Power Lunch - Business Meets Politics 8/29/23

Episode Date: August 29, 2023

President Biden is set to speak about Medicare drug prices. While the FDIC plans to force banks to protect themselves in case of failure.And the SEC just lost a key court battle, potentially clearing the way for an official Bitcoin ETF. We’ll tell you what it all means for you and your money. 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. I'm Tyler Matheson, along with Contessa Brewer. Glad to have you here. And today, we're watching several stories at the intersection of business and politics. President Biden about to speak about drug prices. The FDIC plans to force banks to protect themselves in case of failures. And the SEC losing a court case and potentially clearing the way for a Bitcoin ETF. And in fact, that's where we're seeing a big market reaction here. Judge ruling in favor of Grayscale in its attempt to convert its Bitcoin trust into an ETF. That is soaring the cryptocurrencies higher as well. You can see gray scale up 16%. You've got Bitcoin up 7 percent and ether up 5 and a third. Checking on the broader markets now, the Dow Jones Industries, well, now we're still looking at Coinbase.

Thanks, guys. Dow industrials are up about half a percent and you've got the S&P 500, one and a third in the NASDAQ composite up one and a half. Let's start meantime with our top story and that is President Biden about to speak very shortly on the first 10 prescription drugs involved in price negotiations with Medicare. The Inflation Reduction Act, which was signed last year, let's Medicare negotiate on prices for the first time ever. On the list are some of the most commonly prescribed drugs of all, including eloquist, Jardians, Enbrell. All the major pharma companies are affected. Pfizer, Merck, Eli Lilly, Johnson, and Johnson, and the drug makers are already fighting back with lawsuits. Before we hear from the president, let's get the stock angle on all of this. And joining us

now for that is Louise Chen, a drug analyst at Cantor Fitzgerald. Louise, welcome. In total, these drugs accounted for, I'm told, $50 billion of just Medicare Part D spending. So there is a lot of money at stake here. What is the effect, if any, of what has been announced today on the prices of the stocks of the companies that manufacture these drugs? Well, I think right now in the short term, none of these named drugs will have a big impact relative to what the street was thinking for these companies. The drugs that were listed were mostly ones that were debated. There were a couple outliers that people didn't expect.

I think the bigger impact is probably going to come in 2028 and 2029 when Part B gets rolled into it, and those are the more expensive drugs that have a much more meaningful impact on the bottom line of these companies. So in other words, even though these drugs are big names that lots of us know, like Jardians, like Entresto, like Eloquist, Enbrel, I'm looking at the board over here. In some, you do not think that the negotiation that Medicare may be able to do, subject to court cases, is going to affect, in a material way, the bottom lines of these companies. Yeah, I think, well, it will affect the bottom line of the companies, but I think this has already been. anticipated, right? I'll give an example. Pfizer is one of my companies that I cover. Bristol and Pfizer have a product eloquist. Eliquist is slated to go generic. So it is something that has

already been anticipated in the models on the street. Another example is a product Stalara, the J&J has. That was a rather unexpected addition to the list, but that one is also slated to go generic, and that's how people have been modeling it. So for now, the first tranche, I think, was an easy pass, you know, first time around for these price negotiations. But I do think, time, things will get a lot more complicated. I know that you're going to be watching closely the lawsuits that have been filed by the manufacturers against this move by the White House. What do you anticipate will be the resolution?

I mean, if you had any way to predict the future on this front, do you think that we're going to see this actually go into effect and that you're going to see the impact on the drug companies themselves? Yeah. I think the potential for it to go into effect is 50-50 at this point. A lot of questions I get from different investors on the street is how soon we could see some sort of resolution. And I don't anticipate that will be in the near term. I think this go through the course, at least for the next year or so.

On what basis are the drug companies attacking this plan, in other words, the right for Medicare and Medicaid, I suppose, to negotiate prices? What's the legal defense here that they're using? Yeah. So the legal defenses, there's different ones for different companies. I think the main one is a violation of the First and Fifth Amendment, to a smaller extent, the Eighth Amendment. And then also AstraZeneca came out arguing that it violates the Orphan Drug Act. So they're all going after different angles. And I think seems like the bus is getting bigger with pharma companies suing the government on this. And part of this, and you rightly pointed out to where this goes into effect and then years later, but what does the redesign itself due to the impact on developing new drugs for market? And that is really the biggest question of the day, right? Can the government and industry work together to preserve innovation? If I listen to some of the comments that CMS made this morning, they did say that innovation is really key and they want to protect it.

So there are ways to have a win-win situation between both government and pharma where they will attack the drugs that will be most beneficial to patients. That's my thought on it. I'm still a little perplexed as to how the First Amendment comes into this. I thought that had to do with freedom of speech and so forth, but maybe there is a way. But let me ask you a different question, if I might, and that is about whether if this plan goes into effect and Medicare, Medicaid, are able to negotiate the prices of drugs in their programs, will then commercial insurers that are not Medicare or Medicaid, will they do the same thing?

In other words, will Blue Cross Blue Shield, will the pharmacy benefit managers be able, or will they push to negotiate? So this is a big point of debate, and I think it's an unknown. I think obviously pharma would like it to be more isolated and to be separated to Medicare versus commercial payers. But there is something where it happens that commercial payers might say, hey, your drug is too expensive. Look what Medicare said, and we want better discounts as well. Or it may be an opportunity for farmer to push some of that burden over to commercial.

payers. So I don't think we know yet. It remains to be seen. We are showing you the White House now where we're expecting any moment to hear from President Biden on his new plan to negotiate these prescription drug prices for the Medicare beneficiaries. Let's bring in now the former FDA Commissioner, Dr. Scott Gottlieb, who is also a CNBC contributor. And Dr. Gottlieb, I heard you say earlier that there would be unintended consequences from this plan. Can you lay those out? for us? Yeah, changes in how capital is going to get allocated. So this is really a synthetic loss of exclusivity, and Congress intended it to be so.

So small molecule drugs are going to come under price controls after nine years, large molecule drugs after 13 years. So it creates a real incentive to try to go after biological targets with large molecules rather than small molecules. And you're already seeing shifts in investment towards those ends. Unfortunately, there's certain biological targets that just can't be reached with antibodies and other large molecules. and I think a lot of those are going to go undrugged.

Remember, there's really no benefit from what's being announced today to consumers directly. The benefits of this law, and there are benefits in this law, and they're quite substantial, is an elimination of the 5% cost sharing in a catastrophic range on Medicare and also a cap on out-of-pocket costs in Medicare Part D at $2,000. Now, some of the savings that they're achieving here will go towards paying that, but most of the savings that's being achieved from these price regulations is actually going outside the Medicare program, towards things like green subsidies. There's $286 billion over 10 years and savings that's projected.

I don't think they're going to realize all that. But the vast majority of that money is not going to Medicare beneficiaries. It's going outside the program. So there's really only a lot of downside from what's happening today in terms of, are we going to see fewer investments in the kinds of innovations that benefit Medicare beneficiaries? And I think that that's going to be the case. I think it's very hard, for example, to develop a small molecule drug targeted to a disease like Alzheimer's, which largely a Medicare population. But why shouldn't drugs be subject to negotiation in the same way that hospitals have to negotiate

what the fees are and doctors have to negotiate with the insurance companies, what the fees are? Like, why shouldn't drug manufacturers have to undergo that same process of capitalist haggling? Right. Well, in the Medicare Part D program, they do. I was around when we created that Part D program in the early 2000s, and the idea was to allow these drugs, to be competitively bid so that different plans competed to try to offer beneficiaries the lowest

priced drug benefit by extracting savings from the drug companies. If you look at the pricing, the real pricing in that program, the prices that don't get published, the kinds of discounts offered by the major manufacturers, and as you know, I'm on the board of Pfizer and I know the industry pretty well, the kinds of discounts offered inside Medicare Part D sometimes are in excess of what European countries extract through administered pricing. So there's a lot of discounting in the Part D program. The reason why we wanted it to be a competitively bid scheme like that, where private plans competed to try to extract savings, was that we thought it would lead to the best allocation of capital on the whole, that if drug companies were competing to try to offer drugs in a competitive market and try to offer drugs that they could price at a premium, they would be allocating capital on the whole to the best public health use endeavors.

And you have to believe that pricing does follow some semblance of what's having the biggest public health impact. And I think on the whole, that is the case. Really good drugs end up getting priced more. Now you have the government coming in and saying, we don't want a competitively bid scheme like that. We're going to set the prices. And it really upends the allocation of capital. And that's the bottom line.

Now capital is going to be allocated according to government rules. And if you look at the prices that they set today, the way they scoped in, for example, the insulins, which looked like a policy outcome in search of a rationale, that's the kind of decision-making that you're going to get from CMS, decision-making that's not fully grounded in their own stated policy. that creates a lot of market uncertainties. Please correct me, Dr. Gottlieb, if I misunderstood you,

but I think you said that the benefits that will redound to consumers as a result of this would be relatively small. If that is what you said, please say, yeah, yeah, you got it right. But then my question becomes, is there a larger benefit that redounds to taxpayers as a whole under this? Maybe not to individual consumers, but to taxpayers. Right. Well, I wouldn't trivialize the benefits to consumers. Eliminating the 5% cost share in a catastrophic range, which was a big burden on people who had serious diseases like cancer, and capping the out-of-pocket cost of $2,000 is significant.

The administration deserves a lot of credit for that. That's going to reduce a lot of hardship. My point was that the vast majority of the savings being achieved by these price controls are not going to pay for those benefits to consumers. They're going just to save the government money. But it's not as if the government's taking that money is going to pay down the deficit. or find other constructive uses to provide broader health care benefits to consumers. They literally took that money and paid for the green subsidies. So if you believe that government financing of green subsidies and helping to offset the cost of Tesla's is a good use of savings extracted from the Medicare program, then you'd be in favor of this law.

I don't think that's a good use. If they had said we're taking that $286 billion that we're extracting from the drug companies and using it to help offset costs of health care to families, that would have been constructive. And I would have been supportive of that. I think as long as the money that was extracted from the system stays within the system is used to help consumers get better health care, you can find that to be an enviable use of those sources of funds. Well, you know, and I had that investigative story earlier this year that revealed $100 billion roughly is the annual loss for Medicare health, waste, fraud, abuse. And very little gets spent on enforcement there.

there's an opportunity, if the goal is to save taxpayers' money, there is a real opportunity on that front to do it in that way as well. Dr. Gottlieb, it's always a pleasure to talk to you. Louise Chen, thank you so much for joining us and talking a little bit about the stock impact here on the companies themselves. Coming up, Apple sends out an invite to September 12th event. Could this be the unveiling of the iPhone 15? We'll discuss that in tech check and a quick power check before we go to break.

Tesla, the leading stock in the S&P 500 today. its Chinese rival Neo missed on earnings, which could show Tesla is winning market share. Well, on the other side of the vehicle coin, Pachar, which makes commercial trucks. That stock on pace for its worst day in nearly a year down 3%. And once again, here's the White House live shot here, waiting for the president any moment when he starts his remarks on these drug prices. We'll listen in. Welcome back to Power Lunch, everybody.

Bitcoin up. rather distinctly 7.5% or thereabouts as a court ruling this morning may have cleared the way for a Bitcoin ETF. Kate Rooney has more for us. Kate. Hey there, Tyler. So Crypto Bulls are now one step closer to that long-awaited approval of a Bitcoin ETF. A court of appeals siding with Grayscale in its lawsuit against the SEC this morning. The agency had denied Grayscale's multiple attempts to convert its $20 billion gray scale Bitcoin trust into an ETF. It's also known as GBTC. That's up double digits today. It was the original way for investors to get Bitcoin exposure. It used to trade at a premium to the price of Bitcoin, but now trades

at a pretty deep discount to the value of Bitcoin based on some fears of that trust would need to be unwound if it couldn't convert into an ETF. It's also facing some lawsuits over fees. The judge today, though, saying that the SEC's initial decision was, quote, capricious and arbitrary and that the commission failed to adequately explain why it approved the listing of two Bitcoin futures products, but not Grayscale's proposed Bitcoin spot ETF, and that in the absence of a coherent explanation, the regulatory treatment, as they put it, was unlawful. Grayscale, meanwhile, calling this a monumental step, rather, step forward, and they say they're going to be pursuing next steps with the SEC.

And, guys, this also, as far as the impact here, one venture investor I was talking to told only that the ETF approval is mostly about optics here. It's really seen as the final step for integration of crypto into mainstream finance. It would get the world's largest asset managers on board as well. You've got BlackRock Fidelity. You've got Ark Invest there among those that are in line right now for Bitcoin ETF. And it's seen as a way to really broaden crypto investor base by unlocking exposure to Bitcoin in a brokerage account. And spot ETFs are considered a more efficient way to track the price versus futures ETFs. But a big impact there. And you're seeing, it been Bitcoin.

Back to you. Kate, thank you very much for that. We're going to go to the White House now, the president, talking about the drug price adjustments. Good afternoon. Please have a seat. Good afternoon. It's a room full of leaders. Well, thank you, everyone, for being here and for all the work that you have done leading up to today. I want to thank, of course, our nation's champion, President Biden, for your leadership and commitment to lowering costs for working families. in every way. And thank you to all of the members of Congress for the work that you have done

and continue to do to help us achieve this type of progress. So we are here today with the firm belief that in the United States of America, no senior should ever have to choose between whether they are able to fill a prescription or fill their refrigerator with food. But for you, yes, Because we know for years, far too many of our seniors, millions of our seniors across the country have struggled to afford their prescriptions. And too many of our seniors risked their health as they may have delayed to refill their prescription or they cut their pills in half to try and stretch out the length of time that they could take their medication. So since we took office, President Biden and I in our administration has taken historic, historic action to cut the cost of prescription medication for our seniors. We capped the cost of insulin at $35 a month. We will cap the total cost of prescription drugs at $2,000 a year.

And we have made vaccines free of charge, which will save seniors hundreds of dollars every year. Yes. We finally allowed Medicare to negotiate the price of medications with big pharma companies to the benefit of 65 million Americans at least. And as many of you know, we've worked together over the course of my career, I've seen the stakes of this fight firsthand. When I was Attorney General of California, I met with countless families who are often quietly suffering because they or a loved one could not afford the medication they needed and were prescribed. I investigated drug makers that tried to stop production of cheaper generic versions of their drugs, and we held them accountable.

And we intervened in the merger of hospitals that could have resulted in less competition or increased cost for their patients. All that to say, there are many factors that drive up health care costs and make medications more expensive. And President Biden and I will continue to use every tool at our disposal to bring these costs down. And we will hold accountable those who try to put promise ahead of the head of this and come back as a discussion of reducing Medicare prescription drug costs. We're going to break away, take a quick break and come back when President Biden takes the pose.

We'll be right back on Powell. Let's go back to the White House now and listen to President. Joe Biden on reducing Medicare prescription drug costs. I look around the room and this is a long time and coming. Bill, we started doing this 25, 30 years ago, seeing we could do something about these outrageous prices, give people a fighting chance. Unless you needed the drugs yourself or knew someone who did,

it wasn't as real, but boy, we've been fighting big pharma for a lot. a long time, a long, long, long time. And Stephen, as my mother would say, God love you, son. You've been through one hell of an ordeal. Your story is a familiar one from too many Americans. Instead of using all your energy to fight the disease, you're fighting insurance or drug companies for medicines that literally keep you alive. Without them, you're not going to be here. On too many nights, too many Americans lay in bed, staring at the ceiling, worrying what will happen if their spouse gets sick, if their child gets sick, or if something else happens to them.

And I should have said at the outset that I look out in the audience. There's a lot of people who are in this fight, some even before me, that it's just as amazing. I want to thank you, you, the people sitting in front of me, the members of Congress, the organizations you belong to, for making this happen. It wouldn't happen without you. And that's not hyperbole. Thank you.

Thank you. Thank you. I'm serious. I'm deadly honest by it. I really am. So thank you. You know, questions you lie in bed and wonder about it. I remember we lived in a three-bedroom split-level home with four.

We weren't poor. Just a normal middle-class, I guess technically, lower-middle-class family, but in the development of homes and the bulk of my childhood, that was three-bedroom split-level home that had four kids and a grandpa lived with us. And you could hear everything in the house. I remember one night, this is God's truth, I remember one night, I guess I was a sophomore, junior in high school, and hearing the headboard of my dad's, but I could tell my dad was restless

in the next room. Next morning I'd get up and ask my mom, I said, what's the matter with dad? He said, her company just said they're not going to pay insurance anymore, health insurance. Well, you know, that's tough enough. But imagine when you have life-saving drugs you need to keep you alive. Do you have enough insurance? Can you afford your medical bills? Do you have to sell the house in order to pay for everything?

For all of you out there, I get it and millions of Americans get it. I promise you, I'm going to have your back and I'll never stop fighting for you on this issue, nor will come. No, we'll come on it. But again, I'm not being solicitous when I say, for all of you sit in the audience, this would have never happened without you. Never would have happened without you. I'm not going to start naming names because I'm going to get in real trouble if I do that. But thank you.

Two weeks ago, we celebrated the first anniversary of the Inflation Reduction Act, which in a sense is misnamed. We did lower inflation, but there are many other things in that legislation. One of the most significant laws ever enacted, especially when it comes to reducing the cost of prescription drug. We pay more for prescription drugs than any other major economy in the world, than any other major economy in the world. You can walk into a local drug court across the country, you're paying two to three times

more for the exact same prescription, manufactured by the exact same company that it would cost you in Canada or France or anywhere else around the world. Think about that. A drug company that makes a drug here in America, if it's sold in Chicago, you can buy the same drug in Toronto or Paris cheaper than you can buy it in Toronto. I mean, it's in Chicago. And unlike other parts of the health care system, Big Pharma got a special carve-out that stopped Medicare from negotiating prices of drugs through Medicare.

For years, advocates, like many of you in this room, have worked tirelessly to change that and give Medicare the power to negotiate lower prescription drug prices. just like the Department of Veterans Affairs does right now. It matters. VA pays 50% less than Medicare can and negotiating the same lower prices. For years, Big Pharma blocked this. They kept prescription drug prices high

to increase their profits and extend patents on existing drugs to suppress fair competition instead of innovating. Playing games and pricing so they could charge. charge whatever they can. But this is finally, finally, finally. We had enough votes by a matter of one to beat Big Pharma. Well, we did it. We passed the Inflation Reduction Act with no help from the other team. Every single person on the other team and the Congress voted against it, every single one. And we're in a situation here that the law finally gave Medicare the power

to negotiate lower prescription drug prices. And by the way, negotiating drug prices alongside other provisions this law isn't just going to put more money back in the pockets of millions of Americans across the country. It's also going to lower the federal deficit. According to the Congressional Budget Office, it will save the federal government $160 billion over the next 10 years because Medicare won't be paying less for the prescription drugs they're making available to seniors. The Inflation Reduction Act is already making a huge difference. Take insulin, as referenced by Stephen. It costs that drug, cost 10, $10 to make. The guy who invented the drug who came up with it didn't patent it because he wanted it available for everybody.

But drug companies are charging 30 times that $10 or more than that. Now because the Inflation Reduction Act, seniors on Medicare like Steve are paying $35 a month instead of $400 a month. It matters. Three months after the Inflation Reduction Act went to affect all three of the major insulin manufacturers lowered their prices for insulin for everyone. for everyone, not just seniors, everyone. That's originally what I had proposed, everyone. We lost on getting everyone, but we kept seniors. When we act, change happens.

You know, and today I'm proud to announce that Medicare has selected the first 10 additional drugs for negotiation under the Inflation Reduction Act. Ten additional. Drugs that treat everything from heart failure, blood clots, diabetes, kidney disease, arthritis, blood cancers, Crohn's disease, and so much more. Medicare spends $50 billion a year on these 10 drugs,

and American seniors are spending $3.4 billion on out-of-pocket cost. Look, if your company, if you compare the total drug price globally, the United States is including an outlier. For example, one of the selected drugs that treats blood costs cost about $80, for a monthly prescription in Canada. The same exact drug in the United States made by the same exact company cost over $270 a month

made by the same company here in the United and sold in the United States of America. Triple the cost, just crossing the border. Think about that. Big pharma. Big pharma and charging America is more than three times what they charge other countries

simply because they could. I think it's outrageous. That's why these negotiations matter. Reducing the cost of these 10 additional drugs alone will help more than 9 million Americans. By September 2024, HHS Health and Human Services was going to public the prices and negotiated. In January of 2026, the new prices will go into effect. But we're not stopping there. Next year, Medicare will select more drugs.

for negotiations so more Americans get more savings on life-saving medications they need and deserve. But guess what? Big Pharma doesn't want this to happen, as you might expect. Last year, the industry spent $400 million in lobbying fees to try to stop the Inflation Reduction Act and block the ability of the federal government to lower drug prices. And when they failed, they went to federal... Well, so they're what you're hearing is President Biden talking a bit in detail about his plan under the Inflation Reduction Act to lower prescription drug prices that largely will benefit Medicare, but then does have some trickle-down effect to those who are getting those

prescription drug pills and paying out-of-pocket costs as well. So, of course, we'll continue to follow the impact on the companies that we cover here at CNBC. In the meantime, regulators are going to unveil new rules for small and mid-sized banks with more than $100 billion in assets. Those moves are designed to protect borrowers in case of more bank failures, such as the sudden collapse of Silicon Valley Bank that we saw in March. Our banking reporters, Husson and Leslie Picker are covering the story reporting, and regional banks face another hit as regulators force them to raise debt levels. Hugh and Leslie, join us now.

It's good to see both of you. Leslie, let's start with you. What are the new requirements for these banks? Basically, what regulators are doing is they're taking this group of banks that's between $100 billion and, say, $700 billion in assets. So the ones that fall beneath those that are deemed systemically important, and they're basically kind of enacting some of the same requirements and rules that the largest banks have already had to comply with. One of those is this long-term debt requirement, which essentially acts as a buffer in case of failure. If a bank, as we saw in kind of March, April timeframe, if a bank fails, having a long-term debt component can effectively serve as kind of a buffer between the bank failing and needing

to be costly for depositors, both insured and uninsured. So that's kind of the thinking there. They're also redoing some of the requirements for living wills, essentially a wind-down plan for a bank in the event of failure. All of this banking lobbyists are saying could be more costly to their requirements. bottom lines. Okay, so Hugh, when you're looking at this, one, how does the debt provide this buffer? And then what's the long-term impact? Yeah. So the debt is, just think of it as a pile of money that's there. It's long-term debt. So it should really represent the increasing or decreasing

risk that a bank needs to be rescued and saved by the government. And if it's there, you know, essentially will be a buffer against losses. That buffer protecting essentially the public. When you think about the public, we're talking about uninsured depositors who have their money at a bank, at a given bank, and ultimately the FDIC, which has got their insurance fund. And so what we've seen here, and Morgan Stanley has written a note about this yesterday, is this will impact and feed into the pressures that the regional bank industry faces. They're already under the gun in terms of profits because of rising interest rates and competition. Five banks in particular.

So they names five specific banks, regions, fifth third, and a few. M&T, banks, Citizens Financial, and Northern Trust. And citizens financial. And their analysis was that they're already below this requirement for long-term debt. They're going to have to issue debt, which, by the way, should be more expensive, given some of the downgrades to the banking industry in general in terms of their credit ratings. And they've got to issue debt into a not-friendly market, so they'll have this pile of money in case they fail.

So, Leslie, let me ask you, this feels to me like the government requiring the banks to have effectively a line of credit in case they run into trouble. This would be debt that they would issue at whatever the market rate is, and that debt does what? It just sits there on their balance sheet. It can't be used for anything but this kind of protection. It can't be used as long-term debt often is for capital expenses to expand branches or improve technology or whatever.

It just has to sit there as a resting pile of dough. In case the bank runs into trouble? Yeah, I kind of wish I had a resting pile of dough these days. No, you're right, Tyler. It's there almost like kind of a rainy day fund. Think of it like that. And, you know, kind of speaking to the overall issuance aspect of this, Ben Eamens has a note out saying that an increase in long-term bank issuance can actually

drive higher long-term yields in treasuries. So this could have some of this self-fulfilling prophecy, whereby, as you pointed out, you're issuing debt in a not such a friendly market necessarily given where rates are to issue debt. It could be increasingly costly depending on the directionality of rates as this is implemented potentially over the next few years or so. But then broadly speaking, it could, you know, given just the size of this market, have an impact on, you know, where yields are just in the broader scheme of things. And given where interest rates are right now, is there any chance this actually puts more strain on these banks?

What do you think, Hugh? Well, I mean, I think it's pretty clear. And, you know, the regulators were forthright with this. They said that this would add to their funding pressures or add to their funding costs. So, you know, with all along with all the other things that we know are afflicting regional banks, this adds incrementally to that pressure, which, you know, will develop over the next few quarters. And for what it's worth, feeds into this narrative that the end game for regional banks has to be more consolidation, right? If you have rates that are higher for longer and these regulatory pressures, that the only way

out of this is that they consolidate. There are 4,600 banks in this country. Will there be that many in a few years from now? Thank you very much. Appreciate that. Our Delivering Alpha Investor Summit coming up September 28th in New York City, you don't have to wait until then to get investing insight from some of the best in the business.

You can subscribe to Leslie's Delivering Alpha newsletter, and why wouldn't you not want to do that? Scan the QR code right there on your screen, or you can sign up at CNBC.com slash delivering alpha newsletter. Have it burned into your retinas. That's that QR code. Right there. Right there. You want to do this. All right. Still ahead. Apple's big event, the tech titan set to unveil a host of new products, including maybe the iPhone 15. Does that mean it's been 15 years since the, I guess it does? We'll tell you all you need to know. All you need to know when power lunch returns. Apple sets the date for its next big event. Will we see the iPhone 15? That is the topic for today's tech check. joining us to talk about it. Steve Kovac and Deirdrebosa. What should we look for here, Steve?

New iPhones, of course. What else, Tyler? It's September. It's Apple. New iPhones? It's like iPhone season. It's like Apple picking season. That's exactly it. But look, I mean, just as has been the story with Apple for so long, it's going to be incremental updates year over year. But if you wait three or four years, it does feel like more of an upgrade. So here, according to just numerous reports out there, including analyst Ming Chin Kuo, who is just always correct about these Apple rumors. The big change coming is going to be to that largest iPhone, the Max, the Pro Max. It's going to get this new kind of camera technology that they call Periscope. That means it can zoom in better. That's all that really means. It's an optical zoom

versus a digital zoom. Better pictures. Great. The other thing, this is what everyone's going to be talking about, though, is the change from that lightning plug, the plug that they've been using at the bottom of the iPhone for, I don't know, last decade or so, is going to change to some something called USBC. Now, if you're on an Android phone user or you use a more recent laptop, you're used to that. Those are the new kind of USBC plugs that have been popping up everywhere. Now Apple is going to adopt that. There's a smaller USB, right? They're kind of a mini USB. And this is actually probably going to be a good thing. A lot of the reason Apple is doing this is because EU put out new regulations saying companies have to do this. So Apple has admitted itself that

they're likely going to do it. And it also means that you don't have to go hunting for different chargers for all your different devices. One charger will charge everything from your iPhone to your laptop, to your tablet, to your Kindle. So that's going to be the big stuff. It really was illuminating. One charger to rule them all. Exactly. You know, Deirdre, it was illuminating to me how much iPhone has infiltrated life when I picked up a framed picture this weekend and I started to try to zoom in on it by doing this. You know, I'm like, on a real print picture. What was I thinking there? How much pressure is on Apple to keep innovating from companies like Google and the Android phones and everybody else who's making devices. Well, I'll give you one more example. You tried to zoom in on a picture, but what happens when a baby tries to do that, right?

Before they even know how to talk or walk and they're trying to zoom in on stuff because they've been around iPhones already so much. I love iPhone season as much as the next person, but how important is it? That's another question. I think increasingly less. I mean, we've seen three straight quarters of sales decline. So it's more about this user base, this installed base of more than 2 billion devices that's really keeping Apple the stock, if you're an investor, on the way up. Because with revenue declining, it is about the services. It's about how many people have how many devices and how much they're spending on it.

So I think that it's always fun, and I love to see the upgrades, but it's really about how much more people are going to be using it and spending on it. All right, folks, we've got to leave it there. Thank you very much, Dee, and Steve. Good to see you both. Appreciate it. Coming up, we'll get some technical support. We asked our technician to check the charts for some names which could be worth buying here.

I'll be right back. Welcome back to Power Lunchtime for some technical support, taking a look at some of the movers of the day and if they can offer some opportunity here to chart those names. Katie Stockton, the founder and managing partner at Fair Lead Strategies. Now, first, Katie, AT&T gets an upgrade from City. It noted positive signs of stabilization in the space. What are you seeing? Well, you can see, obviously, lower highs and lower lows.

It creates a downtrend channel on the chart that has been in place for years now. But within that context, we do have an oversold indication. So I'd like to see these upgrades when you have an oversold condition to take advantage of. Now, for me, I wouldn't want to be necessarily long-term in focus until or unless we can see AT&T get through that trend line because that would then suggest that it's seen a long-term bullish reversal. For now, I think we trust that it's poised for a short-term relief rally. Okay. Next up, we have Bristol-Myers Squibb, whose drug was picked for Medicare price negotiations. Today we heard a lot about that. What are you seeing in the chart?

That's right. Here, too, we've had a downtrend much of this year. And yet within that context, we also have a reaction from the oversold condition, helped by today's reaction, a nice little move higher up to the 50-day moving average. If we were to see a breakout above that 50-day, it would target about 68 for Bristol-Myers. And you can even go back to 2019 and see that there is a long-term uptrend in place, sort of a secular uptrend within this sort of cyclical bear move.

And did you think today that you would see any dramatic moves given the announcement of the inclusion? They were all largely oversold. So they were kind of primed, I think, for a positive reaction to the new. and we're seeing it on a broad basis. Last, we have digital realty. The shares higher today.

The stock is up 30% year to date. What do you read in the chart? Well, this one is different. It's sort of a classic bottoming formation, a double bottom, if you will, with a breakout. And that breakout acts as a positive catalyst on the chart. So we feel that this is an interesting turnaround play. It has some yield to it.

And the price objectives that you can get using the Fibodonti retacement levels are close to about 143 initially. So still impressive upside despite what we've seen already. Katie Stockton, thank you for coming in and drawing on our chart. Of course. Tyler. All right, Contessa, we got a lot of stories to get to, but so little time left. We will power through as many as we can in closing time in just a couple of minutes, time. Welcome back to Power Lunch. Let's get to Christina Parts and Nevelas for a market flash on Oracle. What do you have? Well, it's about all about who you know when it comes. to getting your hands on some coveted

Nvidia GPUs, and Oracle knows Nvidia pretty well. The two have partnered for years in the cloud computing industry and that's why UBS is upgrading Oracle. It's quote, underappreciated edge in terms of GPU capacity and cloud infrastructure, which they bet will attract new customers. Most

companies, we know this, we talk about it all the time, are rushing to build their own generative AI models and that means they have to scramble for the hardware. Most often the hardware being Nvidia GPUs. UBS believes we could be sitting on a six to 12-month GPU shortage, which was quite substantial, even though Nvidia said that they do have the supply. So that means any company, like Oracle, in this case, with a stockpile, is already ahead of the game, or what they call a, quote, speed-to-deployment edge, especially since so many companies already store their data with Oracle software.

Another reason why it's a strength. They like Oracle, even with this 47% pop in the year-to-date stock price, and suggest companies are only just starting to wrap up their AI cloud infrastructure, And that leaves room for growth with Oracle Cloud products. Cloud maybe the Midas touch of Nvidia. So they were smart enough to stockpile a bunch of Nvidia chips. We could say it's smart also they have their relationship and they were able to get the chips in advance

compared to maybe some other companies that have been struggling to do so. Well, you treat your best customer best, right? Precisely. And that's why it's all about connections and money. And who you know. And money. And money. Always money.

Always money. Money connections. Money. Thank you. Thank you. All right. We have a few minutes left in the show. a bunch more stories that you probably will want to know, let's get right to it,

farmers insurance, laying off 11% of its workforce, about 2,400 employees. It says the cuts are across all areas of its business and part of a restructure for long-term growth. Now, farmers also recently announced it will stop offering policies in the state of Florida as a way to better manage risk exposure. California, I think, is the state that. Those great ads they do with Jake or the actor, JK. Like we are farmers. We are a farmer.

Don, da, dun, dun, don't, don't, don't. Which we all can sing. The truth of the matter is that the insurers are under a lot of pressure because of inflation. And they have to manage the risk well. And we know that we're watching this storm, Dalia, come barreling up the west coast of Florida right now in Florida because the insurance market has been such a mess for so long. And yes, this year, the state legislature passed a law. And the governor signed it to try and deal with some of that. They've just had some new insurers coming back into the state to try again.

But California is a mess. Texas is troubled. Louisiana has a problematic insurance market. And the insurers have to position themselves in a way that keeps their risk manageable. Moderated, yes. And it does, as you've pointed out before, it often rolls to the reinsurers who have to pay insurance. And the reinsurers are making money hand over fist because they can set the prices at whatever. they want and they don't have to take the risk if they don't want it. Yeah. And so they aren't.

And so that's caused a lot of impact as well. Already as our economy struggles with labor gaps, immigrant workers are coming to the rescue. According to Goldman Sachs, immigrants will account for a half a million jobs filled in the U.S. over the next three quarters. And get this, between January of 2020 and January of 2023, the immigrant workforce grew by nine and a half percent compared to one and a half percent among native-born Americans. This has been part of the American story for really centuries, people coming from outside of the country, into the country, creating economic value for themselves and their families, and this is part of the American way. And apparently the visas have been given out more. But again, there's a demand here,

and the companies are asking the government to speed up the rate at which visas are happening. And, of course, this is a separate issue from the immigration that's coming across the border, the undocumented people who are coming across the border. Absolutely. Right. Another segment helping to fill in labor gaps working mothers, according to the labor department. Mothers had a 75% workforce participation rate as of July. That's more than at any time since the labor department began tracking that data back in 1948. We believe that the pandemic really disrupted some of that, that people were needed at home, and somebody had to oversee children at home doing the schooling at home, and so it disrupted mothers in the workplace.

The participation rate among mothers went down a lot, if I'm not. calling correctly during the pandemic and has come back now to record highs and probably in part because of work from home arrangements that have been made. And the cost of living crisis. Like, you know, what groceries and fuel costs mean that you need more money at home. And finally, at what age do people make their best financial decisions? The answer is age 53 or 54, according to a new survey from an economist in Australia. What does he or she know?

That's the age when you've accumulated enough knowledge and experience about financial matters. But before losing any key analytical and cognitive skills, I am past my cell by date. I have something to look forward to. And worse and worse and worse. Thanks for watching, PowerLy.