need to bring volumes up because price isn't going to happen anymore. I think prices are definitely on the way down or at least staying stable. So you really need to see that pushback and the help from the retailers. I mean, Walmart does it the best, and they really do bring the lowest prices.

Every pricing study I've done, it's among the cheapest place to buy groceries. So let's talk a little bit about price gouging. Do you see it in your work or have the price increases that have taken place since 2021-22? Have they been more opportunistic than malevolent, I suppose? Yeah, I think early days back in the start of the pandemic and for that first year or two, there was some supply issues and there was concern. And people were doing a lot of stockup trips and visits to the grocery store. So prices were elevated at that point.

And then it just kind of continued. And it feels like, you know, the suppliers maybe got a little bit too greedy. I think the grocers tend to just pass it on. They've been trying to keep prices stable. You know, when we look at our pricing studies on a year-over-year basis for the past two, three years, you're only seeing kind of flat, maybe slightly down from the retail standpoint. So they've done a good job. They also leverage their loyalty programs, their fuel reward programs, to help bring prices down for the consumer.

That's another big advantage of shopping at some of the larger retailers. Joe, we've asked this to others, because many of the prices are now disinflating across these categories. How do you invest in disinflation? Which stocks? I noticed you lowered on some of the dollar names lately. what do you do? Yeah, the dollar stores have been under a lot of pressure. It just feels like their core consumer,

which is that really lower to lower middle income consumer, has been under a lot of pressure. They're visiting the stores pretty frequently. Actually, traffic's up at the dollar stores. They're just not spending as much. They don't have as much in their wallets. What you're seeing is that middle income consumer that in prior times of pressure would trade down to the dollar stores are not.

They're staying at Walmart. They're staying at Kroger, Costco, Target other places. And we like those big guys because even with grocery prices having stabilized and maybe we think maybe coming down a little bit over the next few months, that could mean more spending power for the discretionary side. So Walmart, Target, Costco, they sell a lot of discretionary goods as well. So that's why I think that those big guys are still very well positioned for this environment.

That's a great point. Joe, we'll leave it there for now. We appreciate your time. Thank you very much. Joe Feldman with the Telsie Group. Let's go over to Bertha Coombs now for a CNBC News update. Bertha. Hey, Tyler.

A three-judge appeals court panel in Washington today heard more than two hours of oral arguments and a challenge brought by TikTok over the new law that could ban the app in the U.S. if it is not sold by Chinese parent company Bytance. According to NBC News reporters in the courtroom, the panel of judges appeared to be sympathetic to the claim from TikTok and creators that the law violates first-nob. Amendment speech protections. Both sides have requested the panel rule by early December. Boeing announced sweeping cost cuts today, including a hiring freeze, a pause on non-essential travel and a reduction in spending on its suppliers. The airplane maker is trying to conserve cash as it

tries to negotiate an end of the strike of more than 30,000 machinists. And Target announced today it will hire about 100,000 seasonal workers for hot. holidays this year. And in a move to keep shoppers coming in, the retailer also says it will introduce more affordable holiday items, including thousands of stocking stuffers under $5 and holiday toys under $20. Toys under $20. That's a pretty good deal. Tyler. All right. Thank you very much, Bertha. So drug makers are racing to develop new treatments that can deliver radiation directly to cancer cells wherever they are in the body will get a live report when Power Lunch returns. Welcome back to Power Lunch.

Shares of Pfizer are nearly 3% higher today as the company announces success in a trial for a drug to help cancer patients avoid weight loss and other symptoms. Elsewhere in pharma, new technology is being tested by several companies, also pursuing cancer treatments. Angelica Peoples is here now to explain. And this is all coming out of a big European conference, is that right? So the Pfizer data is coming out of that European conference, but this is another trend that we wanted to highlight. And so Bristol-Myers-Swib, Astrosenica, and Eli Lilly are some of the companies that together have spent roughly $10 billion over the last year to get their hands on drugs that deliver radiation directly to cancer cells.

Now, in some ways, it's surprising that Big Pharma is piling into this space. And that's because these drugs contain radioactive material, so making and distributing them isn't easy. They're good for only a few days, and only specialists can handle them. But Novartis is proving that it's possible, even if it means more legwork. One doctor telling us that logistics are manageable, especially since it means they can treat patients in a different way. And one of his patients telling us it's easy enough to plan for his six treatments every six weeks. The only thing he worries about is a snowstorm getting in his way in upstate New York. Right now, the main focus here is prostate cancer and neuroendocrine tumors,

and the real opportunity is bringing this technology to many more cancers like lung and breast. If that pans out, revenue could be in the tens of billions of dollars per Guggenheim's math. It'll take time to see if that works out. But executives I talk to see this becoming an important part of cancer care, so it's one to watch. This is a deceptively simple question, but how does the drug know where to go? It's a good question, and that's because there's markers that we're looking for. So, for example, PSMA, that's one that's expressed by prostate cancer cells. And so PluVicto looks for that PSMA and then goes to the body.

And then there's something called a ligand that helps that goes and finds. It tracks down those cancer cells. And then it brings the radiation there and kills those cancer cells. An injection? So it's an IV, but it's either an injection or an infusion. So the one patient we talked to is saying that it takes only nine minutes. His drive is an hour and 15 minutes and actually getting the whole procedure, if you will. It's really a drug takes much less time.

How much do these drugs cost? I imagine Wall Street's been ahead of this, maybe for years seeing this coming. Which stocks are the biggest beneficiaries? So these are expensive drugs, and that's also one reason why it's particularly advantageous for pharma, if you will, because these are not something that you will probably see generic versions for, because they're so complicated. It's not something that's easily replicated like a pill. So if you go ahead and you make a big business out of this, it's something that you'll probably be able to bank on for a long time. Again, Novartis is the leader here.

They have two drugs. are also seeing Bristol Myers. They're far along. They acquired a company for $4 billion, and that's pretty far along. We also have Astrosenica, Eli Lilly, and even just Sanofi last week getting in this space, too. So Pfizer is also now getting in, are they in this space, or are they just in the space they're trying to help with the symptoms of cancer? No, so Pfizer, they're working on a different drug, and that is actually to help patients who are, they have something called cancer cokexia. So it's where you lose your appetite, and that leads to muscle wasting and that's a problem. You lose a lot of weight and it could make your symptoms even

worse. And so they over this weekend presented some data showing that their experimental drug for that can help. And so that's something that we're going to be watching as well. Wow, a lot of happening. It's always nice to hear. I mean, I know this stuff is expensive and whatnot, but you know, for people who are dealing with these, you know, if they could do something like you said for lung and breasts, that would be, that would be great. Thank you very much, Angelica. Appreciate it. Wall Street has its eye on Wednesday's Fed decision on interest rates. We will bring you three different stock picks with three different Fed scenarios in a fresh, newly cooked, free stock lunch. As we head to break, CNBC celebrates Hispanic Heritage this month.

Here is Eric Lopez, Ulta Chief Supply Chain Officer, sharing his story. What I want businesses to know about my community is just how to tap into the passion around the culture and the relationships. The Hispanic community is deep ingrained in these, and by tapping into these, just, you'll find that there's dedication, excitement, energy, creativity, and innovation, which will ultimately lead back to the business success. All right, time for today's three-stock lunch. We are going to make it Fed-focused today. Why not?

We asked our trader for three stock picks for three different Fed scenarios that we might hear on Wednesday, here with our trades. Chris Grissanti, Chief Equity Strategist at MAI Capital Management. First up, Chris, your pick for Fed scenario number one, which would be a quarter-point cut with a buy-eastern. in the statement or the press conference to less aggressive cutting down the line. In other words, more caution in the narrative but action on the table. You picked alphabet. Why? I did because, Tyler, that's my steady-as-you-go scenario. I think that's a signal from the Fed

that everything is kind of steady and that the economy is in okay shape. They're not terribly worried. So that, to me, speaks of an environment where the economy doesn't slump. I think Mag 7 will ride again. And Google's down about 20 percent from its highs. It's about as cheap as it gets. And with a stable economy, it should bounce back nicely. Advertising revenue will still be strong. Also, while nobody ever talks about it these days, I like the Waymo piece a lot.

That's the autonomous driving. And you're not really paying for it. So a steady-as-you-go scenario says Google to me. You're right. More and more people, Chris, are realizing what that company is up to and its potential on a partnership with Uber last week. So you get Waymo as a kicker. Okay, so let's move along to Fed scenario number two, which you call medium panic, which would be a 25 basis point cut and a bias for more aggressive cutting. And for that, this surprised me. Your pick is Domino's Pizza. Explain. Right, sure. So I call this the We're a bit concerned scenario. I'd buy Domino's Pizza because

Because, again, not unlike Google, it's down to a 10-year low on valuation, in this case on international sales issues. So I think it's got a floor here. And pizza is a recession-proof food. Management has a plan to turn things around. And in this middle scenario, people will still go out to eat and will order in, but they're going to watch what they're spending. So here's a kind of a low-value restaurant chain that's down on its luck, but has staying power

in a strong brand. So I like Domino's. Right. And finally, we've got the third scenario, what might be described as a full-on panic. I don't know whether I'd go that far. But it's a half-point cut. And your pick here is Hershey. Yes, and I think Kelly will smile about this. I am. I called this scenario, the yikes, we're behind the curve, but don't tell anybody's scenario. So this is the Fed trying to catch up. The economy is slowing too much in their minds. they, of course, are seeing much more data even than we are.

So that 50 base point, Scott, is going to make me kind of nervous. So I'm going to be reaching for a staples. I particularly like Hershey, as I've mentioned on this show before, because they're going to benefit. They've been crushed by higher cocoa prices that's starting to alleviate. They've got strong management, keeping earnings solid, even with those tough cocoa prices. When that starts to go the right way and the economy starts to slow, that's the time that Hershey's can really shine. It's a sweet pick. Yeah. A little chocolate makes everything go better, right? Chris Griscily at Halloween, Tyler. You got it. Chris Grisanti, thank you.

Especially when it's not up 80% this year. Yeah. Coco disinflation. If you want to hear more about that, subscribe to our podcast. You can find it on any platform you listen to. I listen at 1.3, but don't tell anyone. We'll be right back. Welcome back. The Dow's up 230 points today. As we come off, Tyler, what was actually a big week, S&P was up four, came within 1% of the all-time highs from the summer, and we are still at 50-50 about what's going to happen with the Fed meeting Wednesday. And the Dow at a record high earlier today, a little bit off it now, but above 41,000. Who to thunk that back four or five years ago when we were in the middle of the pandemic? Before we go, Monday night football fans can breathe a sigh of relief.

The Disney blackout on DirecTV is over. The two sides announcing a truce over the weekend that restored ESPN, Disney, other networks that the company owns. to the DirecTV channel lineup. Two-week hiatus, DirecTV says both parties now working to finalize a new multi-year contract. Yeah, there's now rumors about

whether they will merge with DISH. They're perceived as the loser here. They lost a lot of subscribers, a lot of hotel chain sports bars are very upset by the loss of program. Yeah, they were. I was in an establishment a couple of weeks ago and they couldn't,

and they were apologizing for the fact that they couldn't broadcast the Washington game. Anyhow, let's talk about colleges. Everybody likes the list. One might assume that graduates of Harvard, Princeton, or one of the other ivies had the best salary prospects, but a new report from pay scale found the number one school to yield the highest salary new graduates is MIT.

There you go. Rounding out the top five. Yeah, Princeton got in, Naval Academy, Harvey Mud College, and Babson. You know, W&L and UVA usually do pretty well on these lists, but I don't see them. Come on. Thanks for watching, Power Lunch, everybody. Closing bell starts right now.