Power Lunch - Biden’s Trip To China + Drill, Baby, Drill! 11/13/23

Episode Date: November 13, 2023

U.S.-China relations are a hot topic this week, ahead of President Biden’s meeting with President Xi. And it occurs amid signs China is lessening hostility towards American companies. Which could stand to benefit from these talks? We’ll discuss. Plus, Exxon Mobil is taking a major step toward a clean energy future. The company will start drilling for lithium as it plans to become a major supplier of that key component for electric vehicles. We’ll get the key details. 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. And coming up, U.S.-China relations, a hot topic this week ahead of President Biden, meeting with President Xi. It occurs with signs that China is lessening its hostility toward U.S. companies, which could stand to benefit from these talks. Plus Exxon Mobile taking a major step toward a clean energy future. The company's going to start producing lithium in Arkansas. It plans to become a major U.S. supplier of that key component for electric vehicle. That's a great story. First, let's get a check on these markets with the Dow up 52 points to be the outperformer today. But the S&P is down one and the NASDAQ is down 18 points. Again, we're coming off the best two-week stretch for the S&P this year with a 7.5% gain taking some profits today. Shares of Novo Nordisk, same kind of story. They've turned higher after a data dump on this weekend on Wee Govi. The results showing positive impact on diabetes and heart disease. They were initially under pressure this morning. They're up about a third of a percent now and 50 percent this year. year. Interestingly enough as well, check out the medical device makers today. Among the biggest

gainers with penumbra up 16 percent, insulate, dexcom, intuitive surgical also up nicely. These were all thought to be threatened by the success of those GLP-1 drugs, John. You're going to start, though, Kelly, with the broader markets, which have investors navigating what Mike Santoli has called a confusing macro maze. There are a lot of things to worry about between bond yields, the Fed, the broader economy. It seems to change from data. day. Let's bring Mike in now to guide us through the maze. Mike? Yeah, John, and I consider it a maze because we keep running around and across the same levels on the indexes, reacting to the same sort of feedback loops. You know, we're 4,400 in the

SEP. We got here five months ago. We've traded at this level every month since, and we know why. The economy's been much stronger than expected five months ago, but yields have gone up. We had to kind of digest the higher for longer Fed, and that in itself undermines expectations that the economy itself can continue to grow. So how do we get out of this? Are there any ways that we can see past this dynamic? I would say the fact that we've kind of had a modest earnings recession and now 12-month forward earnings estimates are walking higher again, that's one box you can check off, at least for now. Yes, it's very uneven. Yes, it's mostly the hugest stocks that are driving that earnings growth. But at least the market tends not to get into too much

trouble if earnings are positive disinflation. Key part of the story. It definitely would defang the Fed story and make it make them done if we had further persuasive disinflation. We don't know if we're going to get that. And then productivity growth, longer term, not quite a specific catalyst, but we see glimmers out there that the economy and companies are becoming more productive, more GDP per unit of labor. We'll see if that can continue. Indeed, Mike, stay right there. Our next guess is striking a cautious tone on the markets, It's expecting the S&P to end the year, roughly around where it is now at 4,400 and hold there through April 2024. But he does see some positive signs, including a resilient consumer.

Let's bring in Barry Bannister. He's chief equity strategist at Stiefel. Barry, it's great to see you. I would say you were a little cautious, but compared with some of the outlooks out there, I'd argue you're almost optimistic. So what keeps us out of a worse performance in the S&P in the near term? Yeah, the S&P did pop up the couple hundred points that we expected. in a note we wrote over a little over a month ago at the end of the September correction. We've really not been too interested in the S&P top line.

We think the index itself is peaking out the mid-single-digit, high single-digit earnings growth into 24 would be offset by a little bit of multiple compression. The price earnings multiple would come down. So what we've been emphasizing is more of a cyclical value, prolonged cycle trade, and less of a cyclical growth. So think of that as long financials, industrials, energy, basic materials, real estate. And then on the short side, on a pair trade, some of the semiconductor early cycle cyclicals like Nvidia, Apple and computer hardware as well as autos like Tesla.

You know, you know better than anyone how much you're sticking your neck out on that kind of call, Barry, because for starters, it's something people have been expecting for a long time. But also there's the risk that the liquidity and momentum trade picks back up with some, like we said, Apple's up 8% this month. So what gives you the confidence to stick with this and make this big call that people are going to rotate into cyclical value? Well, most of those big cap stocks are the reason we did have a rally back from 4200, just, or 4150 on the S&P 500 at the bottom of the correction recently in September to 4,400. But I do think that the market stalls out here. If you look at it, the economy is still sailing along fairly well. We came to the precipice of an unemployment signal of recession, but our leading indicators

and unemployment indicate actually a pullback in unemployment in the next few months. The consumer is still quite well. Real goods consumption, these are tangible goods, have been rising above trend, above the 10-year pre-COVID trend now for a couple years, and the services have reconverged on their pre-COVID trend. So that's less volatile GDP. So when you think about it, the economy's holding on pretty well and rates have topped out. Inflation is somewhat sticky, and that puts you more in that cyclical value camp where they're oversold. Mike Santoli, in cyclical value, Barry mentions a couple of areas, real estate and financial services. You've got commercial real estate and you've got

regional banks under the covers there. And there are some people, right, concerned that they might not hold up so well over the next five months. What are you hearing? What do you see in the truck? Sure. No, it's pretty tough to have this idea that we're going to just sort of outrun the late cycle shadows that have been hanging over those groups. I think the answer to that, though, is valuation. The market maybe in the short term has overshot on the downside in terms of valuation for things like pure banks versus what we might expect them to be able to deliver. in the next year or so. It's a tricky one because, you know, when people complain about the extreme concentration of the performance among the mega cap growth stocks, it amounts to saying, what's wrong

with this market? Money's going toward the highest quality companies with all the earnings growth, and it's ignoring the stuff that looks like it has macro challenges. So things can change, though, in that dynamic. And I think you just have to look to a year ago when we got a really hot group of January economic numbers, and people got all excited that the economy of all things might be overheating. So I'm predicting it. but I'm saying that the narratives can change along the way, even if it doesn't get you real escape velocity for the average stock. Barry, how picky do investors need to get in financial services in real estate to avoid potential problems in commercial and in regional banks? Well, I mean, usually the most bang for the buck is going low quality, but chickens get fed and hogs get slaughtered.

So maybe go with the higher quality banks and the higher quality real estate, not the class B office where it's obviously going to have problems for years. And then if the trend reverses, then you can go down market into the lower quality names. But as Mike said correctly, how much is in the price? These stocks are really sold down and the big cap growth is really bought up. And it just looks to us like a rearranging of the deck chairs, not a particularly strong market, just a market with different cyclical rotation. And Mike, finally, what would you be watching? We note that apparently the 50 days move below the 200 day, but it's not a death cross

because the 200 days still moving up. But what are you watching? Well, that's on the Dow. Yeah. You know, to me, it's the S&P and whether, in fact, we can kind of break above this level right here, just purely in terms of the market's own rhythms. You want it to sort of stay clear of $4,400 for a little while. But more broadly, I'm interested to see how the bond market, you know, metabolizes whatever the inflation story is tomorrow.

There might be some mechanical effects on core. And if you get some confirmation, people get more sense that you have seen peak yields and peak Fed, then you can maybe find a new equilibrium in terms of equity valuations with yields. All right, gentlemen, thank you both today. Barry Bannister and our Mike Santoli. And speaking of the bond market, let's get to it. Doesn't seem too concerned with Moody's cutting the outlook for U.S. Rick Santelli is in Chicago.

How does it look, Rick? Well, John, if you look at an intraday of two-year note yields, we're coming down, basically the low yields of the session. But when you pair it with Fridays, really the truth kind of peaks out. We've done work above Friday's high yields in two-year, and look at the same dynamic in a longer maturity. Looking at intraday of tens, also on the lower end of the range, just made the new low yields about 20 minutes ago. But yet when you pair it with Friday, you can see we did a lot of work above Friday's high yields in the mid-460s.

As a matter of fact, if you open the chart up to mid-October, we have covered what many believe may be the range for the rest of the year on 10-year-note yields. 5% never closed above it, but intraday violation. and we traded down as low as 4.5% and did close briefly below that for one session. Those are big levels and traders are highly aware they could contain the market, although real story might be in tomorrow's year-over-year core CPI. Of course, we should be very careful to monitor whether it can actually get below 4% or not, which is still double what the Fed's inflation rate is. And finally, if you look towards the currencies, the dollar yen today has a range that would include,

if we closed above it, a new 33-year high. And do remember, the euro is 57.6% of the dollar index. Number two is the yen. But it's only 13.6%, which means you're not getting a lot of positive horsepower about a positively long-term move of our currency against the yen. Kelly, back to you. I had to kind of summarize, though, would it be fair to say that the better the U.S. dollar does, the less we have to worry that we're really heading into a fiscal crisis? You know, I don't think I could be prepared to say that because I think we may be the

cleanest shirt and a dirty laundry bag of FX. And it's more of a story about what the weaker currencies are going to do. The strong currency, well, it's a good thing. But then again, when we have to pay more for our imports, less for our imports, and the rest of the countries have to pay more. That's a bad thing. Rick, thank you very much. We appreciate it.

And on that note, actually, we just got some new numbers from the Treasury Department on what the government is spending and taking in. Emily Wilkins with the deficit details. Emily? Hey, Kelly.

Well, we just learned now that the amount the government is paying an interest on the national debt jumped last month. 76 billion in October is what was spent, according to Treasury Department data released this afternoon. And this is a...

actually the third biggest line item in what the Treasury spent. Only Social Security and Defense was there more spent last month. And compare this to about a year ago, it's 77% higher now than what we were paying for interest at the national debt. Another interesting detail in this report is that the deficit for the month of October is actually the lowest it's been in five years to compare all of the octobers. But that isn't really a trend. It's more from companies in California who got an extension on paying their taxes due to wildfires in the area earlier this year. But Kelly, John, certainly interesting in terms of just how much more we are paying in interest given some of those rising interest rates. Also because Emily were in the middle of a

shutdown fight over spending levels, but there doesn't appear to be much of a fight over it. It's right. The spending looks pretty set for the time being. And that was something that was a lot of disagreement on, a lot of debate about. I mean, that was a key part of going back couple months with the fiscal cliff and the debt limit, that was what this was decided was the spending. And at this point, it kind of seems like any deviation from that is going to cause a lot of issues and might threaten a bill being able to get passed either with the Democrats or with the Republicans. They've kind of locked themselves into that number, it seems, going forward. Yeah, and the higher interest costs are going to be a persistent thing, it seems.

Emily, for now, thanks very much. We appreciate it. Our Emily Wilkins. I'm still stuck on that cleanest shirt in a dirty laundry bag. The parents of young kids out there felt that one. Coming up, shares of Boeing are hired today on a deal with Emirates Airlines and also hopes that China could allow its airlines to start buying the 737 Max again. This is one of the companies that could be impacted by whatever happens in this week's meeting between President's Biden and Xi. And a couple big name stocks hitting new 52-week highs today. Walmart at an all-time high ahead of its results that are due out later this week, meta at its. highest in nearly two years as it aims for a seven-session winning street. That stock is up 175 percent this year. We'll be right back. Welcome back to Power Lunch. Chinese President

Xi coming to the U.S. this week with a meeting with President Biden among the major things on the agenda. Let's get the latest buzz on how the trip is going out in China. Eunice Yuni joining us from Beijing, Eunice. How are you doing? And what can you tell us? Well, Kelly, to give you a sense of the mood here. We're only a couple of days away after Singles Day, which is the huge shopping festival. But the top turning topic is consumption downgrade. Consumer prices are in deflation, foreign direct investment is turned negative. And this is the economic condition, as well as the level of consumer confidence that is here as President Xi Jinping heads to the U.S. He is going to be meeting with President Biden on Wednesday. And also interestingly,

headlining a dinner with U.S. CEOs. His pitch will be for Americans to continue to invest in China. And then outside of the direct pitch, he's expected to continue to do what his administration has been doing with the Biden administration, and that is pushing for easing of export controls, of sanctions, of tariffs, also looking for some reassurances on Taiwan. Now, for the U.S.'s part, The U.S. is expected to increase its hopes and its efforts, rather, for a greater communication. In fact, the White House's national security advisor, Jake Sullivan, had said that President Biden is going to push for direct military-to-military ties. That's something that the U.S. has wanted especially. But also on the economic front, Treasury Secretary Janet Yellen, Jessica has come off of several days of hours and days of meetings with.

her Chinese counterparts, especially the vice premier, just last week. She has also agreed to come here to China next year as part of what she has described as a regular cadence now of contact between the two sides. Of course, on the U.S. has been, side they've been pushing guys for the Biden administration and the Chinese to continue to have a way to communicate more directly in the case, hopefully not of some sort of military conflict or potential financial instability. Eunice, on the ground there, what's your sense of how high or low the bar is for anything productive getting done here? It seems like there have been so much chatter about the U.S. trying to choke

off China's economy. Is there the expectation that maybe that isn't true anymore, that she and his administration are going to be able to get some kind of a breakthrough? Well, I think when you talk about direct, you know, hearing directly from the government, it's just increasingly become a black box. So it's difficult to know exactly what their expectations are. However, outside and in a lot of China circles, the belief is that fundamentally, China, as well as a U.S., don't really look as though they're willing to make major changes in their policies. And so, you know, when you have Xi and Biden sitting down, the hope is that maybe they could make some progress in, like, kind of on the margins. But because there haven't really been any, you know, there are any indications that either side is really willing to make some big changes.

Expectations are quite low. All right. Eunice Yun, Yun. Thank you. So, can anything significant come out of this high-stakes meeting between, President Biden and China's President Xi, let's ask Derek Scissors, Asia Economist at the American Enterprise Institute. Derek, any hopes here for things getting better or just maybe the fact that they're talking means things might not get worse? Yeah, I think that might not get worse is probably the biggest hope. I don't know that things should get better.

Xi Jinping has been in charge of the Communist Party for 11 years now. I don't think his behavior is going to change. I think the problems the U.S. has with China are going to continue and therefore you're not looking for some big improvement in relationships. You're looking to put a floor under the relationship. The one possible exception is a deal over fentanyl. It's been discussed, at least here in Washington, for the past few weeks. There would be problems implementing that deal and enforcement of that deal, but that is something that could be announced, and we could hope for enforcement on the Chinese side in 2024. for. Not to take this too far afield, but that's really interesting. And do you think it could actually do something to significantly change the kind of arrival of fentanyl in this country? Well, we know, you know, there's a lot of uncertainty here, but we know that fentanyl precursor production is dominated by China. This is globally. We know that fentanyl is arriving in the U.S.

from Mexico and that there are links between Chinese producers and then Mexican buyers of those precursors. So if China were motivated to really crack down, which of course it is capable of doing in a wide range of areas, crackdowns are kind of a Chinese specialty under Xi Jinping. If it's motivated to crack down on that precursor production, then it would matter. The problem is that China makes agreements with the contingency that they don't say, which is unless you're mean to us, unless you're too critical of us. So if the U.S. is critical of China in 2024 during the election campaign, say, then you wouldn't see that Chinese motivation.

The potential is there, but probably we should expect some sort of agreement to be announced and then it not to work very well. That's a great point, Derek. Let me also ask you about something that Anya Manuel last hour said she would take as a sign of a big breakthrough. It wasn't saying it was going to happen, but if it did, and that was kind of the reengagement of military talks between both sides that have been suspended since Pelosi's visit over there. How likely would that be either from the summit or at all in the near future? I think that's possible. The whole Biden administration pitched this year, and Eunice talked about it and you guys talked about it a second ago, is to try to improve communication between the U.S. and China. Now, what they won't say, the Biden administration isn't going to say this is they're worried that Xi Jinping is isolated in terms of information, that he's not being told things about the world that he needs to know because basically everyone's afraid of him. You know, he puts people in power and then they disappear. A few months later, this has happened repeatedly this year. So it's a genuine U.S. concern that we need to try to communicate with Xi instead of going through underlings who may or may not tell him what's going on. We communicated that to the Chinese. They're at least having this meeting.

So there's a chance that more direct military communications will come out of it. It's certainly a goal of the administration within the broader goal of we need to be able to get to Xi Jinping himself and not people that we're not sure are going to tell him what's going on. Derek, how important, even from an economic perspective, is this Mid-East conflict, this war going on, and these two leaders talking at this point about perhaps improving communication? Well, I mean, the mid-east conflict obviously has a lot of really important dimensions. I don't know that it matters very much for the U.S. It potentially matters more for China because they're much more oil and gas dependent than the U.S. is. In terms of imports, I don't think right now they see a major threat, but they do see a problem

there. I think what they'd like is for the U.S. to say we'll take care of it somehow. They don't want to be directly involved. They want us to do it, us to protect their access to oil. So that's their hope. I don't think something like that is going to come out of the summit. I think that's very difficult cooperation for the two countries. So I think that, you know, what's going to happen in the Middle East and its many dimensions, the econ dimension, the economic dimension for China is going to continue to be something that they have to worry about. Derek, could you tell us which companies are going to get a lift here in the next So we've had meta say they might start reselling their headsets, or not reselling, but selling headsets in China for the first.

They haven't done business there in a while. We have Boeing with this news of possibly getting orders from the Chinese. Where, I mean, should we expect more of this and any idea where? Well, I think Boeing is an interesting one. I think you could get China sort of liberalizing market access for Boeing, maybe starting negotiations. The problem there for Boeing limiting its upside is the Chinese are really emphasizing their own domestic airline industry, meaning making aircraft in China, Chinese aircraft. So I think there's a little boost for Boeing possible.

It's hard to see it as a long-term boost because the main event is not Biden-She for Boeing. The main event is what China is doing with its own aircraft industry. I think elsewhere, Janet Yellen, Secretary Yellen, Secretary of the Treasury, really would like better U.S.-China relations. So I don't think the executive order coming out of Treasury limiting U.S. investment in China is really going to have any teeth to it. That may open up profit opportunities for U.S. financials in China, which have been very cautious while the executive order has been formulated. Maybe financials are one place to watch then. We'll see. Derek, thanks so much for your time.

Appreciate it, as always. Derek Scissors with AEI. Seal to come, music to investors' ears. Our technician will explain why Spotify still has room to run even after its monster more than doubling gain this year. There's more Power Lunch after a quick break. Welcome back to Power Lunch. We've been talking about President Biden's face-to-face with China's President Xi Wednesday at the Apex Summit out in San Francisco. Let's drill down on the tech companies that could be affected.

Deer Jarbosa has more in today's tech check. And so far, just meta-deerger, or maybe I'm missing some. I heard you mention that. And I was listening to your earlier conversation. There's a lot of issues that are very delicate, that we're probably not going to get any resolutions. But tech may provide some hope for incremental progress at least this week and help to see. a relationship that's been frowned increasingly tense over the last few years. Now, one area to watch I didn't hear mentioned is semis.

The Biden administration, of course, has been trying to cut off high-end chip sales to Chinese customers through the export ban. There are signs that it hasn't been all that effective, right? We've seen companies set up JVs, tweak chip design, rent through the cloud, stockpiling. Those are just some of the ways that they've been able to evade those controls. But if the Biden-She meeting signals some loosening of chip controls, semis could be the beneficiaries. And on the flip side, additional limits, so that could be a stumbling stone for the tech rebound as a whole,

because over the last two weeks, semis has been leading it. Watch Nvidia in particular, of course, which has the most to gain in the generative AI push happening in both countries. Now, you did mention Mehta's recent deal with Tencent. That came 14 years after Meta, then Facebook was shut out of the country. President Xi could signal that China is open to even more foreign businesses. After the summit, he's holding a banquet with U.S. executives, so could raise the question. Could meta just be the start? And finally, there's a lot at stake for San Francisco itself this week.

The chance to rewrite its so-called doom loop narrative and promote the city's tech revival. And so leading up to this week, guys, the city has had a major makeover. I was just walking by the Embarcadero of the Financial District where this Bureau is, and it is as clean and safe as I have ever seen it. And I think the hopes is more domestic that it's going to encourage more businesses to come back to San Francisco. to San Francisco. All right. Dear Jrabosa, thank you.

Let's stay out west now with Julia Borsden with ACNBC News Update. Julia. John, after former president Trump filed a legal motion supporting media requests for his election interference trial to be live streamed, special counsel Jack Smith is arguing against it.

In the filing today, he said the former president wants a carnival atmosphere, and he cited other trials in other high profile cases in support of no cameras. He mentioned the Oklahoma city bombing, the Boston Marathon bombing, and 9-11. The Supreme Court says it is now adopting an ethics code as several justices face criticism over undisclosed travel and gifts.

It was posted on the court's website today. All nine justices signed a statement on ethical principles and practices earlier this year, but had registered, had resisted until now writing a formal code of conduct. And don't try to buy and flip your new cyber truck. Tesla has added a clause in the purchase agreement, saying, buyers can't sell their new vehicle within the first year unless they have specific permission or they may be sued. Offenders could also be banned from buying Teslas in the future. John, back over to you. Julia, thanks. So is it your truck or is it not your truck? I mean, come on. Well, we'll see.

Julia, thanks. Ahead on Power Lunch, shifting gears. Again, Exxon Mobil announcing plans to produce lithium in a bid to become one of the biggest suppliers on the market for EV batteries. We'll get Key details. Plus, systems go down under why a cyber attack hitting shipping ports in Australia could have ripple effects just as the holiday shopping season heats up. Power lunch will be right back. ExxonMobil intends to keep drilling, or digging maybe, I'm not sure which, only this time it's for lithium. The company announcing that it's got plans as it aims to continue to be a large supplier for whatever makes your car go. Gas or an electric battery. Phil LeBoe joining us now with more. Phil?

Hey, John, this is something we've been expecting for some time, especially with all of the EV battery plants that have been announced over the last year and a half that are being built here in the U.S. It's only a matter of time before they're going to need to have more and more lithium that is processed, drilled, and then processed, extracted here in the United States. So here's the lithium game plan. Xron announced this morning on Squawk Box. Drilling has begun in southern Arkansas.

A huge lithium deposit down there, 120,000, rose acres with production beginning in 2027. And the head of low carbon solutions for Exxon says the whole goal here is to build and generate low-cost lithium for EVs that need to come down and cost. And I think what we've seen over the last few quarters is really the importance of affordability. And in fact, what we're working on here on lithium and having a low and attractive cost position and the production of lithium and domestic supply base for lithium can feed into that affordability equation for EVs. Because if it's not affordable, you know, it's not going to grow at the rate that we needed to. He's talking about EV sales. They do need

to come down in price. Evies overall, they need to crack well below 40,000 if you're going to see more adoption of EVs. Right now, they're just 8.7% of the market. And yes, hybrids are outselling EVs right now. Take a look at shares of Exxon Mobile. And again, the production starts in 2027. That is the expectation. And remember, in 2025, guys, is when we will have the Tesla lithium refinery down in Corpus Christi. That's supposed to come online. So this is the slow but important beginning of lithium extraction and production and processing here in North America.

And Phil, Exxon has had, you know, 100 plus years to perfect oil drilling. What makes them think that in a space where we're. crowded with investment right now, they're going to have the right formula for lithium right off the bat. Well, look, they know that the price of lithium is volatile. It's come down dramatically over the last year. And it's too hard to know, Kelly, where it's going to go. I think that they know a thing or two about extraction of resources from underground, from wells. And I think that they're pretty confident, given the size of this deposit and how much they potentially could extract in southern Arkansas, I think they believe that they've got the right formula. At least that's the

plan right now. We'll see how this shakes out over the next couple of years. Indeed, Phil. Thank you very much. Our Philabo reporting. Meanwhile, Australian ports are getting back to business after a cyber attack crippled one of the country's largest port operators. Our Lorraine Lerocco joins us now with more. This is global reverberations. It most definitely is, Kelly. DP World Australia, which manages 40% of the country's container trade, was the target of this cyber attack, and it's the company that's part of D.P. World, which is based in Dubai. The attack was discovered Friday evening in the company's IT system, and the system was shut down for two days. This created a backlog of 30,000 containers, which are beginning to work through

today. But D.B. World Australia says, while the operations have resumed, this does not mean that the incident has concluded. According to marine traffic, there are currently six container vessels in the port of Melbourne, which is the country's largest port. 20%, I'm sorry, 20 more expected by the end of the month, and authorities are still investigating on who is responsible for the attack. Okay, if they're investigating who's responsible, should we conclude that this is probably a ransomware attack or no? They have had ransom attack in the past, other ports even this year.

DP World is enormous, and they actually have a tremendous amount of port. poor connectivity around the world. And when you look at that, a lot of logistics managers are concerned as to, are they going to be able to infiltrate the other ports that they manage around the world? Wow. So there should be some concern then that the company is operating in other places could be compromised as well? Most definitely. You're only as good as your next firewall, as you know, John. And, you know, they've got about 60 ports around the world. And so that really is a tremendous footprint, if you will. So no one knows if it's a localized attack or if it's something

far reaching. Literally a lot at stake. Laureanne, thank you. Still ahead. Hitching a ride on the clean energy bandwagon. Companies are designing trailers that are not only EV friendly, but also better for the environment.

We'll get a clean start on the other side of this quick break. Welcome back. For those of you who love to hitch up the trailer or that big old camper van and take the family out on the open road. You already know that all that towing costs you a lot more in either gas, battery, or electric power. But what if there is a way to wipe that out? Diana Oleg joins us in her continuing series on climate startups. What are they up to now, Diana? Well, Kelly, look, I am not a camper

myself. I will admit that, but I do know that most travel trailers can't propel themselves, and the drag on regular vehicles means more gas. And with more of us using electric vehicles, now the drag on battery power can actually make it prohibitive. So what if there were a trailer that could change all that. The $50 billion travel trailer industry is finally hitching up to the EV ecosystem. Legacy companies like Winnebago and newcomers like Lightship and Pebble are not only electrifying their systems, but changing the vehicle model itself. California-based startup Pebble has invented a self-propelled, self-powered, remote-controlled trailer.

We have a generous EV battery on board, and we have integrated solar array, over the rooftop of our travel trailer so that you're harnessing the renewable energy from the sun and powers the entire vehicle. You can flip this office down to turn this into a bed. The 25 foot trailer that sleeps four also has its own electric motor, so it propels itself, saving on the power needed

from the car dragging it. That's a major concern for those using an EV to pull a trailer as batteries can run down quickly. Yang, an Apple alum who helped build the iPhone, says he's using that knowledge to enhance the RV experience. We bought an iPhone-like experience to RVing. We automated the hardest part of the RVing, such as hitching, towing, parking, setting up a cam. The user can go to the app to maneuver the trailer on its own, which helps in tight spaces.

That high-tech is a focus for investors who are seeing a generational shift in RV use from baby boomers to millennials. These group of consumers are very different from the baby boomers. They are more tech forward. They are tech savvy. They want better experience. They want better towing experience. In addition to up honest capital, Pebble is backed by Lightspeed and Vision Plus. Total funding so far, $13.6 million.

And the trailer price starts at $109,000, but potential tax credits could bring that down. The version with the motor starts at $125,000. And with the solar and battery backup, it acts as a backup to actually live off the grid in case of disaster. They aim to deliver the first ones next year. Back to you guys. Diana, obscure question here. When you add a lot of electronics to something, it automatically becomes obsolete faster, it seems to me. So I wonder if they think this is more likely to be leased or to have some upgrade plan versus another type of trailer that has fewer electronics that, you know,

five, 10 years later, it still looks just as new and functions the same as it did when you got it. Well, they haven't actually delivered them yet. It doesn't start until next year. So I would imagine there would be upgrades that go along as they have new versions of any electronic equipment, whether it's an iPhone or a trailer, they're going to have version 1, 2, 3, 10, 20. So I imagine, you know, some people buy some could lease, but that depends on what kind of investment you want to make and what kind of upgrades they see down the road, so to speak. Very cool. Diana, thank you very much. We appreciate it. are Diana Oleg.

Coming up, three bullish charts for three companies transforming the world. We're going to reveal those names and get some technical support and Power Lunch returns. Welcome back to Power Lunch. Time for some technical support.

Today, our technician picked three bullish charts that she says fit into two themes, AI and Gig Economy. Here to chart them is Jessica Inskip, director of product with Options Play. I feel bad that I didn't wear my cranberry

today because you and Kelly got the memo. But let's start with Spotify, Jessica. Yeah, absolutely. So Spotify, first of all, when I'm looking at a trend and these are all longer term, I look at the 26th and the 40 weekly moving averages because as technicians and even fundamentalist, we look at the market quarterly represents two and three quarters. So I want to see prices going up. This is my favorite chart. When I see this pop up, that gives me an indication of a bullish trading cycle. Now what happens is it access support. So right, right, Now, that is our support for Spotify, is 155. That's found out that 26 weekly moving average, which now I'm targeting 182, which is this July 17th high.

But once we come through that, then we've got a job to do to overcome this longer term high, which is around 200 and then 215. So what's good here is now I'm seeing a series of higher lows, even though I might find some resistance here as long as that is sustained as a support level, the 26 and 14. I'm very bullish on Spotify, especially as it fits in with the gig economy. Okay, I like it. So up next, Adobe. All right. So Adobe, this one I'd like to say we marry AI and the gig economy. Great B2C and as well as B2B revenue model that's there.

Same thing. 26 and 40 weekly moving averages. This one happened earlier moving up, but still acting as support. Adobe has a job to do. Adobe needs to get high right here and overcome. its initial downtrend, which is a beautiful thing to do, which means it's a very strong area of resistance. Because if you were to purchase Adobe at that high, around 700, you might be holding out to this point, in which case, as soon as we get higher to that point, you may say, actually,

I'm break-even. It's that psychological aspect. So will buyers come in and overcome where that supply is? We'll demand to be there. That's the question. But still, that's a lot of room for movement. but the key here is keeping these levels held. Otherwise, you can see when they're fallen, clear down trend that occurs. Okay. Now, the market caps keep getting bigger. They do. And with the biggest Apple.

They do. So I think Apple's important. I like to call this one the AI Sleeper because they haven't announced it. Perhaps it will come in March. We'll see, John. Same thing. We've got the 26 moving average. We're missing the 40 here, but it is acting as support right around here.

I need Apple. Now you notice the difference charts here. already overcome its downtrend from even pre-COVID because they didn't over hire. They've got some good management. That's important. But our next level here is this high that occurred right around 190, 197. If we can break through that, then I expect all-time highs for Apple. And that's very important and something that I'm excited to see that happens.

But we need that for a broader market rally. You know, it's bigger market cap. So that's what we're waiting on. But we'll see what happens. All right. Jessica, thank you. Thank you. Coming up, deep discounts amid falling fares,

why it could be a good time to buy an EV or book a flight. We'll discuss that and more when closing time returns after a quick break. Welcome back. Four minutes left in the show and several more stories you need to know about. So let's get right to it, starting with global automakers, stepping up discounts on EVs in a bid to counter-weakening demand. Sales data compiled by HSBC shows the average discount in the U.S. hit 10% in October, 11% in the U.K., Those kinds of sales genre were basically unheard of just a year ago. And if you already own one, you've got to, I guess, be concerned about the value of the potential reset, if you're allowed to resell it.

Right. Because if you get a cyber truck, maybe you just got to hold on to it. As we've learned, also, Tesla, the discounts are even deeper than that. In some cases, I've seen for use Tesla's upwards of 20, 30, even 40%. And I guess that leaves money left over to figure out things like solar charging, right? because if you're going to get the EV, how much money can you save in getting that electricity to power? The real question is, what is the sort of sustainable future level of EV demand? And is whose model is right?

Is it pure EVs? Is it Toyota's more hybrid approach? Even I saw there out with an all-electric Volvo minivan today for over $100,000. Is there going to be a buyer there at that price point? We'll find out. Exxon sure is hoping so. Yeah. For all that lithium.

Speaking of discounts, airlines have so many seats to fill, you might be able to book a flight. for less than 30 bucks right now. According to aviation data firm, Syrium, airlines scheduled a record 260 million seats on domestic flights in Q4. That means lower prices to help fill them, especially if you're willing to travel at off-peak times. A bit of a theme here, Cald.

Right, deflation, and that's why the EV stocks have been struggling. The airlines have been struggling, too, even as other parts of the travel segment hold up okay. At the same time, though, you got this trend in, what do you call it, premium economy? Yeah. I guess in a way that's cheaper first class, but it's more expensive economy.

So trying to figure out how to get those margins, even as you've got to lower prices these airlines are. Indeed. Google is reportedly in talks to invest hundreds of millions of dollars in Character.A.I. As the chapbot startup seeks capital to train models and keep up with consumer demand, sources tell Reuters that investment will deepen an already existing partnership between the two companies. We had Character.A.I bring back some debt economists to life. That was several months ago now. But it's interesting to me to watch Google look around for different partnerships and ways that it can kind of build out AI while Microsoft, meanwhile, kind of runs off with a proven business model.

This is starting to feel like FOMO, like the number of different AI startups that are getting big investments from these huge tech companies. It's like nobody wants open AI to happen to them again where just Microsoft gets it, right? Absolutely. Lots of money flowing to just these types of startups, though. I think also the larger question is, Microsoft, correct me if I'm wrong, are you speaking with Sahlia this week? I happened to be. Did I see that? Okay.

So it seems like they're in the nascent stage of rolling out, what's it called? They're co-pilot across enterprise. And so they're showing already that there seems to be a clear monetizable market. Their market cap about to surpass apples and all of that. Whereas for the other major players, we're still wondering exactly what that's going to look like. Learn more in the exchange on Wednesday. Is it at 1 p.m.? It is.

Oh, that's fantastic. Texas A&M is paying $75 million to the coach at just fired. The school parting ways with Coach Jimbo Fisher, with two games left in the season. After a successful pandemic season in 2020, the school gave him a 10-year $95 million contract extension. And reportedly, Jimbo is entitled to every single penny, even if he accepts a job at another school. Why do they keep making these deals? Sometimes the big high-profile hire works out, but how often are we reading about them being fired?

And this is not just in football, by the way. This is in media and many other industries, and they have to pay these people for years. I'd like a contract like that. I don't know. Wouldn't we all, but I'm just saying it. You know, it's unbelievable. Anyway, unbelievable.

Thanks for watching.