Power Lunch - Biden Bows Out, Tech On The Move 7/22/24

Episode Date: July 22, 2024

President Biden has officially stepped out of the 2024 race, with many key members of the Democratic party backing Vice President Kamala Harris to take his place. We’ll bring you the latest details.Plus, Nvidia shares are heading higher again, while Alphabet is set to report earnings. And the ripple effects of last week’s global Microsoft outage are still being felt. We’ll break down all things tech for you. 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 Fort. And coming up, All Things Election, President Biden out of the 2024 race. Vice President Kamala Harris is in and the endorsements are coming in. We've got full team coverage. Plus, all things tech. InVIDIA on the move once again, Alphabet's set to report earnings and the ripple effects of last week's IT outage linger will break it all down. But first, a check on the markets, so three major indices higher with tech leading the way, the Russell also higher after a low. start. That strength in the NASDAQ being helped by those NVIDIA gains today. And new reports out of China, we'll have more on that ahead. As for the names moving the S&P on the positive side, tech firm IQVIA up. Let's see, six, almost seven percent. Surprise beat showing improved demand there. On the negative side, crowd strike, boy, down 12 and a half percent after that rough day. at the end of last week after CrowdStrike Software caused that massive disruption and

outage. We're going to have more on that later in the show. But we begin with the key story that we have been tracking over the last 24 hours. President Biden stepping away from the 2024 election. We've already seen the chess pieces moving around this new board as Vice President Harris tries to secure the Democratic nomination, House Speaker Nancy Pelosi endorsing the vice president. All this while, the Trump campaign plans its next move, and we are going to hit this every angle, the markets to polling, campaign strategy, historical significance, and the latest fundraising numbers. Ed Mills is Washington Policy analyst at Raymond James. Larry Sabadoo is director of the University of Virginia Center for Politics. Michael Beschloss is presidential

historian for NBC News. Meyer Rupert is a political strategist who served as senior advisor to the Warren campaign in 2020. And Brian Schwartz is political finance reporter for CNBC.com. Good to see you. Good afternoon, everybody. Michael Beschloss, this is unprecedented, especially three months in change before the election. We haven't yet seen a strong challenge to Vice President Harris for the Democratic nomination. It seems to me like there's limited upside to doing so

because if you think that this is a too tough situation to go up against Trump and win, if you challenge Harris and you lose, then all your chances might be out because you might be seen as being unloyal by the party. but if you think she can win, same thing. What do you think? Yeah, I think that's right.

You know, this is, just as you were saying, John, this is a situation where we haven't seen a president, you know, pull out of a race this close to a party convention. LBJ in 1968, Harry Truman in 1952, they both did in March. So this is something we haven't seen before. So if you were to combine that with all this talk about an open primation, or an open convention or some device to have people run against each other,

the frank thing is the leaders of the Democratic Party, most of them think it is too late, and it doesn't exactly look as if a lot of Democratic challengers are lining up to run against Kamala Harris. Yes, and Larry Sabina, I've seen polling that suggests a lot of the electorate, especially independents, still don't have a strong feeling about Vice President Harris. So I guess the race is on both from Harris's side and from the Trump campaign to define her.

How do you think that plays out? And is that unusual for people not to have a clear, strong feeling about a vice president after about four years? Well, as I think Michael would agree, vice presidents often aren't well known. And you don't get to know them until they either step up to the presidency or are in position to step up. So it's really not that unusual.

that people don't know much about her. And actually, that's a plus for her. She will get to define herself if she moves quickly and her party moves quickly. They'll move quickly in the sense that in four weeks, she's the presumptive nominee of the Democratic Party. But she's got a big card to play here, and that's the choice of vice president. That will help to define her. And with a balanced ticket, a balance to her and a nominee, from a state that has a substantial number of electoral votes, she'll be in a good position going

forward. Brian, it's interesting to look at the money, and you can maybe talk more about this, but the big criticism of this whole process is that it feels like sort of the Democratic base or voters didn't get to weigh in on this outcome where it looks like she'll probably end up taking over the candidacy. But we do have sort of the vote of the purse, and there are a lot of small dollar donations flowing in from the moment that she became the presumptive nominee. What can you tell us about that? Yeah, I mean, since Joe Biden dropped out of the race and endorsed the vice president, the Act Blue website, which is, of course, the site that raises money for the Democrats, has raised north of 96 million. I've got the live tracker right in front of me.

We're about up to 97 million as I sit here. So that's just from the small dollar donor side. There clearly is a major enthusiasm bump here for the Democratic Party at large since the on Sunday by the president and supporting the vice president as the as a candidate for the White House and it's showing in fundraising and it's not just a small dollar either right there are big money donors who were sitting on the sidelines who told me of the last 24 hours they're coming home essentially and they're coming home to support Harris as as a nominee for as a candidate for for president yeah I suppose the question and Maya I'll direct it to you is then what does that tell us about her I'm going to just jump

to the November electability because the potential the potential for this going to some kind of open process and you'd still have to pick who's in that open process and I'm not sure there's a mechanism by which to do so. Yeah, I mean, as of right now, there are no challengers coming up against the vice president for the nomination. That's it. I mean, unless somebody steps forward and says they are going to run some sort of primary campaign from now into the convention against the vice president.

Unless that happens, there's no, you know, sites here as to this being some sort of some sort of sort of challenge at the convention. The other point I want to make there on that, that is that the vice president now controls $95 million at least worth of campaign cash since the endorsement by Biden. So if you're going to go up against her and you don't have the money, that might not be such a great idea. And I think a lot of people who might be considering it are thinking that as well. Maya, please feel free to weigh in on that, Maya Rupert, but also it occurs to me, even though

many people are saying this is going to be an open and transparent. process, there have already been a lot of major endorsers of Vice President Harris. And this is a year when things like abortion, women's rights have come to the four. She is vice president already. It seems like there's a danger, perhaps, and the base is enthusiasm. If you look like you're trying too hard to overlook a Vice President Harris in this process with your openness, no? Absolutely. I think what we're seeing is that momentum is building around her. There is this outpouring of grassroots support and there's this outpouring of endorsements. I think that the DNC has committed to an open and fair and transparent process. But this is the impact, I think, of that process, right? What we're seeing is people are coming forward and endorsing her. It doesn't seem that there is a strong candidate that's coming out against her. And I think what that shows is really the

strength and momentum of her as a candidate and as a nominee and a candidate going into November. And I think that that should show us everything that I think Democrats have been looking for. The excitement, the shift, this enthusiasm should really be. I mean, and I think it has been. I think it has changed the entire tenor of this race. And what we're seeing is people who are really looking forward at this point to November. So on that note, Ed, we spoke with Dan Clifton last hour who said the change to her, her potentially the top of the ticket lowers his Trump reelection odds from 75%, which is extremely

high number to 55%. And the market reaction, he thinks, reflects that energy's lower today, health care is lower, some of the green stocks are getting a bit of a bid. What would your own analysis be now of the likelihood and the trading patterns that we could see now between now and November? Kelly, here at Raymond James, we told everyone, if there was a switch, we weren't changing our odds immediately. We need to see how the market in the American people, digest this nomination. We do think that this was Donald Trump's election to lose, especially after the reaction to the debate. But now that it seems as if it could be a Vice President Harris on top of the ticket, we want to see who the vice presidential pick

would be, we want to see some of the polling reaction. We talked a little bit here about, will Harris be able to define herself, or will the Republican Party seek to define her? There is a lot of questions that we're getting at Raymond James today about did Trump peak? How much should we play into a continuation of the Trump trade? What we said is there is still a lot of upside from here for a vice president Harris as it relates to where Joe Biden was polling. But there's inside. And we need to see that play out. There's been so many unexpected events of this election cycle.

We can't just switch day after day. We want to digest. We want to keep that clear picture. And the second thing that people really want to know, will there be a Republican sweep? That still seems to be the most likely scenario until we digest that information. Huge market implications, obviously, from that as well, Kelly.

Yeah, especially the last two weeks with the unexpected events. Larry, back to you on this one. Part of what I find fascinating about Vice President Kamala Harris in this position right now, in a very strong position to be the nominee, is that throughout her period running for president, she never seemed to do particularly strongly in the primaries. And every once in a while there's that candidate who you think, oh, well,

if they were in a general, boy, they might do pretty well, but they'll never get there out of this primary process. Here it's like the game of life. I forget what that move is, where you shoot to the front, maybe that shoots in ladders. And here she is now. It seems like the Democratic, just like the Republican Party, there's a certain percentage of people who are just going to vote for the nominee. The independence, and particularly the swing state independence, that's the big question mark. How might this work out for this sort of candidate who wasn't particularly strong in primary type showings, but now is potentially in a general? Well, she was in and out pretty quickly in 2020, and candidates often do that. And let me hasten to

add, Joe Biden lost two presidential nomination battles. Handily. He wasn't even in one of them. He was in and out so fast. So every election is different. Every campaign is different. She's vice president now. She's getting the endorsement of virtually everybody of any real influence in the Democratic Party. She starts out in a strong position, not just among Democrats, but I think among those that we might call the anti-Trump coalition. It's there. We saw it in 2016. It failed. We saw it in 2020. It's succeeded. And so you have to watch this. And look, let me let me just add. I think it's very important to listen to the questions posed a little bit earlier by the fellow from Raymond James. It is critical that people not judge this quickly. Polls are going to be useless. Hooray, until after the Democratic Convention. Ignore all the polls that were conducted before Biden dropped out. And for the time being, while people are actually getting to know the vice president, you think they shouldn't by now, but they don't, and the vice presidential nominee,

whoever that is, and whenever he or she has announced, then once you have that convention, you'll have an even Stephen race, one sort or another, a point or two separating them. Labor Day will actually start the real campaign. It's back to the future. Labor Day. So we're still six weeks out of that. And it'll, and it'll, a lot to come. Michael, I just wanted to ask you to reflect a little bit on the nature of this announcement. And we really haven't heard directly from the president yet. And, you know, so it's leading to a lot of, look, nature of horrors a vacuum. So there's speculation about his health. There's speculation about how much pressure he felt to step aside and how much people were leading

on the legacy point to get him to do so and so on and so forth. Well, know a lot more about that, as you know, in a couple of days. And I think one way to look at this, and I think what Larry said was extremely cogent as usual. One way to look at this is to say that Donald Trump on one side, generic Democrat on the other. Generic Democrat would have been running a lot better than Joe Biden because of the enormous resistance to his age and fear that he would not be able to be an effective president

if elected to do a second term. So if Kamala Harris can basically pick up that, the amount of votes that were withheld from Biden because of his age and health, she is in a very competitive position. It's a little bit like a company that needs to spin out, spin off some components so that its full value could be realized. We'll see if that happens. Great analogy for this crowd. Maya Rupert. I was trying hard. Yeah, Maya Rupert close us out here. It was looking like the Democratic National Convention

had the makings of a fiasco. in a number of different ways, right? Especially with the open convention possibility. But now that we see so many powerful voices within that party coalescing around Harris, it now looks to me like it could be one of the most watched political television events in generations. What do you think needs to happen there at that convention

for the Democrats to have a good convention? What do the Republicans need to do? you're the wrong person to ask in order to counter an event that interesting given this context. Right. I mean, I think you're right. I think what we have is the potential for an incredibly just electric moment at the convention. And that's saying something for these conventions. I think a lot of times people don't think of them as sort of point of watching. And I think that we are going to see that. I think coming out of it, there's just going to be a huge amount of energy and momentum. I think the most important things that happen are that voters are reminded exactly why they voted

for a ticket with Kamalaurs on it. I think that is the huge upside that we have with the momentum that's building around her is that voters don't have to feel like their votes didn't count in this moment because who we are going to get the chance to vote for is the other person who was on the ticket that we all did turn out and vote for. So I think making voters feel like this, reminding them why this was their choice, and getting them excited that this election is so consequential and really showing the contrast between the Democrats and Republicans.

I think you're right. I'm probably the wrong person to ask about what the Republicans need to do because I think It sounds like it. Look, it's going to be a contrast thing, right? They're going to need to, Democrats are going to make their case. Republicans are going to be able to make theirs, right? So I think that's what we're going to see and leading it to November. I think we're actually going to see a very strong contrast between these two parties.

We'll leave it there. Thank you all so much for your time today. We really appreciate it. Ed Mills, Larry Sabato, Michael Beschloss, Maya Rupert, and Brian Schwartz. Speaking of the raised House Minority Leader Hakeem Jeffries is holding a presser regarding Vice President Harris. Emily Wilkins following that. Hey, Kelly. Well, yeah, we just heard from the Democratic leader in the House, Hakeem Jeffries.

Look, he had a lot of praise for Biden. He had a lot of praise for Harris. He stopped short of actually endorsing her, but he said that he and, of course, Senate Majority Leader Chuck Schumer will be meeting soon with Harris face to face. And that kind of seems like a potential impetus for them to then come out of that meeting and potentially, if they're going to make an endorsement, make it then. So it sounds like, again, things are moving pretty quickly. Just a few minutes ago, we did see a former Speaker Nancy Pelosi come out and endorse Harris. And, of course, we've seen other members of Democratic leadership support Harris. goes to what we've seen from last night. Momentum continues to build behind Harris to potentially be

the Democratic nominee. At this point, again, we have no serious challengers for her. And at this point, it really seems like the only thing that's outstanding is exactly what process Democrats are going to take to actually solidify Harris as the nominee. All right, Emily Wilkins, thank you. And in the meantime, Republican nominee for Vice President J.D. Vance holding his first solo rally in his home state of Ohio. It is the first Trump campaign. campaign event since President Biden dropped his bid for re-election and endorsed Vice President Harris. We're going to monitor this speech and this event and provide any updates. A lot of implications is choice for the ticket, questions about, you know, what now or what might

have been. Coming up, is it time for a leadership change? Don't worry. We are not talking about the Oval Office. We're talking about the markets with Nvidia higher today. But we saw that pushback against Big Tech last week. Is a shift really underway or not? We'll talk about that next.

Global office definitely definitely should change. Welcome back to Power Lunch. Lots of movement in the semiconductor space. Rumors of a new Nvidia chip for the Chinese market and NXP set to report results later. Seema Modi has the story on both. Sima. John, let's start with Nvidia. Washington's export controls have no doubt challenged the broader semiconductor sector

and has resulted in fewer sales to China. CEO of Nvidia Jensen Wong recently saying, quote, our business in China has substantially lower than the levels of the past, and it's a lot more competitive in China now because of the limitations on our technology. The company, though, seems to be trying to change that. And according to Reuters, working on a new AI chip that complies with the current export controls, the question for Wall Street is whether this will help improve its growth prospects in the country. Cowan analysts estimate Invidia will make less than 5% of its 2025 sales in China. Before restrictions, sales were anticipated to be around 20,

to 25%. Looking at Nvidia stock today, bouncing back at $124 a share up about 5%. Piper Sandler this morning raising its price target on the stock to $140. Analyst, they're expecting a strong earnings report when the company reports in late August. This as Wall Street awaits earnings from NXP semiconductor. That stock also higher today. It feeds into the automotive market. And investors will look for a read through the electrical vehicle sector and whether demand is starting to improve in the back half of this year, Kelly.

Indeed. Seema, thank you very much. We appreciate it, Sima Modi. And what should the average retail investor do? Will Nvidia continue to remain the dominant force in the market, just as tech bounces back, or will we see a leadership change? For more on this, Michael Noss's chief market strategist at trade ideas. Michael, what do you think?

You know, trends, we have to bet that trends are going to persist, right? So I'm not going to call the top on Nvidia or anything like that. But at some point, we need to see this rotation continue. And we saw a massive spike in IWM, small caps, and pretty much the rest of the market last week. And I think that was just the beginning. You know, at trade ideas, we do a lot of data. We look at what happens when these breadth surges happen. And it's generally not the top, right?

You generally don't see all of the rest of the market catching up to the leaders at a point where that leader completely falls. So what happens generally is you have that leader continue higher, but then you have the rest of the market catching up. So I do think we saw the start of the rotation last week, and I think it's going to continue going forward. So you see a leadership change where perhaps other parts of the market are stronger, but it doesn't necessarily mean that Nvidia is not investable. Exactly. So a rising tide lifts all boats. So if the rest of the market is going to move higher, then Nvidia likely will as well. it just might not be to the degree that we saw, you know, where if the S&P 500 is going to move higher, it's going to pull NVIDIA with it, as opposed to what we saw at the beginning of this year,

which was kind of NVIDIA pulling everything up. So that change may be occurs. And we're basically talking a rate of change when we come to a leadership change scenario. How concerning, Michael, do you think it is that there are a lot of other AI names, and I'm thinking about Broadcom, maybe Super Micro, that have cooled off more significantly over the past, month or a bit longer. InVIDIA has stayed stronger, but it's more out there by itself and still not, I think, at those highs from about a month ago. I think that is sign for concern and sign for rotation, where when you get a sector cooling off, it makes sense that the leader is going to

lead for another little bit. It's going to be, it was the strongest player out of the gate. It makes sense that it's going to be the strongest player going forward. Now, we can't see the doubling and the tripling of Nvidia that we saw last year, but we should see the semiconductors hold up a little bit. The question always is when in bull markets, you have these changes, you have people sell their leaders, they sell the stock that they're making so much money on, and they rotate that money into something else. And that's, again, what we saw with the IWM and the microcaps moving a lot last week. So what we have to do is we have to look at, okay, now that profits are being taken in that sector, and that may, and I believe put somewhat of a lid on what we're going to see from the

semis going forward. Where do we think they're going to move into? Michael, also, how important is the prospect of an invidia chip designed specifically for China? So sort of knee-capped a bit, if you will, because if they manage to make it good enough that it's good, very often the U.S. just ends up blocking that one as well. And they're already supply. constrained. So I wonder, can it really provide much of a benefit, or is it a potential hedge against supply catching up to demand if they can end up tapping into some new demand in China? Well, I think your point was right on the head that they're, they don't, they're not worried about selling more chips. Invidia right now it can sell as many chips as they can produce.

So this, to me, may seem like some kind of news that was talked about to kind of hold up the the recent little sell-off that we found. But I think you're 100% right. It's not going to be a demand problem with Nvidia. There's people out there spending for second-hand chips and things like this, spending out the nose. So what we need to do is we need to say, okay, if there are going to be supply cap, well, where is that supply going to come from?

So things like material sectors have been doing well. You know, looking at the actual raw commodities that build the chips, those have been doing well recently as well, because they can sell chips until they're blue in the face. It's just, you know, eventually they're going to run out of supplies. They're going to run out of manufacturing capability. So I think you're right that the demand side is already saturated. The question is, where is that supply side going to come from?

Yeah, still dangerous to bet against Jensen Huang, Michael Noss. Thank you, Michael Noss, from trade ideas. Further ahead, could Vice President Kamala Harris's entrance into the 2024 race mark a major shift for big tech will explain when Power Lunch returns. Welcome back to Power Lunch. I'm Contessa Brewer. Here's your CNBC News update. Ukrainian officials say they've reached a deal today with a group of private creditors to restructure more than $20 billion of debt. That agreement will save the country billions and preserve funding to its military as the war with Russia nears the two and a half year mark.

That deal came after months of rocky negotiations with the committee representing the bondholders, which include Black Rock and Pimco. The president's son dropped a lawsuit accusing Fox News of violating New York's revenge porn law. Hunter Biden's lawsuit centered on racy images shown in a Fox streaming series that featured a mock trial on charges he has not faced. His attorney confirmed he filed a voluntary dismissal notice of the lawsuit Sunday. And the National Highway Traffic Safety Administration's opening a probe into 150,000 Stalantis vehicles over a power issue. Dozens of customers reported their engines shut down while driving. happening mostly at slow speeds, the 80 complaints affect 20-22 RAM, 1,500 pickup trucks,

and Jeep Waggoner SUVs. We'll stay on top of that. John, send it back to you. Contessa, thank you. Now, as we head to break, it is big short week on fast money. The original traders from that story are going to reunite to lay out where they're seeing opportunity in the market right now and how they're setting up their portfolios for the back half of the year. And that kicks off at 5 p.m. Eastern tonight. Also remember, you can always hear Power Lunch on our podcast. Be sure to follow and listen to Power Lunch wherever you go. We'll be right back. Welcome back to Power Lunch. Google Parent Alphabet shares trading hired today ahead of the company's second quarter report tomorrow after the market's closed. Artificial intelligence spending along with management's efforts to monetize those investments

are expected to be key topics on the call. Joining us now with thoughts on the AI space is XIA, an award-winging AI expert and CEO of AI consulting firm Malacanto. Good to see you. So I wonder, XIA, if security might actually take a more prominent role in this call, A, because there's rumor out there that if there's a whiz acquisition to be done, it might get announced on this call. And then because of what we saw out of Crowdstrike last week. Definitely.

I believe that cybersecurity is going to be a key factor in all earnings, reports for companies moving forward after the crowd strike failure that happened last week, which resulted in global outages. I think Alphabet has always been a leader in the cybersecurity space. When we look back at their Q1 earnings reports, it really was their cloud gains that drove a lot of that new revenue that allowed them to go almost 25% up year over year. And those cloud gains were the introduction of tools to be able to accelerate AI adoption within enterprise, but also tools to secure the adoption of those AI tools within enterprise. So I think that we're really coming into an age where we're going to see a lot more AI

and cybersecurity conversations go hand in hand from both protecting the traditional infrastructure, but also from protecting the algorithms itself. And Alphabet stands to be a leader in that space. Do you think the crowd strike disaster has an impact on perception of AI? Because I heard a few people say, well, how come AI didn't prevent this? But it seems to me like the bigger question might be, might AI do something like this in the future? And then the provenance of something falling apart is even harder to trade. Oh, who put that patch out? I don't know. Actually, the software did it by itself. Oh, 100%. I think that there's always a fear that the machines can make the same mistakes that humans make. And if folks don't have the ability to understand why their algorithms

are making the decisions that they make, then they do run the risk of things like, hey, it made a decision I don't understand and I don't know how to repair it. However, with CrowdStrike in particular, the reason why the failure happened was not because of AI at all. And the question of why didn't AI prevent it

goes back to the EU's anti-competition agreement that they made with Microsoft back in 2009, where they forced Microsoft to allow different providers to be able to access what they call the kernel level changes which are system deep level changes inside of Microsoft Windows systems. And so CrowdStrike, which is a third-party software provider, runs this cybersecurity software that basically goes in and every couple hours a day shoots out updates that,

update that kernel level change so that it can monitor for better cybersecurity vulnerabilities or potential malware. And what happened was they made a kernel level change that they didn't practice rolling out correctly. They tested it correctly, but didn't test how they rolled it out. And so it ended up locking a bunch of devices now. Because CrowdStrike has, most of their clients are almost exclusively businesses, even though only 1% of the computers that run their software were affected in this, we saw global outages. So it brings to question what responsibilities do enterprises have to be able to test things before they deploy them when their impact can be so big,

whether that's an algorithm or cybersecurity update. Now, XIA, a question for you about culture. That's really a politics question, but cloaked in culture, about Silicon Valley. Ultra-rich Silicon Valley. And I'm talking the VCs, the entrepreneurs who have had big exits, have long range between moderate and libertarian conservative. But worker Silicon Valley has tended to be a lot more liberal, right, than those who have a whole lot of money.

So how do you think the emergence of Vice President Kamala Harris as the strongest right now candidate for the Democratic nomination shuffles things from Silicon Valley's perspective? I think that it furthers the existing divide around the AI conversation, particularly around regulation. When you look at both sides of the presidential candidate tickets, whether it's Kamala Harris, who represents and has deep ties to Silicon Valley being an Oakland native, being the former district attorney in San Francisco, as well as the former attorney general of California, she represents the legislative side of AI, of regulating it, of being able to bring balance to it and has spoken, including it last year's AI Safety Summit, hosted by the White House, that she fundamentally does not believe that you are needing to. to put innovation and regulation against each other, that both can coexist, that regulation doesn't inherently slow down innovation. Now, on the flip side of that presidential ticket, you have Donald Trump and J.D. Vance. Now, J.D. Vance himself is a venture capitalist with deep ties to folks like Peter Thiel, who's, you know, instrumental in PayPal's success and has lots of business ties with folks

like Elon Musk, who are on a very different end of the spectrum. I mean, some of the first funds that J.D. Vance raised were almost a billion dollars, and he's been a partner. of VC funds that have raised a billion dollars. And a lot of the push inside of both Silicon Valley as well as in different regulatory entities to slow down regulation is coming from those bodies because they believe that the more regulation they have, the slower they're going to have to move, which doesn't really sit well with their bottom line. So I think with Kamala emerging is the new potential presidential nominee for the Democratic Party, it's really going to be about which side do you believe? Which side are you on? Do you believe? Do you believe?

believe that we can have regulatory bodies, regulation on technology, and still innovate, or do you believe that we need less regulation in order to innovate? Because that's what both sides are essentially representing in their approaches to AI. All right. XIA from Malo Santo. Thank you very much. Great to have you with us. And speaking of tech, we'll dive into what a potential Kamala Harris presidency could mean for the future of tech policy, regulations, dealmaking, and so forth. Power Lunch will be right back. Welcome back. Kamala Harris's entrance into this race is leading many to ask who will big tech support. Both Trump and the Biden administration have taken hard lines with the tech at points.

But Harris has history with the West Coast. Kate Rogers has more in today's tech check. Kate? Hey, Kelly, that's right. Kamala Harris has deep ties to California and its tech community out here, having launched her political career as San Francisco district attorney, going on to win the state attorney general position in 2010. And from there, serve one term as California's junior senator. Funding and support from tech heavyweights, including Apple's Johnny Ive to Meta, Cheryl Sandberg, and Mark Benioff of Salesforce helped to bolster her bid for state attorney general in which she described herself as a, quote, capitalist. But the public perception, of course, of technology companies

has shifted over the course of the last few years. In fact, data from UGub finds it's become increasingly popular to seek out tougher regulation of tech as Biden has done in launching antitrust cases against Apple, Google, and others. It's a balance she could have to strike if she wins the nomination and the presidency. It would be quite radical, a quite radical departure for Harris to turn this around and basically undermine Biden on such a popular legacy and something that really is so central to what his entire administration is about. After all, I think she does have a debt to Biden fulfilling that legacy. And it would constitute a fairly radical departure if she were to undermine

it. I think it would result in tremendous blowback. Now Harris faces a delicate balancing act in addressing big tech while managing her personal ties to Silicon Valley. For example, Tony West, chief legal officer at Uber is her brother-in-law. Here in the Valley, investors are watching for insights on how her policies would impact Section 230 before becoming VP. She vowed to hold social media platforms, remember, responsible for hate speech on their platforms and also regulate generative AI guys. Back over to you. Kate, when I think about Akamala Harris run here, I think about when the vice president, was district attorney in San Francisco.

She actually, for that position, ran to the right of her opponent. And within California, she had sort of a moderate reputation. Now, granted, Joe Biden had a moderate reputation, too, before he became president. But I wonder if there's any sense of how that might factor in. Her prosecutorial background, some people thought at times that she was too tough on things like gun violence. You know, might that play out here, even within her appeal? to tech? Yeah, John, it's a great point.

And as you mentioned, seen largely as more moderate, perhaps even centrist when it came to some of these big business issues. I think another thing we have to consider here is who Harris winds up choosing as her VP and her running mate, right? With Donald Trump and J.D. Vance, we've been speaking so much about things like crypto, about the idea of breaking up a big tech company like Google, because that's something that Vance has really spoken about and really heralded in as an idea that he really support. So it remains to be seen who she winds up choosing and what their tech stance would be as well.

But as you heard Hal Singer say in our piece here that she also is a part of the Biden administration and kind of unwinding some of the things that have been done in the last three, four years would be a really tough act for her as well. So a lot to balance there. All right. I suspect it'll be someone slightly to the left of Joe Mansion. Kate Rogers, thank you. Kelly, I'd be surprised if it's somebody to the left of her. Still ahead, Abercrombie and Fitch. Never know. Never know. Upgraded to overweight at JPMorgan after dropping more than 10% so far in July. We're going to trade it in three-stock lunch next. Well, welcome back. It is time for today's three-stock lunch and joining us with her trades. The CNBC contributor Courtney Garcia, she's the senior wealth advisor

at Payne Capital Management. Starting off with first solar, shares are getting a boost as the renewable energy sector is rallying today on news of Vice President Kamala Harris becoming the frontrunner for the Democratic nomination, or is this just a burnt cat? balance. Courtney, what's your trade here? Yeah, the movement today, which you pointed out, has to do with the idea that Harris may be on the Democratic ticket, which could see tax incentives for things like solar companies, which would absolutely be a benefit to for solar. We do caution don't trade on these political headlines. We don't know who's going to be on the ticket. We don't know who's going to be in office. We don't know what their policies are going to be. That being said,

I do like this as a stock and we are a buyer here, mainly because of some of the fundamental factors. So with this AI revolution, there is not enough energy to go around. It's going to be an all hands on deck in the energy field, including solar, and they're absolutely going to benefit. And they have a U.S. focus centric, which means it's a higher margin business. And also you are seeing some sort of incentives like tariffs on Chinese products coming in, which is going to benefit your U.S. company. So I think for all those reasons, regardless of any political headlines today, I would be a buyer here. Yeah, it's been a very, very tough space, but they're probably the best positioned, at least from a domestic point of view.

Let's move on to Abercrombie and Fitch. That retail stock jumped 3% after JPMorgan upgraded it to overweight. It's paired its gains, though. It's slightly lower. They were citing strong demand for the brand after marketing improvements, and we just know it's been a denim cycle, Courtney. Is it too late to jump on the bandwagon? You know, I don't think so.

I do like this company. Despite the fact, it's done really well. It's kind of quietly outperform the stock markets. I don't think a lot of people realize. But it is a brand that is absolutely resonating with your younger generations, your millennials, your Gen Z. And even in the face of a tough consumer right now, they're facing inflation, they're pulling back on spending. But for the right thing, they are continuing to spend. And I think the fact that they are resigning so well in this tough space for retail, I think just

puts a lot for them as we look forward that I think you're going to continue to see further growth. And they have the financial flexibility to whether some of the economic uncertainty, right? I mean, they have 900 million in cash right now and only 222 million in liabilities. And I think that actually absolutely puts them in a good position to continue to see further growth as we go forward. And finally, we have CrowdStrike. The cybersecurity stock is plunging another 12 and a half percent as investors continue to digest Friday's massive IT outage. If you try to catch this falling knife on Friday, you're bleeding. Courtney, can you catch it here? Yeah, I know. I know that's a little cliche, but this is one of those scenarios or you don't want to try to catch a falling knife.

This is considered one of like the best in class cybersecurity companies. But when you have news like you did on Friday and that kind of outage, the big question remains is what kind of financial liabilities are they going to be at risk for that really nobody knows. And if that does end up being larger than expected, it's absolutely going to continue to have some pressure on their stock. And this is a company that was expensive even before the downturn that we saw on Friday after this news with the outage.

And they still remain expensive, really compared to their peers and compared to the overall market. So I think for all those reasons, I would stay on the sideline here. There might be an entry point to get in. I wouldn't say that's yet. Okay. Courtney Garcia, thank you. And Power Lunch, we'll be right back. Welcome back. Markets are hanging in there in the green. AMC is up 9%. Bloomberg reporting the company is restructuring its debt up as much as 15% in the session and was halted earlier. All right. We'll keep an eye on that. I've had some action. A couple of individual names, but not as much action, Let's bring our viewers up to speed, shall we? And by viewers, I mean Kelly 20 minutes ago, trying to figure this all out.

Another story we're watching, Kamala Harris, providing some viral personality to kick off her 2024 presidential bid. The Veep hopped on the Brat summer trend, changing her official campaign X page to have a Kamala HQ banner in the Brat look, which is that green there with the simple font. Now, if you don't know, and some of us had no idea, this is all a reference to Charlie XX's ultra-popular album Brat that has. has taken TikTok, John and Gen Z by storm. Harris's move has the younger generation buzzing. Charlie herself gave Harris the brat stamp of approval, but it's not just a brat summer. Pop stars like Chapel Roan.

Chapel Roan and Sabrina Carpenter are also putting industry staples like Taylor Swift and Katie Perry on the back burner. Yeah, Chapel Roan. I'm young enough to know about the memes, but too old to understand them. I think this is, now everyone will understand. If you see brat, if you see the green,

if you see like we're bringing it all together here. And so is Kamala in her own way. See you on overtime. Thanks for watching, Power Lunch. Closing bell starts right now.