Power Lunch - Boeing Under Pressure, Rise of “Dumb Tech” 9/13/24

Episode Date: September 13, 2024

As stocks look to wrap up a strong week, Boeing shares are taking another leg lower as its union workers walk off the job. As a result, Moody’s is putting Boeing on a review for a downgrade. We’ll bring you the latest details Plus, smartphone prices are down 9% year-over-year according to the latest CPI. And smartphone pushback from parents is leading to an increase in demand for so-called “dumb tech.” We’ll dive into all of that.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, welcome to Power Lunch, everybody, alongside Kelly Evans. I'm Tyler Matheson. Good to be with you. I'm glad you're with us. Stock's wrapping up a strong week the NASDAQ and the S&P, up every single day so far this week. It's actually so interesting. This is not how September was supposed to go, by the way. September is usually a pretty bouncy month. It's the past four years, I think on average, we're down 6%. And today is the day, if I recall correctly, the Andrew Slim and Morgan Stanley told us the buyback window closes ahead of corporate earnings, that the weakness could start in the back half of the month. It's Friday the 13th. Indeed it is.

Here's what's on our menu for this hour. Boeing is taking another leg down this afternoon. It's union workers walking off the job today, more than 30,000 of them, after an overwhelming vote to reject the company's contract offer. That has Moody is now putting Boeing on review for down grade. And Tyler, the shares are down almost 4%. The shares are down a lot.

The union clearly looking for a higher pay raise up as much as 40% over four years. The company, I believe, offered 20% over four years. Maybe there'll be... I think this is a strike that needs to get settled quickly before further damage is done to Boeing. Well, as firms like Apple and OpenAI prepare to launch new AI models, lots of people are talking about the threats of AI. Oprah Winfrey releasing a substantive special on the subject last night,

and we will talk to Tristan Harris, who was featured in the special. He previously sounded the alarm on social media and now says we're making the same mistakes with AI as we did with that. I just thought the fact she did a special on this was so interesting. I mean, I remember when she did the big Lance Armstrong interview years and years ago. But I think, if anything, Wall Street is kind of backing away from this idea of worrying about a lot of the dangers of AI and just actually wondering what the investment cycle spending is going to look like. So, but perhaps they need to.

Our guess we'll make the case that we need laws and regulations on AI to avoid what he says has happened with respect to social media. it's very hard to know how to regulate something when you don't know what the effects of that something may be. 100%. And so we'll explore that with Tristan. It's also day three of our inflation blueprint. We're looking at consumer electronics this time. They're always in deflation, right?

Or maybe not if you're Apple. Well, smartphone prices are down 9% in a year, according to the CPI. And pushback on smartphones in general is now leading to an increase in demand for so-called dumb tech, the simpler, the flip phones that we all used to have. And in that same vein,

What could be more low-tech than paper? Show them, tie the onion. It's going back into print. Yeah, but can you pick that up? There it is right there. There it is. It used to be very fun, satirical. It still is in its online edition, but it's coming back.

And one of its headlines says that the New York Times is going to cease to publish because it says the Times is saying, we just can't compete with the onions's newly released paper edition. We'll find out about that. Meantime, let's begin, shall we, with Boeing. Factory workers strike there for the first time since 2008, after overwhelmingly, rejecting a proposed contract that if I'm not mistaken, the union leadership had actually gone for. Let's check in with Phil LeBow, who has more from rent and so correct me right off the top if I got that wrong, Phil.

No, you're right. Union leadership did recommend approval of this contract that they reached an agreement to with the management of Boeing. They reached an agreement. They said, vote on it. You know what the member said? We heard it all yesterday. It wasn't even close. Ninety-six percent said, uh-uh, 25% raise over four years is not going to cut it. So Boeing is under pressure, not just because of the strike vote and the fact that production has been shut down, but you had two credit agencies out today saying that they may cut Boeing's credit rating if this is an extended strike. The key here is that if it's an extended strike, then the credit rating is at risk.

C.F. O'Brien West was speaking at an investor conference today, says the company is focusing on conserving cash. Why? The financial impact, this is one estimate. Jeffrey says that Boeing's free cash flow could take a $1.3 billion hit if this is a one-month strike. That's an estimate by Sheila Kaila at Jeffries. All of this intensifies the pressure on new CEO, Kelly Orpberg, to get this resolved as quickly as possible. And Brian West, the CFO, when he was talking today about that renewed push to get back to the bargaining table, he talked about how Kelly Orpberg and the rest of the management team want to get this.

deal done as quickly as possible. Kelly is personally engaged and focused on restoring our trust with our people and the union. And that's a priority, resetting that relationship. And, you know, we want to get back to the table and we want to reach an agreement that's good for our people, their families, our community, and our intent is to do justice. that. As you take a look at shares of Boeing, slumping to another 52-week low, seems like we've said that a number of times over the last couple of months. Remember, 96% of the machinist voted to go on strike. 95% said that last contract wasn't good enough. Bottom line is this.

They won 40% raise over four years, Tyler and Kelly. The company has offered 25%. That was flat out rejected. Now the question becomes how quickly can they reach some kind of an agreement, we're between 25% and 40%. All right, Phil, thank you for now. We appreciate it. Our Phil LeBow reporting, stick around with shares of Boeing

down nearly 4% in the session. The Dow managing to rally despite that, and the stock is down nearly 40% this year. For more on the strike and how it will likely impact the company. Let's bring in Ken Herbert. He covers Boeing for RBC Capital Markets. He's got an outperform and a $220 price target.

Ken, how long have you had the outperform? Yeah, hi, good afternoon. So we've had the outperforms since for about a year, since the fall of last year, when obviously it looked like things were getting better from a delivery standpoint on the max and the financials were on a better trajectory, certainly than they're on today. But of course, the major incident was this Alaska Airlines incident. Correct me from wrong.

Late December, early January. Why no reaction at that point to the seriousness of what transpired, both from regulators' point of view, which I think charged the company with a crime and from the point of view of sort of frustrated shareholders who just think the company has one challenge after another? Yeah, so obviously, you know, it's hard to predict how these events would play out and the confluence of events we would see through this year. In our view, the Alaska incident was incredibly devastating and unfortunate. We think there's been other issues that have surprised us as we've gone through the year. And if you sit here today, we feel like the setup still remains positive, obviously, or we would have different view on the stock. As we get through now under the new CEO can get through the labor issues and the strike ideally helped to shore up the balance. a little bit, and our view is the strike will be relatively short-lived. We still like the near-term setup as we get through some of these negative catalysts and should see investor confidence improve on the stock here moving forward. Obviously, a few issues here still to work through.

What are those short-term catalysts that you see contributing to a positive setup for this stock? Because for a layman like me, it's hard to see them. Yeah, great question. You've got to keep in mind, the backdrop in terms of airline financials in terms of traffic demand remain very healthy. So we think production rates on the most important programs at Boeing, whether it be the 737 max, the 787, have significant room to improve over the next one to two years. We do think you're at sort of a trough right now. We're not a trough, but you're looking at a situation where a very limited downside risk on those key programs. We also think there's significant opportunity to improve.

the execution and performance at the defense business. We think the company is well positioned coming out of the strike to maybe take some steps with equity or other measures to to improve the balance sheet. So we do think you've got a very strong demand backdrop. You've got airlines remaining in very good health financially. You've got a very good backlog. You've got production increases that could be substantial over the next couple of years, which should all contribute to what should be a very nice inflection in free cash in 25 and 26 and later into the decade. That said, how much can Boeing, well, it's kind of ironic. You say it, if they are inflecting and are going to be in a good cash position,

should they be paying upwards of 40% to resolve this quickly? And what do you feel about the $60 billion debt load that if they start to bleed cash as this goes on, it becomes more of a pressure point? Yeah, I mean, they've obviously been bleeding a lot of cash year to date. And I do think there's, you know, a significant expectation from investors and ourselves that the company likely looks to issue, you know, raise some capital through some equity issuance coming off the back of this, ideally what should be a short-lived strike and the ability to move forward here. So that should certainly help. I mean, the debt load, obviously, it is what it is. And the events this year certainly haven't helped that and compounded that.

But I think you got to remember, there's significant cash in even tied up an inventory on the balance sheet. we can get to a point where we can start to see some better visibility on monetizing that cash and get to a point where, you know, you're looking at production increases on these programs. Those will be very significant tailwinds in this business. Phil, let me get you to respond to something Ken said, and I think Ken is quite rightly pointing out, that demand among airlines for aircraft is high. The air traffic business is pretty healthy. But is it, am I wrong that that hasn't been the case for quite a few years now with the exception?

of the pandemic when things just fell apart for air travel and the airline and the airline and presumably aircraft manufacturing business. But hasn't that been the case for a while and hasn't it been true that Boeing has done nothing but lose money for several years? Under circumstances that you would think actually should, by and large, since 2022 at least, favor them. Well, the broader environment is favorable, Tyler. But as Ken has pointed out, look, It's been one bad incident, self-inflicted wound after another for Boeing. Whether you go back and start with the max crashes, move forward to the door plug blowout with Alaska Airlines, go forward from there to the, you know, the FAA saying, look, you have got to get your quality control in order.

You put all that together. Those are all Boeing-specific issues. And if they can resolve those issues, if they can get past those issues, it's a very favorable environment, both for Boeing as well as for Airbus, which is what I think Ken was alluding to earlier. I don't mean to put words in Ken's mouth, and we've got to move on from here, but I sense Ken that you're saying it can't get worse than it is, and that once the strike is settled, and once these other things get out of the way,

not only can they overcome these mishaps that they've had, that include, if I'm recalling correctly, some criminal charges against them, They can move up from here. Just quick thought, Ken, as we tie it off. Quick thought, yes, you never want to say it can never get worse, but ideally we're tropping in a lot of metrics. And personally, I've got a lot of confidence in Kelly Orpard, the new CEO, to turn the ship around here and to start to make substantial improvements in execution

and with regulators, with customers and with cash, ultimately a Boeing. Ken Herbert, we thank you. Phil LeBoe, we thank you, as always. Tell those people to quit honking their horns out there, man. lively. Thanks a lot. All right, still to come. Meta says it's going to begin training its AI model using content from Facebook and Instagram in the UK over the coming months. Many are anxious about social media's role in AI.

And our next guest says the AI industry is making the same mistakes that social media companies made to the detriment of society as a whole. Power Lunch will be right back. All right, welcome back to Power Launch. The AI space flooded with headlines this week. Apple's AI powered smartphone. Open AI in talks to raise about $6.5 billion. Even Oprah Winfrey waiting into the conversation and in-depth special on the topic within the last 24 hours. Companies are talking about at 2. 40% of the S&P 500 mentioned AI on their most recent earnings calls,

and all this point into one conclusion. AI is driving full speed toward the center of our society and culture. But will it arrive safely or face a head-on collision with our ethics and practices? Here to discuss the risks of AI's emergence and the role of companies in this new frontier is Tristan Harris, co-founder of the Center for Humane Technology. He also hosts the TED podcast, Your Undivided Attention. Welcome back, Tristan. Good to have you with us. There is so much to get to here.

And we're going to solve the issues right here in four minutes. I promise you. I'm interested by something you wrote in May. Many cutting-edge AI companies are rushing to release risky, unreliable, insecure, and even unethical AI products in the hope of dominating the market in the process. They are whitewashing harms and offloading responsibility to governments and the public to figure out solutions for problems their AI products create. I don't doubt that that's true, but I'd love you to give me some specific examples of those

and what the effects of the could be. Sure. So, you know, we last talked, I think, when the social dilemma, the Netflix documentary came out, the lesson that we should learn. What's the lesson we should learn from social media? that if you don't make companies accountable for the harms that they create, then the business model, the incentives will drive them to take shortcuts and just do whatever makes the most money.

In the case of social media, it was the race for engagement and attention, the outrageification of politics, personalized news versus creating a shared reality, breaking our shared reality, and now society is left holding the bag. So even though the stock prices of Facebook and Snapchat and YouTube, TikTok, have gone up, you know, youth mental health goes down whenever your 401 case as Snapchat goes up. Were these consequences? And I don't dispute that there is an outrageification, not just a political conversation, but of all conversation on social media in lots of ways.

Were these outcomes really predictable? Were they an objective of the companies that were producing these products? And then how do you, quote, hold them accountable? Right. So I don't think that they were intentional by any means. We did anticipate them in 2013. Charlie Munger said, if you show me the incentive, I will show you the outcome. The incentive for attention and engagement, maximizing time spent,

created the race to the bottom of the brainstem, and they could be held accountable for those harms. We didn't do that. So here we are with AI. We're about to roll out of technology that's moving a million times faster and is way more powerful and transformative than social media. Have we made these companies accountable or liable for the harms they create? No. What are the AI harms going to be? Well, I mean, we're already seeing it. We talked about some of it in the Oprah TV special. You know, the same AI that can let you instantly edit your family photos because it's trained on, you know, human faces and bodies is also trained in the other parts of human faces and bodies so you can create notification apps that are causing havoc in classrooms right now. Those are some of the harms we're seeing. So you're not talking about generative AI per se. Well, we are talking about generative AI, yes.

Well, because in other words, replacing Google with something that answers my question in the form of a sentence is a little bit different than the way that AI could be deployed in to recreate photos or videos and that sort of thing. Yeah, well, I mean, the AI is the generative AI that can deep fake photos or voices or videos. We, in the Oprah TV special that aired last night, there's a woman who her daughter was kidnapped and there was a fake audio message about a fake kidnapping asking for money to be paid for ransom. This stuff is already hitting our society. She was fake kidnapped or actually kidnapped? Fake kidnapped. Yeah, a lot of people have had these phone calls. My grandfather got one that was supposedly my brother, you know, not long ago.

So Taylor Swift. The reason I ask the question is to understand, are we talking about companies like OpenAI? Or what kinds of companies are we talking about? Are they nefarious ones or ones that are out in the open? And then kind of how do you target them with rules that can say obvious things about, you know, you can't create nude images that purport to be real ones. And there's rules about that distribution as well. or specifically how do you get at this?

So we believe in a federal liability approach for AI. In fact, we just released a podcast episode that kind of goes through that in more detail. We believe in things like whistleblower protections to make sure that people, you know, the government admittedly does not have that much expertise in all these issues. In the meantime, the people who are closest

to seeing where that harm can arise, you know, notice the open AI whistleblowers that came out and recently left, the safety team and alignment team, you know, some of those folks have left open AI, This is telling a signal that there's some problems with how this is being rolled out. It's not that anyone has bad intentions or are bad people. It's the race to roll out.

If I get there first, if I roll this out, I get market dominance. That's how I raise the next big venture round. That's how I hire the most talented people. And that's how I can continue to influence policy by leading that conversation. How can laws keep up with phenomena that may not even be anticipated yet? if you see, we know we can see what some of the risks and dangers are. Yes. Those bots, those fake influencers,

creating harmful images of young people or whatever. You can see some of that. But there's a lot of this that is so beyond our understanding right now that it would seem very hard for legislators to draw laws to restrict it and create liability. Well, what we should do is increase the light. the responsibility of companies to have more foresight into all of the kinds of risks that can occur. We need to incentivize that foresight. What did we learn when Francis Hogan, the Facebook whistleblower, came out?

She revealed this internal research that Facebook knew that it was causing this mental health harm to teen girls. But what that did is it shut down all the internal research at Facebook now, because if they don't look, then they're not liable. So we need to actually increase the incentives for that research on all these kinds of harms. Is there any historical analogy to what? is happening in this big, sprawling world of AI and social media, and perhaps the willfulness on the part of some of the companies to other industries that have knowingly or obligingly allowed harms to perpetuate, whether it's a chemical company, an oil company, a tobacco company.

Yeah. Well, in many cases people don't know until a little bit later, but, you know, I think in the case of forever chemicals, there was that research early on, but it didn't get out till now, and now fines, you know, billion-dollar fines don't clean up the forever chemicals that are our environment. Now that mental health and has been degrading in young people and we've broken our shared reality, fines don't clean all that up. We now have to actually, you know, fix this. But I will say on the good side, we can be using AI to help address some of these problems. It's not just about red tape. We can. We can be using AI to add context to help bridge divides. You can have an AI that says where are people disagreeing and help provide and generate text that generates more context to bring conversations closer together. We can be using AI to say, what are the areas of the laws that are actually obsolete, that we need to actually update those laws or sunset them or help address and fix some of those laws. It's not that AI is the problem, but we're currently rolling out in a way that it risks undermining and overwhelming our society.

I know the big thing people are concerned about is China. You know, are we in a race with China? If we're in a race with China, we're in a race to get this right. What's the lesson we should learn from social media? We beat China to social media. Did that make us stronger or weaker? And then they came out with TikTok. Yes.

You know, and grabbed a lot of that attention back, and a lot of people are still upset with the result of that. Yes. But that's the point is that we might have beat China to the technology of social media, but it weakened, you know, attention spans, mental health, our IQ scores, education scores, our polarization. So it's not about the technology being bad. It's about who's being in a race to govern the technology in a way that strengthens the holistic aspects of your society. That's what we need to be aiming for. Very, very quickly, because we're out of time.

Companies almost universally say, we favor sensible regulation. Yes. Do they? They say that, and then the next day their policy team's job is to mostly block as much of that regulation. as possible. Tristan, thank you very much. Tristan Harris. We'll have you back soon. Appreciate it. Still to come on Power Lunch. After a quick break, trading stalwartes for upstarts. Market Navigator delves into that next. Welcome back to Power Lunch with a Dow up 257 points. It's outperforming despite Boeing's weakness with those shares down 4% today, S&P NASDAQ, up a half

percent. And check out shares of Donald Trump's media company, DJT, Trump Media, and Tech. It's popping 12%. The former president says he won't sell any of his shares. That lockup is, I believe, supposed to expire September 18th, allowing him to do so. The stock had been briefly halted for volatility and is popping about two bucks to 18. Now, in today's market navigator, our trader thinks the dominant thesis on the consumer is overlooking something, and he's running out to capitalize on it. Joining me to explain Todd Gordon is founder of Inside Edge Capital and a CNBC contributor. Todd, show me your sneakers. I knew you were going to ask that.

I don't have a mock, Kelly. Welcome. What's the consumer narrative here, broadly speaking, and what's the trade? I knew you're going to ask me that. Yeah, so I think a lot of people looking at the consumer discretionary sector, specifically X, LY, seeing it's very range-bound relative to the other growth sectors like tech and communications and making a judgment on the consumer that it's weak, stocks are underperforming going to a recession. And I think if you look below the surface, there's more happening.

on the largest cap stocks within XLY. Amazon, until very recently, has been underperforming. Tesla, we know has had some issues, questions of EV adoption, etc. But if I go down and I look at my list here, there's a lot of stocks that I think are rotating out that are formerly leaders, that are high valuation, and making way for new names reflecting shifts in consumer taste. So a couple names who don't mind, like Darden McDonald's, CMG rotating out what's coming in, Kava, Sweet Green, Wing Stop, Texas Roadhouse. Lulu Lemon, Under Armour, rotating out, Lulu, very high valuation loss, CEO. There's a bunch of other upstart athletic leisure companies coming in, Starbucks out, Dutch Bros. In, Monster Celsius, and to arrive to the point, Nike has had issues. There's questions about the reliance on the Air Jordan line, internal issues.

And I think there's newcomers coming on, specifically one that I like is On On On Cloud. It's a Swiss Bakes shoe maker. I hold it. I added to the portfolio in June. I increased my allocation in August. It's the second largest holding we have for consumer discretionary. This company is growing revenues quickly. About 68% 2022, 46% last year, and they're expected to go mid-20s over the next couple years.

Good margin. And I do think they're taking market share from Nike. I think some of the buzz post-Olympics is wearing off. Nike's only growing 4 or 5% year over year for, you know, formally a pretty high valuation. You know, and I think O&ON is a company that's being very proactive. What's the-to-consumer sales? Very-quickly, Todd. Sorry.

What's the price target? Okay, so right now we had a close above 48. This is going to be the highest close that we've seen yet. So mid-60s looks good. Okay. It's got a compelling valuation. I'm going to hold it. I continue to like it.

All right. And next time, we'll take a look at those sneakers. Todd Gordon, have a great weekend. Thank you so much. Tyler. All right, coming up, many were expecting some huge price tags on Apple's new iPhone, but you're pleasantly surprised to find that most prices remain the same from the previous model. Overall, however, smartphone prices are down over the past year.

We'll dive deeper in today's Powerhouse Blueprint, Your gadgets and stuff next. Welcome back to Power Lunch. While prices keep rising, we remain. focused on staples like groceries and food. But where do smartphones land on the inflation scale? Since like it or not, those devices have become almost essential, today's blueprint, we look at electronics in the home, stocks like Apple, Dell, HP, according to the CPI reports. Prices for smartphones are actually down 9% year over year. Here with more is Amit Dariani, senior managing director at Evercore ISI covering the IT hardware sector. Amit, welcome. Good to have you with

how much are electronics prices still coming down? I mean, we all remember when the 70-inch flat screen was $4,500. Now you can get them for a grand or less, maybe. Is that still a deep trend? Yeah, listen, I think there are two different buckets on this, right? There's Apple and iPhones, for example, where I think pricing actually has been, relatively speaking, very stable, right? iPhone 16s are about the same price, actually literally the same price of the 15s are, right?

But if you look away from Apple smartphones, iPhones, right, if you look at other smartphones, we look at PCs and printers and all these things, pricing for these things went up pretty dramatically through the pandemic when there was supply chain issues and shortages. An average PC, for example, in 2021 was about $850, $860, those prices are starting to come down in a pretty substantial manner as supply chains normalized and, in fairness, as demand weakens a bit. These companies are forced to play with price elasticity a little bit further, right? So I think outside of iPhones, you're suddenly starting to see a reversion back to the deflation post the pandemic for consumer electronics.

Well, wherever there's deflation, I guess we should welcome it because otherwise prices are sticky and higher than they were pre-pandemic. What stocks do you like in this category, Amit? Yeah, listen, I think deflation is great as long as it's not on your wages personally, right? It works really great otherwise. As you think about, I'd say Apple, you know, is one of the bigger consumer electronic plays, I think is extremely well positioned. And one of the dynamics that Apple has on the pricing side is they're able to shift consumers more and more towards a higher-end models, be that higher memory or the pro-pro-max models, which are the regular ones. So I think Apple is really well positioned and, you know, is somewhat more price in Elastic, I would argue, than a lot of the companies are. And then the PC companies, right, HP and Dell, I mean, eventually, maybe in 25, we will get a bit of

for PC upgrade cycle and, you know, do these companies in the industry broadly get into the AI jet stream as well at AI PCs? That could be a really good story for them next year. I think Apple is a name we would say is worth owning across the spectrum. Be dealt potentially, especially as you get into a PC upgrade cycle next year. Amid Daryanani. Thank you very much. We appreciate it. Thank you. Let's get to Julia Borsden now for a CNBC news update. Julia. Kelly, Secretary of State Anthony Blinken announced that This afternoon, the U.S., UK, and Canada are launching new sanctions to address the threat posed

by Russian state-controlled media outlet RT. Blinken accused RT of working with the Russian military and running fundraising campaigns to pay for weapons and other equipment used by Russian soldiers in the war against Ukraine. He called the outlet a key part of Russia's war machine. Pope Francis weighed in on the presidential race today as he departed Singapore. He criticized former President Donald Trump's plan to. deport millions of immigrants, as well as Vice President Harris' stance on abortion. He said Catholics will have to choose the lesser evil when voting.

And Boar's Head will close its Virginia plant that produced meats tied to a deadly, multi-state listeria outbreak. The company which is facing several lawsuits linked to tainted meat is also permanently discontinuing its liverwurst products. As of October 28, the CDC says 57 people have been hospitalized in this most recent recent Listeria outbreak and nine people have died. Kelly, back over to you. So scary. Julia, thank you very much, Julia Borsden. Let's take a look at another look at shares of Trump media, DJT, up 25% now after being reopened after a brief halt. It's currently halted again.

All of this comes after the former president has said he's not selling shares. Again, that lockup is supposed to expire around September 18th. We'll be right back. Welcome back. Stocks are rising today about a half a percent across the board, and it comes on increased hopes for a half-point cut at next week's Fed meeting. On that note, let's get to Rick Santelli to see the impact across bond yields and whether we think this is a real likelihood, Rick. Well, I'll tell you what, I didn't, but that's about what this whole spot is to say that I'm going to talk about. The drama is unbelievable. Everybody is talking about whether it's a quarter of 50. You have large, brokerage concerns, I don't need to name names, weighing in on 50. You have huge trades going through some of the CME contracts that are definitely moving

towards a 50 basis point ease. But maybe a picture is worth a thousand words, especially three pictures. Let's look at January Fed Fund futures today. And I'm not going to talk about anything but direction. So if you look at this chart, it's basically flat. It's starting to aim up. Now, before we get to the next chart, remember, on Wednesday and Thursday, we had CPI, and PPI respectively. And if you're agnostic about inflation, there was some spots in both of

those number sets that were sticky on inflation. Okay, let's do a two-day chart now. So after PPI, you could clearly see the market rocketed up. And that's where we are today. But that isn't even still the whole story. Let's go back another day when we had CPI coming out. And now you really get to see the true picture. CPI comes out, it moves down, goes sideways, then PPI comes out, it goes down an even lower level. Remember, when Fed Fund Futures prices go down, you take percentages out of an easing. When they go up and the price increases, you put percentages back up there. As it sits right now, Kelly, it is pretty much dead on 50-50 on a 50. Now, I remember in 88, I was there the first day Fed Fund futures traded. And one thing

and tell you, they've given the contract a lot of crystal ball type characteristics, but really, in essence, history will dictate that it's best. It's really accurate predicting the future when you're within a couple of weeks of a meeting. So what I would say to answer your question, if by about Tuesday afternoon or 60, 40 or higher percentage on a 50, I think the Fed goes along with the contract. So we still have some time to enjoy this Fed fund rate drama. back to you, Tyler. We were there in 88. Wow, you must have been about six years old.

Rick Santelli, thank you, man. All right, whether it's a ban on smartphones in classrooms or a desire to unplug from all our modern devices, old tech is having a bit of a moment, a senior moment maybe. It's leading to the rise of so-called dumb phones. We'll get the details next. A growing crackdown on cell phones in classrooms across the country creating a boom for so-called dumb tech.

Julia Borsten joins us with that story. Julia. Tyler, a growing number of smartphone bans in schools are creating a business boom for more basic technology, a trend that's affectionately called DumbTech. Nine states have enacted laws or policies restricting K-12 cell phone usage, including four states that have fully banned smartphones in schools. And here in Los Angeles, which is the second largest U.S. school district, a ban of cell phones in schools will be put into effect early next year. With the U.S. Surgeon General calling for a warning on social media apps, parents in schools are thinking about alternatives to the current trend, which is giving kids phones. The National Institute of Health estimates that as much as 53 percent of children have a smartphone by the age of 11. One company benefiting from smartphone backlash is called Yonder. It makes pouches for students to lock up their phones during the school day.

It tells us it's on track to double the number of its pouches in use in school. this year to 2 million across all 50 states. Another company called GAB designs what it calls safe phones just for kids. They tell us they've doubled the number of phones sold every year for the past five years. And another company, Lightphone, designed its streamlined mobile devices, which offer calls, texting, and navigation for adults who want to minimize distractions. But the devices have been embraced by younger and younger users, along with some schools and parenting organizations that are well,

working to drive the adoption of light phones with teens. Now, the market for these phones and other tools to limit kids' access to the internet and technology is expected to grow even further. Tyler, and I have to note that France just announced is doing a trial ban on mobile phones in schools for kids under the age 15. If they think it works, Kelly, they're going to roll it out across the country. My husband tries this every now and then to kind of dumb down his phone, but then he needs it for, you know, paying for something or, you know, paying for

parking. There's so many different apps that we're almost now required to use. It's hard to kind of let go. Julia, thank you, though. We appreciate it, Julia Borson. It's not just so-called dumb phones making a comeback. As the backlash on social media and its algorithms and fatigue heats up, print media is also making a bit of a comeback, researching within the past year, in fact. Recently, Jay Kru announced the return of its iconic catalog, and satirical news outlet The Onion just released its first print edition and over a decade. Ultimately, listening to what the readers wanted. As digital fatigue kicks in for consumers,

does this present a better opportunity for the print space? For more, let's ask the onions, Jeff Lawson and Ben Collins, who both join us now. Gentlemen, it's great to have you and welcome. Jeff, let me start with you. This was kind of, you know, the investment piece of this. This was your brainchild. And you're not only in print.

I mean, you guys have a big social media and digital presence, too. Is that right? Absolutely. We've got the website that people visit. You see headlines all across social media. but ultimately, this is about giving readers what they want and focusing on readers. What we found is that amazingly, you know, we surveyed 42 billion readers. And what they said is that they don't like those awful ads for belly fat and like weird, bizarreo cars that when you click on them, you get an ad for vitamins.

We never would have thought that when we bought the company, but it turns out people don't like those. And so what we did is we got rid of all those and we listened to the readers. And it turns out they love the onion when they get to see a front page full of great stories. And so that's what we're giving them. You know, I'm kind of a devotee, and I thought maybe, well, you know, I worked in the business. So there's a fondness for getting the Wall Street Journal every day. But then maybe it's just kind of nice. You sit down, you read it.

You're not bombard. I mean, some people call this the death of the Internet and think that AI is actually accelerating that with all the fake content it generates. Yeah, how many pictures of a guy with 45 fingers can you possibly see? Yeah, exactly. Yeah, no, I think that's a big part of what we're kind of capturing here is that people just, just want a nice thing in their hands that has nothing to do with the weird racist garbage they see constantly piling into their face on the internet. And we can, Jeff, but I just want to correct Jeff's numbers. It was 47 billion people that we talked to for this. But it has, you know, in reality, we've, you know,

we can comfortably fill an arena with the amount of people who signed up for this thing. There is a real tech lash in general, but also people just want to get something in the mail that's nice, a pretty good price point. You know, we had a bunch of progenitors in this space who were, you know, moving to subscription models, but we wanted to give something else that was really good. And you can open up an onion right now, right in front of you, and get an ad for free conversion therapy, redeemable any Chick-fil-A. There is a lot of good stuff in there. I really recommend it. I like, Jeff, the sort of effortless reference to a crowd size that you made there about filling an arena. That was beautifully done. Ben Collins, let me turn back to you. How often

are you going to print a printed version of the onion? And what does it cost? Sure, I'll let Jeff take this one, by the way. Jeff, go. Go for it. Oh, sure thing. For a hundred bucks a year, you get an onion shipped to your door every month with the newest and freshest news available.

And this is just the beginning, right? We've got huge plans. You call this news. We'll do. You call this news. Maybe one year we'll do 13 issues. We don't even know yet. But for right now, a hundred bucks gets it to your door and for an entire year.

And what we see is that people like having this thing on your coffee table says something about you. It says that, you know, you're valuing your time, the slowness and slowing down life. And it also says that you are a sicko. And so to us, our audience are people who really identify. They want to be a part of this new generation of sickos who are getting offline and who are really saying something about, you know, the kind of company that they keep. Jeff, I'm curious just to build on that. You know, I mean, not to overbroaden the point. But if you were looking at other areas of distressed businesses or broken things from the dot com

area or age and arena, I mean, are there other business models that could try to do that and maybe ones that haven't even tried it before? Well, I was really attracted to this business model, A, because it was so broken. Look, the onion was owned by private equity. And say what you will about private equity, it won't be good. But especially owning the onion, what were they thinking? And so this was an obvious opportunity to take an American. institution, a beloved asset, and actually turn around the business. Like, the internet has three

business models, subscriptions, products, and ads to sell one of those first two. Well, we know one of the business models doesn't work. Ad. So we're going to cross that one off, and we're going back to subscriptions. Sorry, that wasn't really a middle finger aimed at PE. Maybe it was. I don't know. But the reality here is that this is a business model that when Ben and I talked about it, we agreed. We could easily grow three, 400 percent year over year for the next 30, 40, 50 years. And so that That is the commitment that Ben has made to me as the CEO of the Onion. Yeah, no problem. All right.

Sounds good. Good luck with all of that, guys. And as a guy, I am one of the few people probably in America who gets a print edition of the Times in the Journal every day. I'm with you. Saturday. We love it. Throw in the post for a laugh in the day. You know, it's great.

All good. Got to go. Guys, thanks. Very much. We'll be right back. Welcome back, folks. Let's give you a quick check on the markets. As you see a pretty good week rounding out here with the Dow Industrial's up 273 points.

So that is good. And the other major index is higher as well. We want to update you on the standings in our stock draft because we've had some movement near the top of our leaderboard, ladies and gentlemen. O'S Pearlman, the medalist, thanks to Carvanna, is neck and neck now with Steady Eddie George, who has Nvidia and Apple. But here comes Joey Chestnut, thanks to Oracle, up 14% this week after raising its guidance and getting a lot of positive analyst commentary.

So there you go. I know. Also, continuing our high-tech to low-tech theme, Boot Barn, is up 14% this week to an all-time high. It had those reported sales numbers. And that's helping Catfish's Neve Shulman into fourth place. If you heard the news that Neve was injured in a bike accident last month, while one of our producers spoke to him today and said he's recovering nicely, and we hope to have him back on the show soon. By the way, it's been a good week, Tyler, for one of my fantasy players. Coco prices. That's a good call there. Man, up 80% or something year today? Yeah, 82. I need them to do well between from now to year end, and I don't know if I can feel good about that with an 82% rally behind them.

And by the way, that came as Ghana had increased, I believe, salaries it was paying to farmers. To the growers. Yes, I heard that this morning. Well, wrapping up a good week. We'll see you next week in Washington for part of it for the Fed meeting. We will be there.

Thanks for watching, Power Lunch.