Power Lunch - CEO Spotlight, Presidential Politics 01/24/24

Episode Date: January 24, 2024

There are 2 CEOs in the spotlight today. Dave Calhoun is facing questions from lawmakers over Boeing’s safety procedures. And Elon Musk is facing investors as Tesla reports results. We’ll tell you all you need to know. Plus, is Trump vs. Biden: Part 2 a certainty at this point? And if so, will the big money donors which had been behind Nikki Haley defect to Trump as he tries to retake the White House? We’ll discuss. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, in the power launch, everybody, alongside Contessa Brewer. I'm Tyler Mathis. Coming up, two CEOs in the spotlight today, Dave Calhoun facing questions from senators about Boeing safety procedures and Elon Musk facing investors as Tesla reports after the bell. Plus presidential politics is Trump Biden the sequel, a certainty at this point? And if so, all that big money that has been behind Nikki Haley, will it move to Donald Trump as he tries to retake the White House? First, let's get a check on the market. Stocks slightly higher today. The NASDAQ higher by just a little less than 1%. There, you're seeing the Dow fractionally and the S&P 500 up half a percent. Getting a boost here from Netflix up 12 percent after reporting strong results

helped by continued crackdown on account sharing. That's been a big boon for them. That is absolutely has. Also boosting technology today would be Microsoft and Meta. Microsoft crossing the $3 trillion market. cap level for the first time ever and meta getting back above a trillion dollars. Let's begin, though, with two big stories in the transportation space. Boeing CEO meeting with senators in Washington to answer questions regarding the 737 blowout. The FAA promises to take a direct inspection

approach going forward. And then on the ground, Tesla's earnings after the bell, as some firms expect expressing caution about the months ahead. Redbird Atlantic says to sell that name and Wolf research adds that Tesla and its earnings blow up warning list. Phila Bow covers both of those stories for us. Let's begin, though, with Boeing. Hi, Phil. Hi, Contessa. And let's summarize exactly what's happening with Boeing, because things are changing hour by hour, depending on what you hear out of Washington, also out of what we hear out of Seattle, where Alaska Airlines is based, Boeing is based. Let's start first off with Alaska Air CEO Ben Minnicko. Yesterday, he gave an interview with NBC News, and he summarized how he feels right now.

I'm angry. By the way, we'll hear from Ben Minnacucci tomorrow here on CNBC after the company reports its fourth quarter results. Meanwhile, the FAA following through on what they told me a week ago, that they were going to be adding actual on the ground inspections at the Boeing facility in Renton, as for Boeing and the CEO Dave Calhoun. Well, he was a meeting with senators on Capitol Hill. Here's some of what he had to say after a few of those meetings today. We fly safe planes. We don't put airplanes in the air that we don't have 100% confidence in. I'm here today in the spirit of transparency to, number one, recognize the seriousness of what you just asked. Number two, to share everything I can with our Capitol Hill interests and answer all their questions because they have a lot of them. As you take a look at shares of Boeing, remember the company will be reporting its fourth quarter results next week.

Guys, the bottom line is this. Dave Calhoun taking a far different approach. than what we saw from his predecessor during the max. Remember at the time, Dennis Mullenberg, he did not go to Capitol Hill right away to say to senators, I understand the concern. And as a result, a lot of people in Washington were furious by the time they held hearings. Curious if there will be hearings in this case with regard to the Max 9 and this grounding. Yeah, it does seem, Phil, that Calhoun has owned this and certainly has been up front.

I mean, he's been in front. You've talked to him and everybody, right? Absolutely. Look, they are not dodging this. Now, look, are they, you know, they understand there's no way to make this look positive. There's no way to spin this aside from saying, we screwed up, we're going to fix it, and we're going to make sure it doesn't happen again. That's the bottom line.

And the question is, how quickly can you fix it? How quickly can you reassure regulators in Washington that it won't happen again? Yeah. And it might have been tempting, mightn't it, for them to push some of the, quote, blame for this door plug thing back on Spirit Aerosystems. Is that, and I get the name right this time for once, Spirit Aerosystems, which is the fuselage manufacturer. Well, they're wise enough to realize that ultimately the NTSB will make a determination in terms of the root cause of this accident. If you push all the blame off on Spirit, which they have not been doing, they've said, look, ultimately, anything comes out of this factory. We're responsible for.

That's right. Got our name on. And therefore, and also they realize NTSB is going to make a determination here. That will be the ultimate decision in terms of what caused this accident. All right, Phil, stay right there. Our next guest says Calhoun is doing the right thing by interfacing with officials in D.C. Let's bring in Robert Spingarn, lead analyst for the aerospace defense and space sector with Melius Research. Mr. Spingarten, welcome.

Good to have you here. Good to be here. Thanks. Both Phil and I acknowledge that Mr. Calhoun. has been up front and owned on behalf of Boeing, this matter of the door plugs. But is that enough? I mean, because it would seem to me that airlines,

who have done a lot of business with Boeing, may be going, here we go again, after the 737-8 max issues, that this may be a company that has sort of intrinsic safety issues. Well, I think when we compare this to the situation that you were talking about before, the max grounding. This is a, in my mind, I think, a different situation. This is post-COVID. And one of the key differences here is in the workforce. We have a different factory floor today

than we had five years ago. Clearly, there have been lessons learned going through the Max's experience a few years ago. And CEO Calhoun has taken note of that. And I do think that he is trying to put Boeing's best foot forward here and acknowledge that they need the tightest possible oversight on the factory floor. And again, this is because we have a much newer workforce that is yet to get up the learning curve. It's just a different situation. When you say that the workforce is different, are you saying they are better or worse or less skilled or less experienced or what? The last part. They're less experienced. I think. I think what we've all learned is that the aerospace supply chain is among the most fragile supply

chains across the industrial sector. And we've seen this over the last three or four years through COVID and post-COVID. It's taking quite a while and longer than most people expected to repair that supply chain. A lot of talent left in 2020 and 2021. And so new folks are coming in. It takes a long time to train an aerospace mechanic, train aerospace engineering, aerospace engineers. And so, you know, Boeing, I believe, is doing the best it can. It can. There's always opportunity for changes and greater oversight. And this does seem like a management

team that's willing to do what it has to do, to recognize problems quickly and attack them. And so, but I think some of this, and we see this not just at Boeing, but across some peers and some suppliers, it's getting this workforce on board trained and mature. And that's really nobody's fault. It just needs to be done with care and efficiency. But Rob, we've spent so much time on the big headlines. And it is concerning for the flying public. We heard, you know, airline CEOs are furious. We get that. But what does it really, like, what is the impact here? Does it mean that airlines in the future are going to go to a competitor to buy their planes? Does it mean that the flying public

is going to say, well, is it a Boeing that I'm not flying on a Boeing? I mean, in the long run, isn't this a blip? Well, it is. And it's understandable, contestant in that context where we had that we had the max accidents, the tragic max accidents, and now we've had this, those have been Boeing issues. But there have been issues elsewhere and issues with maintenance. And again, This is across the aerospace industry. And in general, I think in many cases, it reflects what we've been talking about here with the supply chain coming together and the labor force coming together. Over time, you've two primary suppliers of commercial airplanes, Boeing and Airbus,

and their track record over the long haul is excellent. They make very good products. They're generally very, very safe. And neither one can supply the entire airline demand that's out there. globally. So they have to split the market at this point. And most people are having great success with Boeing aircraft. Obviously, this accident was very unwelcome and they have to get on top of this quickly. But again, I think they are doing everything that they can do in order to make that happen. There is going to be a lot of attention paid, of course, to the earnings call, as Phil pointed out for next week.

Rob Spingarten, thank you for adding your perspective to the conversation. Appreciate that. Let's switch gears now to Tesla. Phil, going back to you now, what do you expect from those results after the bell. Really three things that people are going to be focused on. Separate from the numbers, we've talked about the numbers, gross auto margin, et cetera. Let's talk about the three themes that are going to come up during the call. And maybe we'll hear about it before the call, but definitely during the call. What are they seeing in terms of pricing pressure, especially in China? Is there a lower priced model coming? There was this leak that they are working on Project Redwood, which is a lower priced vehicle that would come in 2025. What do they say about that, if anything

at all. And what about Elon's future plans? Remember, he had to sell a bunch of his stake in Tesla in order to buy Twitter, which he then renamed X. Well, he now is saying and said in a post last week on X, I think I should have 25% voting share. And that is going to, you know, be a topic that's going to come up, whether or not he addresses it, or if he says, look, that's between me and the board, blah, blah, blah. You can bet. People want to know about his commitment to the future at Tesla. One last thing, as you take a look at chairs of Tesla, the number that a lot of people are focused on, deliveries for 2024, 2.1 million vehicles is the estimate. And there is some chatter that Tesla may not give a guidance estimate for this year. They may say, well, we're going to

try to hit our benchmark as much as possible. But given the dynamics and the economies around the world, we're not going to give you a definitive guidance number. That's also something people we'll be watching for. Okay, so Phil, stay with us here for a minute. Our next guest recently lowered his price target for Tesla as he forecast modest volume growth in 2024 amid a slowdown in global EV demand. He's bullish, though, long term and thinks that the company will maintain a lead as the world makes the transition eventually to electric vehicles. Let's bring in Dan Levy, senior autos analyst at Barclays. Dan, it's good to talk to you today. You expect a big shift here where demand is driving. the volume rather than production, right?

Yeah, that's right. And this is really the first time that we're seeing this in Tesla's history, that historically volumes for the company have been defined purely by their production capabilities. And we started to see it last year where really that shifted to more of a demand constraint. Even on Elon's own admission, finally on the 3Q call, saying, hey, we're not going to go all out in the Austin and Berlin facilities, given some of the macro uncertainty. And so it's really this more challenged macro backdrop and challenged fundamentals.

That's really the backdrop into the forked cue call that we have this evening. How much do you think that the Hertz sell-off of its, you know, a portion of its electric vehicle fleet is going to give competition to what Tesla is trying to do in terms of selling cars? Well, the Hertz sale of some of their EVs It's just a reminder of some of the demand challenges we have in the broader EV market

that Hertz was part of the EV excitement a couple years ago when they said they were ramping up on EVs and EV in their fleet. And that hasn't worked out very well. And the fact that you have Hertz selling more EVs into the market and just another indicator that from a demand perspective, EVs are facing some challenges, right? The fact that we've gone from the early adopters to the early market, majority, and that's been a bit of a challenge. The fact that you're selling into a market where there are some subsidies rolling off in different regions. And so I think it's important to

acknowledge that there is some EV demand softs right now, even if over the long term you still have upward penetration and growth in the numbers. Does that softness in demand explain why you expect them to come in short of the consensus of 2.1 million units next year? Yeah, we're at 2 million units, and really there's a couple of things driving that. One, as you know, Tyler, the underlying demand softness, and that it is tricky to sell vehicles into that, into this type of a market. The other piece that you have is, what is their willingness to sell, given the pricing backdrop? That we've actually seen them, if you just contrast a year ago, Elon said, we'll sell cars at zero profit. That's not the case anymore. They're showing some margin sensitivity, and they haven't been

cutting prices as aggressively as they were early last year. So they're trying to set some floor on the margins. And you combine that with the fact that this year, really all your selling is incrementally Model 3 and Y's. It's a saturated lineup model wise already the world's best selling vehicle. Cyber Truck really isn't contributing much to the volume growth this year. That I think underscores our below consensus view on the volume. Matheson's law says that I will buy a car right before they introduce massive price cuts. And that's what I did. Okay, there we go. Got that out there. I'm not angry. I'm not bitter. It's okay. But speaking of price cuts, this is part of what appears to be the new strategy, right, Phil?

I mean, if they're talking about the leak over the cheaper models and everything, this is something that Elon Musk has been talking about as a strategy for the future. Why hasn't it already happened? Well, you've got to drive down the cost, Contessa. It's easier said than done with electric vehicles. Look, they came out with a lower-priced battery pack with the LFP, form. for the battery, and all of the automakers, when it comes to electric vehicles, are doing that. That said, the cost of building an electric vehicle is still high, relative to a traditional internal combustion engine vehicle. Now, they've been driving down the costs. The key is, can you drive it down low enough that you can make, let's say, a sub-30,000-dollar EV and be

profitable doing it? That's the challenge here. So, yes, Elon Musk has said, you get it down under there, then it becomes one of these things where it really starts to take off around the world. You add in robotaxies, and that's part of his long-term vision for the company. But the challenge is bringing down those costs. And by the way, this is not just a challenge for Tesla. It's all automakers. EVs are still an expensive vehicle to build. Dan, I want to squeeze in one more quick question.

Tom and Ryan last hour said robotaxies are going to be a big hunk of Tesla's future. Going to be the driver of Tesla's future. You agree with that? Quickly. Certainly the opportunity for more advanced stages of autonomous driving play into the opportunity, certainly priced into the stock. We take a more, I would say, cautious view on the rollout of those capabilities. Right now, as much as we talk about full self-drive, it's really a level 2 plus advanced driver assist system that they're selling.

All right. Dan Levy, thank you. And Phil Leboe, thank you as well. Coming up, Chipotle, laying down the groundwork to avoid the union-related pitfall, some of its rivals have fallen into. The company beefing up benefits for its Gen Z workforce. We'll take you through the program details next. Plus, a major loss for Nikki Haley is making a round two of Trump versus Biden even more likely. That story when Power Lunch returns. Welcome back. Chipotle has announced new benefits in an attempt to lure and keep its largely Gen Z workforce at a time when competition for restaurant workers remains challenging. Kate Rogers has been following the story for us.

Hi, Kate. Hi, Contessa. Chipotle announcing this morning it's introducing new benefits for workers that focus on mental and financial health, as it says it's looking to both attract and retain Gen Z workers, which actually make up more than 70% of its current restaurant workforce. Once eligible for a 401K match, Chipotle says it will match up to 4% of employees' salary through contributions to their 401K if they make eligible student loan. payments using SOFI's student loan verification service.

Employees will also have access to the SOFI at work dashboard to manage their financial wellness, the opportunity to build credit through banking with CRED.AI, and mental health benefits with the new employee assistance program. The new benefits come as it seeks to recruit 19,000 workers for its busy, quote, verito season as it calls it. This is an uptick from the 15,000 workers it brought on this time last year. The company says it now has 110,000 employees. Its current hourly wage is $17 an hour. Remember, attracting workers in this age group has been tricky on and off for years. For context, outplacement firm Challenger Gray had the lowest teen summer job forecast since 2011 last summer.

In preparing for college, some younger workers are seeking internships instead of these traditional jobs. The company also does a fair amount of promoting from within. Chipotle said it promoted 26,000 workers last year alone, guys. Back over to you. You know what's interesting about that, Kate, is that. that there are all these bureaucratic offerings, things that you have to be somewhat savvy about in order to access within a company. If they really want to attract and retain workers, why don't they just give them more money per hour? You know, I think it's not just about more money per hour.

And remember, in a state like California, the minimum wage is actually going up to $20 an hour this April. But, you know, it's saying these are the things that matter to Genzi. It's not necessarily just pay. It's both financial wellness and mental health. It's becoming more and more of a talking point for workers. And so they're kind of zeroing in on those two things and reminding people that you can move up to what they call a restaurateur in as little as three years at a Chipotle.

And they make over $100,000 all in, including benefits there, which is quite a salary in the restaurant industry. Interesting. All right, Kate, pass a guacamole. Thanks. Appreciate it. Thank you. Further ahead, the $150 million Hampton's mansion, Ladoon, falling into the bankruptcy and hitting the auction block.

We'll explain how it got there when we were turning to. Welcome back to Power Lunch. Some key pieces of economic data do out in the next two days. Let's see how the bond market is positioning ahead of those numbers. Rick gave the auction a D-minus in the last hour. Professor Santelli. Yes, it wasn't a very pretty auction. That follows a very average, a slightly below average, two-year auction.

That was, of course, on Tuesday. will complete the trifecta of Treasury supply with $41 billion seven-year notes. And as Tyler pointed out, top-tier data. First look at fourth quarter GDP. We're going to have on tomorrow along with initial continuing claims. Friday, personal income and spending with the PCE, inflation reads. It's going to be busy. Look at that five-year today.

Up, up and away. Yields extended after the very poor reception to that five-year note auction by investors. And if you open the chart up, we're on pace for the highest yield close in fives, again going back to the 12th of December. If you look at a two day of tens, our yields today are higher than yesterday. Guess what? That's true on all treasury maturities after that very rough auction. And if we look at 30-year bonds, long maturities are on pace for highest yield closes going back to early December. And finally, the 2s 10 spread now under or above.

It's minus, minus 20 basis points at minus 19 and change. Why is that important? Because on Halloween, the least inverted the spread has been recently was minus 15 basis points. Should we take that level out and trade above minus 15 basis points, we'd be looking at the least inverted the spread's been since CEP of 2022. And believe me, every trader I know is watching at minus 15 basis points. from Halloween. Contessa, back to you. Rick Santelli, thank you very much. The White House reportedly delaying a decision

on a big gnat gas terminal, a potentially big hit to the export ambitions of U.S. companies. Pippa Stevens joins us with those details. Hi, Pippa. Hey, so the New York Times just wrote about this and saying that the Biden administration is delaying that permitting review of for CP2.

And this would be the largest LNG export terminal in the U.S. And it's more than one of a dozen projects that are currently in the pipeline review process. And this is really interesting because this has become a battleground issue. The U.S. is now the largest LNG exporter worldwide. Last year, we surpassed Australia and Qatar. And of course, Biden ran on this platform

of reducing emissions and focusing on the climate. And so at the same time, not only is the U.S. the largest LNG exporter, but we're now also producing more oil than any country throughout history. Our oil exports are also at a record high. And so what he's saying today is that, he's instructing, reportedly, the DOE to take a more holistic review of this project and see,

evaluate what the carbon emissions would be from the project itself. And typically, that has not been done. And so now the industry is saying that if all of the other projects in the pipeline are also required to do that, that could mean some of these projects never actually come to fruition. Now, the American Petroleum Institute is saying that this would be detrimental for our allies who now depend on USLNG, particularly after Russia. Right. As I was thinking, is the demand from Europe is high.

And we're, and we've got the supply. And what we need is the terminals to transship, right? So that's what the advocates would say. On the flip side, yes. The people who are against it say that these projects are very capital intensive and they have more than 10 years in operation. They put that the projects themselves create carbon, create carbon.

Not to mention the fact that the encouragement of fossil fuel trade creates carbon. That's exactly it. You're signaling that there is long-term demand for LNG. Since the upfront investment is very large, you know, in excess of billions of dollars, you're then giving the green light for the U.S. to continue exporting robust exports for years to come. And so that's why the environmentalists are saying we should not be doing this, we should not be expanding. And remember, there are seven LNG terminals currently. We should make it harder for global economy to stay hooked to fossil fuels. Exactly. And our output, our LNG exports,

are already set to double by 2027. And so they already say we have these five projects in the pipeline. We don't need any more. A couple of big other big movers in your area. Why don't you tell us about what's going on with those? So some under the radar energy plays. The first is TE connectivity. That stock hitting a more than two-year high.

They make sensors for things like EVs and wind and solar farms. And they say EV demand is actually a lot better than the market is indicating or that all the chatter is saying. And then secondly, Freeport McMorin, that stock up. after earnings, also copper getting a boost today on the back of China stimulus measures. CEO Richard Adkerson earlier told CNBC that the weakness in China and the property market was actually offset by renewable spending by grid spending. So certainly wanted to watch there. All right, Pippa, thank you very much. Let's go to Kate Rogers, who has finished her Chipotle and go to deliver a CNBC news update. Kate.

Hi again, Tyler. State Department officials denounced today's attack on a UN training center in Gaza. U.N. officials say the center was serving as a shelter to hundreds of people trying to escape the violence of the Israel-Hamas war. They reported nine deaths and 75 injuries after two Israeli tank rounds hit the building. The State Department reiterated this afternoon, civilians must be protected in the violence. The White House announced today President Biden invited Kate Cox to the State of the Union address. She's the Texas mother at the center of a high-profile abortion case in Texas after the state passed its near-trial. total abortion ban. The invitation is another sign. The president will make abortion rights an important part of his reelection platform. And sources tell CNBC Saudi Arabia opened its first

alcohol store in the diplomatic quarter of its capital city, Riyadh. The Saudi government has not confirmed the news. The store marks a major breakthrough for the highly conservative Muslim theocracy where alcohol has been banned since in 1952. According to store rules seen by CNBC, only non-Muslim diplomats can enter the store. Back over to you. All right, big changes there. Thank you, Kate. After the break, Nikki Haley was once a rising star in the GOP and a hopeful contender to Trump.

But losing New Hampshire is fueling fears that the same thing could happen to her in her home state of South Carolina. And that's up next and next. Welcome back to Power Lunch. Former President Donald Trump scoring a double-digit victory over a Republican candidate Nikki Haley. is only remaining competitor in the New Hampshire primary last night. But as now, Haley is still vowing to stay in the race, despite that loss, with the home state of South Carolina coming up next. But now big money donors are starting to abandon Nikki Haley.

Let's explore that with Libby Cantrell. She is a managing director and head of public policy at Pimco. And Brian Schwartz is political finance reporter for CNBC.com. And Brian, you have some news on a donor pausing who had been supporting Haley, right now pausing that support well that's right before i came on our air here you know we're learning that uh reed hoffman who's a billionaire co-founder of lincoln who did give 250 000 to a nicky haley super pack last year uh is now deciding to uh put a pause on any future help that obviously could change if things change in this primary but right now uh niki haley can look at this

where hoffman's kind of stepping back he's usually a democratic donor he gave to niki haley in this idea being that she could be the best bet to defeat Donald Trump in the GUP primary. He said that on a LinkedIn post. And now we're hearing that that is over, at least for now, in terms of seeing help from him. And that's just a little trickle of what we've been hearing throughout the last 24 hours from GOP fundraisers and the like, where there is just this look at this race right now and questions as to exactly, A, what impact any money they raised for her could have on this race. And B, where is she going in South Carolina?

In conventional wisdom, whoever brings in the most dollars has a better shot at winning hearts and minds of the voters, in part because you can splash it all over the airwaves and just inundate people with your name. That doesn't seem to have worked for her in Iowa and New Hampshire. And especially in New Hampshire, it's notable because of how, I mean, I'm a former New Englander myself. I think I can say this. How crankily independent New Hampshire voters can be. Like, don't tell me by your polls and your predictions, who will. I'm going to vote for. Yeah, you're right. This was a state. The New Hampshire primary, if you look at it from just electoral perspective, this was one where she really could have won, in theory. There were

enough independent voters out there where this really should have been a state she did well at. Now, the Haley camp's going to argue, well, we got within 12 points, and that's great. But, you know, I would say that 12 points back from number one is still number two. It's still the silver. She did not win in New Hampshire. And that's the situation for her now, just reality, going into South Carolina. Libby, let me turn to you. Ms. Haley, memorably, said we do we don't do coronations in America. We do elections and choices in America. But I have to say this is looking more and more like a coronation of Donald Trump. Yeah, Tyler, that's right. And we've been talking to our clients for several months now that this was really Donald Trump's nomination to lose. He was such a clear frontrunner, both in polling but also in fundraising. And also something that may not be really appreciated is that his campaign, this cycle, is incredibly sophisticated. It's very professional.

It has an excellent ground game. So all of the ingredients are there, were there over the last few months, for Trump to basically wrap up this nomination in the early stages of the primary is basically the primary process being over before it really starts. Now, you know, Nikki Haley did well enough last night. We'll see, I mean, I think the news about the donors is quite notable. She has a big fundraiser here in New York next week, at least supposedly. We'll see how that goes. But she may stay in South Carolina, but unless something really dramatic happens in South Carolina, which looks very unlikely, this is going to be effectively a coronation. Donald Trump will be the nominee.

Is South Carolina her make or break state? I mean, if she doesn't win in South Carolina, is it over? I mean, we were saying New Hampshire was make her break, really, but again, she did well enough. She didn't have the knockout that she really needed to change the momentum of this race. But yes, I mean, I think for all intents and purposes, South Carolina is really going to be the last gas. Now, there is a chance, like Governor DeSantis, who said he was going to stay in until South Carolina, but that, of course, promptly dropped out. There is a chance that she may drop out as well before that contest.

I think that's unlikely, though. Of course, this is her home state. She was a, you know, a quite popular governor. So I'd be surprised if that happens. But I do think South Carolina will actually be make it or break it. But again, this very much likely is going to be a Donald Trump nomination. Interesting that in that clip we just showed of Donald Trump standing behind him with South Carolina's Tim Scott. Yes, you're right. And that was an endorsement that maybe not to become too much of a surprise, but is notable for where Nikki Haley is in the state of South Carolina and this larger price. Yeah, very, very interesting. Any, is there, is the talk going to start turning to who his running mate choice will be? I think we're already there.

And I think that's a notable situation here for Donald Trump. I think there's becoming a push from certain people in his orbit to pick somebody. Could be in Elise DeFonic, could be somebody else. I mean, there's been a lot of chatter pre-New Hampshire about Nikki Haley being one of those potential people, a running made for Donald Trump. Would she want that job? She has said she's not running to be his VP, that she doesn't want. that role. So we'll see if it ever came down to that. But there are names being floated at the moment for Donald Trump's feet. Yeah, I wonder, I wonder if she's really running now, as I suspect DeSantis is for

2028. She might be. And I think that's the position. What is the future Republican Party? You know, ironically, that is kind of what this primary has been about. I mean, in the end, we're talking about policy on one hand, you know, where people are going to stand if they become president, but also what is the identity of Republican Party now versus a few years from now? Is this, is the Nikki Haley's, are they the futures of the party or could it still be trump down the road we'll see all right thank you liby thank you great to see you thank you you bet still ahead some exclusive real estate up for grabs one of the hampton's most expensive beachfront estates will hit the auction block with no reserve price could a lucky bidder be moved in by beach season and then turn around

and rent it out to all the college kids no just kidding we'll get the key details when power with returns. Welcome back on this Wednesday. One of the most expensive properties ever listed in the history of the Hamptons is now falling into bankruptcy. And it's up for auction. Robert Frank, how did that happen? Such a fall from grace. It was once listed for $150 million, offered for rent for $1.8 million a month. Now, the famous Hanson's estate known as Ladoon is headed to the auction block. It's four acres, two houses, 400 feet of oceanfront. in Southampton. The owner was Louise Bluin. She was a Canadian art world publisher who bought the property back in the 1990s for $13.5 million. As her business faltered, she put it up for sale in

2016. It came on and off the market. No buyers emerged at her price. One of the loans defaulted. Last year, she put it into bankruptcy. It has 23 bedrooms in the two homes combined. There are two pools, a sunken tennis court, a theater, a sauna, sponsor. Two gyms, everything you could ever want. The auction will be just in about an hour at 4 p.m. today at concierge's auctions. No, concierge sold the most expensive home ever auctioned two years ago. That was an estate in L.A. That had been listed for $295 million.

It auctioned for $141 million. The bids on this property start at $66 million. Obviously, it will likely go higher than that, but it's just to tell you that this could go anywhere, and we'll start to know in about an hour. So $66 million is the reserve? Is that what they're? There's no reserve, but there's clearly a starting bid,

which means someone has bid or pledged to bid to buy this for $66. So we know they're going to sell for at least $66. The question is how much more than that? Like, is there a lot of interest in getting a Hampton's estate right now? Is this like a hot property to have and to own? You're going to have sharp elbows at the auction? It is. The very high end of the Hamptons,

It's oceanfront. A lot of land has been very strong. There just isn't a lot of supply. Last year, we had two homes sell in the Hamptons for more than 50 million, including one property, similar to this in East Hampton that sold for $91 million. Where is this one? This one's in Southampton. So a little bit further west. But at that very top end, there isn't much inventory. Everyone wants Oceanfront. And last year, you know, nationwide, we had a number of dozens of properties sell for over $100 million. So that very top of the market, there's still demand for special property.

And this house will sell today. It will sell today at no reserve, no matter what the price. So that's going to be, this is a real cliffhanger because this house has been famous. It's been on and off the market, the most expensive. It starred in a Woody Allen movie, so everybody knows it from that. Oh, really? So a movie called interiors. So a lot of eyes on this property, to your point, Contessa, how many people will actually be bidding?

That'll be the question. She paid what? She paid 13.5 back in the 19. Then she built an extra house on it, so that adds value. All right, Robert, thank you. Thank you, guys. Coming up, off the hook, shares of AT&T falling on softened and expected earnings. We will trade that one in three-stock lunch when we return in two minutes.

Three stock lunch is here. We're going to take a look at three big movers of the day, and here with our trades is Quint Taitro, founder and president of Jewel Financial. Up first, Quint is DuPont. That company pre-announcing disappointing earnings. earnings results before the opening bell this morning. The report sending shares lower. They are now off more than 13 percent. Your trade on DuPont. Yeah, Tyler, thanks for having me back. First of all, this is a no touch or a sell for us. You know, it's always enticing to look at a company that's, you know, down on news and think, oh, it's an overreaction and go ahead and pick up shares. But you've got to

be very, very careful, especially in an environment where so many other things are working. Managers are going to dump their laggards. They're going to move into things that are working. Ultimately, yes, they lowered guidance. They talked about de-stocking. They talked about China demand. They also have a goodwill charge of $750 to $850 million. Here's the thing, though, despite the lower guidance, the stock wasn't all that attractive

to begin with, 16 times forward earnings. Now, with those revisions, it's obviously going to be even higher. They do have a decent balance sheet and $2 billion in cash, but I, I think you've got to be patient, wait for the dust to settle and then look to move in. It's not for us here. Up next quick, we have AT&T shares dropping today after posting a fourth quarter earnings miss. The company forecast a lower than expected adjusted earnings for 2024. But slightly beat revenue expectations.

How do you trade this one? Yeah, Contessa, I really want to like AT&T. I've always wanted to like AT&T, but I just can never touch it. the debt, the balance sheet just keeps me away, thankfully. But this is kind of the same story. I mean, they did beat top line. They missed bottom, but then they turn around lowered guidance going forward. If you dig through the report, they had some positives. Latin America was up like 26% year over year. There were some corporate segments that were up, surprisingly, and that's fine. But the reality is we're in the midst of a turnaround here. And the midst is the key. You don't

have to be early. They have a pretty significant debt level, and they pay out 50% of their earnings in that fat dividend, which means they don't have a lot to work with as far as paying that debt down, etc. So I think, again, kind of like DePont, you've got to be patient. It's not for us here. And in fact, AT&T says it expects to deliver adjusted EPS growth in 2025. It's just looking past 24 and, you know, down the road there. So I think that's a great point, Quinn. All right, finally, we got IBM to report after the bell today. The company stock had, has had a nice run, nearly doubling in price since its lows about a year ago. Your thoughts on IBM, Quint? Tyler, I like IBM. We're long IBM for clients. This is one going into the print. I'm not so sure

I'd chase it, but any pullback in IBM, if the market, which looks a little frothy today and maybe we get a little pullback, this is one where I would pick up shares. I mean, IBM, you know, missed the the hardware to SaaS conversion early, they totally missed that, but it looks like they're early, or at least in line with the AI movement. And that's really giving them some decent tailwinds. It's not cheap, 17 times forward. They do have a high debt load. But, you know, price to sales, 2.6, $11 billion in cash. You know, this is a decent company, a turnaround. But as you put it, they've run a pretty good amount, I think, but any pullback, if you look at that chart, that long base, I think gives you an opportunity to get in on a pullback.

All right, Quinn, thanks very much for the good strategy there. We appreciate it, Quint Taitro. Still ahead. Streaming's magic moment, how Peacock reportedly leveraged its NFL wildcard game into a monumental score. We'll get a live report when Power Lunch returns. Let's make the best use of these two minutes and 20 seconds as we can with another story that we're watching right now.

new data from Antenna shows the NFL wildcard game drove 2.8 million new subscribers to Peacock, which is, of course, owned by our parent company. Julia Borson has those details for us. Hi, Julia. Well, Kedessa, those 2.8 million people who signed up for Peacock made the Wild Card weekend. The biggest subscriber acquisition moment ever measured by Antenna Research. The game drew 23 million viewers, making it the biggest live-streamed event. in U.S. history. The question now is whether Peacock can hold on to those subscribers who signed up for

at least $6 a month, depending on what option they picked. We're sure to learn more when Comcast, which is the parent company to CNBC and to Peacock, reports its earnings tomorrow morning. Back over to you. Key question here, and I was one of the people who signed up. I was lazy. I sat there with my clicker or my Comcast, Xfinity clicker. I can't find my password now for Peacock, so I don't know how I would ever cancel it. But how many are they going to hold on to? They got any ideas? You got any ideas?

Well, I think the whole idea here is that Peacock really wanted this game to introduce people to the platform. The fact that they're a destination for live sports, they're going to have a ton of live sports when the Olympics are coming up this summer. And so the ideas that they really are going to try to hold on to those subscribers by using that game for customer acquisition and then showing them all the other great content that they have in store. So I don't have a crystal ball, Tyler, but I know that our parent company is working to hold on to all of them.

Have you seen other, like a similar opportunity in soccer, you know, with Leonel Messi for Apple TV? Or have you seen other moments where they put a lot of eggs in that basket and then it just doesn't pay off? Well, we don't know whether or not these pay off over the long term. And there are also so many other factors at play. I mean, Leonel Messi, I mean, his team didn't make it to the finals. So that was another piece of that equation. But the one thing I would point to is Thursday night football for Amazon. They made that investment.

It played into their larger strategy around streaming. And they say that has paid off. Julia, thank you. Julia, thanks so much. And thank you for watching Power Lunch.