Power Lunch - Dow hovers near 42K, heads for winning week after Fed rate cut 9/20/24

Episode Date: September 20, 2024

Stocks are mixed today, but higher for the week following the Fed’s decision to cut rates by a half-percentage point. But today’s big story: Apple’s iPhone 16 going on sale amid some concerns about demand. We’ll track that for you. Plus, shares of Nike are higher after the company announced a change in leadership. We’ll discuss the challenges facing the incoming CEO.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Launch, everybody, alongside Kelly Evans. I'm Tyler Matheson. Welcome. Glad you could be with us today. Stocks are mixed today, but higher for the week and how, following the big Fed meeting that concluded on Wednesday. But today's big story is probably the iPhone 16 going on sale amid some concerns about demand. And that's what Steve Kovac has been reporting. Indeed, we'll see him in just a moment. He said light lines. The lightest he's seen in the last three years of iPhone launches. UBS, meanwhile, is talking about how they don't think this is going to be a super cycle for upgrades. They say that doesn't have to be a disaster, but if the shares were, by the way, the shares are higher still. They're coming off the highs, but up about 1%.

Again, difference between what analysts who are bullish on a huge upgrade cycle need for a price target versus what those who say, look, it could be muted, but not a disaster. And keeping the lid on this, to me, is the idea that a lot of the functionality, the AI tools that are supposed to be the big cell here on this phone aren't really ready just yet. A thousand percent, not till October. The other thing, Huawei has launched this trifold fold. I think we're going to trifold phone. Unis might be joining us with more on that. Apple's already out of the top five in terms of China market share.

And now Huawei's got all the buzz around this new launch. Meanwhile, shares of Nike are higher. After that company made a big change at the top, the new CEO is facing a lot of challenges, though, including consumer weakness in China. It's hardly just Apple experiencing this. Not quite the Starbucks boost, but Nike is still up about 6%. And I think one of the criticisms has been that Nike has not been on the cutting edge in terms of fashion and design

and coming up with the hot new sneaker. And there have been these little ankle biters nibbling at it, whether it's on or Hoka or Vori or whomever in the clothing area. They've got a lot more sort of trendier, maybe trendier competition, let me say. And one key decision, Nike, made going direct to consumer, you could argue for it now, I guess, but the whole DTC thing has blown up. A lot of companies are going back through stores,

back through that traditional model. It's arguably cheaper in the long run now that advertising costs are so high. And when people came back into stores post-pandemic, the Nike inventory wasn't there. So a couple of different strategies they have to retool. And other than the Fed, the big story of the world has been reading and talking about this week, the attack on Hezbollah via exploding pagers, we're going to have a guest on to talk about whether anything like this could happen here in the United States. And what are the vulnerabilities of the supply chain to the kind of very, very sophisticated industrial espionage that apparently the Israelis were able to perpetrate here. This was a case where counterfeit devices apparently were purchased

from a counterfeit company, a front company. We'll explore that and more. Everybody's talking about it. But let's begin at the Apple store in New York City, where Tim Cook appeared earlier this morning, but lines seem to be dwindling just a bit now. Our Steve Kovac is standing by. Steve? Hey, I heard there, Tyler. And what you and Kelly were talking about is exactly the theme of the week with Apple. It's these questions of what iPhone 16 demand actually looks like. We went into this cycle with a lot of bullish analysts saying, you know, the new artificial

intelligence features are going to drive another super cycle of iPhone sales. So far, the early data we have just isn't really showing that. So many analysts came out at the beginning of the week saying pre-order sales looked lackluster compared to a year ago, some significant drops in those estimates. And then same thing like Kelly noted, UBS coming out with a similar note this morning. At the same time, we also heard from the T-Mobile CEO earlier this week who said those pre-orders on that carrier were actually up from the year before. That's why we saw Apple shares up 4% yesterday.

So how do we make sense of this? Well, I talked to the man himself, Tim Cook, CEO of Apple. I was able to snag him on his way out of the Apple store earlier this morning. Take a listen to what he told me. Today is great and very exciting. Better or worse than last year? Oh, I don't know yet. It's only the first hours, so we'll say.

Pre-order is good? It's amazing. Everything is enthusiastic. Enthusiasm, amazing. No, no real hard numbers, of course. We do have some time to go through all the sales data and things like that. As you guys mentioned, the lines have been dwindling. I think I talked to Cook.

I think it was around 9.30 a.m. this morning. An hour later, the overflow line. line, which kind of goes around the corner on 58 Street from Fifth Avenue here. That was empty. And now you can see the plaza here where they usually have people sort of snaking around to get into the Apple store. That is fall. The line there has fallen dramatically. That's the main line you're looking at right now. I was here the last two years. A year ago for the iPhone 15 launch and a year before that for the iPhone 14. The line, the overflow line lasted well into the late afternoon, early evening on those launches.

Not sure what to make of that. It could be a lot more people are busy today or a lot more people ordered online or went to their carriers instead. I just did think that's notable that just compared to the last two years, though, significantly lower lines here at the flagship Apple store on Fifth Avenue, guys. I'm curious, Steve, how many analysts are still expecting or have kind of priced in a super cycle versus those who think, you know, expect, you know, that those expectations are too high. We heard some of that commentary coming into the iPhone events last Monday, actually.

I can't remember exactly which firms, there were a couple of them going into that saying, all this artificial intelligence stuff, all this super cycle talk, that's our been priced in. We've seen how Apple shares have gone up since that June events where they finally announced their artificial intelligence plans, finally went positive for the year after spending pretty much the first half of the year in the red and especially underperforming the peers in the mag seven as well so it could be baked in and it could be we might find out a month from now people were just waiting for these AI features to hit these new phones and that will spur another upgrade there's so many people also saying kelly that maybe it's just a prolonged upgrade cycle as these features roll out to different countries

different languages and things like that. So this is going to be an interesting one to watch. We'll get some more data next week once this first full weekend of full sales come in, guys. Some shoe leather reporting from our Steve Kovac. Thank you so much, Steve, for now. We appreciate it. And while there's a lot of excitement for the new iPhone here in the U.S. still, in China, the competition is even taller.

Eunice Yun is live in Beijing for us. We were talking about the Huawei-T trifold phone, Eunice. Is that the culprit? Well, it definitely is today. The Chinese rival Huawei did unveil its mate XT. This is a trifle phone. It's the same day that the iPhone 16 debuted here. So this phone is $2,800.

It's a tablet and smartphone all rolled into one. The screen is, of course, you can fold it in three ways. And the screen is able to handle a lot of different windows. The phone is pretty lightweight. It's only slightly heavier than the iPhone 16 Pro Max. And that model was really the big talker in the lines outside of the Apple store today. Scalpers told us that the Pro Max was the one that they were trying to buy off of the customers who had been lining up since 5.30 in the morning. They said that they were offering a markup of $70 for the black or white model or $42 for the desert.

The desert of... It was almost like a rose gold color, but I'm just blanking the desert titanium color. That's right. Online orders for the pro max are backlogged for two to three weeks. But this excitement really doesn't mean that Apple doesn't face issues here. The IA intelligence, the IA service called Apple Intelligence, still hasn't been approved by the Chinese regulators. And also, Apple does face a competition from Chinese rivals. Not only Huawei, but Huawei appears to be ramping up.

It's competition with Apple outside of China. A source is familiar with the matter had said that Apple, that Huawei now plans to sell its $2,800-tri-trifle phone in the overseas markets starting from the first quarter of next year. So, Kelly, maybe you'd be able to get your hands on one of those phones. A $2,800 phone. I mean, that strains. That would strain the pockets of even the most affluent American consumers. I can't imagine what it means in the Chinese market. But speaking of the Chinese market, how are consumers doing there?

Yesterday, Skechers was the latest company to say they're seeing some softness in sales. Apparently today, Nike attributing some of the issues that they've been having to weakness in sales there. Yeah, absolutely. That warning by Skechers really does match the broader picture. that we are seeing here with the Chinese consumer. So as you said, $2,800, a really hefty price for really anyone, but especially here in China. But there are people who are affluent.

So you do have people who are buying the iPhone 16 or the Mait XT or sometimes even both. But the broader trend is that if people can find a cheaper alternative, they will. People are really worried about the economic situation. They're concerned about their own financial position. And so because of that, if you could find anything that's even priced slightly lower than people go for it. And that's one of the reasons why foreign companies and foreign brands are suffering, because they are positioned slightly higher price point-wise than their local competitors. Thank you very much.

Eunice, Uner, reporting in the middle of the night, as she also often does for us. We appreciate it. Thanks, Eunice. Let's talk more specifically about Nike now, which had also warned of those soft sales in China. But the stock is surging today after announcing CEO John Donahoe is stepping down. And company veteran Elliot Hill is coming out of retirement to replace him. Here to talk about what this means for the future of the sneaker giant. Brian Nagel is a senior analyst at Oppenheimer.

He's gotten outperformed sticking with it, $120 price target. And Brian, it's worth repeating, as Dom Chu pointed out last hour, Nike shares are down about 50% from their pandemic. eyes. How do they fix this story? Well, yeah, thanks for having me on. Look, I think the issues at Nike have become pretty well known, okay? And really, there's probably two buckets now. I mean, one, they need to revitalize product innovation. And then second, they need to reembrace the wholesale distribution. And I think, you know, this CEO announcement they made last night, I think is very much a step in the right direction because they're bringing back a proven successful executive for the company who, when he was at, when he was at, when he was at, when he was at, when he was.

was with Nike, Nike was performing much better. And so I think we're, I think this against, there's still issues for Nike. There's challenges. It's going to take time. But I think this CEO announcement is very much a step in the right direction. But to Tyler's point earlier, there's also the little problem of massive competitive pressure. I mean, the sneakers from on are ubiquitous. I see them everywhere. The same was true of Hoka a couple of years ago. How did they miss a step on the fashion? Well, look, Nike's a massive company, right? Okay. So if Nike's misstepping, losing connections with consumers, that does open, to some extent, opens an opportunity for smaller players to come in. And I think that's exactly what happened. Now, we'll see. I mean,

my sense is, and having studied Nike for a long time, is that there's still an underlying consumer demand for Nike. I think if Nike gets this right, Nike starts to introduce better product, more innovative product, and is selling these products where consumers want to buy them. We're not talking but there is these wholesale partners. I think what's going to happen here is you're going to have a shifting dynamic. You know, I think, look, there's some of these smaller companies have done very well. Maybe they have staying power, but I think they're going to be fighting against a stronger Nike, and that's going to be much more of a challenge.

It's very interesting to me what's happened in the world of sneakers. I'd be interested in your thoughts on this. Sneakers have gone from being athletic wear to being everyday footwear. And that has also, I think, benefited a couple of those competitors that, that Kelly just mentioned, whether it's on or Hoka or a ball star or a whole host of them that are that are fashion items as much as they are functional footwear and certainly not necessarily athletic items, which has been the sweet spot for Nike for decades. Now, look, that's a great point. And what that basically means is that, you know, the market for

what's called athletic footwear has expanded significantly. You know, in that sense, where the market share is coming from as traditional footwork companies. I always make the joke. I'm talking to our clients. I don't see as many loafers out there anymore when I'm either in my office or the offices of our clients. A lot of people are wearing sneakers. So, you know, that dynamic is very much happening. And I think that, you know, again, going to Kelly's question, I think, you know, that opens an opportunity for, you know, reemergent, a re-inviguration of Nike, and maybe still some success of these smaller players that have performed well over the last few years. Bring back the loafers, Brian.

Bring back the loafers. You got to visit my closet, man. I've got a lot collecting dust as well. I don't know what to do with them. Yeah, you just can't find a good tassel loafer anymore. Brian Nagel, thanks, man. Appreciate it. Thank you.

Nice seeing you. Okay. Yeah, nice seeing you. Sovereign wealth funds are plowing billions of dollars into AI startups as oil rich nations push to diversify their economies and compete on the world stage. through tech investments. We'll get the key details when Power Lunch returns. Welcome back to Power Lunch. As billions of dollars continue to chase investments in AI,

some of that money is coming from sovereign wealth funds in the Middle East who are trying to diversify from oil to artificial intelligence. Kate Rooney is here with the details. Kate. Hey there, Kelly. So sovereign wealth funds out of the Middle East in particular are emerging as some of the biggest backers of Silicon Valley's AI darlings. And today I am told by a source that MGX, that's an AI fund out of Abu Dhabi, is set to find out if OpenAI has chosen it as one of its investors in what is becoming a very competitive round. That values Open AI at $150 billion. There's also Mubadala, which is out of the UAE. It's backed rival Anthropic.

It competes with Open AI. Saudi Arabia, of course, has the PIF, plus some mega funds out of Qatar, Kuwait. All you can see investing in AI. These funds have increased their spending, especially if you look at Q2 of the day. year. It jumped to $6.5 billion. That was up fivefold from just a year earlier. That's all according to pitch book. And these are historically oil-rich countries. They are looking to diversify their economies. And they're in a unique position to write these mega-checks for what's a really capital-intensive AI industry. Only a handful of funds or big tech companies

can really afford to write a check of that size. And one effect I'm hearing about here in Silicon Valley, with this endless spigot we're seeing in capital, it's really pushing up valuation. Someone described it to me as the soft bank effect. You think of what Moss. Assan did with the Vision Fund. It's really known for writing checks that pushed up the valuations of WeWork, Uber, for example, to sky high prices that turned out to be unsustainable. There are geopolitical implications as well. Anthropic, as one of the startups I'm told, has said no to taking money from Saudi Arabia to avoid any sort of controversy. Plus, the U.S. wants the Middle East to really be an ally in this AI arms race. It's even brokered a deal between Microsoft and G42 recently,

Kelly. All right. And Tyler. Yes. I'll take it. Thank you so much. We appreciate it. Kate Rooney. Staying with the Middle East, Wauke-Tockies detonated in Lebanon, killed at least 20 people and wounded hundreds a day after Pager blast, killed at least a dozen,

and injured thousands across the country. Turning us now to discuss how the covert operation was carried off, and what its implications might be is Chad Sweet. He's the co-founder and CEO of Chertoff Group, global advisory firm and investment bank, focused on the security sector.

long history, Chad, at the Department of Homeland Security as well. So how did the Israelis pull this off? It seems to me that what it looks like now is counterfeit devices made or adulterated by a counterfeit company in Hungary. That's right, Tyler. It looks like this was done over many years. Physical infiltrations of supply chains take a long time to execute. And in this case, they set up a front company in Hungary that was able to successfully penetrate Hesbola's supply chain. And it does look like they altered the devices to implant what looks like either C4 or Pettin, which are plastic explosives. So what is to prevent a similar kind of infiltration of the supply chain for other companies or potentially commercial buyers,

whether those companies or U.S. companies or not? What would make it harder to penetrate a U.S. company supply chain than this? Well, I think in this case, we saw Hezbollah, you know, shifting to these low-tech devices because the U.S., Israel, and others have been able to successfully use smartphones as a targeting tool to conduct drone strikes against high-value target terrorists. In this case, in the United States, Pagers and Houndheld radios are not a very widely used tool other than in law enforcement. And as a result, it would be very challenging to carry off a large-scale attack like this. I think the other problem is that smartphones, unlike handheld radios and pagers, the form factor is much smaller and more compact.

So even if they were able to obtain the devices outside the supply chain and try to alter them, it's extremely difficult to have sufficient space to have enough explosives for any serious damage. So as a result, I think it does, though, highlight Tyler the importance of the supply chain, though, overall. both physical and virtual for commercial customers. If you were a company that got caught in the middle of two state actors like this, you could end up being crushed by two 800-pound gorillas. So whether it's a criminal or whether it's a state actor, companies do need to be paying close attention to both their virtual and their physical supply chain. I wonder if you expect more attacks like this to come or if you think this is a one-off.

and what communication means Hezbollah might now have resort to. I think you're right, Kelly, to put our antenna up, I think copycat attacks by other adversaries or a Hezbollah retaliatory strike that could spill into the United States in some form or fashion is a possibility. And I think what this underscores, though, is we have to step back and see that these types of weaponization of the supply chain are not new. The United States, we carried out, as you may recall, a cyber attack called Stuxnet, which is code-named Operation Olympic Games against the Iranian nuclear centrifuges. That was in 2010.

This attack just happened by the Israelis using weaponization of non-combatant consumer electronics. And I think what this shows is that whether it's several years ago with U.S. in Iran or whether it's yesterday with Israel and Hezbollah, or tomorrow we could see China taking the supply chain vulnerability of the United States and bringing us to our knees. We all have to be vigilant on diversifying and increasing resilience in our supply chain. So if you are a corporate out there, there are opportunities for you to join programs like in my old department, DHS, called it's the CT pat, the counterterrorism against with private sector partners. And think of it as an opportunity to get your supply chain more resilient, collaborate with the government, And you get special privileges if you participate in that program. How?

It's like a trusted traveler program, but for businesses so your goods that you import get expedited on U.S. borders. How vulnerable, Chad, might our telecommunications devices be, not to the insertion of explosives, but to disruption from a foreign actor so that effectively they bring down the ability to communicate? That's question one. And number two, you said that the form factor of a cell phone makes it very difficult to insert explosives. But a laptop could be vulnerable. Yeah, that's right. Well, if you look at, you know, all of us now go through the airports and TSA has done an increasingly more sophisticated job of scanning our laptops and other devices in a more efficient way. We've introduced what's called ATI Advanced Imaging or AIT Advanced Imaging Technologies that can detect not just the metallic dead.

but the actual explosive itself. So those technologies are advancing in governments and private sector together are helping to use that technology advantage that we have against our adversaries. On the issue, though, that you're raising generally about the use of cell phones on the virtual side, they can be more easily penetrated as opposed to the physical side. That type of penetration allows for collection and surveillance, but also we've seen it now used in kinetic opportunities too that I mentioned before in targeting. So the bottom line is the FBI director Christopher Ray did testify that our China and others are increasingly infiltrating critical infrastructure in the United States through our supply chain and we're having to

work together with private sector to create higher and higher resiliency. But at the end of the day in the game of nations in the game of espionage, supply chain vulnerability exploitation will continue to be a reality. It has been for many years. And the key thing will be, the winners will be the ones that can actually reduce their vulnerability in the most interdependent time in human history. All right, Chad, thank you very much.

We appreciate your insights today. Frightening thoughts there. Chad Chirtoff, Chad of the Chertoff Group. And shares of Trump media are hitting a new 52 week low today. One day after lockup restrictions, preventing the former president and other early investors from selling their shares, expired. Former President Trump said last week he wouldn't sell any of his stake. The shares are now down nearly

5% and 11% on the year. Coming up, we'll look for some safer ways to play the post-rate cut upside in Market Navigator next. Welcome back to Power Lunch. Here's a check on the markets, which are broadly lower today, the NASDAQ the most so down about half a percent. The S&P giving up 24 points back below 5,700 and the Dow only down about 60 right now. The utility sector, though, has been outpacing the S&P year to date, and after the rate cut, it could be more attractive than ever. Here to explain why and how to trade it. Mike Coe is chief strategist at openinterest.pro and a CNBC contributor. Mike, it always makes me nervous to kind of run into something so consensus and loved, but you're saying it's still the time. Why? Yeah, I think so. I mean, look, I appreciate

the concern that somebody might have. I mean, the outperformance of utilities since the beginning of October of last year is pretty extraordinary. I think we've got total return outperformance over that period of time of more than 7.5 percent. And, you know, if you think about it over the long term, people haven't really thought of utilities as much of growth sector. But I think a little bit more historical context is in order. First of all, it's trading about 19 times forward earnings. Typically does trade at a discount to the market. But one of the reasons for that, is that the explosive growth that we saw in, among other things, electricity demand in the post-war period. So after World War II through, you know, call it 2022 or thereabouts, you know, we saw about a six-and-a-half-fold increase in electricity demand.

And then it kind of stagnated from 2007 onwards. But I think we are going to see a second leg, essentially, to electricity demand growth. Two things are really propelling that. I mean, EVs are a part of it, and that's not quite the same as putting air conditioning in the southern parts of the United States, but it is material. We're going to probably have an electric vehicle fleet that's about 50% by 2030 or thereabouts. And the second thing, of course, is what everybody's talking about right now, which is, you know, data centers for AI.

And that is also clearly going to create massive demand. We can see that with some of the transactions that people are talking about to basically meet their generation needs. So I think you combine those two things and I think it's still reasonable. And it's also important to remember, you know, XLU, the ETF that was tracking, you know, the utilities, this thing was essentially flat before we started to see this recent now performance. So I think this might still be the beginning of it. Sure. And you're saying the multiple is, you know, not extended at this point compared to history. I mean, just today, the news that Microsoft is going to bring back a three-mile island nuclear reactor is the epitome of this trend that

we're talking about. So for people who want to play the space, what's the best way to do so? Yeah, I mean, obviously, XLU is an ETF that one could own, but if you are concerned about, you know, chasing it, and I mean, it obviously has had exceptional performance. We're talking about since that October timeframe that I was referencing, it's up more than 40%. Hard to believe we're talking about normally safe and stable utilities here. But the other thing is that because they are usually pretty stable, options premiums are relatively cheap. So if you are looking to make a price action bet that XLU could continue higher, you can go out and buy some longer dated call options and then look into essentially selling some downside

puts nearer dated against it. We call that a diagonal risk reversal. But, I mean, the simple part would just be to buy longer dated call options because those options premiums are very reasonable. Diagonal risk reversal sounds like some kind of Twitter account or album that we need to come out with or something. Nevertheless, a couple of different ways to do this, Mike. And thanks for joining us to make the case. Good to see you today. Thank you. Mike Coe on utilities. Over to you, Ty. Thanks, Kelly. FedEx plunging after reporting disappointing earnings and slashing its full year guidance,

signaling some potential cracks, maybe in the broader economy. We'll get our traders take on what it means for FedEx shares in three-stock lunch. Next. All right, welcome back. Time now for three-stock lunch. First up, we got Nike, higher on news at John Donahoe will step down in mid-October to be replaced by company veteran Elliot Hill who's going to come out of retirement like Tom Brady to take the helm. Here with our trades is Brian Vendig. He's president of MJP Wealth Advisors. What do you think of this?

Let's start with Nike and your thoughts on it. It's up today, as you see, by almost $5 a share. Thanks, Tyler. Well, I think this one's pretty interesting when you look at the headlines. And that's why I look at this for myself, caution any investor to dig in because with Mr. Hill coming back, you know, you think it's got to be about the shoes, Tyler. But at the end of the day, I think Nike is a very expensive turnaround story right now. A lot of competition in the space, sales down in North America, declining sales from an e-commerce

business, and between Decker's, Hoka, on, I think we need to see a little bit more from management moving forward before jumping in. So I would say sell on the news. is the expression and then wait to see what that pipeline innovation is going to be for Nike as part of their turnaround story. The shares are up. I mean, I hate to say it, but only 6%. And they've been such an underperformer. The Ford PE is also still 28.

Let's move along to FedEx now then, which is plunging after it missed on earnings and cut its full year outlook. The shares are down nearly 14 percent, Brian, who picked this one up? Yeah, Kelly. Actually, I would pick this up because I kind of dug into the earnings report. And I looked at a lot of things that were mentioning. Now, first, investors are paying notice to the fact that full year guidance is down and down significantly, which is why we have a little bit of a pullback.

But at the end of the day, if you take a broader look at the stock, it's actually had a pretty good run recently and has been outperforming some of its other competition. So it's a little bit of a mean reversion. But when we dig into it, we see that they commented that demand is still healthy, especially in the industrial and e-commerce space and expecting a little pickup, modest pickup in demand, Plus, they have some cost and restructuring initiatives that might add to savings to a tune of about $4 billion over the next 12 months. So I don't think this is an indication that the economy is definitely falling off a cliff, but also that customers are being sensitive to price, something that we've heard from companies all throughout the year as we're going through a slowing economic cycle. So again, I look at this as a value opportunity and something that I'm looking to pick up for myself.

All right, our final name is another laggard today. Lenar, the home builder, actually beat on earnings, delivered strong commentary. And CEO Stuart Miller said the company expects demand to remain high amid a chronic shortage of homes for sale. What's your trade on Lenar down $9 today? Yeah, this is another value play, I think, Tyler, where I like the pullback here as a good entry point. We're seeing demand still in the housing sector, forward P.E. that's very attractive. And right now, again, a stock that's had a good run, investors just being a little fickle on margins that were weak, but we still saw increase in orders, deliveries,

and revenue growth. I think that macroeconomic backdrop with a decline in interest rates is going to help the stock moving forward. All right, Brian, thank you so much for being with us. Have a great weekend. Brian Vendig. We appreciate it. And to Pippa Stevens now for a CNBC News update. Hi, Pippa. Hey, Kelly, the deadly back and forth between Hezbollah and Israel, continues. Israel today launched a rare airstrike on a Beirut neighborhood and killed a senior Hezbollah military leader. Lebanese health authorities say it's the deadliest attack on Beirut in years and that at least a dozen people were killed and dozens more injured. Executives at the port of New York and New Jersey tell CNBC they're preparing for total work

stoppage from the Longshoremen's Union. It's the largest port on the East Coast. The union represents more than 85,000 longshoremen and a strike would try. shut down five of the top 10 ports in North America and a total of 36 ports on the Atlantic and Gulf Coasts. Their current agreement expires October 1st. And ahead of Monday night's game against Jacksonville, Buffalo Bills fans will get a chance to invest in the team's future and buy municipal bonds that will go towards constructing the construction of a new stadium. On Monday, retail investors will be able to buy the bonds if they have a brokerage account and at least $5,000 to spend. institutional investors can jump in the next day. Kelly, back to you.

Wow. As we expand different ways, what? Bonds for the bills. I wasn't sure if it was going to be a slight from a giant span or PIPA thanks. PIPA Stevens. As we head to break, let's get a quick check on the markets, which are lower today, but on pace for a winning week. Gains of 1.3% for the Dow, which is actually leading the way. We'll check on the bond market when we return. Welcome back to Power Lunch. Rick Santelli here at CMEHQ with your bond report. It's been an interesting week, of course, and the highlight was Wednesday, three days. Let's look at three-day charts. If you look at the left side, you could see the volatility of that 50 basis point drop in rates.

But what's interesting is the general direction of two-year. It's moving sort of sideways. Let's move down the curve a bit, and you can see the 10-year hasn't upward bend to it. That is because the curve has steeped, and it retained its steepness. As we sit now at 357, we're down one on the day, down one on the week on two years. But as you move down the curve at 372 on a 10, we're up two on the day, up seven on the week. So we've steepened eight basis points on twos to tens, and pretty much every combination of yield curves have steepen and retain their steepness.

And what's going to really make this interesting is next week we have supply. So twos, five, seven, $183 billion will get a glance of investor sentiment and see if it's changed at all with respect to purchasing our debt. And finally, two weeks of the dollar index, we're hovering near a 14-month low. We have not closed under 100.5 key technical area. We want to continue to pay attention to that. Tyler, back to you. 180 billion coming out next week or whatever you just said.

Rick, thank you very much. Rick Stenelli. Quick check on our 2024 stock draft. standings. The medalist O's Perlman with a strong lead up nearly 60% so far. Huge gains for his second round pick, Carvana. O's is in the house today and will join us on set next. We're prepared to be amazed. Welcome back to power launch. We're about halfway into the 2024 CNBC stock draft, which we conducted back in the spring. So far, Wall Street mentalist O's Perlman, team O's nose, leading the way, he's up more than 60% since our April draft.

Thanks to huge gains out of Carvana. O'S Perlman joins us now. Why did you like Carvana? Now you must love it. Love it, and I still love it, because I think going into 2025, I think we have a lot more upside. So last time around I told you, they reorganized their debt. If you look at it, a real indicator of strength right now is that it's north of par, trading north of par. The street is saying, I think, about $15 billion in revenue by end of 2025.

I think they're going to blow that number away. I think Carvana's still going to go up. And by the time this thing ends right around the Super Bowl, we're going to be even higher. And I think Bitcoin still has quite a bit. It's been steady. Bitcoin was your other choice. It's been pretty steady. But I think the election might throw that in.

And Bitcoin's asymmetrical. You look over the life of Bitcoin. It's a boom and bust cycle. And you just got to catch that wave at the right time. I could see Bitcoin 80, 85K. We'll see. O's nose. O's nose.

How much does he know? How much? Let's find out how much he knows. You set up a little thing earlier today with me. Let's go through it with both of us. Here are the four words that my four-year-old daughter, she gave show and tell. My daughter has made. My daughter has made.

My daughter has made. And here are the four words that you need to do amazing at the stock market. So simple, yet so difficult. You're ready, gang? I told her I would bring this in. There it is. It is buy low, sell high. That's a very wise move.

So simple. So simple. Magnetic board. Thank you, honey. And so here's the game, right? Think about it. What's the buy low element? It's my four-year-old, right? The buy low, which could be any age.

You could be 7, 37, 47, any age, is catching those stocks on the way up. That's the key. Get them on the way up. And then you have to sell them before they go down. So here's the plan. Kelly, I'm going with the ones that are sell high. What do you think is the right moment to sell?

And so I'm asking you each. Yours, Tyler, is more of something that's on the upswing. I'm not saying down swing, but you think is at the highest point. And I want you to see yourself. I did a bad job with this. You can't do a bad job. I can't change my mind.

I mean, it's a free market. You can do anything you want, but I think you already changed your mind once. You did something spontaneous. I saw your eyes. Look at that. Twiddling the fingers, she wasn't sure. And then the one she did after that,

she's like, should I get this? Should I not? Think of the... So the question was, what is a stock that you think is high and would be ripe to sell? That was the question to go. Look this way.

I think that you went steady. We want dividends. We want to come in the keys before me. Close your eyes, please. Tell all the viewer at home. NBC, leading financial network. It's all about integrity. I did not tell you what stock to fix. I think I was overly influenced by Steve Kovac's report this hour, and I went with Apple.

Apple is what I went with as well. Apple is precisely what I went. I do not know how you did that. Right? And she changed her mind in the middle. You saw it yourself. And so here is the question. Buy low, sell high. You could have picked anything. This. You gave me a pack of cards with names of... Absolutely. And here's what I want you to do for. I want you.

Dog-ass companies, basically what we're talking about. And the question is, did I influence you? So what I want you do is on three, on three, I want you to tell us, out of all the companies that you could have picked, say it, what was the company you went with? Say it. What is that company? Boeing. Folks, I said, buy Los Eye, don't blink because right here, I've got something ready for you,

my daughter brought, and it is Boeing. No, no, no, no, no. That worked out quite well. No, no, no. What if he had picked, like, Nike? What would you have written on the first? I don't think it would have gone any other way. That's it, folks.

19 on this one or something. Whoa, that's good. Well, Boeing was in the, and you gave me 52 cars with the names of companies, and I shuffled them, shuffled or something. The one I turned up was Boeing. And I thought, well, that's a pretty good by-low company right now. Why you're still a magician and not a portfolio manager? That's my next, you know, it's my previous position was at Merrill Lynch.

And go figure, I went from the street to being the Wall Street mentalist, so go figure. Yeah, love it. Oh, it's great to see you. Continue good luck with you. the draft, and I'm sure we'll see you again soon. I hope so. Take a lot of traveling coming up for you. All the time. Love what you do with the NFL teams. Thank you. It's really compelling. A lot of good stuff coming up. Wait until you see what I do next. All right. That sounds great. A saucy new gimmick meantime that's sure to please job seekers will explain why your next Pizza Hut order could come with a

side of employment. Power lunch is back in a moment. Welcome back. This could be telling us something about the job market, or it's just a clever gimmick to sell more pizza, but Pizza Hut is putting job seekers, resumes on boxes and delivering them to employers in New York City. You have to apply to Pizza Hut first and then be selected and then get the desired employer's permission for the delivery. But if you do all that, your resume will certainly stand out. I mean, they gave us some examples. But this is cool. It's just, you know, it's printed on the box itself. It's all in the box, and I guess this is a way you personally market yourself to a potential employer. Yes, Mary, Nara, Ha, Ha.

But the larger point is more interesting. I mean, it's eye-catching. And to me, I think, a sign that remember the great resignation a couple of years ago, Ty? When everyone was like, work, who needs to work? You know, my employer's lucky to have me. Well, I think this is a sign that the dynamics. I guess this would just be sort of a compliment. I'm sending a pizza.

What is that? Say that again? Control room? I think. Yeah, there's John Doe. There's John Doe. Yeah. In case you didn't believe it, it is.

John Doe. And his email is J.Doh at pisa hut.com. So I would flood that address with your thoughts and reactions. But you know what I'm saying? It's like we didn't have Pizza Box resume a couple of years ago. No. This is a new phenomenon. We'll put it up there along with the beverage curb for labor market leading indicators.

Let's also get a quick check on our fantasy stock teams before we go. My kickers are helping me out. This is like the Harrison Butker, cocoa and coffee over here. Coffee prices rose to a 13-year high because of production in Brazil, the biggest bean grower tie. They had adverse weather.

So we've got, look, you're just some nice year-to-date rallies in the seasons all the good start. You had some nice picks there in the commodities area. Thank you very much. Who knew? Let's, yeah, a couple of my players in the news this week, Decker's among the footwear companies

hurt yesterday by Skechers, cautious comments on the Chinese consumer. and United Airlines. Thank you to United for finding my iPad, by the way, and recovering it when I left it in a seatback. Props to you guys. How far had you made it when you lost? Oh, I was home for several days.

Several days, and they recovered? They got it. They found it. God love them. Wow. Boost in demand for flights, they say, wherever Taylor Swift is playing, 25% boost for a given city on her weekend concerts.

I think she's wrapping up her tour. So get them while they're hot. That's also why Airbnb shares were up the other day, up 7%. Having a nice session on the same kind of thing. The Taylor effect. The Taylor effect is back. Taylor Rule. Well, have a, the Taylor Rule.

A little Taylor Hand. All right, Kell, have a great weekend. Thank you. Thanks for watching, Power Lunch, everybody.