Power Lunch - Car Insurance Inflation Soars & EU Passes AI Regulation 3/14/24

Episode Date: March 14, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, folks, welcome to Power Lunch, alongside Contessa Brewer. Glad you can be here. Glad you can be here. I'm Tyler Matheson. A new contender emerges to solve the TikTok drama, former Treasury Secretary and New York Community Bank's savior. Stephen Mnuchin says he will lead a group to buy the app from its Chinese owner. Plus a trio of real estate stories here, the impact of rent stabilization, using AI to build

homes, and using sports stadiums. If it's Latin, it should be stadia to build real estate empires. But first, a check on the markets. Stocks lower today following a hotter than expected PPI. You've got wholesale prices rising six-tenths of a percent in February compared to an, excuse me, an estimate of 0.3. There you're seeing the Dow Industrial's down a third of a percent. You've got the S&P 500 down a third as well, third of a percent. And NASDAQ composite up.

0.14 percent. Tesla, the worst performer in the NASDAQ 100 today continuing its slide. It's down 20 percent so far in March and off by almost 4. percent today. InVIDIA right behind it. That stock has been down the four of the last five days and it's off, almost three percent as we speak, Tyler. All right, let's start with the big news reported on squawk box this morning, actually broken on squawk box this morning. Former Treasury Secretary Stephen Mnuchin says he is putting together a group to buy TikTok. He says it will cost a lot, but he thinks he can make it happen. It's worth a lot of money. Let me just say, you know,

I think the number one issue that needs to be solved is the technology transfer. And if we can figure out a way to solve that, which I think we can, then, you know, I think the price is some large amount of money up front and probably a big earn out. Because you're right, the business, my understanding is, does not make money today. And does that require the rollover of the current investing group into your group? And are they part of that? I have spoken to some of the existing investors. I would propose that they would roll over the U.S. investors.

and my guess is they would. Well, let's get to Emily Wilkins in Washington now for more. Hi, Emily. Hey, Tyler. Well, yeah, I mean, what we just saw from Manusian is what lawmakers want. They want someone to buy TikTok, ideally an American group. Manusian laid out some of the realities of this potential sale. He does think that China will be willing to sell so long as there's not this transfer

of technology. And that means that the app would basically need to be rebuilt in the U.S. He also warned that TikTok shouldn't be. owned by another major tech company, antitrust concerns there. And of course, he's not the only one looking to buy TikTok. The Wall Street Journal reported that Activision Blizzard CEO Bobby Kodick is looking for partners to buy TikTok with him. And I'd be surprised if we don't hear some more names as the saga continues.

Of course, to sell to anyone, the bill still needs to pass the Senate. And of course, Bill would force TikTok to either divest from parent company bite dance or be banned in the U.S. And while the bill might have flown through the House, don't expect the same thing in the Senate. It's been endorsed by the heads of the Senate Intelligence Committee, but Majority Leader Chuck Schumer has not promised to vote. And several lawmakers have said that they want to make some changes to the bill. Plus, TikTok has really ramped up its efforts after it was caught off guard when the House released their bill the other week. Bighton says a powerful team of D.C. insiders who are lobbying for the bill.

and Bightat spent 8.7 million on lobbying efforts back in 2023, according to Open Secrets. And then TikTok CEO, Shosey Chu, is stepping up into the game, posting a message on the video app yesterday, vowing to fight to keep the app in the U.S. Although he didn't address a potential sale. Listen to what he had to say. We will not stop fighting and advocating for you. We will continue to do all we can, including exercising our legal rights, to protect this amazing platform that we have built with you.

We believe we can overcome this together. And today, the Chinese Commerce Ministry said they will, quote, take all necessary measures to resolutely safeguard our legitimate rights and interest. Guys, it seems like we are far away right now from getting any sort of finale on this TikTok bill. But again, I think this is what lawmakers were hoping to see. They were hoping to see buyers. They were hoping to see interests. And we'll just have to see how this plays out.

Is there any speculation over what the price tag for this acquisition, if there is an acquisition, might be, and how one would justify paying that price for a company that, as former Secretary Mnuchin said, to his understanding, doesn't make money? I think it's a great question. I mean, ByteDance, TikTok's parent company is valued at billions. I don't have the direct number in front of me, but of course, TikTok would be less. And I think the big question here, one of the real features of TikTok, one of the reasons it's successful as it is, is that it has this incredibly powerful algorithm that's really able to keep people scrolling through videos and staying on the app. The question is, does that algorithm wind up coming with TikTok? Does there need to be a new algorithm built? How much is that algorithm worth?

So I think a lot of questions in there right now as far as exactly what a sale would look like and what the price would be. And what you'd get in that sale, as you point out, if you don't get the algorithm or some of the software behind it, what value are you really getting there? Emily, thank you very much. Emily Wilkins. Of course, Elon Musk spent $44 billion for Twitter, and you have to wonder whether that pays off and whether that informs the people who are willing to go in now and say, should we go in and invest here. It's not with $40 billion now. No, for sure. My next guest says a potential TikTok ban could be a double-edged sword for the markets posing both a risk and an opportunity for some U.S. companies. Jack Ablin is the CIO and founding partner at Crescent Capital. Jack, good to see you. Just lay out the case for me here. What's the opportunity? What are the risks? Sure. I mean, the opportunity would be for U.S. investors like Steve Mnuchin, but also large tech

companies like Microsoft or Alphabet getting into social media. I think gaining a very popular app. that could be a huge boon to a U.S. company there. On the other hand, of course, if we set off a geopolitical skirmish, that creates some vulnerabilities for companies like Tesla, Apple, Nike, Starbucks that rely on the Chinese market as a decent size of their share of their revenue. You think that exacerbates the investing tension at all that we're seeing that's already between the United States and China over chips and tariffs and other things that we've seen unfold in the last, say, six years? Yeah, I mean, it certainly doesn't encourage it, you know, as we're as we want to ban this. But it certainly, again, a double-edged sword in terms of positioning, right?

You have 60% of adults using the app, and yet it does pose a security risk. When you look at the potential for a group of investors to go in and buy this, you heard Emily say that largely on Capitol Hill and maybe on Wall Street, too, that there's a discounting of the chance for meta or X, or maybe even other the big alphabet, Microsoft and others to come in and take over TikTok because of the antitrust sentiment that's running through Washington, D.C. right now. Would you give there, how much chance would you give a big tech company of being able to go in and purchase TikTok? Well, if I recall, you know, Microsoft was a sizable bidder.

I think it was TikTok a few, maybe a year or two ago, when the same kind of conversation developed. It really depends. The thing about it is, yes, Congress is very wary of big tech for a lot of good reasons. Certainly, we've allowed these mega companies to get even bigger. The interesting thing is that a lot of these donors has now been really downstream. And in fact, mega cap donors, big company donors, are a much smaller share of Senate and congressional candidacies, campaigns. than they have been. And so perhaps all of that together suggests maybe it's a broader group.

But either way, having a TikTok as a domestic company, I think, would be a boon to the U.S. Let me turn you just a little bit to get your reaction to this morning's inflation number, what it might mean for the course of interest rates in 2024, and then what it means for the kinds of stocks you favor right now and why? Sure.

So yeah, it was a setback. You know, we've gone now from the debating between five and six rate cuts this year to between two and three. We had not only a strong PPI report suggesting that inflation is, you know, a little more stubborn than we expected, but we also had a weaker than expected retail sales report. So not a great combination. But I think that, you know, the way we're playing it is, look, we love private credit. Private credit is direct lending to middle market companies. It's floating rate, and it resets every quarter.

So the higher the overnight rate stays, the better private credit will continue to be. It's currently yielding between 12 and 12.5%. On the other hand, once we start to get sense that the Fed is going to start cutting interest rates, and I do believe they will, I mean, real rates are as high as they've been in more than 20 years, then we think that financials, ex-regional banks, will benefit the most. So we actually think reeds, which have gotten absolutely hammered in 2022, really didn't. I mean, they bounced back a little bit in 23, but way over, over, spent, over, sold to the downside relative to private markets. I think it's a great opportunity.

And once liquidity starts to filter back into the market and borrowing becomes easier, I think these reeds and a lot of real estate-related companies will benefit. Federal Realty, Essex Property Trust, Franklin Resources, the big money management company among your choices. Jack Ablin, thank you. Thank you. You bet. Coming up, doing the due diligence when it comes to artificial intelligence,

we'll speak to the CEO of one firm that helps companies navigate AI risks and rewards and the regulatory issues therein. And as we had to break, a quick power check. On the positive side, train technologies, negative, end phase. energy. Power Lunch will be right back. Welcome back to Power Lunch. Artificial intelligence is everywhere these days, but efforts to regulate it are really just beginning to pick up steam. Yesterday, the European Union's parliament approved the world's first major set of ground rules governing AI. So what exactly is this going to mean for companies using AI in Europe,

and could the U.S. do something similar? Let's ask Navrina Singh. She's the founder and CEO of CRETO AI, a platform that helps companies manage AI. risks. Navrino, welcome. Good to have you with us. I heard about the passage of this bill in the European Parliament yesterday on the BBC. What does it do? What is its goal? And what is the risk here? As is true with a lot of AI regulation, that the technology will outrun the regulations and the regulators. Tyler, thank you so much for having me. You know, at CRETO AI, we've been on a mission to ensure that AI is always in service of humanity. And what that means is we have a governance platform

that provides that continuous oversight and accountability across all the organizations and their AI. You know, yesterday was a pretty historic moment with this really landmark regulation passed by the European Parliament. Now, what that means is any artificial intelligence that is going to be deployed in Europe will need to go through pretty strict, scrutiny under this law. Obviously, you know, if you are a European provider of AI systems,

and even if you're deploying these AI systems outside of Europe, you can imagine that there's going to be pretty massive implications. So let me, let me interrupt if I might, Navrina, and ask you, so a U.S. company doing business and using AI in Europe will be affected by these regulations. Tell me whether I'm right or wrong on that. And second, what do the regulations do? What are the safeguards that are being put in place? Yeah, absolutely. So if you are a multinational or United States company operating in EU and are launching products which are powered by artificial intelligence, yes, you will need to comply with this new EU AI Act. As you can imagine, this act is going to take a couple of years to really, you know, start to come into enforcement,

especially on the compliance side. But what at minimum it's mandating is a couple of core requirements. One is transparency requirements. Where is your data coming from? How have you tested these systems? What is the impact of these systems on different users? Secondly, it requires a very comprehensive risk management framework associated with any AI that is going to get launched in Europe.

And what that means is, obviously, if you have an artificial intelligence, application, which is high risk, it requires higher level of scrutiny and oversight before it goes on the European market. And then lastly, what is really critical is a need for quality management system is key part of this Europe's Artificial Intelligence Act as well. And there is going to be conformity assessments and notification associated with any application that is going to be put on the European market.

No, no, no, none of that seems, though, that onerous. It seems fairly common sense. And yet I know that there were big business leaders that pushed back and said that if Europe passed this, it would put European businesses at a disadvantage competitively globally. I'm just curious. We've seen Europe lead the way in other ways. For instance, every time I go on a website now, I get asked whether I want these cookies to track them or not. That was led by something that Europe did, but now I benefit from it in the United States.

give me a sense of what you think the impact will be competitively, or does this just sort of laid the groundwork for everyone else around the world? You know, that's a great question, Contessa. I think this is going to have a similar Brussels effect to GDPR. So if you recall way back in 2018, when the privacy legislation was passed by Europe, we saw, you know, landmark shifts across the globe, including in California with the launch of the CCPA and then in other countries like Brazil, a lot of privacy regulations. So, you know, I think a couple of things to pay attention to here is first, any organization, any enterprise that is looking to use, deploy, build artificial intelligence will require continuous oversight and accountability. And one of the best

ways to build trust is by using the frameworks that are being laid out in the EUA. Act. So is it onerous and cumbersome? I don't think so. I think it is necessary to build that trust with this powerful technology, which is pretty much becoming the infrastructure of our entire society. So you do not see, to pick up on Contest's point, these regulations as excessively onerous. I assume there will be some costs involved here one way or another, but let me cut back to the chase. Will this be a model for global regulation for regulation in the United States or not? You know, I think this similar to GDPR, there is hopes that there is going to be Brussels effects. That means that other, you know, countries are going to adopt a similar model.

In United States, you know, for us it's been a big focus on innovation. We are going to see and are already seeing a lot of state and local regulations that are very aligned with the AI acts risk management approach already show up. The other thing I do want to emphasize is last year, NIST, which is the National Institute of Science and Technology, launched one of the comprehensive AI standards around risk management. It's called the AIRMF. So, you know, Tyler, to just bring it home, we are already seeing that happen across standards, across local and state regulations. And we are going to see maybe something at the federal level, especially around privacy show up. Navrina, thank you very much. Credo AI. Navrina Singh. Thank you. Is rent stabilization destabilizing parts of the economy? The practice protects a lot of renters, of course, but could it create problems for the market? We're going to dive into the details ahead on Power Lunch. The mining company, Lithium America, is jumping today on the back of a hefty loan from the Department of Energy.

Pippa Stevens here with the details. Hi, Pippa. Hey, well, so shares are up more than 10% after the company said it secured a $2.26 billion dollar conditional loan from the DOE to build a lithium process. plant that sits next to its Thacker Pass mine in Nevada. This comes on the heels of a push to develop domestic supply chains for critical minerals, and the financing comes from DOE's loan programs office, which was supercharged under the Inflation Reduction Act. Lithium America's processing plant is actually more expensive than the mine itself, and while the company did raise its cost estimate for the facility, the loan covers more

than three quarters of the total, but T.T. Kowen noting, the loan basically does, de-risks any overhang around financing. The company has broken ground at Thacker Pass, which is the largest lithium reserve in North America, but production is insulated to begin until 2027. Once up and running, lithium Americas said it can initially supply 800,000 electric vehicles. And last year, GM invested, giving them exclusive off-take rights

for up to 15 years. But this, of course, comes as lithium prices have all but collapsed, falling 80% since the 2022 high. Wow. And is it apparent that there's buyers for all of the lithium that will come out of the new mining enterprises? So GM has the exclusive offtake agreement for 15 years for phase one. And this is all about having a domestic supply chain. And so the idea is that if you have secure, reliable provider, there will definitely be buyers on the other hand. We've seen all these OEMs go straight to the source just like this. If you dig it, they will come.

All right. You can dig it. All right. Let's get over to Bertha Coombs. CNBC News Update. Hi, Bertha. Hi, Tyler. A judge ruled today an Australian computer scientist who claims that he invented Bitcoin lied about his identity. Craig White claims that he had authored the 2008 White Paper, the foundational text of Bitcoin, published under the pseudonym Satoshi Nakamoto. But the judge said today, after a two-month trial, that the evidence that he is not Satoshi is overwhelming. A conglomerate of cryptocurrency companies had sued right over his claim. The group called today's ruling a win for developers.

A March snowstorm is expected to dump up to a foot of snow on Denver today and even more in the nearby Rocky Mountains. The storm already forcing cancellations of hundreds of flights. A large stretch of interstate 70 is shut down. A winter storm morning is in place until Friday morning. And the voting is now open for the World Video Game Hall of Fame, the 1979. classic asteroids is the oldest game up for nomination to be inducted this year. It's competing against other well-known contenders, including Tony Hawks Pro Skater, SimCity, and Guitar Hero.

And Contessa, because I know you're wondering, Miss Pac-Man was inducted last year, and classic games like Pong were inducted back in 2050. No, that was not at all what I was wondering. What I was wondering is, where's Tetris and all of this? They were, Tetris was inducted back in 2015 along with Mario Brothers. Okay. Well, Mario Brothers. Now, like, and mine.

Bertha knows your game history here. Well, I wanted to look it up because I thought, what about those games, right? Yeah. Now I've got news from my day that I can actually bring home and talk about over dinner tonight. There you go. It's great. Thank you, Bertha. All right, coming up, one of the factors keeping inflation high, auto insurance premiums.

Bad news for consumers, but good news for the stocks involved. We will discuss next. All right, there's the Dow industrials off 147 points of 38,893, down a third of a percent. There's your Dow check at this hour, S&P down about the similar amount in percentage terms earlier today. After the break, investing in a sports team is like investing in an entire ecosystem, ticket sales, merch sales. And one often overlooked aspect, that would be real estate. It is an increasingly important part of the equation. That discussion is next.

Welcome back to Power Lunch. Tuesday's CPI showed a 3.2% rising costs compared to a year ago, marginally higher than what Wall Street expected. Despite the modest increase, some metrics surged compared to where they were a year ago. Auto insurance premiums shot up more than 20% compared to 12 months ago. And it was the second biggest jump in the CPI behind only frozen, non-carbonated juices and drinks, which your car insurance matters a lot more than your... frozen orange juice. Third highest increase was admissions to sporting events up a mere 11% over the past year. Here to discuss the impact that car insurance rates are having on the consumer and the investing opportunities in car insurance as well. Andrew Cleggerman. He's a managing director

at TD Cowan, specializing in insurance and insure tech space. Andrew, good to see you. The interesting thing is when we're looking at the car insurance rates soaring, and surely people who have to buy it have noticed, we have not seen necessarily commensurate earnings. For instance, all state has had a series of disappointing earnings reports because of how much they're paying out for lost costs. Right. So think about it this way. You talk about the CPI now being up in that 3 to 4 percent zone, but think about the economic inflation over the last few years. And let's think about the economic inflation to insurance components, there was a point about a year and a half or two ago that used car prices were up 40 plus percent. And on top of that, we had labor inflation,

you know, mechanics in particular that was up 10 percent. Medical was a little more moderate. Used core parts were up dramatically. So we had... Rental cars, that went up pretty dramatically? Massively, right. So insurance, auto insurance in particular, home insurance too, right? Construction, terrible. So they got a disproportionately bad proponent of economic inflation in a high economic inflation environment. Now overlay social inflation. There are now litigation. Right. I was going to say this is insurance jargon for really the rising costs of lawsuits, litigation, verdicts and settlements. Horrible. Horrible, Contessa. I mean, we look at charts on personal lines where social inflation is three, four, five points higher than what we would

see in just your traditional loss costs. So there are a lot of issues out there with social inflation. In some places, we know that Florida, for instance, has tried to grapple with the issue of litigation and the cost it means to insurance. But in the meantime, then let's flip that script a bit, Andrew, and talk about the opportunities for investors, because you have Allstate and Progressive, both up 40 percent over the last 12 months. Why? Correct. Correct. So it's kind of a tale of two worlds. So I'll start with all state, though. They have been losing money in auto insurance for the good part of three years. And they've been diligently going to regulators and asking for price increases. But you've got, you know, a lot of these regulators, and it goes state by state,

they're elected by, you know, the consumers. So they're not going to give you the rate right away. And what we saw was this massive move in loss costs, economic and social, at the same time, not quite getting enough rate. Finally, the tougher states, California, New York, New Jersey have come through. Allstate in December got 30% in California, roughly 20 in New Jersey, and 14 and a half in New York. And that's why people are seeing their bills going in. up when it comes to auto insurance. Andrew, I'm going to have to leave it there. Thank you so much for joining us on the newsline today. And check out shares of New York Community Bank. It's lost two-thirds of its value in the past three months, among other problems. NYCB is the poster child

for a growing problem facing the real estate industry and the banks which lend them money. Leslie Picker is at an apartment building in Manhattan to explain why. Hi, Leslie. Hey, Contessa. Yeah, this is what an apartment can look like when a tenant moves out of a rent stabilized unit after living here for nearly 30 years. At that time, this apartment went for 775 per month. For a full year, though, it sat vacant because the landlord says it needs $50,000 worth of renovations just to bring it up to code. Since 2019, many such renovations have been unaffordable for some landlords because of a New York law that caps rent stabilized increases at 3% in order to tackle housing affordability in the city.

As a result, though, property values have plummeted 60 to 70% over the last five years, a degradation that is now trickling down to the property lenders, New York Community Bank Corp, being the poster child of this phenomenon. The landlord of this unit said he's, quote, getting squeezed because his revenue is declining with some apartments no longer habitable, all while his taxes, his insurance, and his interest rates are going up. You're seeing foreclosures left and right. You're seeing banks going under.

You know, it's something must be done. The status quo is not tolerable. We are watching our buildings disintegrate before our eyes. There's no money to be put into it. A recent report by DA Davidson found NYCB is the most exposed, as well as flushing financial, dime community, Northfield, and Valley National. Now, a new study from the city comptroller released this week said that the 2019 law has not led to an increase in vacancies or distress among rent-stabilized housing.

The city says the number of vacant rent-stabilized apartment unavailable to be rented actually declined 39 percent between 2021 and 2023, guys. Leslie, thank you very much for joining us. We appreciate that. All righty, the owner of the Washington Wizards and Washington Capitals, Ted Leonis, is abandoning the city to move to Northern Virginia in an effort to build a sports and entertainment empire. The move of becoming a common one now among team owners as they try and monetize their businesses. And they turn to real estate development, adding luxury apartments and shopping malls to bring in extra cash and drive up the value of their franchises. Joining us on set is real estate mogul Elon Braca.

He's CEO of IB Global. Welcome, Elon. Good to have you with us. Walk us through this move. I think most especially of Stan Cronky in Los Angeles with the SoFi Stadium and the associated development in that area, multi-billion dollar deal, where it's basically a real estate play

with a football team or two of them thrown in. Absolutely. So the game is basically, when you're buying an arena like that, it's an experience, they own an experience. and they're making sure there will be an experience around it, just to build a security for themselves, to start, obviously, for their investment. But when you think about it, it's actually, you know, they can create multiparer because they owns all the area around.

They buy up the land around the stadium to bring in retail. It's cheap before. It's often not in the most desirable neighborhoods, by the way. Absolutely. And then they create, because in general, in real estate, it's a longer play. Seven, ten years you can create, you probably can double your money. You get a solid income, you know, you get appreciation. When you create a play like that, you can double your money with two to three years.

When this is kind of money coming in, it's very difficult to do it when you have billions of dollars. The retailers and residents want to live in that kind of proximity to a large stadium venue like that with its associated traffic and rowdiness that may come on the, 10 days a year, man, I wouldn't want to be near some stadium. How about baseball stadiums? It's a lot more than 10 a year. Absolutely. So think about it, you know, what it's come with it, right? The best restaurant, the nicest bars, the experience that's come with it. And then when people and when the land has become more valuable, more investors coming in.

So now you have a apartment building that looks much better. And you have more younger crowd that's adjoining. And all of a sudden, you have a different place when, you know, you look at it before. So the plan is just coming in, buy it in the beginning, you know, for very cheap and then create an experience around it and people joining into the expense. It reminds me of the family, the Adelson family, the heirs to Sheldon Adelson's Las Vegas Sands, buying into a majority stake in the Dallas Mavericks. Now the plan is, yes, they're going to have this team, but also there are real estate development plans around it. And they're doing it even for maybe lobbying reasons to demonstrate their commitment to the community so that Texas will give them a gaming license. When you look at the integrated nature of some of these developments and these resorts, can you do an old-fashioned stadium?

When I worked in Milwaukee, I watched them build a brand new stadium with nothing but parking lots around it. Can you do that in this day and age? No, it's remind me the retail. If you see the retail market, the bad retailers. are still bad, and the retail, the good rituals are the retail with experience. So the retail market is not really dead for the good ones. So the same things here. You know, we are not anymore just real estate alone.

When you look at buildings today, even office building, the best office buildings is the one with the amenities, the Class A building, the one that's giving you different experience. What are the risks, though, of focusing even more on one neighborhood, especially if you're looking at a neighborhood that is not a desirable currently neighborhood. What is the risk? Obviously, the time that you're buying, it cheap for reason, the risk and rewards.

So you're buying it, and you believe on the dream that you're going to make it happen. And the execution level, I think, it's probably the biggest risk. Can you actually execute it? It's tons of loans, and a lot of people need to believe

that you can deliver it. So this is, I think, is the biggest risk. I think of an example of the Washington Nationals who built a stadium down in what was used to be called the Navy Yards of D.C. and Southwest D.C., which was not a particularly livable neighborhood. It was industrial. It was warehouses and so on and so forth. But that stadium in attracting people has attracted retail, restaurants, and apartments. And it is now quite spiffy. It's really quite nice. Right. Look at what we have in, and I agree with you totally. And look what we're having in New York City. All the billion a row on 57th Street. Some of the stars, sports start starting to buy in one or two buildings, and all of a sudden the building changed the price per square food, the volume of sales.

So the influential power of having a sport team or be part of a sport team, it's very powerful. And they utilize it, you know, by investing in a specific place before everybody's doing it. So they're catching it and it's a great return. There's a way for a public investor, an ordinary investor, to play in this game, is there? I think it's a very big, there is only few of them can play. On this level, I think there's only few.

Although, if you look at Bally's, which owns property where actually it's GLP, it has a reet in Las Vegas, they're going to get the new A's stadium. They're redoing the whole casino with a baseball stadium. It's publicly traded. You can buy stock. Howard Hughes has an integrated development with apartments and retail. they have a minor league baseball stadium out in Summerland, Nevada. That's a publicly traded stock. So you can get exposure.

It's interesting, yeah. Yeah, very interesting. All right, great. Elon, thank you. No, it's a pleasure. Thank you for a good. Good to have you. Up next.

Biden's administration, likely stepping into the middle of a major steel merger. We'll discuss that and more. Which camera am I on? Three Stock Lunch. All right, time for today's three stock launch, where we take a look at three big movers of the day. Here with our trades, Eva Otto, CIO, of ER shares. Up first, Ava, is Robin Hood. Shares of that company jumping on some positive headlines,

including better than expected trading volumes in February. Shares are up more than 40% so far this year. Your trade on the hood. It is a buy. They're having a great day today, up about 7% even though the general market is down on inflation news. They did announce an increase in their net assets under custody of 16% that's only in the last month. That's a huge increase. And it's following the approval of the crypto ETS. Now, their revenue growth is extraordinary. They have a 37% revenue growth compared to their peers of negative 6%. It's an amazing growth story. It is not profitable yet, but they are making progress with their margins and also their margins and also they're cutting down their SG&E costs. They're gaining economies of scale and that shows. And so we might

even see them turn profitable next year, which will be another major. catalyst. But as of now, we are seeing them enjoy the fruits of crypto trading. And that's, and we still think there's room to run. Up next, we have Citigroup. City is getting an upgrade by Goldman Sachs to buy from neutral and raised its price target. The analyst says City can both grow its revenue and deliver on expense reductions. Eva, what's your trade on this one? I'll disagree with that one. And I have it as a hold because they, one of the reasons why they, they upgrade, it is that their PE ratio is better than the competitors, but it's slightly better. And to us, it doesn't justify a buy in this case.

We need to mention that this is a company that has fallen from grace. It's 90. It has come down. The stock has come down 90% in the last 20 years. Unfortunately, their best days are behind them. It's a large bureaucratic company. Their revenue growth is extremely low. It's a well below peers.

It's actually almost zero. and their income growth is negative 38%. Another extremely low metric. I wouldn't buy based on this. However, they do have a dividend yield of 3.7%. So investors who are interested in dividend yields might want to buy to get into the stock for the dividend yield. But if you are interested in appreciation and growth,

this is not a company that we would encourage investors to buy. Well, let's move on to the last one, which is U.S. Steel. President Biden expected to oppose an acquisition by the Japanese company Nippon Steel, expressing, quote, serious concerns. U.S. Steel trading a little bit lower today. What do we think of U.S. steel, Ava? It is a sell.

This was the ticker symbol is X. This was the original X well before Twitter even existed. It dates back to 1901 with a famous entrepreneur, Andrew Carnegie. It's a sad story. This was a great U.S. story. A great U.S. entrepreneur company was the number one steel producer globally, it's the number 27 steel producer. And unfortunately, in this market, if you don't have economies of scale, it's really hard to compete.

So I think they're in a downward trend. And in fact, they're not even a large cap anymore. They are a $9 billion market cap company. And today, for example, Microsoft is moving more than U.S. steel is even worth. And as you said, there was a rumor for a potential acquisition. It looks like the Biden administration will block that acquisition to save, U.S. jobs, it's a political decision. We have an election year. And we also need to remember it's a short-term decision because, unfortunately, if this company doesn't get acquired, it won't be there in the long term.

It's a sell. It's a sell. All right. Pretty clear point of view there. Ava. Thank you very much. Eva, Ados. We appreciate it. Still become refund fraud rampant. More power lunch. Next. All right, a little more than two minutes left in this hour. We have lots more stories you want to know. so let's get to it. Dick's sporting goods, beating earnings estimates, raising guidance, and its dividends. The stock up 15% today on track for a record close. Turns out that there is a market right now for tennis rackets and sports gear and new tennis shoes. I think his spring comes along, a lot of people getting out, loading up on baseball gear, tennis, golf, and so on and so forth. Let's move on to the

EV maker Fisker, reportedly hiring restructuring advisors to assist with a potential bankruptcy filing. The company has been struggling with growing its sales and stagnant EV demand in the U.S. It is tough if you are not the number one, two or three company in this area, and they clearly have not been able to crack that one. Very competitive landscape. All right, Bob Iger's return to Disney brought investor excitement. You can't say the same for Kevin. Plank's return to Under Armour shares lower when it was announced that Plank was returning to the CEO role. It's always, it's got to be disconcerting internally.

if you see the announcement and then this is the investor reaction. Yeah, no, that is a low-price stock. I'd like to look at a 10-year on that stock. Do we have it? Do we have a 10-year chart on Under Armour? I'd love to take a look at that. I wonder if that company is one that will be out there or will merge with somebody.

There you go. Let's look at 10 years. No, that's what is that? That's year-to-date, down 17%. Anyhow, there you go. We've got a few seconds left. The market's, well, we've got refund fraud groups. We've got one more piece here. Fraud groups organized like businesses are exploiting lenient refund policies and robbing retailers of billions of dollars a year.

In a suit brought in late 2023 against dudgeons of alleged fraudsters, Amazon said consumers have to bear the brunt of increased cost, decreased inventory and service, a disruption that impacts genuine customers. So they're they've got it. They're making a lot of money off of ripping off Amazon and others. All right, and finally, former CNN host, Don Lemon, alleging that Elon Musk canceled his new talk show on X before the first episode even aired. Lemon claims Musk was upset over an interview between the two on Friday. And so, Bada Bing, Bada Boom, if you've got the emperor and the emperor says no, that's the way it goes. All right, thanks for watching. Power Lunch, everybody.