Power Lunch - Dow tops 44,000, S&P 500 hits 6,000 in week of market milestones after Trump election win 11/08/24

Episode Date: November 8, 2024

The Dow and S&P 500 climbed to new records today, headed for their best week in a year after Donald Trump’s election win.Stocks also got a boost from the Fed this week, as the central bank lowered interest rates by a quarter point on Thursday.Fed Chair Jerome Powell noted he is “feeling good” about the economy during a press conference following the change.We’ll tell you all you need to know today. 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 Lunch. I'm Kelly Evans. Joined today by Steve Leasman. Welcome, Steve. It's great to have you here. Good to be here, a lot to talk about. Yes, there is. It's been a wild week for the markets, lots of news to digest. We had the presidential election on Tuesday, clear victory for President Trump, no drawn-out process, no major controversy. That led to a huge rally on Wednesday of 1,500 points for the Dow, everything at record highs.

A Fed decision yesterday completes the trifecta as the markets got their quarter point cut, following on the half point cut from September, and that's what brings us, Steve, to today. Did you bury the lead, Kelly? Did I? 6,06. You like the palindrome aspect or the fact that we're above 6,000? I didn't think about the palindrome aspect.

We almost did a palindrome for the Dow a moment ago there, too, 404.44. We are continuing with the rally, it says right there. The Dow topping 44,000 for the first time, and welcoming two new components, NVIDIA and Sherwin Williams. S&P 500 up nearly 5% this week, and the NASDAQ up almost.

6%. And the yield on the 10-year note at 4.3%? 4.1. 4. Touch below now. Touch below. Following yesterday's rate cut, we're down about 14-15 basis points, but 6,000. 6,000 is bullish, but I think underpinning that is exactly the discussion we're going to have on rates. You get that 10-year falling now back away from the 4.5 level. And I mean, you tell me, but that is a very positive development. It well could be. I always think, like, in terms of ranges. I think like when it hit a low, it came up and now it was kind of exploring the top here. Where is the top of this? And now it's going to come down. I think we have somebody who might be talking about this. Let's do it. Let's start with these two market milestones today. Dow 44K S&P 6 and I'll throw in NASDAQ 19. We did that at the

close for the first time yesterday. But can these gains fueled in part by Trump's comeback continue? And if so, for how long? We turn now to our panel of experts. Mark Lashini is chief investment strategist at Janie Montgomery Scott. Here on set with us is Ron Ansana, CNBC senior analyst and commentator and CEO of, what is that, IFI? No, Ifi.org. I find, Ron, you might want to pour a little bit of cold water on this, on this hopium. No, not for the remainder of the year, Kelly.

I think, you know, the markets are going to continue to discount the business-friendly aspects of an incoming Trump administration. So lower taxes, in many ways, maybe a larger package than is currently envisioned, and then also less regulation, more M&A activity, just more business-friendly activity. I think next year, and again, this goes back to 2016. in my mind when people were deciding, do you take Donald Trump literally but not seriously, seriously, but not literally, if you take him both and you're talking about tariffs across the board and you are talking about mass deportations at least attempted, I think from an economic perspective,

the inflationary and recessionary implications of that might be viewed differently if and when that comes to pass. But that's not, for right now you're saying it's, you know, the race is on, the chase is on and see your end. Yeah, Fed's probably going to cut again in December. So, you know, you've got some, tailwinds at your back, and the palindrome parallax that is now underway here, which will make a great movie, I imagine, someday for Wall Street. Yeah, you've got all the major averages at all-time highs. You've even got the unweighted averages moving higher that are, you know, broadening out this market. So it's hard to get bearish right here. All right. Mark, are we replaying an old movie, or is this an entirely new movie?

And what's the plot? Well, I think part of the newness of it is the fact that the underpinning for why stocks have advanced even so far this year is the fact that the economy is in pretty good shape. We had a bit of a gross gear back in August when we had a couple of punky data points come through that put market investors on their heels. But we've seen the economic surprise index move basically up at a 45 degree angle since that point in time, which is drag 10 year treasury yields along with it. But at the same time, it's been a boon for stock prices. So you couple that with what Ron talked about in terms of some of the policy measures that at least at this point are expected to be forthcoming

under President Trump 2.0 in the White House. And as a consequence of that, it certainly is a set up for this rally to continue into year-end, perhaps not necessarily linearly at the pace we're currently experiencing it happening. But nonetheless, I think it's a strong set-up seasonally, certainly, and as well, the presidential cycle historically suggests that this is also a very healthy period of time for risk assets. But I think that can carry over into 2025. So much after that will depend on the sequencing of the new Trump administration's processing of immigration and obviously, as was mentioned again, the imposition of tariffs. I think the most important number on Wall Street right now is not 6,06. I think it's 218. Absolutely. Absolutely. 100%. What is it?

That's the total tally in the House. Is it Republican? What you need in the House to have control. So, Ron, my question to you is, if Republicans get 218, does that change the stock calculus? Well, again, I think it still goes back to the same thing. It also gives Donald Trump, the president, elect, a free reign to do anything and everything that he would like to do. It's priced in right now, though, isn't it? Well, it's 218 priced in.

That's what I don't know. I would think so. Well, it's 200211 right now, according to the official NBC count. Yeah, yeah. And there are, I will tell you, in just a nanosecond here. I mean, how many of them have to break? There are 24 races outstanding. Right.

So the Dems need to kind of not quite run the table, but they need more than half. I think it's anticipated that the Republicans are going to take the House. They have the Senate and now have the White House. The question is, is everything that the president elect wants to do market friendly? Some things are, some things are not. Some things are not fed friendly, which is not something we've talked about, but we'll talk about shortly. So I think, look, I think the jury's out. You know, Ed Yardney was talking about a melt-up several months ago.

Wow. Right here on CNBC. And we've certainly had one. And, you know, the third and fourth years of a presidential cycle are historically the best two. Typically the first year is not among them. And so, again, typically also the Fed's tightening in the first year of a presidential cycle, which may or may not be the case next year. So I think there's so much up in the air that I'm comfortable talking about the next, you know,

45 days. If you want to make any bets, Ron, on something being typical, In the first year of a Trump administration, I will take the other side of it. Well, yeah, I mean, 100%. And look, I mean, I think one bet I will take is that energy prices are going lower. The only counter to that is if they really crack down on Iran and take some of those barrels. And Venezuela. But neither one of those countries is servicing the global markets.

They're serving specific areas of the global market. Iran sells to Russia and China. We know that. But yeah, but if we go from 13.4 million barrels and they start opening ANWR, they start opening offshore, platforms and, you know, do all that and deregulate and I'm sorry. I'm- I mean, look at Apache trading down 11% your APA. I haven't, but that's on a price basis, right?

His oil prices will go down. But that's what I'm saying. So energy stocks have been one area that I don't know if Mark wants to weigh in on this, but I have a real problem with the Trump math on the energy sector. I get that he can make, I'm not saying it's going to. I get that he can make energy more profitable because you can reduce regulation. But if you bring a whole bunch of U.S. oil production on the market, what happens to prices? And isn't America the high-cost producer out there in the world?

Well, that is very true. And in fact, I think what it does, and actually there's been a certain reluctance to actually continue to explore and expand production, obviously. We know that basically energy executives have found religion relative to capital allocation. And it is not just all about freewheeling spend baby spend. It's more about capital preservation, dividends, paying down debt, making sure shareholders are treated first over and above expanding capital budgets to go speculate on new drilling opportunities. And so I'm not so sure that it necessarily is going to be quite the boom for the energy sector. And in fact, if anything, it may be kind of productive to prices.

Again, so much is said on that depending upon the geopolitical situation, facing. But I think domestically, on balance, I think it's a positive, but perhaps not as bullish as some might suspect it could be. I think on the geopolitical front, it really depends how it goes. If Donald Trump were to, as he has proposed, bring a conclusion to the Russia-Ukraine war, bring a conclusion to the violence that's going on in the Middle East. And then you look at the fracking community, which has become much more productive and is getting more barrels out of the ground than people previously thought. And we head towards 14 or 14.5. even 15 million barrels a day, if indeed that were to happen.

Yes, prices would come down. So exploration and production is not necessarily the place you want to be, but transmission, you know, pipeline companies, the definers could benefit. You're just talking about energy transfer. An LNG maybe. Exactly. Well, and we're already the biggest producer in the world of that, right? Bring it on.

General, or Mark, thanks. Mark Lachini, we appreciate you joining us today. Now to a few that could be brewing between Fed Chairman Jerome Powell and President-elect Donald Trump. Take a listen to the exchange during Powell's press conference yesterday about his future under the Trump administration. Some of the president's elects advisors have suggested that you should resign. If he asked you to leave, would you go? No.

Can you follow up on his, do you think that legally you're not required to leave? No. Do you believe the president has the power to fire or demote you, and has the Fed determined the legality of a president demoting at will any of the other governors with leadership positions? Not permitted under the law. Not what? Not permitted under the law.

Thank you. Sona is still with us. We want to bring in Amin Javers, our senior Washington correspondent. Even if the president can't fire Powell, there are things he can do and say, and plus a very interesting and complicated political situation surrounding this. Yeah, absolutely. Look, I mean, you think what Mar-a-Lago is signaling right now is that they don't want to take on this fight right away.

They're saying that the president-elect does not plan to remove Jay Powell from office. And I think that's true in the short term. But it's clear that Donald Trump thinks that J. Powell cut rates during the election. He doesn't like that. He thinks that Jay Powell doesn't answer to him. He doesn't like that. He has said publicly that he wants the Federal Reserve. He wants as president to at least have a say in what the Federal Reserve does.

Jay Powell doesn't agree with that and is determined to protect the independence of the Fed. So the two men are at loggerheads and one of them is the president-elect of the United States with enormous and sweeping powers and an enormous political mandate, you know, I think you can see where this is headed. And, you know, what Trump can do over time is sort of undermine Powell, even if he doesn't force him out by calling into question his judgment, criticizing him on social media, appointing a successor early to say that this is my designated person when we get rid of Jay Powell, and then markets will start to listen to that person and it will make it harder and harder for Jay Powell to communicate to markets. Well, speaking of social media, Elon Musk was out there,

retweeting a tweet, Ron, from Elon Musk, retweeting his tweet from Senator Mike Lee, basically saying, end the Fed, if you want to just summarize it. Ron, I think politically you can put the number of people who support the Federal Reserve in this country unlike the Staten Island ferry and still have enough room left over to do the regular morning commute. If he couldn't put them on there, so I think he owns it. Exactly. But my point is that there is not a lot of political support broadly.

in the country. And I will tell you, Amon earlier this morning tweeted me that, or texted me, that he doesn't, he thinks the American public would get behind Trump in an end-the-Fed kind of thing. I mean, like, God forbid. I mean, look, the bulwark against, you know, future bouts of uncontrollable inflation is an independent central bank. And listen, people will argue about this forever. If you want to be William McKinley, if you want to be Williams, Jennings, Brian, if you want to go back to that period, that is pre-Fed Federal Reserve, and assume we can go back to a gold standard, which we can or assume that Bitcoin can become the coin of the realm, which it won't. You know, the bulwark against inflation and the requirement that you have some price stability,

as is mandated by Humphrey Hawkins in the congressional legislation that demanded the Fed, maintain price stability, is there. Now, whether or not people support the president's an open question, you would see, I think, if any of this move forward, you would see a dumping of the dollar, you would see a dumping of U.S. Treasury's interest rates would spike higher, and I think it would be the single largest mistake this incoming president could make. But Steve, just for a second and, Amen, maybe you can both clarify. So my understanding is there's not a lot of seats up for grabs in the next four years.

Not until 2026. So could anything happen that the president would want to do to change the nature of the FOMC between now and 2026? Well, here's the thing. He could go in and change the Federal Reserve Act, give the president. But Congress has to do that. Get Congress on board. Again, 218 is what's required for that.

Right. He needs to win the House. But here's the thing. If you went about that process, it would probably take as long to become law. Exactly. As Chairman Powell's term would be up by the time that probably rolled around. I'm not sure you want to do that. Now, Scott Besson, who is presumably a Treasury Secretary possibility, has suggested a shadow-fed chairman.

To undermine the president. to undermine the current chairman. Look, I don't love that idea either. I think this, I think, look, I think they're playing with fire. John Scott said that. Scott said that on our air this week, again, saying that, you know, the idea would be to nominate a Federal Reserve Chair replacement early for Powell. And that's what I'm talking about.

How early is early, right? If it's a month, that's not maybe a big deal. If it's six months, that maybe is a big deal for Jay Powell, because then you have this alternate figure out there who's talking to markets and undermining Powell's ability to do that. I just think that there's a lot of ways for Donald Trump, who doesn't like J. Powell, doesn't like what J. Pal has done directionally and doesn't like really the idea of a fully independent Fed to put a lot of pressure on J. Powell, make his life miserable, make his ability to communicate with markets very difficult. And to the point where maybe J. Powell throws in the towel. He's clearly Powell very determined to protect the independence of the Fed. I'm pretty sure. I mean, he's not going to throw in the towel. But let me throw this out. If I could just a quick historical reference, if you go back to the Reagan era, they didn't want Paul Volus. in the chair and then Treasury Secretary James Baker, who eventually became Secretary of State,

was at least according to some books written about this, went in to see Volker and made it clear that he was not going to be renominated. Alan Greenspan replaced him. And there was some political pressure to change. I would be a net, listen, this is the most, I think, you know, probably strongly worded a statement I could make. If they were to go down this road, I would not want to be an owner of U.S. assets, financial assets, if they tried to do this. We can always look at the Turkish Lira to see what happens when you have a non-independent Fed. I just want to point out that from a political standpoint, the line that says, what are you kidding me, the president cannot fire the chair of the Federal Reserve, is a pretty potent line.

Yeah. I do think that Fed Chair Powell probably did a service to markets yesterday in terms of providing stability about where he stands on. this. I tried to go over my head how he might have otherwise handled it, but declaratively saying he will not go away is probably the best thing for markets. He didn't say, I serve at the pleasure of the president. No, he did not say that. Yeah. Because he doesn't. And so that's where he stands and we know it. And we'll see how President Trump plays it. Amon has an idea that because Powell said that, he might have made his situation worse with Trump. I do wonder about that, Amon. I do, I do think, I do think that Donald Trump doesn't like sort of political defiance, right?

I mean, just as a general rule, he doesn't like people out there who are powerful and kind of sticking it to him the way Jay Powell did yesterday. That'll be seen poorly in Marlauga. I don't think they have the appetite for this fight right now. They've got a lot of other things to do. They're very, very busy. But if you just spin it down just theoretically, you know, if they did want to push Jay Powell out, you know, Powell's talking about not legal under the law or not appropriate under the law, I mean, I guess the question is like who adjudicates that? right?

I mean, because Donald Trump will control the Department of Justice and the Supreme Court. I think it's really important to correct Senator Mike Lee. I'm sorry to do this. The Fed is not in the executive branch. And he's wrong about that. The idea that the president can't fire the Fed is one of the reasons that gives it its independence. It's a creation of Congress. Congress can ultimately change that law if it wants, but it is not for the president.

Change the Fed's mandate. But I'll leave it there. And that's why this House determination makes such a big difference in this. Mr. Mike Lee, I think, ought to know better. Maybe he does it. He misworded it or whatever. So the big question is, do Jay Powell have his Billy Bats moment from Goodfellas? Come on.

Come on. You feeling big? Come on. Tell me how it ended. Not low for Billy Bats. That's what I thought. Okay. Thank you both.

I am not laughing at that reference. Ron and Zana. Coming up, the pros and cons of a Trump presidency for the market. We talked about the potential chaos that could come to the Fed, but there's still plenty of optimism from from traders right now, and especially around the banks. The KRE soaring 10% this week. We'll have more on that next here on Power Lunch. Don't go anywhere. Welcome back to Power Lunch. Regional bank stock staging a huge rally this week with the prospects of reduced financial regulation in a Trump administration.

The Regional Bank ETF, the KRE, up 10% this week here to discuss and how to trade the big moves in regionals is Chris McGrady. McGrady, did I say that correctly? Head of the U.S. Bank Research at KBW. Chris, thanks for joining us. Thanks for having me. So, Chris, I've got to tell you my general philosophy is one. One should not invest with one's politics broadly in the market because you end up losing money if you bet the other side or against the other side. But when it comes to sectors, that's a little different.

So with that in mind, is this a play here that one ought to take because the politics surrounding regulation are sufficient to justify a long-term investment? We've seen this. We've seen this trade, Steve. we saw it in 2016. The scramble, if you will, was significant in 2016. I think there's a couple key differences between 2024 and 2016. 2016, we were talking about earnings revisions going higher for the banks because of tax cuts. So earnings went up 15, 20 percent. ROE's went up 20 percent, or 200 basis points I should say. Today we're just talking about multiples. And so what was interesting

this week, you mentioned the KRE being up 10 percent. The KRE had its best inflow from ETS in 10 years on Wednesday. And so that tells you the power the ETS can have on this market. Financials, you make money and financials out of times of change and out of crises. And so is this 10% it or is there more to come? It was pretty quick to reprice risk. We did a note. We looked at where valuations are after Wednesday's moved and we compared it to where evaluations have been for the past seven years. What's interesting is we were within 2 to 3% of historical averages in a matter of a day. Now, you could argue, we could push valuations, markets overshoot, we can look back further and multiples were higher.

But the market was pretty quick to reprice risk. In particular, the banks that have had the most regulatory handcuffs, those banks got re-rated the quickest. Okay, so as I understand it, the president-elect, as soon as he comes into office, can get a new office of the Comptroller. and FDIC, he cannot get a new vice chair for bank supervision at the Fed. Is that enough for the president-elect to have or the president to have to really change regulation? We think it's a lot. We think there's as many as eight changes that could occur within short order. We've done a lot of work on that with our policy team. The biggest one is the handcuffs coming off related to M&A. We've seen really a stalling of several years, not only for the financial services sector, but

broadly, broad M&A, the restrictions, the time to close a bank deal, if you look back under the Biden administration compared to the Trump 1.0, it was nine months versus six months. So it's 40% longer to close a deal. And the common denominator was a Democratic administration, number one, and number two, the scrutiny from the FDIC. So if the FDIC gets to be more bank-friendly, we think mergers are healthy. We need more competition in this sector. That is a big catalyst for the group. So let's bring this home, Chris, for people at home that are thinking about how to invest. in this. It seems to me like the least risky way is to buy the ETF by the broad group, but are there stocks within it you think that haven't come along for the ride here that may yet do

so? Yeah, sure. The biggest banks have done the best for the last 18 months coming out of the crisis in 2023. There was a flight to safety. We think because of the deregulatory efforts that are in play today, the banks that were on the cusp of greater regulation, so these banks that were bumping up against $100 billion, the issues that brought down a lot of the pressure on New York community, those stocks have the ability to re-rate. What's happened over the last six months is these banks, I see Webster Financial. We'll talk about that. Webster Financial traded at a 40% discount to the peers. That is about a 20% discount today. We think because of the return profile of a company like this, a high-teens ROI, 10 times earnings, this is where investors are going to go to play the

deregulatory efforts. Chris, hold on. I got to interrupt you because my understanding is that $100 billion is a rule in which the Fed is involved. Wouldn't they? And now you're just saying they could be bought, and that would be the catalyst there for higher, for better returns? Because I don't know that the Fed is they just changed that rule on $100 billion, didn't they? Yeah, our understanding is the $100 billion. Some of the rules are going to keep, right?

We think bond losses going through capital will keep when you go through $100 billion. What I'm referring to is some of the most severe earnings pressures, the expense bill, the issuance of T-LAC, those pressures may not be as significant going forward. And if that's our WEs are going to rise and not be as depressed. All right, Chris, thanks very much for your help. And I think that this is an interesting area, but it's a thorny area to go invest with regulatory relief. Fertile. Fertile.

You may make a lot of money there. I'm not saying you won't, but you've got to read this stuff. And it's seriously. As the guy who has to report on this stuff along with Leslie Picker here, it's brutal. Oh, yes, it is. That's how you make money. Chris, thankfully, Chris knows about this stuff. Chris, thank you for joining us.

Another group getting the Trump bump is crypto. We'll take a deeper dive into that space with Market Navigator next. Welcome back to Power Lunch. We're green across the board as we head into the ending hours of the trading session. The Dow above 44,000 today. It's up 8 tenths of a percent leading the way. The S&P remaining above 6,000, the NASDAQ, above 19K. And the incoming Trump administration has promised to be more supportive of crypto.

FundStrats, Tom Lee, says that gives Bitcoin. which has already rallied, big upside potential. Six figures is still possible for it before the end of the year. I think because now, you know, post-having and now Bitcoin's becoming a lot more relevant, and I think maybe the regulatory overhang is diminishing, that there's a lot of upside from here. How much upside and where else in crypto might there be opportunities? Let's ask someone who's been a perennial first mover in this space. Jan Vannick is the CEO of Vannick Associates.

Yon, it's great to have you. And when you're probably asked as much as I am if Bitcoin's going to 100,000 next, what would you say? Kelly, happy Friday. I think Bitcoin's going to hit all-time highs. Well, sorry, hit them today. And I think it's going further. Right. My basic premise is that ultimately Bitcoin's value will be half of that of all the gold outstanding. So you're talking about something like $300,000 for Bitcoin. Why only half the value? Why not a quarter of the value or pick some other random number? Well, because maybe I'm more balanced. I think if I were Bitcoin maximalist, I would say we'd overtake gold. But I'm just, I think that's like a reasonable base assumption. It's, it's clear,

you know, one of the big winners this year is individual investors have really piled into the Bitcoin ETFs. And I think as individuals, as a constituency, they were important in this election. The loss by Sherrod Brown of his Ohio Senate seat, the fact that Trump went to, to the Bitcoin Convention shows that there's a big constituency in the U.S., and hopefully it becomes a bipartisan issue as well, not so one-sided. There are other ways to play the crypto space. There's stocks like Coinbase. There are coins and tokens and things like Ether.

Doge now gets a lot of mention. Would you be an advocate of all of that as well? Well, what I've said, Bitcoin is sort of digital goal to me, and it's a store of value asset. What I've said about Ethereum is don't buy it unless you really understand its business proposition and its competitors, the other databases that might be the rails for crypto. I do think, however, that overall big picture, stable coins are the new global payment system. And one of the big winners is going to be Ethereum and Coinbase as well. Ethereum's market share kind of bottomed in September. We look at stuff like that.

And so it's a little bit of a contrarium play. Ethereum has outperformed over the last several weeks. And I think it's a good entry point, actually, for Ethereum, if you understand the pros and cons of it. Well, maybe that's a discussion for next time. Jan. We'll leave it there for today. Appreciate you joining us. Good to see you. Jan Van Eck.

Over to you, Steve. Yeah, well, still to come, coffee prices climbing, but quality could be dropping. Price for the commodity are up 34% this year, and it's boosting coffee stocks, too. but consumers may be getting jittery. More on that when Power Lunch returns. Welcome back to Power Lunch. I'm Sima Modi with your CNBC News update. The U.S. will be able to send military contractors to Ukraine

for the first time after the Biden administration reportedly lifted a de facto ban on the practice earlier this month before the election. The contractors will help maintain and repair U.S. provided weapons systems, including F-16 fighter jets, according to CNN. Meanwhile, Tesla's CEO Elon Musk, reportedly took part in a call between President-elect Donald Trump and Ukrainian President Vladimir Lizelensky. Sources described the tone of the call as positive, according to multiple reports.

Trump has promised to bring a quick end to Ukraine's conflict with Russia once in office. And Beyonce, leading this year's Grammy nominations with 11 nods for the release of her country album, Cowboy Carter, which is up for album and country album of the year. That brings her career total to 99 nominations. Post Malone, Kendrick Malamar, and Charlie XCX follow Beyonce with seven nods. Pop star Taylor Swift and first-time nominees, Sabrina Carpenter, got six nominee nations each. Kelly and Steve? I'm waiting for Steve to go country.

That will really be a sign. I haven't gotten country. Have you? I've got a country song. You've written one? I've written a couple country songs. I stand corrected. On the fourth coming out.

You've got to hear it. Now we should be playing that as music throughout the show. We can't. The lawyers have destroyed all the fun. But your own music we could play. No, we can't. Okay. I actually was going to play on one of a segments, my own song, to back it up.

They told me I couldn't do it. The lawyers are running everything. That's all you need to know. Taking all the fun out of it. Meanwhile, shares of Dutch Rose are higher again today after Thursday's 30% surge on third quarter results that beat expectations and featured an upwardly revised forecast. It comes as coffee prices are trading nearly 50% higher over the past year and are up another 4% this past week. What is the impact of all of this and on the coffee chains that sell it? Let's ask Nick Set.

He's managing director of restaurants equity research at Wedbush. Nick, it's great to see you. I could almost foresee if you blindfolded, well, that's not right now. If you told me coffee prices we're going to surge, I might think it would hurt the coffee chains. Instead, it seems to be helping them. Is that right? You know what, it's actually neither that, you neither hurt them or benefiting them in the near term. You know, historically coffee chains have been extremely good at buying coffee in such a way where they avoid the peaks and the troughs.

And, you know, Starbucks buys at least the year ahead. Dutch Bros, for example, is a little bit more exposed as we go into 2025, but certainly not in Q3 and not in Q4. So, you know, so far, so good. Starbucks has, of course, been underperforming, but they've got Brian Nicol there now trying to change things rapidly. Could that be a risk to the performance of Dutch Bros and others, who I assume have been taking market share from Starbucks, at least for coffee drinkers? Yeah, long term, perhaps. I just think, you know, Dutch Brothers does what they do very well. You know, I think Starbucks tried to go in that direction, right?

So if you think about, you know, bigger picture, the positioning of Dutch Brothers, it's been doing the sort of espresso beverages, the cold beverages, the energy drinks, the non-coffee beverages. In fact, its drip coffee is less than 10% of its business, you know, since its inception, Starbucks tried to move in that direction. And that's what really, the complexity of drinks, et cetera, you know, has them in trouble. and Dutch brothers only has drive-thrus. And so they can focus on throughput, et cetera,

whereas Starbucks has to, you know, the Starbucks baristas have to, you know, take care of the drive-thru, inside the store, the mobile order and pay pickups. So I just think the complexity that's that the move, the consumer move towards those types of drinks is what's really impacted Starbucks, but Dutch Brothers from day one was made for that.

Nick, I want to go not to the 30,000-foot level, to the 3,000 foot level, the approximate level of rain clouds. Tell me what's happening. Why is there, are there droughts out there? Is this episodic or something that, as a guy who covers the coffee business, you've got to get more used to. Well, coffee prices have always been cyclical. I do think it's episodic. You know, it's, and again, coffee buyers historically have been extremely good at predicting the peaks, waiting out the peaks. And then, and resuming their buys after the coffee price have declined. And I would be surprised if this time is any different.

So you think you get the drought right now, which is raising coffee prices, is temporary, and they'll come back and won't be a long-term issue? Especially for Starbucks. You know, they're Arabica, Dush Brothers. They're robust. They're probably not contracted as long, but they also don't have as much exposure.

So it's less than 10% of basket is coffee. So in each case, I'm not overly concerned. All right. Nick, thanks for joining us, Nick Setyan. We appreciate it today. And Kelly, there is still time to nominate a 2025 CNBC changemaker. The list recognizes women transforming business and philanthropy. Nominate a leader at cnbc.com slash changemakers or scan the QR code on your screen right now.

The window closes this Monday, November 11 for nominations. are coming right back. While stocks are holding on to their post-election gains today, Salesforce is going to hire more than 1,000 workers to sell its generative AI agent product. That's according to Bloomberg, which reports that CEO Mark Benioff says the product is aimed at capitalizing the, quote, amazing momentum of the product. Bon yield's giving back a lot of ground over the past two days. Let's get to Rick Santelli in Chicago for a really memorable, momentous historic week. Rick, I was on the desk that night. The election results were rolling in. Bonn yields were shooting up and now they've shot back down.

Well, it all depends on what your time frame is because, yes, what you're saying is true. And even right now, we have yields in twos, three, five's higher and we have yields in tens, 20s, and 30s lower. But let's look Friday to Friday. Friday to Friday, right now at four and a quarter, two year yields are up four basis points on this wild week. and 10-year no yields at 430 or down eight bases point. So there's been curve movement. So what's a retail non-institutional investor to do, like many of you watching?

Let me give you 90 seconds worth of quick ideas here. If you look at T bills, that's a good thing. Everybody likes them. But remember, they tend to be shorter term, and the Fed is lowering rates. The last four-week bill auction we had earlier in the week, the yields were 4.515, six-month, 4.26. Now, we can also turn to fixed income.

We had auctions this week. Fixed income securities fall into two buckets. You have sovereigns and corporates. On the sovereign, if we had three-year auction, $4.15 was the yield. We had a 10-year, 435. Yield curve is steeper, and we don't know what President Trump's administration and some of the notions he has are necessarily going to do, but I think look for a steepening yield curve.

So if you do bills, remember, the short-term yields are probably going to ease back, mid and longer term yields might be stubbornly higher, so you want to pick the right maturity, maybe somewhere in the three to five year area is best. On the corporate side, remember, unlike sovereigns, there's some credit risk on corporates, so you want to pick high-quality companies. But remember, historically, the extra yield you get to take that risk is very small. And finally, my favorite, if you want to keep it really easy, until we know how all this is going to pan out, high-yield savings accounts.

They're FDIC insured. they're pretty flexible. They do float, so you're going to see your rate move around, most like a little bit lower, but they're right around 4.5% right now, and there are some restrictions and fees. So no matter what you want to do, just remember one thing,

that if you buy a fixed income, security, sovereign or corporate, be happy with your yield, because if you sell it before it matures, you have market risk. If you hold it to maturity, you get all your money back. Kelly, back to you. Rick, I'm just going to take it real quick.

442. Is that now you think, Rick, the top of the range that we've just seen in terms of exploring where that top is? Is that, was that it? That's not it, but that's it for this leg. In my opinion, what we've done is we've basically gone from roughly three and three quarters on a 10. We just narrowly missed four and a half percent. I think when you look at the difference between European and U.S. yields, right as all this was going on, it rocketed up. 202 basis points we were higher than Europe. Then the next day after all the election results, it started to come down.

I think that along with other catalysts are telling me we've peaked briefly, but I would look for long-term rates to remain sticky for the next couple of years. Thank you, Rick. Rick Santelli, we appreciate it. Tesla shares are on pace for their best week since January of 2023, pushing the company's market cap back above the trillion-dollar threshold. We'll trade it in three-stock lunch after this. Welcome back. Let's do three-stock lunch, shall we? We're trading some of the biggest gainers of the week, and there's been many to pick from here here with our trades as Scott Nations. He's president of Nations indexes. Scott, it's great to have you here.

And Goldman, this one keeps popping up. People can't get enough of it. It's up 13 percent this week, best week in a year. Big banks, of course, could see a boost from the belief that next administration could loosen, you know, regulations on dealmaking. What do you do with this one? Right, Kelly. None of the names we're going to talk about today is a screaming vibe, but there are some. interesting opportunities. Goldman would be one of them, as you pointed out, it's off a bunch this week on expectations for a freer regulatory environment. To the degree that that means more M&A, then that's going to be great for Goldman investment banking. But, you know, that revenue is both very competitive and can be very expensive if it means that Goldman has to hire a bunch of new bankers. And that revenue being volatile means that the bank would love to find less volatile streams of revenue. They announced this week that they want to do that by creating what we're going

to call the family office in a box for its private wealth customers that have over $100 million and assets. That would be a great way to reduce the volatility of their revenue. Listen, Goldman is always going to find a way to make money, but this is a buy on a pullback. So I don't want to pay up. I want to wait until it gets back below $525, and that's when I would be a buyer Goldman Sachs. All right, Scott. Next up, Tesla, the share is storing 27% this week, which would mark its best week since January 2023. You are laughing already. The rally boosting its market cap back above the trillion dollar mark. Scott, Elon Musk, roll in the Trump campaign, obviously a factor here. What do you say? All right, Steve, I am never going to laugh at people

making money, but Tesla is a hold, and this is a real hold, this is not a gentleman's sell. Much of the recent rally has been due to fascination with Elon. That's understandable, but a bad investment thesis. The latest leg up is due to political considerations. That's also probably a poor investment thesis. On the operating side, they just announced that for the cyber truck, they're going to offer a $999 a month lease. We'll have to see if that helps them avoid the problems that the F-150 lightning from Ford encountered a Ford announced that they're going to pause production of that truck.

So we'll see how Tesla does. One interesting thing about the Tesla option market, though, that is unique, absolutely unique. It allows for people to put on protective hedges in a way that are much more economical than average. It's the only name of the 10 largest in the S&P that's so situated. So this is a hold. I don't believe that I would buy it.

But on the other hand, there's no reason to think that the fever is going to break. And so I wouldn't sell it either. Well, speaking of fever break, Vistra is the best performing company in the S&P this year. The electric name posting a big third quarter beat yesterday. The shares are up another 17% just this week. And what do you do? You know, this is a buy. I think you have to hold your nose and buy it.

And I say that because if you look at the chart, you're going to think you've missed the move. But the forward PE is still just a tad below 20. Most of the competitors are a tad above 20. As you pointed out, they just announced earnings. They now think that forward guidance for 2025 is going to put EBITDA just above $6 billion. They just announced another billion dollar in stock buyback. Listen, we're never going to use less electricity than we do right now. They've just announced two big plants that they're going to build for data centers.

This is a new growth stock, new growth. That is electricity generation. And so now you can pay up for 20 forward PE and actually feel pretty good about it. I love the idea that an old line electricity can, not old, but you know what I'm saying? Yes, absolutely. In the AI boom, that electricity, it tells you you have to think outside the box, but you also have to think inside the box. Well, don't, I was going to say something like, don't judge a book by its, but an old dog can learn new tricks or something. It's just funny.

You go back, I mean, when economists study productivity and innovation, They keep going back to electricity. Yeah. And all of these things, when something comes along, you don't know what the ultimate return is going to be. We're still getting returns for electricity. Thank you very much, Scott. We'll be right back.

Welcome back to Power Lunch. A final check on markets before we go. We are wrapping up a monumental week by knocking out some key milestones here. The Dowel topping 44,000 for the first time. S&P 500, getting over $6,000 for the first time today. Check out Nvidia. Check out Sherwin-Williams, both stocks officially.

members of the Dow industrials as of today, both those stocks up 8% this week. And Invidia now putting some room between itself and Apple in the market cap race, a little less than $200 billion more valuable. Incredible. And I think, again, it's many things. It was also the busiest week of earning season. So you kind of hit one after another. But there was a Fed meeting too. Oh, yes, the Fed meeting. I'm pretty tired. And you've got a long night ahead of you. Exactly. A gig tonight with my son. Well, I hope it goes very well. Thank you so much. And thank you, Steve for joining us.

It's been very good. Steve Leasman, and that does it for Power Lunch. Thank you so much for watching. Have a great weekend. Closing bell starts right.