Power Lunch - Dow rallies as investors feel Trump’s tone on tariffs is softer than feared 1/21/25

Episode Date: January 21, 2025

The Dow is higher today, as Wall Street views President Trump’s first-day comments and actions around trade as softer than initially believed. We’ll tell you all you need to know. 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, everybody. I am Brian Sullivan. She is Kelly Evans, and we are drilling down on the president's executive orders. What do they mean for energy and your money? Well, maybe here's a hint. Trump thinks you may not want to buy an ocean-going windmill or an electric car. Plus, the big money mystery around the Trump coin, who made, who lost millions, and what does it mean for crypto in general? And we are soon to find out about another round. of squid games and whether or not, Kelly, it is going to help that company, Netflix, right there. Yes, we'll find out after the bell, maybe. But first, let's get a check on markets, which are higher across the board. We've really, this morning we're up about half a percent. It's now a percent for the Dow, about three quarters of a percent for the NASDAQ, which was flirting with the flatline earlier. The reason for that is that Apple's down more than four percent today. Hit with a couple of downgrades. The stock is now down 11 percent this year. And the big move in Apple is shaking up the market.

market cap standings, putting NVIDIA back in front. You can see the numbers here. Apple about 3.3. Invitya nearly three and a half, so in fact that gap is even widening some. Industrials are meanwhile boosting the Dow, which makes sense. 3M, the biggest percentage gainer following its results. It's up 5% today. Caterpillar adding the most points on hopes for a renewed infrastructure push from President Trump, Boeing, Brian, rebounding as well. All right, we have got a lot to do. But we are going to lead this hour with President Trump, moving quickly with his pen, signing a number of executive orders into law on his first day. And some of them have to do with energy, cars, and your money.

All right, there's a lot to do. But the big thing may be with energy, Trump issuing what he is calling a national energy emergency. He put out an executive order to what he calls unleash American energy. It's very broad. But on a macro level, all these executive orders are really kind of trying to do one thing. That is to promote more oil and gas and mineral development all related to energy. They are designed to stop or severely slow what Trump uses things that we don't need, specifically more offshore wind power or electric car subsidies.

We can debate that all we want, and we will. But let's blast through some of these headlines. First up, the two main executive orders try to force government agencies to help what they think is promote the development of things related to oil, gas, and critical mental development. Also, push more pipelines. That is not helping, by the way, the price of oil and natural gas. They're both down right now.

Pipelines, they're mostly higher. The Illyrian MLP up 1.5%. And earlier today at the World Economic Forum in Davos, Switzerland, the CEO of Occidental Petroleum, Vicky Hollab, commenting on what some of this could mean for oil. I think we can look at growing our production again meaningfully. So I think production in the U.S. is going to increase by maybe two or three hundred thousand barrels a day, 2025 to 2026. When you have more of something, prices tend to go down, right? Anyway, Trump's action does want to speed up permitting and also to do things like build more power lines.

And that is helping investors in stocks like Quanta Services. Power. PWR, the ticker, that stock is up four and a half percent. Trump also ending what he calls an electric vehicle mandate. This orders, really terminates, state emissions waivers that limit sales of gas-powered cars and considers the millions of unfair subsidies related to electric cars to be moot. Again, we can debate this all we want. There is no national mandate, but whatever you think of it, it is hurting stocks of EV-makers. Tesla down 1%. But look at Rivian and Lucid.

Down 6 and 5%. Ocean-going windmills also squarely in Trump's sights. Trump trying to maybe ban a big swath of the ocean from development for offshore wind farms, saying, and party wants to help fish and even whales. Shares the biggest wind turbine maker that is Denmark's Orsted. There's your ADR. It's down almost 10% right now. Slammed.

This stock, by the way, has lost a third of its value in a year. And then, oh, Alaska. Another executive order is targeting that state, revoking most the regulations that prevent the development of Alaska and its natural resources. That executive order is called the Unleashing Alaska's Extraordinary Energy Potential Act. And finally, that wasn't enough, Trump ending the pause on new LNG projects, which could be very good this week for the IPO of Venture Global. That is one of the biggest energy IPOs ever. So Kelly, these are huge. They're barely broadly worded.

There's lots of lobbyists and lawyers and states all going over these words and try to figure out exactly what they mean. I don't know. Those are the headlines, but at least we've kind of got the market today to give us a little sense of it all. One of the questions to ask, I think, is whether oil will not only fall today on these announcements, it's down a couple percent, but whether it will stay down. So it was interesting to hear Vicki Halib saying, yeah, I think we're going to be. we can boost production. Do their investors want them to, especially with an oil price that's fallen? Well, it's a great question because there are so many people out there that view President Trump as good for the oil and gas industry. And I want to make it very clear, folks,

be careful. We don't know if that means good for, listen, more oil and gas means lower prices, which means it's good for the consumer at the gas pump. I'm not sure it's so good for the oil and gas industry vis-a-vis the stocks. A hundred percent. We talked to with Dan Yergan last hour about the president's announcements on energy. And he talked about the impact on our power needs as well. Clearly, he's not a fan of renewables and conventionals, back in, you know, leaving the Paris Agreement, ending various types of incentives and subsidies for renewables and so forth.

You know, so he's basically saying we're going to largely bet on U.S. oil and gas. The other thing, though, is I think we're going to see a bigger emphasis on nuclear power. And, you know, you talk about the energy emergency. That's about two things. One, it's about permitting. And two, it's getting the infrastructure in place to support the data center and the AI boom that's coming. That data centers could be 10% of U.S. electricity by 2030. And we don't have the infrastructure in place to deliver that.

And in fact, that's set up a nice one-to punch today because after, or I guess yesterday, we get the announcements on the energy emergency. And today there's potentially this meeting about AI infrastructure. The two are closely related, and the lchpin of all of that is LNG, really. You know, there's oil, which is important for Americans who drive gasoline-powered cars. For the rest of the world, it's in for heating our homes and so much more brightness, you know better than anyone. It's going to be about that bridge fuel. And I was posting that this weekend.

Listen, I know it's, what would the Brits say, bloody cold all over the country? In fact, you've got snow falling in New Orleans, which is in itself bonkers. But that said, I was posting, make sure the energy grid held up, and it has, by the way. 90% of our energy right here, and anywhere from North Carolina to Chicago to Pennsylvania, the energy grid operator, PJM over the weekend, about 90% of all the heat that we were just loving was nuclear, natural gas, or yes, even coal. There you go. So we can pivot off those, but 90%.

I mean, I'm not a math-wiz, but that's nearly all the percent. Yes, it is. Yes, it is. And coal is part of that. By the way, look at that. Where is that guys? Super dome. That is the Superdome in New Orleans. It's not foggy.

If you're on the radio, just imagine a giant space dome with a lot of white stuff around. It looks very ghostly. That is not fog. That is snow in New Orleans right now. Wild. And they do really well with snow. Yeah. And driving.

Uh-huh. Remember Atlanta when they had those, my cousin got trapped on the roads down there for 10 hours. Because they had a quarter inch of snow. Absolutely. So something to think about it. But your cousin's okay now. She is now. Good to hear. All right. Also happening today, some confusion and maybe some anger around a new presidential digital

coin that was launched over the weekend. Two days before the inauguration, Trump's team launched a crypto token called the Trump coin. Because, of course, it's basically a digital coin that you can buy and sell. It's soared in value when it came out. And then the incoming president launched another coin. and this one named after his wife, Melania. Then both Trump and Melania coins sold off,

and people who bought near the top got hammered. The entire spectacle, generating a lot of hot takes in the crypto space, with some suggesting maybe this is a good thing, right? Because Trump is finally fully in on the crypto game. Others saying, no, this is a surprise and an amateur move. I can give a bad name to all things crypto, and then it makes the sector look like a big, Grift. Then there's also concerns about who may be making money off this. Trump tokens, Kelly,

about 80% went to insiders, 10% going to the public, the other 10% kind of floating around for liquidity purposes. And according to crypto data platform, Meteora, this token has brought in millions of dollars in just fees since launching. All right, let's talk more about all of this. Joining us now is Anthony Pompeiano Professional Capital. management, founder, CEO, crypto guy, great guy, and former last call guest, Anthony. Well, good to see you back on. What do you make of this Trump and Melania coin? Yeah, guys, thanks so much for having me. Look, we can spend hours talking about all the nuances and complexity here. I think on one hand, we shouldn't be surprised. You know, there's been

tons of celebrities and other large brands that have launched these meme coins. And so the president of the United States and Trump are two of the biggest brands in the world. On the other hand, there's a lot of questions about what are they going to do? Who's going to actually make this money? Are there conflicts of interest? And so I think that both of those points are very valid. But, you know, one of the things that I've heard online that I think actually is inaccurate is there's tons of people who have been saying, oh, look at the crazy crypto people. Look at how insane they are and be putting their money into this thing. And I just want to remind people that also in the traditional market, the regular stock investors are valuing, you know, DJT at about $7 billion

market cap on $4 million of revenue. And so maybe it's actually just Trump as an outlier, and his companies or assets or products or services that he's associated with tend to, you know, overperform from a financial perspective more so than anyone form factor, whether it's a stock, a meme coin, or anything else. Anthony, explain it for me real slow, like I'm five. What are these coins? What are they? Yeah, the best way that I could think about this is, if you think of Berkshire Hathaway,

Berkshire is a lot of a good business and a little bit of a meme, right? If you think of Tesla, it's like 50% good business. I love you, but I'm going to stop you there. I don't want an analogy to Berkshire Hathaway. You can analogize it to Bitcoin if you want. I sort of understand that. What are these coins? Yeah, well, the reason why I start with Berkshire is because Tesla is the next kind of

in the step, right? Tesla's about 50% good company, 50% meme. DJT is like 80 or 90% meme, you know, 10% good company. I see. And the final form of this kind of transition is ultimately people just launched the meme and there is no company, right? And I think that this is actually a progression over the last 50 years or so.

But is it a protocol? Anthony, I'm trying to understand, like, tell me it from a technological point of view, what are these? Remember the ICO boom? And Trump himself was against that. This was back in like, I don't know, 2016, 2017, something like that.

So those were initial coin offerings, for instance. Now we've had different kinds, you know, there's stable coins, there's different kinds of protocols, there's different kinds of blockchain. So, again, what is this? What are these? Think of this as a branded coin that are all the same. So if you think about trading cards, obviously there's baseball cards, then there were these kind of branded trading cards that were digital. Trump actually has launched some of those and many other brands or companies and celebrities have done them as well. But now what we're seeing is people saying, well, you don't even need uniqueness between the different coins. It is just a asset that is put out there. Now, I should say that, you know, I'm not necessarily condoning this. I didn't necessarily buy it. I don't hold either one of these tokens. But I do think that it's important to pay attention to this.

because ultimately what we're seeing is we're seeing the collision of the digital world with brands and a new financialization. And so this financialization, obviously Bitcoin is kind of a digital version of gold. We have seen now open source projects that have started to launch coins and figure out a new way for them to monetize what otherwise was a non-monetizing activity. And now what you're going to see is you're going to see brands and celebrities do the same thing. The real question is, you know, what does the market ultimately think about the long-term value here? right? And I think that that's the big question is if it is just a token that has no business, has no revenue, I think that investors should be cautious and figure out, you know, hey, what is the value over the long run?

And that's kind of the point about what I think, and I don't want to speak for you, Kelly, whatsoever, which is what is it? What backs it, right? And I guess it's just the same idea as Bitcoin, the idea there's 21 million. Of course, a lot have been lost. So it's not 21 million to get my point. The whole thing is sort of built on scarcity and it's got some real value because of that scarcity alone, like a Picasso painting or something, right? There just won't be any more of those things. But, you know, you follow all the hot takes. You look at like Dave Portnoyneau over the weekend, right?

And Dave's like, what's this Trump coin? How is it different than a Ponzi scheme? And then he buys Melania, loses some money, right? And he's widely followed and listed. And he's making, by the way, I think, whatever you think of Dave Portnoy, really good points, like, what is this thing? Yeah.

I mean, look, I do think that there's an element of who's also buying it, right? obviously institutions and large financial organizations are now buying Bitcoin. I think the Bitcoin is the king of the crypto world will remain the king of the crypto world, and that's going to be the asset that is accepted in the institutional world. The meme coins are really kind of a retail phenomenon online. Dogecoin is like a 60 or 70 billion dollar asset, I think. It's just a joke. There is no business.

There is no cash flow. And so is the market being irrational or somehow has the Internet started to ascribe value to a joke? I don't know. Again, I'm not buying this stuff. But I do think that Trump has this massive brand. If he's able to sell watches, if he's able to sell sneakers, if he's able to sell NFTs, we shouldn't be surprised that he's also able to sell a meme coin, right? So I do think that the long-term viability of this is what people should be paying attention to.

And frankly, we don't know yet, right? It's only been around for three days. It's sitting at a $30 billion market cap, which is much higher than anyone thought that it would go originally. I'm just reading through here, a Bitcoin.com explainer of potential legal concerns around a meme coin. And it says, of course, everyone's quoting everybody else on this. A key question is whether it qualifies as a security under U.S. law. This is what I bring up again, because we've been having this debate for a decade, okay? You know, does it, if it's a cryptocurrency issued through an ICO, is it, okay, meets the Howie test.

Maybe. But it says it's not a security and has not promised future profits. And the SEC has yet to begin issuing specific guidance on mean coin. So I guess he would know better than anyone what his SEC might end up issuing on that front. Well, look, I do, I don't want to bore the audience with all the legalese, but I do think that, you know, Bitcoin very clearly has been deemed not a security. I think there's a question about a lot of these protocols that have launched coins, but there's a business. There's a product. They're trying to generate revenue.

They're trying to, you know, drive the price of the token. And how will that be treated? These mean coins are somewhat of a industry response to, you know, really say, hey, what are the rules in it? What is the kind of a loophole? And a lot of times what they'll do is they'll launch these coins and they say, but we don't have a product. We don't have a service. We actually are going to what they do, a fair distribution. Anyone can come and buy it, and the team doesn't hold any.

And so far, what lawyers have said is that that kind of avoids a lot of the security's questions. Now, in this case in particular, 80% of the token is still being held by the team. There's a three-year vesting period. And so the question is, well, if the team is holding on to some of it, how does that get treated? And I don't imagine. Who's the team? And there were people out there like Adam Kobaci and others posting that some of the websites

that built these coins were created or at least registered like 24 hours before the coins were launched. You've got to say, Anthony, and I think I got your point of at Berkshire, by the way, you're kind of saying there was a Warren Buffett put on the stock because it's Warren Buffett. Correct me if I'm wrong on that. It's a compliment. He's the go. That's what I'm saying. It's kind of a mean. Like he adds value to Berkshire Hathaway stock because of who he is.

But that said, you've got to admit some of this is not a great look for crypto. Oh, look. I definitely think that there is a concern among many people in the crypto industry that, you know, Bitcoin is kind of the king. Bitcoin is the main story. There's talk of a strategic Bitcoin reserve. A lot of energy, time, money, et cetera, has gone into, you know, really pushing that forward. And so some of these other projects are definitely either distracting or taking away from that. On the same hand, you know, look, Trump's net worth, even though it may be illiquid, like 80% of it from the last estimate I saw, is now in crypto. And so there's also an argument that if Trump has 80% of his net worth in crypto, he's going to pay a lot more attention to the industry. And naturally, Bitcoin will benefit alongside some of these other things.

I don't want to sit here and speculate as to what percentages, et cetera. But I do think that it is very clear. We now have somebody as president of the United States that is paying attention to Bitcoin and cryptocurrency. And that should probably serve as a tailwind for the industry overall during his administration. Anthony, thank you, as always, for joining us. Appreciate it. Yeah, thanks, guys. We should launch some meme coins then.

If they're going to be legal. Why not? Yeah, let's launch it. I think the name Power Lunchables. Why don't you launch Power Lunchables Beamcoin? Because they're small, they're easily snackable. They come prearranged and you don't have to do anything with them. What do you think, America?

Power luncheables? Let us know. Why not? I think he just called Berkshire Hathaway a meme stock. Well, 10%, I think he said. We'll have more on what President Trump's actions and not the meme coin. The executive orders, what they mean for your money, including a new AI venture that could change.

the tech industry forever. Full details next. Welcome back to Power Lunch. A lot of tech stories to run through today. Steve Kovac is here to kind of talk us through them. Got to start with Apple, whose shares are affecting the whole market today. If you're wondering why the NASDAQ is slightly lagging, although it's come back. Apple's down another 4% nearly and almost 12% so far this year. It's got two downgrades today, one calling the stock and underperform. How dare they see? And it seems to me every day I wake up, there's a new headline or someone's

talking about their iPhone sales in China. And what I can't figure out is, is everyone talking about the same reports just one day after another? Yes. Or are their actual new deal? In short, the former. Okay. So let me tell you what's going on here with these two downgrades. And by the way, another firm lowering their price target. Remember in December last month, all this exuberance around the stock, it was going up every single day for basically no reason on no news. Well, the story hasn't really changed, though, beyond that exuberance. There's been lots of crummy signals on iPhone sales since the beginning of the iPhone 16 cycle started way back in September. And piling onto all that negative data, we had Jeffries and Loop downgrading Apple and JPM Morgan lowering their price target on the

stock today. Jeffrey's saying Apple's going to miss its revenue growth guidance for the December quarter and lowered its own expectations for the iPhone 17 cycle. This is all based on lackluster response to Apple's artificial intelligence system, Apple intelligence. Over at Loop, they're saying the iPhone 16 sales are, quote, not amplified by Apple intelligence. It's launched last year. And saying for the full year of 2024, Apple sold 5 million fewer iPhones than it did in 2023. JPM lowered its price target by five bucks.

And by the way, this keeps piling on with China troubles. To your point there, Kelly, counterpoint research on China today. Huawei is gaining share again against Apple. Huawei's up to 18% market share last quarter. and its unit sales are up 15.5% year over year. Meanwhile, Apple is third in market share behind Huawei and Xiaomi with 17.1% market share, and its unit sales in the country were down 18% for the December quarter. All the brands you're looking at right now, they grew in China except for Apple. Next up for Apple, though, there's earnings January 30th. That's next Thursday.

And one thing that may help the iPhone business, a new iPhone SE is expected this spring. Those are The cheaper model of iPhones, the entry-level iPhone that sells for a couple hundred bucks cheaper than the iPhone 16. Well, but meantime, off to a rough start this year for Apple, down about 12 or 13 percent so far. It reminds me of last year how the year started really crummy for Apple until they announced Apple intelligence. It was lagging behind. We're seeing Apple right now.

It just got surpassed by Nvidia as the most valuable company in the world. So we're just seeing this kind of snapback from all that exuberance December. And I think correct me if I'm wrong. The big question is, is this going to be like? last year where you have this weakness and you have this snapback? Or have these changes that you just talked about in China? Are they so real and so pervasive that Apple has a real problem? Nobody knows the answer to that. Right. Well, let's talk about one problem that we do know about, and that's Apple Intelligence cannot launch in that country without government approval from

the Chinese Communist Party. So that is a huge barrier for Apple. It's not going to be able to partner with open AI like it can do here in the United States and elsewhere around the world. it's going to need a Chinese partner for that AI chat bot that it's using right now with chatGBT on their iPhone guys. So it's a huge challenge in China. We're going to find out in a little week and a half's time what the quarter really looked like, but dismal. On the opposite side of that, another story. You've got Oracle, Oracle going literally the opposite of Apple, which it's up at Oracle, expected to be involved in a new joint venture on AI.

The president expected to announce something about, we don't know what. but something later today. Now, this sounds like an AI infrastructure announcement, to me, at least, Amen, Jabbers did confirm this report that's probably going to happen at 4 p.m. And this is just going to be hundreds of billions of dollars in announced investments from Oracle, OpenAI, Masasan from SoftBank is supposed to be there. We should also note when we talk about AI CAPEX where that CAPEX is actually going. First of all, we already know Masasan announced that $100 billion plan to invest in AI here in the United States. Oracle has announced its own CAPEX plans. Microsoft has announced its own CAPEX plans. But that money doesn't go to

necessarily create jobs or blue-collar jobs. Yes, they're construction jobs to make these data centers. But beyond that, it's all going to Nvidia. It goes to Nvidia. It goes to Dell. It goes to Kula Packard Enterprise. It goes to super microcomputer. We learned this from Satya Nadella, the CEO of Microsoft last year, who said about half our AI CAPX basically goes to the compute side. That means invidia and all the guts that makes this AI. And Masa Yoshi's son, who's the richest man in Japan, is trying to get a lot of that money, I would imagine, filtered to the companies in his portfolio. Exactly. And what's also interesting here is Open AI and Oracle, not Open AI and its biggest

investor and partner Microsoft. So that raises a lot of questions. What's going on between these two companies as they increasingly become competitors, but also rely on each other so much. Open AI relies on Microsoft, of course, for Azure, and Microsoft relies on Open AI to make all the AI stuff it's doing. No, it's a great soap opera in the make. It really is because Larry Ellison, big Trump backer, too. Of course, but even just trying to figure out what's going to end up happening with Microsoft and Open AI.

Yeah, good news for InVitya. Any news was Zuckerberg over the weekend? No, I haven't heard much from that guy. I mean, glancing around. Yeah. Steve. On deck. You got a new chain. On deck, 300 Performings Talks that may be worth your money.

We're going to tell you why. ahead. All right, welcome back. It's time for your market navigator. And today, it is all about finding some value among the trash heap. And who knows more about finding value? No matter where it made, you wonder where I was going to say trash heaps. I was not going to say, I was going to say Dom Chu is not only handsome, but intelligent. Oh, that's very kind of you. So, all right, so Brian, so can a stock be so good that it's bad? One dividend-focused investors looking for entry points into three beaten up behemus. You're kind of seeing them behind us right now. now that could be poised for a rebound that actually pay you to wait while you kind of get

their turnaround efforts back and sort it out. So joining us now as Matt Powers, the managing partner at Powers Advisory Group, a financial advisor who's looking at these three names and they're on your shopping list. For what reason are you looking at these beaten up names and what has you convinced a turnaround is in place? Tom, hey, how are you? To tee this up, here's what we're looking at. So with stretch valuations at the top of an already concentrated market and following back-to-back 20% plus years on the S&P 500, we just see a grind this year and a likelihood of us trading sideways through the year. So there's less obvious opportunities out there, but these are three household names and their companies that have clearly struggled, but have

attractive valuations with clear turnaround plans in place. All right. So take us through the names and why you think they're attractive. Yeah, so Nike's first. So we'll start there. Shares are off, I mean, over 50% in the past three years, 29% last year. And they installed a new CEO early last year. And the company had shifted away from the retail partnerships, which was clearly a mistake. And they allowed competitors to enter that space. And they also had pulled back on their new product pipeline. So here's a lot going on here with the turnaround.

There's a focus on major sport categories to reignite their identity. Where Nike used to dominate was marketing. And they're placing a renewed focus on this moving forward. There's a push on some on product innovation, specifically in running. and rebuilding the retail partnerships, think Dix, Foot Locker, etc., but ultimately we just see Nike bringing back the market dominance and core identity they once had. If we move on to Starbucks, I mean, shares are off 5% the last month, but just like Nike, there are definitely some parallels here.

They've got a new CEO, Brian Nickel. He had his first earnings call in late October with a clear version, vision to turn around the business. But he accepted the changes needed to be made instead of defending poor performance of the company. And the main focus is working to shorten time to serve coffee, which means adjusting processes during traffic surges and reducing all the menu items I have and product launches so they simplify the menu and become more efficient. So lastly is Target. Simply, I mean, Target's oversold. They are, shares are off 2% last year while Walmart is up 74% and

Target's gotten attractive valuation, relatively speaking. So they've had a heavy miss on their estimate earnings, their last earnings announcement. The price dropped 20% in one day, which was the worst drop in years. And the main causes are not necessarily internal, but more macro inflationary issues and soft their demand from a stretch consumer. They've implemented on the turnaround side implemented heavy price cuts, some promotions, and they push to grow their 360 Circle program. So a lot to like here. Slightly different story than the other two, but we see Target turning this around and working through this inflationary environment. All right. Matt Powers. It powers advisory group with the three dividend plays he likes. Thank you very much. We'll see you soon,

sir. Thank you both very much. Still to come, the Netflix watch list. Subscriber growth, profits, and now even sports. They've delivered on pretty much all of Wall Street's hopes over the years. What do they want now? We'll discuss that when Power Lunch returns. Welcome back to Power Lunch. I'm Angelica Peebles with your CNBC News Update. Former proud boys leader Enrique Tario and a founder of the Oathkeeper Stuart Rhodes have been released from prison. They faced lengthy sentences for seditious conspiracy in the January 6th riot at the Capitol. The releases came hours after President Trump commuted the sentences or ordered the dismissal of cases against all 1,500 people facing federal charges over the riot. The suspect in the 1990s killing of rapper Tupac Shakur lost a bid today to have his murder charges dismissed.

A judge said Dwayne Davis, also known as Keefe D, was unable to prove his claims that he struck immunity deals with federal and local authorities years ago. His trial is currently scheduled to begin in March. The SEC is forming a task force dedicated to cryptocurrency. The agency says it will develop a regulatory framework for crypto assets. It comes after President Trump promised on the campaign trail to create a crypto-friendly administration. And just days after he launched and promoted two meme coins named after himself and the First Lady. Kelly, back over to you. All right, Angelica, thanks.

It's time for three-stock lunch, luncheables, where we trade three different stocks on the first. move. Eva Ados joins us today. She's C.O. and chief investment strategist at ER shares. Eva, it's great to have you. 3M is boosting the Dow, so let's start there. It had better earnings this morning, topped analyst estimates. Stocks up 4%. Do you jump in now? No, I think it's a sell. It's a 3M was once a great entrepreneurial company. Back when Post-its were popular, but now we all use technology. So I think their best days are behind them. They did have good earnings today. What we need to realize that the stock is down 36% in the last seven years, and their gross margins have dropped 7% in the last four years.

They're trying to reinvent themselves, so they did have a spinoff of one of their divisions last year, but we don't think they will be able to compete in this very competitive environment, especially due to the lack of technology. All I know is Post-its have gotten pretty expensive, but maybe pricing power is enough. What about Moderna? They secured about 600 million in government funding to further develop bird flu vaccine. those shares which have been all over the place are up 6% today? It's another sell.

This used to be perhaps the best COVID play. We used to own it during COVID. We don't own it anymore. The company is down 90%. The stock is down 92% since their all-time high during COVID. And I think the $600 million government contract will not be enough, given their sharp decline in their revenues. They have massive losses, margin contractions.

So they will have to do a lot. of work probably resize the company. They do have $6 billion in cash that they can use to reinvent and restructure themselves, which I think is needed. Yeah, and maybe at some point you change your view on that one. But one name you do like, you told us, is T-Mobile. Now, it's not necessarily in the news today. It's fractionally higher. Kind of hasn't moved much this year. But you think the connection to Elon Musk's Starlink becomes a bullish catalyst with Trump taking office? Definitely. We are fans of the Elon Musk trade. In fact, we made SpaceX, although privately held our biggest weight in our XOVR, ETF. And again, T-Mobile will have, has a partnership with Starlink that allows them to compete and expand their footprint. It allows them to serve underserved remote areas, as well as maritime and also aviation. So we're bullish, especially when it comes to the Elon Musk trade, SpaceX, again, is our biggest way. And so as an extension to this, if you want to have an indirect saddleway to have a nylon mask trade and you already own, DeMobile, I think it's a great name to own.

Up 32% over the past year as well. So I've got some performance as a tailwind. Eva, thanks. Appreciate it today. Eva, Atos. Or meantime, CNBC is accepting nominations for our 13th annual disruptors 50 list of private venture-back companies to nominate somebody. and scan the QR code on your screen or go to cnbc.com slash disruptors we'll be right back welcome back to power lunch rick santelli here live at cm e hq what an interesting first day

for the new trump administration lots of green and the price of treasuries lots of green and equities let's look at twos and tens on one chart which you jump out at you and this goes back to cpi wednesday is how rates have trended lower but two-year rates they're a little bit more more stubborn today. Yes, the yield curve is flattening. Two-year virtually unchanged at 428. And do remember, it's so the last year at 424. We have a 10, that's at 457, open that year-to-day chart up. Guess what? We're unchanged on the year on a 10-year, and it's down a handful of basis points, flattening the curve a handful of basis points. Why is it? Well, we've seen the lead that used to be long-dated treasury yields,

pushing rates higher, now is switched, it's moving lower, short-dated, or moving higher. I think it was a lot of policy uncertainty and the notion you could call it Trump derangement system, whatever you want, but the economists, the analysts, they were all about everything half-empty on tariffs. Well, as we come in today, maybe the talk should be about deregulation, all those signings, but no matter how you slice it, it's going to be an interesting second term, and how much interest rates move up. Well, we'll have to wait and see. with the actual legislation and some of the issues regarding tariffs, size, and who they're aimed at before maybe we start selling those long-dated treasuries again. Brian, back to you.

It's like an embarrassment of news, and it's only day one of the new administration, Rick Santelli. Thank you. All right, coming up, back to stocks, Netflix, their numbers do out tonight. We're going to get some key insights into really what to watch for with Netflix. Welcome back and take a look at shares of Netflix, which are higher ahead of its earnings after the bell today. About a percent. So what are some key things to watch for? Tim Nolan is here with us.

He's a senior media and tech analyst at Macquarie, got an outperform on Netflix, and you just hiked your price target 20 percent about a week ago to 965. Why? We think it's going to be a good quarter. And we think there are good drivers for Netflix in the intermediate and in the longer term. So I think for the quarter, keep mind, this is going to be the last quarter that we're going to get subscriber numbers from Netflix. I know they're moving away from it. They may give us occasional numbers when they hit a threshold or something at some point,

but we won't be getting subscriber numbers. This is the one number that has been driving the stock for over a decade now, and we won't be getting that number anymore, which creates an interesting setup where we're going to be looking at revenues. We're going to be looking at what's going behind the revenue. So in the quarter they're going to report, first of all, I think it's going to be a good strong quarter because there's some big events. The NFL on Christmas had 31 million viewers, I believe, globally,

globally, which is an important point, which I hope we can get to a bit later. We're looking for a potential. The big live fight, right? The Jake Paul, Mike Tyson fight. I think that was well over 100 million viewers globally. Squid Game second season came out right around Christmas time. So a lot of big things that could drive subscribers and viewers. So you already raised your price target basically think, which kind of gets how much of this

might be priced in, right, when the narrative has been that good on it. And it's also fine interesting you're looking at look at revenue. growth and not earnings or profits. In other words, it sounds like it's still growth is the most important thing for this stock. Well, what I meant was without subscriber numbers to build into a revenue number, we're only going to be able to make up revenue numbers as forecasts. Maybe they'll give us some guidance, maybe they'll give us a regional breakdown. I don't know. But we'll just have revenue instead of all the buildup to revenue that we're accustomed to. But absolutely, operating profit is critical. And look at the other companies in the streaming space, Disney Plus, etc.

All these companies are struggling to just get into break-even territory now. Netflix will be pushing 30% operating margins in a couple of years' time. Which is what people who bought the stock at 100 times earnings 10 years ago always hoped and here we are. Right, so it's grown into that valuation and it's still growing. And so the near-term story, obviously for tonight in an hour or so is going to be what the sub-numbers were, what the big events were, how that drove things. Then it's going to the question to be, what are they going to be giving us in terms of guidance that's going to help us model this company going forward? Right. But you've got, I think, an interesting setup now with the advertising tier becoming an important driver for Netflix. So I'm glad you mentioned that, and that's exactly what Laura Martin last hour talked about as well.

Why is it so important and what is so important when you're trying to figure out how much money the ad tier is making or how much money the paid tier is making? Well, first of all, probably the advertising tier has driven subscribers up to start with. They've talked about new subs being, yeah, new subs coming on on the advertising. So probably some of that growth is coming from advertising subscribers. It's a lower price point. It started off, interestingly, being accretive to the revenue versus the standard plan. They've since talked about that ARP who kind of coming down, or arm, as they call, the revenue per member coming down. But since then, they made the decision to go with some of these ad tech outsource suppliers.

So some of these companies like the Trade Desk and Magnite, which can help them monetize their advertising much more effectively. It will take a little while. But we're looking for an upturn in advertising. So we're estimating $2 billion of revenue next year, $3 billion the year after that, four and a half the year after that. It could just sort of take off from there as the data and as the technology improves. I'm going to say something I shouldn't working for a media company. But we use Apple TV at home as well.

We have cable and we have Apple TV. And when I put something into my remote, we can use it by voice. We can too now. I don't even really know where the content is coming from anymore, nor do I care. I don't care if it's Netflix. I don't care if it's Hulu. I don't care if it's Peacons, it's the content. And I just was thinking about it literally yesterday. Is this going to damage these brands? Because if I don't really care where this is coming from, what's to keep me engaged or paying. If you access it, if you go to say, you know, hey, watch the NFL game on Christmas Day and sorry, you're not paying for Netflix. I guess that's how you find out. You need your Netflix to access it. Yeah, I think the brand power at Netflix is still very strong. And to the point of the sports. Just because of NFL? Oh, no, for lots, no, all kinds of I think people associate content with Netflix. Squid Game, I think everyone knows that's a Netflix show.

So, you know, Stranger Things, all these other shows, all these other Netflix. I think there is a brand affiliation with Netflix. But getting to the interesting point of sports, which we're a little bit early in this. It's not time quite yet. WWE is time now that if you call it a sport that started just a couple weeks ago. That is 52 weeks per year of live event content and I believe that drove something like two and a half times of viewership on its first week in Netflix than it did last year on cable TV. Really? Did it? Is that what they're saying? I would love some color on that. That's a big deal because it goes to one point about Netflix, unlike a lot of the other platforms, a lot of people start their viewing on Netflix. They're not, they're going there to figure out what they're going to watch. Because there is so much that you can watch.

Exactly. And now down the road where it gets interesting, Netflix is finally moving into live sports. They've got the next two Women's World Cups in 27 and 31, I think it is. But what's really, really intriguing here is Major League Baseball can opt out of its contracts with traditional TV networks end after the 28th season, as well as with the regional sports networks. So Major League Baseball within a year or two might be renegotiating contracts for the next batch. NFL has opt-outs in 29 and 2030 on its network contracts. Do you want them? The only thing, and I see where you're going with this and it would make perfect sense, but these are going to be expensive. Do investors really want Netflix? I mean, and maybe they do. Well, it depends. We estimate Netflix probably made money

on the two NFL Christmas games just now. Yes, it's going to be expensive, but look at the global audience that they can appeal to. Now, these two Christmas games, I think, added four or five million viewers on top of 26 million in the U.S. That's a pretty good number. I actually thought it would be higher than that. And as the NFL is building its brand over time, you're going to get a lot more global viewership on Netflix. They've got a much, much bigger wallet. They've got $7 billion of free cash flow next year. They've got the money to pay for these things. Tim, thank you. It'll be a fun afternoon to see what they say. Tim Nullin with Macquarie. We'll be right back. Before we go, check out shares of Tempice AI, searching a cool 32% today to make it a $7.5 billion company. Two pieces of news

around 830 this morning. They announced the launch of an AI-enabled personal health app. But shortly before that, word spread in the market that Speaker Pelosi had disclosed the purchase of 50 call options on the stock with a strike price of $20. I think that's the reason the stock is moving more than the AI thing. Nancy and her family were very, very good traders last year. They're widely followed now, and then you throw in a kind of jazzy AI thing, and there you go. They just need to get into quantum next. I think they call that a chef's kiss. Thanks for watching. Power Lunch, everybody. Closing bell starts right now.