Power Lunch - Dow rallies after encouraging inflation report, strong bank earnings 1/15/25

Episode Date: January 15, 2025

Stocks are surging after the latest CPI report showed core inflation unexpectedly slowed in December, and big banks kicked off earnings reporting season with blowout results. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. Look at that. Take the family to dinner because stocks, they are rallying your investment dollars higher across the board. It is a big turn, Kelly. It would have been a rough start to the year. Although Mag 7, by the way, they're higher. And it has it with inflation and earnings. We're going to hit all of it.

I think you're also watching oil prices on reports of a ceasefire between Israel and Hamas. We'll circle back to that in a sec bribe. But look at that up 3%. Yeah. Look at that. We'll get more on it later. All right, and we're looking at a move in the 10-year yield as well. A big drop after this morning's CPI report.

The core rate was not up as much as expected, and that got yields down to 465. Because of that, we're seeing reaction in interest rate-sensitive sectors. Housing is one, Home Depot, another leader on the Dow today. As mortgage rates take some pause here, we shall say, from the backup that we've seen lately, Home Depot, up nearly 3 percent, Mohawk Pulte, Brian, some other names popping. All right, we have got a lot to get to. Let's get right to your money, markets, as we showed you. They're up.

Price hikes, aka inflation, coming in a little bit cooler than some feared. That is good news as well. Also seeing a slight drop to bond yields, which if we see yields go down, that tends to, not always, but tends to help equities. Let's talk more about it all with your lead guest. That is Jason Ware. He is CIO of Albion Financial. All right, I guess Jason, here's the question.

It's been a rough start to the year today. different pop, as Bapazani has said, it's like nine to one up to down. That's a good ratio. What is your take on CPI, inflation, bond yields, and equities? Good afternoon, Brian. So there's a lot to celebrate today, and the markets are reflecting that we had the softer than expected inflation report. I think the underlying elements of CPI look pretty encouraging. There was a fair amount of anxiety going into this CPI, so we do have a relief rally underway. We had strong earnings from the banks. We've had strong earnings from the banks. We've had a news of a deal between Israel and Hamas. So there's a lot out there happening that is encouraging

for equity investors. Meanwhile, the backdrop for the economy and for earnings look good. Yeah, earnings look good. And that's good because here's the thing. I don't like to talk about, oh, you know what? Jason, sit tight. President Biden is speaking right now about the ceasefire between Israel and Gaza. I can announce a ceasefire and a hostage deal has been reached. between Israel and Hamas. For more than 15 months of conflict, it began with Hezbollah's brutal massacre on October the 7th.

More than 15 months of terror for the hostages, their families, the Israeli people. More than 15 months of suffering by the innocent people of Gaza. Fighting in Gaza will stop and soon the hostage will return home to their families. The elements of this deal The elements of this deal were what I laid out in detail this past May, which was embraced by countries around the world and endorsed overwhelmingly by the UN Security Council.

The deal is structured in three phases. Phase one will last six weeks. It includes a full and complete ceasefire, withdrawal of Israeli forces from all the populated areas of Gaza, and the release of the release of the release of the war. of a number of hostages held by Hamas, including women and elderly and the wounded. And I'm proud to say Americans will be part of that hostage release in phase one as well. And the Vice President and I cannot wait to welcome them home. In exchange, Israel released hundreds of Palestinian prisoners. And during phase one, the Palestinians can also return to their neighborhoods in all the areas of Gaza. and the surge humanitarian assistance in the Gaza will begin, and the innocent people can have a greater access to these vital supplies. You know, during the next six weeks, Israel will negotiate the necessary arrangements to get phase two, which is a permanent end of the war.

Let me say it again, a permanent end of the war. There are a number of details to negotiate to move from phase one to phase two, but The plan says if negotiations take longer than six weeks, the ceasefire will continue as long as the negotiations continue. I've spoken to the Emir of Kuwait and the President of Egypt, and we have pledged to make sure the negotiations will keep moving forward for as long as it takes. Then, when phase two begins, there will be an exchange for release of the remaining living hostages, including male soldiers, and all remaining Israeli forces will be withdrawn from Gaza, and the temporary ceasefire will become permanent. And finally, phase three, any final remains of hostages who have been killed will be returned to their families.

And a major reconstruction plan for Gaza will begin. This is the ceasefire agreement I introduced last spring. Today, Hamas and Israel have agreed to that ceasefire agreement and the whole ending the war. You know, those of you who have followed the negotiations can attest the road to this deal has not been easy. I've worked in foreign policy for decades. This is one of the toughest negotiations I've ever experienced. I've reached this point because of the pressure that Israel built on the Moss backed by the United States. Hamas's longtime leader, Sinwar, was killed.

Hamas's strongest supporter, Iran, launched attacks in Israel. Those attacks failed after my administration organized the coalition of nations to stop them. And after I ordered the U.S. ships and planes to come to Israel's defense, we also shape Israel's strong and calibrated response, destroying Iran's air defenses, but avoiding an eschatory cycle of an all-out war. The United States also organized a coalition of 20 countries to stand up to attacks by the Houthis, including their missile attacks in Israel. Then, Hezbollah, another Hamas's strongest backers, was significantly weakened on the battlefield,

and its leadership was destroyed with our support. Israel negotiated a ceasefire with them, and after that, Lebanon finally elected a new president, who's not, who's not beholding Hezbollah, and he can begin a new chapter for the Lebanese people. All told, these developments in the region which the United States helped to shape change the equation. And so now the terror network that once protected and sustained Hamas is far weaker. Iran is weaker. Iran is weaker than has been in decades. Hezbollah is badly degraded. And after more than 15 months of war, Amos's senior leaders are dead.

Thousands of Amos fighters are dead, and the military formations have been destroyed. With nowhere to turn, Moss finally agreed to releasing hostages. You know, there was no other way for this war to end than with a hostage deal. And I'm deeply satisfied. This day has finally come, for the safety. of the people of Israel and the families waiting in agony, and for the sake of the innocent people in Gaza who suffered unimaginable devastation because of the war. The Palestinian people have gone through hell. Too many innocent people have died. Too many

communities have been destroyed. In this deal, the people of Gaza can finally recover and rebuild. They can look to a future without Hamas and power. You know, the people of Gaza, Bible says, blessed are the peacemakers. Many peacemakers help make this still happen, including an extraordinary team of American diplomats who have worked nonstop for months to get this done. Secretary Blinken led the effort. Secretary Jake Sullivan, is it not, National Security Advisor Jake Sullivan, Bill Byrne, John Finner, Brett McGurke, Amos Hoxton, and the Vice President work relentlessly as we work to the deliver this deal.

I'd also note this deal was developed and negotiated under my administration, but its terms will be implemented for the most part by the next administration. In these past few days, we've been speaking as one team. This has been time of real turmoil in the Middle East. But as I prepare to leave office, our friends are strong, our enemies are weak, and there's a genuine opportunity. opportunities for a new future. In Lebanon, there's an opportunity for a future, free from the grip of Hezbollah. In Syria, a future free from the tyranny of Assad. And for the Palestinian people, a credible pathway to a state of their own. And for the region, a future of normalization, integration of Israel and all its Arab neighbors, including Saudi Arabia.

At the G20 in Delhi in September 23, I rallied key countries behind a vision of an economic corridor from India across the Middle East to Europe. That vision can now become a reality. There are a risk as well, including ISIS and Iran, even in a badly weakened state, but, but we're handing off to the next team a real opportunity for a better future for the Middle East. I hope they will take it. Let me close to this. My friend, for years in the United States Senate, former Senator George Mitchell, who did so much to forge peace in Northern Ireland once said about diplomacy, said it is a 700 days of failure and one day success.

700 days of failure and one day's success. Well, we've had many difficult days since the mosque began its terrible war. We've encountered roadblocks and setbacks. We've not given up. And now, after more than 400 days of struggle, the day success has arrived, God bless all the hostages of the families. May God protect the troops of all those who work for peace. As you were saying, the implementation of this deal will be in the hands of the next administration,

and basically they will shape the future of Gaza. So how do you see this future? And also, how much credit do you give to the Trump team for this? this deal. Trump is a better taking credit first. Well, you know, this is the exact framework of the deal I proposed back in May, exact. And we got the world to endorse it. Secondly, it's America's support for Israel that helped them badly weak in a mace and as backers and create the conditions for this deal.

And thirdly, I knew this deal would have to be implemented by the next team. So I told my team to coordinate closely with the incoming team to make sure we're all speaking with the same voice, because that's what American presidents do. How many Americans will be released when the hostages are being released? All the exact detail of how many people are being held,

how many bodies will be returned unless we'll all be forthcoming. All of it, all of it, thank you. He will hold. I'm confident. Thank you. Brooks credit for this, Mr. President. You or Trump? Is that a joke?

Oh. Thank you. That was President Biden speaking on the Israel Hamas ceasefire agreement just now, updating the nation, although leaving some questions out there. Amon Javers here to wrap the key takeaways for us. Amen? Kelly, the president outlined a three-stage process that's now been agreed to by Israel and Hamas.

and process or part one of that process is a six-week period of time in which they're going to work out the release of some of the early stages of hostages, including, he said, the elderly, women, anybody who's wounded and also any American hostages be released in that first phase. Phase two is going to be the release of remaining living hostages, including male soldiers. And then in phase three, the president referred to a major reconstruction of Gaza, which has been absolutely devastated in the wake of Israel's invasion. there in response to the October 7th terrorist attack. So all of that taken into place, the president suggested, sets a roadmap now for peace

and development in the region, even though this is just a ceasefire deal. This was a President Biden who's clearly optimistic about the future in the region in the wake of this nearly year-long negotiation. The president saying that this is an agreement that he put forward last year. And he says that as he prepares to leave office, America's friends are strong. and its enemies are weak. The president there also referring vaguely to the incoming Trump team, suggesting that he worked closely with the Trump team on negotiating the final details here, guys.

So we'll wait and see the final details in terms of who's released, how many people are still alive to be released, and when all that will happen. And again, first, the news of the ceasefire is the news. That is the good news. That is what we have been waiting for. And that should be the key takeaway. and hopefully it is. But this also being the United States,

Amen, at a time of transition, you know where I'm going with this. Kelly and I were kind of looking at each other. It appears, at least on this side of the camera, that both administrations are trying to take part or some or all credit for what happened. You heard the final question there, yelled by a reporter, something,

something, I think it was, Kelly, who do we take more of this to, you or Trump? You said, you know, do you think that, Trump's team is taking credit for that. Do they deserve it or something? And he just said, is this a joke? Is this a joke? And Biden did say they were working as one with the Trump team. Is there any way to sort of galvan? Tell me if it's correct that both parties, both administrations do appear to be taking credit for this. Absolutely. Brian, you know the old saying victory has a thousand fathers and defeat as an orphan. I think that's what's playing out here. I mean, this is a very good thing for the United States, very good thing for Israel.

This is a ceasefire that's largely on Israel's terms because of the decimation of Hamas that happened in Israel's military response, which, as you heard President Biden say, was backed by American military power and aid. But clearly both the outgoing and the incoming administration are trying to take credit for this. Former and future President Trump put out a statement on social media a short time ago saying this would never have happened if I wasn't elected. You just heard President Biden there saying this is the pro, this is the pro, this is. This is the exact deal that I put on the table months and months ago. The Trump team came in late and we worked together with each other. You know, I mean, that's the nature of these things, Brian.

When there is a big win, a lot of people are going to say they're responsible for it, and that's what's happening here. Amon Jabbers in Washington, D.C., Amen, a huge story. Nonetheless, glad you're there and no doubt have not heard the last of it. Amen, thank you very much. All right, now we've got some breaking news as well on the economy. Steve Leasman, about 17 minutes later. later than we'd plan, but still news right now on the beige book.

You've got to stack it. It's a linear medium, as you know, television that is. Well, the base book is very interesting because it is replete with mentions of the incoming policies or potential policies of the incoming administration. Here's the headline that we look at every month. Economic activity increased slightly to moderately. Consumer spending moved up moderately, but most district reported strong holiday sales that exceeded expectations. That's what our CNBC data show as well.

High cost of materials in financing, however, weight on construction. Manufacturers were stockpiling inventories, according to contacts of the 12 Federal Reserve districts in anticipation of higher tariffs. High mortgage rates held back residential real estate. There were more contacts were optimistic, however, for 2025 than contacts were pessimistic. Contacts were concerned about changes in immigration, and tariffs could negatively affect the economy in 2025. employment ticked up on balance. Six districts reported slight increases. Six said there was no

change. There was difficulty, this is we can see this every single base book, difficulty in finding skilled workers. Layoff reports, however, remain rare. Wage growth was moderate. The Fed keys in on that particular description there. They like to follow it in terms of the anecdotal evidence. Some say pressures have eased in this regard. Prices increased modestly in some reports of flat to decreasing prices as well. Input costs rose. Again, some mention a flat to lower input costs. Some mentioned the potential for higher tariffs or contribute to price increases. Brian, taking a page out of your book, 23 mentions of tariffs, 11 in the last Baysbook,

nine mentions of immigration, just three in the last Bagebook. So these are becoming, guys, realities for businesses out there. They're passing along those concerns to the Federal Reserve districts, and that's how they're ending up in the Baysbook, and part of the thinking of the Federal Reserve. I guess tariffs are part of my beige book now. They are now because they go to energy and all the Canadian imports. And besides oil and lumber and sheep, I don't know what we import from Canada. Well, I mean, look, a little clarity will go a long way when it comes to the incoming administration

for all of these uncertainties out there. We'll see how it's played. We are expecting some executive orders on day one. I don't know if they involve tariffs. I don't know if tariffs are going to be those passed by Congress, those passed by fiat of the executive branch through emergency powers that they have. We don't know how they're going to be, how much they're going to be, or who they're going to be on.

And then we don't know if they're retaliatory tariffs. And we don't know also, Brian, and this is a conversation I've enjoyed having with Kelly over the past several months, how or if they show up in the inflation numbers. That is going to be the big question for 2025. Steve, thanks. Steve Leasman. Let's focus in on bond yields. Kind of another angle on that.

Rick Santelli out in Chicago talking to the traders. Hi, Rick. Hi, yeah, boy, yields dropped big time. So let's see. Here's the numbers today for CPI. Up four tenths on headline, up two tenths on core, year over year headline up 2.9, year over your cores you see on the chart of tenure chart up 3.2. Do those sound cold to you? No, cold is walking here from the other exchange. It's cold outside. Those numbers are not cold. The market did have a huge move, though. And we'll discuss with a trader why

and keep an eye on that dollar index. It's almost backed on chains, even though rates have taken a big drop. Let's go. Chem, I have one question for you, okay? None of this data look very cold to me yesterday or today, but yet we saw a big drop in rates

in your market screen. Why? Everybody looks at the price action and then comes up with an answer for why. Oh, boy, is that true? But the truth of the matter is, is in ball markets, VAL is very well supplied, and the downside options,

but SCU is very well supplied. And so once we filled that gap to the pre-election number, people were looking for that, and there was a lot of ready buying there underneath the hook. So you're saying the markets went way to the upside after the Trump election. Now they came down and kind of filled all those holes in. Correct.

And once that happened, once you got enough support there, with the VAL supplied, all you really needed is a slowdown in the momentum, because once you do that, there's structural flows that come back into the market, particularly in expiration week. This is a January OPEX. This is the biggest OPEX for single stocks. Most people focus on December. That's a big index, the biggest index expiration, but January is also

really big. So all of that decay of those puts and that VAL means dealers have to buy back all their stock and their hedges against it, particularly going into expiration. So that's a big reason for this rally back. We're right at the 20-day. It's really just back to the middle. So what you're really saying is viewers, If you're out there, looking at the data, listening to me at 8.30 Eastern is interesting, but it's more about positioning that moves markets. 100%. Positioning is supply or demand and weight. So if there are people who are short, and it's overwhelmingly short,

you should probably be prepared if the momentum doesn't continue for buying pressure back. Very similar in options markets. With that, those put short and short stock, the decay forces those dealers, those banks, those market makers all to come by those deltas. And that's what we're seeing today. All we needed was a neutral number, which is basically in my mind what we got. So that momentum did continue. And again, with that gap fill, there's plenty of demand underneath the market.

That's really pushed us back up here. Excellent, Chem. Excellent. And very quickly here, we want to point out, if you look at where the market was on Wednesday or Thursday of last week, it's the nervousness about these numbers that started Friday that we're reversing out. Back to you. Rick, thank you, Chim. Thank you very much.

And after the break, why we could be on the cusp of a generational change. change to international trade. Power lunch will be right back. Welcome back. We're just a few days from the start of President Trump's second term, and he's promised tariffs starting on day one. Yesterday in a truth social post, Trump said he will create an external revenue service to collect tariffs and other revenue from foreign nations. For more on this and The Impact, joining us from Washington, D.C.

Contributor, Michelle Crusoe Cabrera, the CEO of MCC Global Enterprises. Michelle, always great to see you. And stitch this all together for us. What do you think is in the works on the tariff front really? And what's it all going to mean for the dollar and the economy? Well, the headline about the Office of External Revenue is clearly meant to be a headline and speaks to President Trump's beliefs that we can raise a lot of money from tariffs. And that's quite possible.

But there's more to it than that. Kelly, I brought a prop. This is a report that's making the rounds here in Washington quite a lot written by the incoming head of the Council of Economic Advisors, Stephen Miram. It's a user's guide to restructuring the global trading system. And this is about connecting tariffs to our national security, to making sure that our allies and our rivals know what we expect of them and what they can face if they don't go along with some of the things that President Trump thinks is important, including reciprocity when it comes to trade.

Are you committing to your NATO commitments and are you meeting them? Those are all things that haven't really been discussions within international trade. This is a dramatic change if it happens. This is going to be the first major change of the way we think about international trade since the end of World War II. Michelle, you know where I'm going to go with this

because the incoming president promised a smaller government. They got this Department of Governmental Efficiency. They're going to whack this, whack that. Now we're talking about creating a new agency. Isn't that going in the wrong direction? You know, I think that's President Trump's style in that he wants to create a headline.

I think he likes the play on words instead of the internal revenue service, the external revenue service. And it's also about making the point that he wants other countries to pay for being able to ship to the United States. Now, the thing is, you'll hear a lot of economists say, oh, and we just heard Steve Leesman talking about it. Great point about just to what degree could tariffs be inflationary. The simple answer is, oh, the consumer pays for it. Not always. Oftentimes, currencies adjust. The country that's importing, their currency may weaken. And so the buyer here in the United States actually doesn't see any impact on the price. That's what we saw with a lot of the Chinese tariffs back when they were implemented the first time under President Trump. So there's a lot of tradeoffs here. And it's much more complicated than I think it's being made out to be. And I think that's an interesting question, Michelle, of how exactly does it work? Because a lot of people are saying, no, no, no, wait a minute. these are tariffs on U.S. companies, and we are the ones who pay. And then you've got the theoretical

framework of, like, no, no, in the bigger picture, in the longer term, it's really the tariffed nation that plays. So it's almost like both of these things are going to be true at the same time, which is going to create, I think, a lot of confusion. It depends on what happens to the currencies between the two countries. If the currencies adjust, if the other country's currency goes down, the U.S. consumer, whatever the buyer or the product is, won't see much of an effect or less of an effect. If the currencies don't change or, you know, you don't have a currency effect, then you could see higher prices.

It really depends on situation to situation. Think about it. If suddenly you're buying something from a foreign country and their currency's gotten much cheaper, you buy them a lot more of their stuff, right? And so you don't realize that the price has gone up because your dollar is much stronger. Yeah, and I thought it was interesting. They said, look, last time around, we almost had a one- for one offset, you know, and what happened with the Chinese currency and then the tariffs.

So this time around, we'll see exactly how it works out. Watch for the Mar-a-Lago Accords. That's something that's being talked about, bringing everybody together to talk about, or at least our allies, to talk about, okay, what's going to happen with trade and with currency? Think like the Bretton Woods Accords, but this time, you know, he owns a resort, and they happen to be negotiated at resorts, so that's what they're talking about. And he can't resist a label, to your point about external revenue service. Thanks. Appreciate it. As always, Michelle Crusoe Cabrera.

All right. Now the latest on the Los Angeles fires. Contessa, we're joining us now from Altadena, where the Eton fire is still burning. It's less than 50% contained. And here's a thing. I'm a native Los Angeles and, you know, the Palisades, one of the richest areas of America, Contessa. Altadena is not. I mean, this fire is not just impacting the bold-faced names. This is working-class people underinsured and minors. cases, uninsured in many cases, also getting burned out. Yeah, and so the good news today, Brian, is that there's no flames actively burning. That containment percentage has to do with when they go around the line and they're mopping

out the hot spots. That's the good news. But we've been watching the aircraft go overhead and still making sure that with infrared, they're not these problem areas. Meanwhile, here in Altadena, you've got temporary cell towers up. You see that yellow tape behind me? Look there. You can see that the permanent repeater melted, and it's just down all the way.

And look, if residents can return to Altadena, the fire has destroyed a lot of the businesses where they would have frequented. I mean, in this row alone, you've got what was a grocery store. There you go. That's the pizza place. There's the liquor store. We took a drive on the side streets to illustrate how completely the fire eradicated these neighborhoods. And as you said, Brian, these are modest middle-class homes where the median household income is about $129,000, according to the U.S. census. Residents told local news outlets already they're getting offers for their land, offers that seem too low.

Governor Newsom has issued an executive order for bidding unsolicited offers that undervalue these properties for three months. As I have reported, a lot of these homes will be underinsured or not insured at all. homeowners might feel desperate and overwhelmed. And if they're approached with cash in hand, that might seem very tempting. The experts say they should hold off. Meanwhile, Altadena may have trouble enforcing these rules because there is, well, it's an unincorporated part of Los Angeles County. So there's no mayor, there's no city council that normally you would see in these situations advocating for the community. It's something that will keep an eye on. I just got an alert here. The federal task force and state task

local task force joining together to to crack down on fire related crimes we'll keep our eye on that one too because as i heard earlier on cnbc contest and it's a good point it's a difficult point but a good point even if you're covered by insurance to the point where there's enough coverage to rebuild your home that's the best case scenario it could be years before many of these people are able to rebuild because of lack of builders lack of resources lack of materials and also permitting delays. These people are facing potentially years of disruption in their life. Yeah. So the governor has tried to streamline the permitting process and cut some of the bureaucratic red tape. The mayor of Los Angeles has done the same. But again, in Altadena, where there's

no city, it's a county issue, will that be the case? Will that happen here? You're still seeing a lot of law enforcement around here trying to make sure that as residents come back there safe, there's just layer upon layer of complex challenges ahead. Contessa Brewer, we are glad you are there. Very tough situation. Thank you. Meanwhile, Los Angeles residents are increasingly turning to third-party apps for information and to save lives. Julia Borson looking at that side of the story for us. Do tell Julia. Well, Kelly, I'm among the Angelenos that are turning to new apps for real-time updates on evacuations, wind, and air quality. Watch duty.

shot into the top 10 in the app stores nationwide rankings with 2.5 million downloads since the fires started last week and 12 million unique users this week. That's compared to last years, 7 million users. This nonprofit is operated by 15 employees and 200 volunteers who listen to radio broadcasts to delineate evacuation zones. I spoke to its CEO about how watch duty shares information faster than government resources. The magic is in the humanity of this and the people that do this work. The government should be doing this. And unfortunately, they're not.

They are doing other things. They're just not good at signals intelligence and software like we are. Other apps have seen download spikes Genesis Protect, operated by a San Diego public safety company, public safety app citizen. Reddit threads are sharing detailed local information. and weather apps, including climb, are sharing air quality. Now, reliance on these apps is growing here, especially after the city accidentally sent a false evacuation alert

to all 10 million L.A. residents late last week. Brian? A false alert to evacuate? It was a false evacuation warning to all 10 million residents. Wow. Julia Borsden in Los Angeles, glad you're safe. Julia, thank you very much. Very quickly, Kelly.

A lot of these homes, you know they have a risk. We'll get to Salt in just a second. They have an environmental risk score with realtors. Some of the homes of the Palisades had a risk score I was looking at five out of ten. I mean, I've heard half even higher. So CoreLogic had a VP of theirs joining us on the show. He was directly affected. By CoreLogic's own score, it was an 80 out of 100 for fire risk and had grown over the years, but he still lived there.

He said, look, I walk my kids to school down the block. You know, so they were aware of these risks and the risk, like you said, or probably even higher than what's being reflected in that data. All right. After the break, call it salt in the wound. Trump promising relief to taxpayers, but some say he may already be backtracking. We're going to hear from New Jersey Congressman Frank Palone about the salt deduction cap coming up. Oh, wow, a lot going on today. We've got a number of big headlines around energy happening right now as well.

First up, President Biden at the top of this show speaking on the ceasefire between Hamas and Israel. it's good news all around. Now, for energy, you would normally see the price of oil go down on headlines like this, like the idea of reduced risk in the Middle East, but oil is actually higher right now, up nearly 4 percent, back above 80 a barrel. Likely a couple of reasons why, Kelly. First up, incoming President Trump is seen going after Iran in a big way when he takes office. Iran's oil exports, they have been gaining steam.

They've been growing the last couple of years so this could make some oil go off the market. also got some new sanctions put on by the Biden administration on Russian oil a few weeks ago. Those are seen actually impacting global oil supplies. It's all, by the way, impacting oil and gas stocks. As you mentioned, I heard in the show, Tex the Exchange, 1 p.m. Eastern time. The XOP oil and gas ETF not only up six days in a row, but... 15 of the last 16 for the first time ever. Boom. First time ever. Also happening.

We got the continued closure of the critical colonial pipeline. This pipeline expected to be closed through Friday. It's all done to check for a possible leak in Georgia. The Colonial Pipeline, you only hear about it when there's bad news, is the critical artery for gasoline from Houston all the way to here in the New York, New Jersey Harbor area. There is plenty. Don't go out right now.

Phil up. We talked about it yesterday, Kelly. Get about it. Plenty of gasoline right now. But if we do see any longer closure of the Colonial, longer than a couple of days, supplies could start to be affected around here. But we're still not there yet and calm down everybody. And the oil thing, as you mentioned, isn't.

I mean, energy has been really strong this year. The oil price, you know, so I appreciate the explainer because this has a lot of people's attention trying to figure it out. Another story, we're watching the Food and Drug Administration saying they'll ban the use of red number three. It's a synthetic dye that gives food and drinks their bright red color. It has been linked to cancer and animals, but it's still using thousands of foods, although I heard that maybe is already banned in cosmetics. Anyway. Yeah, in 1990, they banned it in cosmetics because it might be dangerous. So we've been eating it for 40 years. In candy, cereals, cherries, strawberry flavored milkshakes, according to the food safety groups. President Elect Trump's HHS pick, RFK Jr. has promised to push for the removal of dyes

and to increase regulation of ultra-processed foods. The U.S. UK and Canada lead in the consumption of ultra-processed foods. So big question for investors, what does it mean for the companies that make these products? Barkley says it depends on the exact type of regulation that might be coming. How much consumption falls? Will consumers buy cleaner label products? Those are, by the way, those are one year moves. We're showing these, if you're on the radio, we're showing huge declines in General Mills, Mondalies, and Pepsi. Those are over one year. I want to be, not right now. It's very, I want to make that very clear. So look at Mondalies, we were up 23 percent or whatever on the S&P last year. It was down 22. That's a 45 percent.

But this is not on red dye number three. I want to be clear on that. It could be in anticipation, though, of some of these measures. Of course, other headwinds, high rates. And so, forth, clearer and more strict label guidelines could be an easy policy achievement, and that's why we're seeing the pressure across the state. I guess the question I have now is, first off, why was it 40 years we've been eating this stuff? And secondly, why now in the last couple days of administration are we suddenly banning it? So what I've been told is that consumers have always wanted to keep these. So when fruit loops or anything tries to change what they're doing to exclude some of these

products, consumers rebel and they want to bring the old one back. We'll see if this time is different. And of course, it's an easy thing to do. ahead of what could be bigger changes coming. Okay, well, on that note, it's the old saying when one door closes, another one opens. Maybe we'll see that with red dye. But we're going to talk about social media. So if TikTok's ban in the U.S. takes effect on Sunday, could that help snap?

Talk about that and more in three-stock lunch. Welcome back. It's time for three-stock lunch. We'll hit three different stories, why they matter to you. And what our trader do with these names? He's Will McGoff, director of investments with prime capital financial. well, it's good to have you back. Let's start with Goldman Sachs, which is higher after beating fourth quarter estimates on stronger than expected trading up 6% today. They doubled their

profit year on year. You buy it here? Hey, Kelly, thanks for having me all. And as you just mentioned, they crushed earnings beat by $3.60 up to $11.95. Revenues were up 22%, beating by over almost $1.5 billion. You just nailed one of my talking points. They doubled last year from $300 to $600, technical pattern up 5% today. I like diversified financials and Goldman Sachs, no pun intended as the gold standard with investment banking. They're one of the most tech forward investment banks in the world with higher rates. They get higher net margin interest. There can be smarter with their balance sheet. But I do have concerns here, kind of what I would say peak economy, about what's going to happen going forward. And given the run up and given the success, I would

just be a holder here, so I wouldn't necessarily buy or sell. I'd be happy owning it and watching for it to go higher here, most likely, but not initiating new money. All right. Well, on Sunday, unless the Supreme Court steps in, TikTok could be banned. We don't know exactly what it means, but either go away or be completely controlled, whatever. Is this a reason to buy SNAP? So TikTok is all the rage. I'm a teen girl dad, guilty of watching reels and social media myself, consumers probably not going to be happy with TikTok potentially going away or dying a slow death.

One problem here with their stock is that meta is more profitable and less expensive. So being less profitable and more expensive than meta is a problem for SNAP. I do have a concern with it going from $65 down to $12. So I think if you've been an investor and SNAP this whole time, it's a tough call. I think you wait and see what happens with TikTok here, but otherwise it's sell, clearly itself, because meta is the better company here. The one thing I would just kind of throw out there is a curveball, and it could be an X factor is watch Elon here.

You never know what he's up to. Could we see him come in and swoop up Snap or TikTok at the last minute and save the social media world? Who knows? But that's just kind of like the one will swan I'm looking for in this space. All right, Will, in a quick final couple of seconds we have. What about Trade Desk? They just announced they're going to acquire ad data firm Sincera.

There's another deal for you, making the second ever acquisition since they launched in 2009. You like it? Yeah, Trade Desk is an interesting stock. Nobody's really heard of it. They put together advertising campaigns for folks that don't want to go to local TV and radio and or Google. They have solid analytics, but the acquisition of Sincera massively increases their analytical capability, which helps them fend off Google. At a $60 billion market cap, 80% gross margins, 20% revenue growth.

We liked it before Sincera. Sincera is kind of like a cherry on top. Speaking of red dyes from earlier. So I would be a buyer here of the trade desk. And again, I'll keep things, watch of things. Could they be a potential suitor for Google one day? Who knows? So it's probably a long way away, but we'll have to watch.

If that kind of M&A picks up, Will Banks, appreciate it. Appreciate your time. Will McGough, three stock lunch. A lot going on. A lot of deals and we're done. Thanks for watching, Power Lush. Closing bell starts right now.