Power Lunch - Big Tech On Deck 10/30/24

Episode Date: October 30, 2024

Stocks traded near the flatline Wednesday as investors digested a deluge of earnings reports and looked toward more results from megacap technology companies. Alphabet exceeded analysts’ expectations as the company saw strong quarterly revenue growth from its cloud business. While other tech titans Meta Platforms and Microsoft are set to report on Wednesday, and Apple and Amazon are due Thursday. We’ll tell you all you need to know. 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 Mathis. I'm glad you could join us today. There are three big ease driving the markets right now. The economy, we got earnings, and we got the election. Let's start with the economy. GDP coming in a little lower than expected, only 2.8% growth in the most recent quarter. But the ADP Private Payrolls report showed 233,000 new jobs created.

That was double the estimate, Kelly. And so it looks like the economy is holding in there very nicely. Yep, exactly. the earnings front. We've got so many big names and movers throughout the show to get to, but Google is a big one. It's up 4% helping to send the NASDAQ to another record high today. Meta and Microsoft are coming after the bell. Yeah, good earnings report from Google, seemingly clicking on all cylinders once again. And again, as you said, a couple of other big reports coming out after the bell. And on the election front, shares of Trump media are lower

today, but they have still more than doubled just this month. And Donald Trump has made more on this than any other company he has ever been involved in. And who knows what will happen after the election? Depends, I guess, I suppose, on who wins the election. But there are questions about who can invest in this company. Are there conflicts involved here? If he becomes president again, what will he do with his holdings in that company? It gets a little gnarly pretty quickly.

We'll gnarle it out with Robert Frank a little bit later on. Let's start with a mixed bag on economic data. GDP fell short of estimates by a little bit. But private job growth beat expectations and PCE, a inflation measure, if I'm calling correctly, is on deck tomorrow, followed by the jobs report on Friday. That's November 1. So what does all this mean for the market? Assis Shah is chief investment officer of public investing at Goldman Sachs Asset Management. Mike Santoli is our senior market's commentator. Acey, I'm going to begin with you and ask you a question I did right before we came on the air.

Are you surprised the market has had the sort of unrelenting upward course that it's had all year long? Look, I'm not surprised because if you think back to 12 months ago where, you know, we have had a 40% rally from 12 months ago, the world was really scary place. You had positive correlation. You had across bonds and stocks, right? So your stocks were going down, your bonds were going down. investors were not happy. And over that total month period, what's happened is that you've seen a rally in bond, you've seen the Fed start to ease, you've seen the economy stabilize,

and you've had this kind of growth from AI that is just creating a tremendous amount of economic growth and value within the stock market. The AI trade, Mike Santoli, has certainly been one of the animators this year. Can it continue? Well, I think obviously can continue. The question is how much has the market maybe already figured out? I think what's been interesting is it was really the first half of this year when that was really dominating, consuming most of the oxygen in the market, that AI trade, the Mega Cat Tech Group. If you go from, let's say, July 10th, happen to have these numbers up the top of my head, that was right after a very benign CPI report.

That's the peak in the NASDAQ 100. We're still not back to it. The broad S&P 500, the Eco-Eat S&P, the Russell 2000, have all vastly outp. perform since then because you have had this sense of the Fed has clearance to ease a bit into a firm economy. Earnings growth is broadening out. So I think you can have more than one thing happening at one time, which is excitement over AI and the rest of the market, too. I will say, though, you know, S&P up 22% year-to-day, trading at 22 times forward earnings. It's obviously not an inexpensive or really under-exploited bull case anymore, but I think it's still intact. And I should I guess the question now is, if you thought it was obvious, we were about to take off on a 40% increase,

please tell me what the next 12 months are going to bring and the election outcome and all the rest of it, because we always worry that when optimism about the market is now so high is the moment when things are going to unravel. So look, I think that you are going to see positive returns in equities from here on out, but I think it's going to come in a different way. And, you know, as just highlighted, you've seen kind of a different market since July. You know, July, August, September, it really does feel like a very different environment where the market's broadening.

You know, one of the trades that I think is really interesting is what I like to call the power pivot where you're seeing not AI stocks, but you're actually seeing kind of the stocks that benefit from AI, you know, whether it's utilities, industrials, other parts of the economy where investment needs to happen to facilitate

this economy going forward. That's what's going to propel us into this forward cycle. I think the other thing that's fantastic to see is that as the Fed pulls its foot off the brakes, right, other parts of the economy that have been holding back because there just wasn't in enough capacity to grow, they're able to take hold and, you know, generate returns for those companies. Meanwhile, those companies have been leaning out during this time. What does Mr. Market want to see out of the election?

Does Mr. Market care really in the long run, whether it's a Harris victory or a Trump victory? Does Mr. Market really care in the short term whether there is a definitive result or a period of challenge to the results? Walk me through how I should think about the next few weeks and ultimately whether the market truly cares whether Harris wins or Trump wins. Yeah, so I'll tell you the following, which is the number one thing the market wants to see when it comes to the election, is it wants to see the election done, right? So if the election drags on. And not drag on. And not drag on. Give me a result.

So what I've seen from every market participant out there is everyone is taking down risk. The market does not like binary events. We've seen that in the past. Binary events are not what the market likes to invest in. But having said that, once we get through the election, which is a lot of the election, which is a lot of the election, which is a lot of the election, we're not. we will. I'm very confident we're going to get through the election. Then the pivot is going to be towards what are monetary policies and then what are the policies that sit across different sectors. I think in general, though, there's been policy convergence. Shockingly, it might seem like strange

to believe, but there's been policy convergence where there's going to be investment in the U.S. in manufacturing capacity. There's going to be kind of higher walls in the U.S. relative to imports. They may come in different forms. It may come from export restrictions. It may come from tariffs. But the magnitude of those and how rational they are relative to what's pricing in the market or what's going to matter for market returns. Yeah, you say small caps, big opportunity. We're having a big debate about this last hour. This narrative would have been pristine, if not for the increase in interest rates, which of course wipes out a lot of their profitability. What do you do with that fact?

I think you look to the Ford, which is in January, it turns out it's going to be January. People are going to have fresh money they put to work. They're underinvested by the nature of the large-cap rally. They're under-invested in small-caps. And the combination of the Fed starting to cut rates along with kind of a rejuvenation of these secondary trades when it comes to AI technology more broadly is really going to be beneficial to small-caps. Meanwhile, the kind of low-quality small caps where you don't have earnings, there were, you know, SPACs and other types of speculative plays,

they've really shrunk down as a percentage of the overall universe. And that's where an active manager can really sort those out and focus on... And you like mutis. We heard about this. Yes, a 4%. So what do you get 6.5, you know, tax equivalent yield? Not bad. Look, you know, I think one of the certainties when you look at the U.S. deficit

is regardless of who's in power, your taxes are going to go up and if you're a wealthy individual. And so going into this election, we've seen a big influx of issuers trying to issue before the election. This is the V time I would, you know, I'd encourage everyone out there in front of the election to go out and buy because you've had a back-up in the news. What if you live in New Jersey? Am I supposed to buy New Jersey municipalities? And it's all going to be nothing to worry about, nothing to see? Sure. All right. Triple tax rate.

Triple tax rate. Mike Santoli, close the discussion off here. Why don't I go back to the question I asked a cease? And that is, what does Mr. Market want to see out of the election? Yeah, aside from getting past it, I think I'm persuaded by the idea that the market probabilistically says that the most likely set of outcomes is sort of red wave or Harris wins with some gridlock, which is a status quo type of outcome. In which case, the market can make its peace with that policy set. I do think in the near term, you've seen a little bit more of an aggressive overplaying of the kind of textbook Trump trades because that outcome would have a much more extreme or dramatic

effect directly on some quantifiable trades. If I told you Harris is going to win, like, what do you do? You buy treasuries? It's not as clean a trade as DJT or coal or, you know, something like that where you feel like you have a clear path. That being said, I do think that beyond a, a sort of final settlement of the election, you basically want nothing super extreme. I don't think that what the market wants is genuinely mass deportations plus tariffs on day one because that's going to be a little more disruptive than is priced in right now. All right. Mike Santoli and Assis Shah. Thank you very much. Appreciate your time. Have you back soon. Thank you. Thank you.

Following the GDP and ADP reports out this morning, the 10-year yield is somewhat down today, around four and a quarter. A few basis points off yesterday's highs. Let's bring Rick Santelli in for more on these yields. And Rick, should we talk Liz Truss? Wait, pardon? What was the last thing you said? Should we talk UK bond yields and Liz Truss? Is that a preview of what's to come here? Yeah. Oh my God, you read my mind. I wasn't sure if you said that. To me, today is a very, very important day. And we'll get to why Kelly asked in one second. First of all, Tyler did a great summation of today. ADP, strong, strong, strong. So if you look at intraday of two-year,

and let's concentrate on short maturities, they're the ones arm-lock with Fed policy. We see rates went up. Then we saw strong consumption 15 minutes later. Rates went up. Then we saw less inflation. Rates went down. And what changed everything?

Let's pair that chart with a two-year guilt in the UK. And there's Kelly's question. With regard to Liz Trust, I can't say whether I talk to her or not, But what I can tell you is after the budget news came out and austerity came out, something else came out. They're going to have to issue more supply. That's been my mantra for months and months. Not only is the U.S. going to compete for investor dollars in the debt markets, we're going to be competing with many other economies, UK, China.

And you see how that two-year in the U.K. popped in a reversed course with us. Matter of fact, if you open that up, it's all of a sense. sudden that two-year guilt in the UK closed at the highest yields since June 11th. Now that might not sound like a lot, but it was on its way down, not that many sessions ago. And this underscores the downside of globalization in a debt-ridden world. We're asking questions about what happens after the election. I'll tell you what happens after the election. We're going to have to find ways to pay for servicing the debt because I really don't see how these prices are going to alter much. I don't see how yields are going to go down very dramatically. And even though today was

led by short maturities because of central banking issues, don't think the long end isn't paying very close attention here. Tyler, Kelly, and Kelly, you get an A-plus for the question of the day. Listen, I... And you're a tough grader, Rick. That's right. That is... I know you are. It's just on my brain, because as we say, you know, the election we're going to get through. And I think the UK has been dealing with these problems for years now, and we could be years from now still trying to sort these issues out as well. I don't know. Well, I would say that would be the best news that it would take years for us to sort it out. But I have a feeling the market's going to be much more efficient in that sorting process. All right, Rick, thank you very much. Always appreciated.

I'm Harry Potter, the sorting. The sorting hat, yes. Which house are we in? Coming up, the earnings parade continues. The long-awaited tech giants are finally reporting results. We'll break down Alphabet's results last night and explain what to expect from META and Amazon. Plus, we'll stick with earnings and get the trades on Caterpillar after its weaker results, although the stock is rebounding. Eli Lilly down 8% and Carvana and a deluxe three-stock lunch. Power Lunch will be right back. Welcome back to Power Lunch. It is time for a deluxe three-stock lunch.

It's earnings season, the thick of it. So let's get the story on three key names and then get the trades from Victoria Green. She's our trader today. the chief investment officer at G-squared private wealth and a CNBC contributor. Victoria, welcome to you. Let's start with Caterpillar. The shares are off their worst levels of the session after that unexpected earnings missed this morning in the third quarter. Before we get your trade, let's bring in Cima Modi with all the details.

Cima. Kelly, this was significant. The first time operating profit for Caterpillar and earnings per share declined year over year in four years. And its fourth quarter guide came in light. Inventory levels remained too high, raising concerns that Cat won't be able to be able to able to continue to increase prices. Barclay says Caterpillar's inventory increase is a red flag for the bears, cutting its price target to $335.Milius research analysts blaming higher rates for the slowdown and demand. But shares did bounce off the lows after CEO Jim Opelby on the conference call said

the company's building even more capacity in engines for data centers, saying data centers rely on Caterpillar for backup generators and will increase overall load on the grid, which does benefit CAT data centers remain a small but growing opportunity for the industrials, including companies like 3M, that is working on alternative engine fuels and commons with its strength in engines as well. That's where analysts expect these companies to invest. As a broader industrial story remains weak, we've seen construction jobs, decline, and the manufacturing sector is still in contraction, Kelly. Exactly.

shares are actually not doing even worse. Seema, thank you. And, Victoria, what do you do with the stock? This to me is a sell. I want to sit it out at this point. I think there's more risk you're going to retrace down to the 320, 330 levels than you are that you're going to push up to 400. Number one, you've got to realize this is a huge global company. They're only about 54% of their revenues and sales are here in the U.S. And we're seeing that whole global picture slow down. China is a massive problem for them.

But they also saw in the Middle East, Africa and Europe also slow. Number two, construction is their biggest segment. And that was down 9% year over year. That's a bad miss for them. Manufacturing and machinery, that area is still very, very light. For me, I understand. there might be a little bit of catalyst, but if you look at overall, what might happen with inventories, I think expectations are a little bit too high. And the only reason the stock could come up to the 380s level is because of the Chinese stimulus. You can almost track it from where it bottomed out to where it is now and say, oh, that almost tracks exactly with when China announced their stimulus. And if the stimulus isn't doing what we think and China's not going

to pick up the way that we initially thought it might, then that could be a big black mark for Caterpillar. I look to sit this one out a little bit. Take some profits if he got them and look for something little less economically sensitive. Let's talk about a stock that is going to the woodshed today. Eli Lilly tumbling after the drugmaker missed third quarter estimates. Angelica Peoples has the details. Angelica. Hey, Tyler.

It is all about GLP ones. Of course, Monjaro and Zeppound both missing estimates in the third quarter. And of course, a miss on those drugs is concerning enough for some investors. But I think what you're also seeing in that weakness today is the uncertainty. This is not a function of supply, though. It's a function of these wholesalers and retailers having capacity and wanting to stock every dose,

which they often don't. So, yeah, we're just balancing all these parts. And, you know, there isn't excess supply, but we haven't been stimulating demand the way we had originally planned. So we're pausing that a bit. We did pause that, but we're restarting here. And so what you're hearing him talk about is this dynamic where Lilly has, increased supply and they're saying that wholesalers had enough and they're working through that inventory instead of buying more. But that begs the question, right? Is this a supply or a demand

problem? And Dave, Rick's today on the earnings call saying that it's neither. It's not a supply problem and it's not a demand problem. But I don't think that you're seeing people really buying that and still wondering exactly what is happening here. Now, Lilly is saying that they're going to start some promotional activities for Zepbound starting in November. So things like direct to consumer advertising, as well as looking at those health care providers, giving away some free medicine and trying to get more demand there. But again, a lot to pay attention to there, guys. All right. Thank you, Angelica. So, Victoria, is this a slip or a blip? And if it isn't, it's certainly a big one, $900 million to a billion. Absolutely. For me, it's a blip.

I do not think their CEO answered questions very well, but I think they're going to come back from this. Number one, they're getting some of those generic compounders off the market. That's been a problem, right? When they didn't have enough supply, the FDA allowed them to come in and generate their own generic semi-glid for the market. They're going to get those off the market. Number two, Zepbound. That could be approved for sleep apnea, which would get it in with Medicare, which is a huge market for them. Number three, I think that's still working through the supply and demand issues. So I think you had Invis story destocking because people were concerned, oh, if we have constrained supply and supply chain issues, I need to keep more on hand, then suddenly they

destocked as supply became more readily available. And now I think we're going to see more more normalized levels. I do not see it as a demand issue at all. If anything, I see that market continue to grow globally. But yes, they need to advertise more. They need direct to consumer. They need to compete with some of these easier ways. People have been getting semi-glued. But I think they're on top of that. And this is a rebound and a $1,200 stop for me. So buy the dip. Buy the dip. By the dip. All right. And the slip. And the blip. Carvana also reporting after the closing bell today, that stock is up 300 percent this year for full story and what a story it is on this one.

We turn to Phil Leboe. Phil? Kelly, when Carvano reports its results for the third quarter after the bell, three things that people will be looking at, really the metrics within the third quarter. And the first one is profit per vehicle. Also, have they done a good job limiting inventory? This has really been their calling card over the last several quarters. Essentially, they're moving the vehicles quicker when they buy them,

turn them around and sell them again. And then there's the sales growth. They are in the sweet spot of the market because use vehicle sales, they're increasing around the country, and that's certainly been the expectation for Carvana. Look at the growth from the first quarter to the second quarter, expected that the third quarter sales will top 106,000 vehicles. As you take a look at Carvana over the last year, keep in mind that that profit per vehicle, why is that so important? It's their metric. It's the metric to say, okay, how much money are you making off of the vehicle you're buying from somebody, turning around, and then selling to somebody else?

The expectation is for it to be more than $6,500 for the third quarter. Don't forget tomorrow on money movers. You do not want to miss what we have coming up. A first on CNBC interview with Ernie Garcia. We'll talk about the third quarter and what's really been a heck of a year for this stock and for this company. Indeed. Phil, we appreciate it. And Victoria, for you and the trade on Carvana, I'm very curious what you're going to do with this one.

Just to me as a sell, mostly as the expectations are much higher and as still, stock is up 300% this year, up 61% in the last month and a half. And I think they're going to see a little problem with that margin, as he discussed, because we saw that on CarMax, right? CarMax had to discount to move units. They may hit that 106-107 unit movement, but I think possibly we're not going to see the margin growth there, and a margin growth stalls out.

Some of this rally here might have just gotten a little bit in front of it. Also, how much of a moat does their technology have? As everybody else gets more into selling DTC, everybody else's technology catches up, I'm not sure if this is sustainable, that they're going to have the momentum they've had. Remember, two years ago, the stock was almost in bankruptcy. So I think a little bit for me, I'm going to sit earnings out, maybe take my 300% profit, see what they do on margins. I just get a little worried after the CarMax results, that they're just not going to be good enough because that bar is a lot higher than I used to be six months ago.

Great point. Victoria, thank you so much for your time today. Victoria Green with G-squared private wealth. All right. Still to come looking to power tech gains. We will look at one ETF. it could be a solid companion trade to AI and tech stocks. Market Navigator is next. Welcome back to Power Lunch as we see the S&P and the NASDAQ dip lower.

The NASDAQ hitting a record high earlier on. The Dow 58 points positive as it fights to stay in the green dom as well. Dom Chu is here because it's time for Market Navigator and to reveal that mystery chart from before the break. All right. So Kelly, if we take a look at tech stocks overall, they're taking center stage this week. but our next guest is focused less on the tech earnings story itself on more on what could power some of those tech names literally in the future. So joining us now is Jessica Inskip, the director of investor research over at stockbrokers.com. Jessica, I say power because it is literally about power in this derivative play on technology stocks. Take us through what it is and

why you think it's the right trade today. That it is, Dom. AI, it's using a lot of power. Every iteration that we have of InVidia or those chips, it becomes more efficient, but that issue arises, demand is just really growing at an astronomical rate. So grid pressure, in my view, it's a byproduct of that compute growth. And there's opportunity that arise, because this is a headwind. We need to see who makes that a tailwind. And that's power providers that can bring this to the market faster as an alternative. And something like nuclear energy could do it quickly and have better margins. And we're definitely seeing that follow through as we're getting earnings now coming for those big tech providers, telling us where they're spending money, data centers, and then

even reviving old nuclear plants right now. So that's where I'm looking at URA. Yeah. So let's talk through the URA trade, because you think it could be a better play derivative-wise on that AI trade with less volatility than some of the tech plays that we talk about all the time. It certainly can because of the less beta associated with it and utilities as well. First of all, talking about the chart. You know, I'm a chartist at Hart, Dom, and Kelly, and what I'm looking at is 13, 26, and 40 weekly moving averages, that's beginning to slope upwards, which is indicative to me of a bullish trading cycle. Now, I say beginning, because it's beginning with the 13 weekly moving average. I need to see follow through with the 26 and 40. So two and three

quarters worth of prices. And then once that happens, I actually want to see it overcome its resistance zone, which is where it's currently at right now, it's about a 30 to 31 level. Once that occurs, then that's going to give me the conviction that I need to resume a stronger rally, and that also needs to be maintained, also confirmed by that MACD crossover. So that gives me, from a technical perspective, a neutral to bullish view. And what's the options trade you think you could do here to take advantage of that? I mean, it sounds like you could just go along, Jessica, but what else do you see? Absolutely. So options, if we sell premium, we can capture that neutral to bullish view. So it's going to be

short-term, neutral, longer-term bullish. And the way that I want to do that is I would sell an at-the-money put, go out about 45 days, and capture some premium to create an obligation to buy the security. So earlier today, I was looking at the 32 strike December 20th puts, and they were giving me about $1.85 worth of premium. So in the short term, I'm capping my upside to 185. That's the max that I can make. But in the long term, if you think about that, that represents 5.5% of that strike price or of the current price of the security, even in the current yield environment. That's a pretty decent yield or discount I can get on the security within a 45-day period. So that's the way I would execute that.

The price has changed. So if you haven't placed that trade yet, I would definitely lower my strike to something that's closer to the money, which just means the current strike price right now. All right. It's interesting. Jessica Inskeep with the trade on uranium, thank you so much. We appreciate it. We'll see you soon. Thank you. All right. So, Kelly, the curious part about this is it's the way that some traders use to get exposure and still try to either defer the cost of it or at least lower some other, the initial outlay they have to put out there. They use options. They say, you know what? I'm going to create the obligation to buy it. I'll collect some premium just to kind of help defer my costs a little bit. And so it's an interesting look at uranium.

I just don't like capping the upside. You know, why not just... But it's only short term, though, because if somebody puts you the stock and you own it for the long term, you can ride that stock gain all the way to wherever it hypothetically could be. Fair enough. Dom, thanks very much. Market Nav, tie over to you. All righty, thank you guys.

After the break, shares of Trump media lowered today by a little bit, but former President Trump's stake has made him more money than any other business he has launched, including Trump's stakes. More on that story when we return. All right, welcome back, everybody. massive stock swings today to tell you about most tied to earnings, so it's time for a power check. First up, we got Corvo, tumbling 26 percent. Weak guidance the issue here. That is overshadowing a better than expected quarter. Raymond James downgrading the chip stock, Kelly, following the report.

While heading in the other direction, Reddit, the social media stock soaring 40 percent, the company posing a surprise profit. And first solar shares making a bit of a comeback today, missing on results, also lowering its full year. guidance. Despite the weakness, J.P. Morgan reiterating its overweight rating, saying it is still the best position solar name, and so it is up, a buck 52. And making headlines, super micro, plunging more than 30 percent after disclosing a company auditor had resigned. The furor auditor from Ernst & Young had reportedly disagreed with the firm over its governance and board independence, and the shares are down 31 percent for their worst day since 2009.

Look at that. And finally, you got Dropbox, cutting 20 percent of its workforce, the CEO, citing a challenging consumer environment and inefficient business operations, and yet the stock is higher by nearly 2%. That's your power chat. Now to Leslie Picker for CNBC News Update. Leslie. Hey Kelly, Defense Secretary Lloyd Austin said this afternoon North Korean troops wearing Russian uniforms and carrying Russian equipment are moving into the Kersk region near Ukraine. He also added talks are underway right now to discuss what to do about the deployment. According to U.S. officials, North Korea has sent as many as 11,000 troops to Russia so far.

far, a move they call dangerous and destabilizing. A New York grand jury is reportedly hearing new evidence in Sean Diddy Combs' federal sex trafficking case. NBC News learned a male will testify tomorrow in the case. Combs has pleaded not guilty to the charges and has been fighting to be released from jail. Two separate judges have denied his appeal. And the two fans ejected from Yankee Stadium last night after prying a foul ball out of Los Angeles Dodgers outfielder, Mooker.

Betz's glove have been banned from tonight's World Series game. The team warned it is unacceptable to intentionally put the players at physical risk. Meanwhile, the NYPD says there are no charges on file. For the fans. Kelly, I'll send it back to you. Watch that whole deal. Did you see that play? Okay, I actually missed that play.

It was a great play. And I'm telling you, that Mookie Betz is my favorite player. I mean, I'm a Yankee fan because I'm a New York guy now, but Betz is awfully awful. Incredible what he's done. I mean, there's been so many playmakers on both teams. Very fun to watch, absolutely. Mooky's the man. Meanwhile, join, we should get him on the stock draft.

Oh, that's a great idea. Let's ask. And meanwhile, join the CNBC Delivering Alpha Investor Summit in New York City on November 13th. Investors are convening for insights and ideas to help deliver meaningful returns. Just scan that QR code. Someone was asking for this earlier. Here's your chance. There's the QR code or visit CNBC.com slash delivering alpha.

All right. Welcome back to Powerline. Shares of Trump Media. big today, but it has had an incredible run. Up 150% in October alone. Those gains have helped make former President Trump more money than any, any of his other businesses. Robert Frank, now for more on this part of the Trump Empire. Well, Tyler Donald Trump heads into this election nearly twice as wealthy as he was in the last two elections. And the reason is, Tyler just mentioned, Trump media. The shares of DJT doubling over the past month, he owns about 57% of the

company, about 114 million shares that stake in. now worth about $5 billion. They account for about two-thirds of his net worth, now around $7 billion. So if elected, he would not only be the richest president ever. He would also be the first to hold office while holding a controlling stake in a publicly traded company. The president and vice president are largely exempt from government conflict of interest rules. During his first term, you might remember he put the Trump organization into a blind trust.

And then there was that lawsuit involving his DC hotel and foreign interests. interest. That was dismissed by the Supreme Court on the grounds that he had already left office. Now, with DJT, wealthy investors and governments now have a direct path to add to his wealth, and they can remain anonymous. Trump's saying in September, he has no plans to sell the shares. The Trump campaign saying in a statement, quote, unlike most politicians, President Trump didn't get into politics for profit, he's fighting because he loves the people of this country, and he wants to make America great again. And Tyler, this has been a roller coaster almost every day, Even in Truday with this stock was down quite a bit this morning after its huge run yesterday,

now making some of those gains back. So it's all paper wealth. I assume former presidents have owned stock before, right? I mean, I don't know. I'm also surprised by this. Like, if you want to be Treasury Secretary, you have to, so if you had to, you know, Howard just picking Zabwe-Lutnik would have to sell a lot of Cantor Fitzgerald. But if you're president, that doesn't apply?

As Hank Paulson did when he served in the cabinet. Put it in a trust. You either put it in a trust or you put it in a museum. fund that is considered acceptable. In other words, you're not trading in and out of certain stocks. But basically, you know, with the exception of the vice president and the president, everyone else had to adhere to these rules, even when the Trump organization was in a blind trust, that was a blind trust with 2020 vision, as they said, because he knew exactly what was in it. So in this case, you know, he hasn't said, look, here's my plan if I become president

with this asset. He hasn't said whether he's going to do anything with it, but he doesn't have to. How much? Do we know anything about the underlying? This is all about the Trump, truth social. Truth social. Is that the only holding in DJT? Yes. So do we know any of its financial metrics? Yes. There aren't many. Basically, they have revenue of less than $2 million a year. They have losses in the most recent quarter, about $16 million in losses. And what's interesting, to your point, it is now valued, or at least as of yesterday, is valued about the same as X, formerly known as Twitter. You consider the number of users and the length of businesses. Valued almost as much as...

Yeah, so yesterday, I don't know... J.T. is down a little bit, but they were both about $10 billion in valuation yesterday. What about Elon Musk feels about that? I don't think he cares at this point. I think he sees the long game here and he thinks he's on the right side of it. But still, the whole point of this would be if you were Trump or somebody holding this bag to liquidate, to take those gains. And if he says he's not going to sell...

the shares or doesn't, then this whole thing becomes somewhat irrelevant. Well, and the question is, if he loses, does it go to zero, which many people say? And if he wins, what is then the going forward plan for this company? Because he, the idea is, well, he'll communicate through social. He'll be present, so everyone will need to buy. But he's also posting on Twitter now, and so that gets rid of that argument. Right. But if he has this high, this is what companies with high stock prices should do. They should go buy something else without.

Then he should buy Twitter or something. And then turn that into, you know. Maybe that's where he and Musk finally have a meeting of the minds. You imagine. X and truth social. Truth X. Robert, thank you. Thank you guys.

As we head to break, Google is setting the bar, crushing earnings estimates with strong growth in the cloud and putting other MagS7 names on notice with meta, Microsoft, and Amazon, and Apple all set to report this week. We'll dig into it when Power Lunch returns. Welcome back to Power Lunch, a strong start to Big Ten. earnings as Alphabet sets a high bar crushing estimates last night beating on the top and bottom line, reporting a 35% surge in its cloud business, and said AI investments were paying off and seemingly helping margins. Up next, Meta, Microsoft, Amazon, Apple. For more, let's talk to Ron Josie. He's a senior internet analyst at City Research. Ron, now that we have Alphabet in the books,

what does that make you think about the rest of the field? Look, Kelly, I'm of the belief that performance advertising is in a pretty good spot. And I think that bodes well for meta and Pinterest and several others. We saw that with Google. We saw that with Snap to a certain extent and we certainly saw it with Reddit. We also heard that Google Cloud did better last quarter with growth rate accelerating to 35%. I think that bodes well for AWS for Amazon as we see that number tomorrow. So how does it make me feel? It makes me feel as if the call it, the broader tailwinds that we saw in 2Q seem to have continued into 3Q. And given where I believe the consumer is and given the demand for performance advertising, I think that bodes well for 4Q and ideally into 25 as

well. What is going on to take sort of a sidebar trip to Pinterest? Is that just a big move for a beaten down stock? Or is there something bigger to glean from that? Look, I think the thing with Pinterest what we're looking for is basically just continued consistent growth. And they've done a very good job of launching new products, getting newer users, particularly those Gen Z on the platform, except that they are more exposed to certain verticals that may not be in this call it performance advertising bucket. And so food and beverage, CPG being some of those verticals that highlight there. So just a matter of time before we actually see that coming back. I misspoke because what I meant was snap actually. Oh, got it. Yeah. My fault, there's the, you know,

the return of the, I don't want to call them. the once high-flying platforms. But Snap is a standout. Yeah, look, I mean, the thing with Snap, we've had a lot of ups and downs. And what we're looking for, and I think the broader streets looking for is just stability. And as they redesign their platform with simple Snapchat, as a DR business actually does pretty well and is holding up pretty well, I think you might get that stability. Now, we need to see a few quarters of that to continue and great to see the move today. But our view here is more around, let's look for stability, let's see a few quarters together of just better results. Your view on Amazon?

Sure, Tyler, like Amazon in our view, there's several things that we're looking for. One, I think e-commerce demand. I think e-commerce is actually going pretty well. We talked about how consumers holding up and back to school probably was a benefit prime day. And of course, we go in the holiday season. But really, the focus on Amazon is two things. I'd argue it's AWS growth. And the cloud results at Google yesterday suggested AWS is pretty well positioned or should be at least.

We're looking for accelerating growth there. And then it's profitability. And there's a lot of debate whether AWS profitability comes down as they need to invest in growth. And frankly, if you're growing in the high teams, low 20s, you should be investing. But I actually think profitability would hold up relatively well. And then the second debate on profitability is that margin on North America retail. And it's just a matter of time before that just continues to go higher, notwithstanding the shorter-term investments in Project Kuiper

and maybe on supply ingestion that they're working with their third-party partners on. So we're pretty excited about Amazon here too. And meta, you've got to buy. I've got to buy on Google. You don't cover Microsoft. So we'll see if the others can do with AI what it appears that Alphabet is doing and help margins and the rest. Ron, for now, thanks very much for your time.

We appreciate it. Thank you. Ron Josie. All right, coming up, a crisis of confidence. While a majority of parents agree it's critical for their kids to learn financial literacy, a new survey shows many of them question their ability to teach it. That story is next. Welcome back.

Many parents don't feel confident enough in their own knowledge to teach their kids about investing. Sharon Epperson has been talking to parents about financial literacy. Sharon? Well, you know, Tyler, financial education may begin at home, but some important lessons are missed. And most parents want the schools to find. fill the gap. Nearly all parents in a new survey agree that a class about investing would be more valuable than many required K through 12 classes. But only 26 states now require high school students to take a standalone personal finance course to graduate. Parents are so interested

in their kids learning about investing in school that nearly three out of four say all other things equal, they would enroll their children in a different school if it offered financial education and investment courses. Many parents admit they don't know enough about the financial markets to teach their children. My son has been a leader in the household kind of bringing to us what we need to do for our finances. So there's no way I could have taught them. Students who completed an investing class recently visited the New York Stock Exchange. What really I've taken away is that you shouldn't just buy the product but buy the company. And they've also been teaching their parents about investing.

Generational wealth. That's super important to me and also my family. I was also able to teach them like how much of a risk person there are. So if they're a low risk person, a middle risk person or a high risk person, for me personally, I'm a middle risk person. Research shows that the risk of not learning about investing makes people more likely also to make quick speculative bets rather than focus on building long-term wealth. Tyler. So what has been, has there been resistance in those states that I think the 24 that do not require the teaching of personal finance? People don't like the idea of a mandate of what you need

to learn, even though there's the mandate for English. For English and math. Right, right. But that has been, you know, and then some critics say, well, that early, if they learn that early, will it make a difference later on in adulthood? Yes. Many studies show that it will in terms of credit card debt in terms of making better financial decisions when it comes to saving and investing for college, paying for college. So there definitely is a return on the investment of having financial education. They're parents say, hey, their parents say, we've learned more from you than you've learned from us. Yes. Yeah. It's amazing. And the fact that they're having the conversations as a family is so important. Yeah. Because that's, it does start at home often, but it can continue at home. And if you're

helping your parents, too, I think it's great. Love it. Sharon, thanks. Sure. Sharon Epperson. Meantime, the Yankees big win last night over the Dodgers and Shohei Otani extends the World Series for at least one more game. So watch the yen volatility. When Game 5 starts tonight at 8 p.m. in New York, it's 9 a.m. in Tokyo. And reports say the Japanese trading firms have fixed TVs to financial news and banned traders, Tyler, from watching the game on their phones. It's hurting the markets. It's bringing activity to a halt. 12% of the Japanese population is estimated to be watching.

They love, there's Yamamoto, there's Otani and so forth. But that's amazing. They can't change the channel on the trading floors. And we know they find a way around that. He's a massive star there. They say he's like Elvis Cross with Taylor Swift. Yeah, well, he's a, he's a generational, generational player. Oh, of course, and they need him to do a little bit more if they want to just get over that finish line tonight.

All right. All right, that'll do it for Power Lunch. We thank you for watching on this beautiful. Beautiful Wednesday in New York. And closing bell starts right now.