Power Lunch - Dow touches new record, then struggles 8/26/24

Episode Date: August 26, 2024

The Dow briefly hit a new record high of 41,420 – it’s first record since July 17th. While the S&P 500 is close to reclaiming records, too.  What does that action tell us about what the market expects of Jerome Powell’s ability to engineer a “soft landing?” We’ll discuss.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody alongside Kelly Evans. I'm Tyler Matheson, and the Dow hit a new record high this morning. The averages are now off their highs of the day, but they did, the Dow did briefly get to 41,420. That is the first record for the Dow since July 17th. The S&P 500, also close to reclaiming records. The NASDAQ still has a little ways to go, about 5%, as you can see. And check out the sectors today, 7 of the 11 hitting 52.2. two-week highs in the S&P, five of them hitting old-time highs. Tech is not among them, though. It staples, materials, utilities, and financials. What does that tell us about what the market thinks of Jay Powell's ability to engineer a soft landing? Let's ask Michael Santoli from the New York Stock Exchange. Mike, good afternoon to you. What do you make of it? Well, I think, Kelly, that the market is embracing the idea that Jay Powell at least now has a soft landing as an explicit goal. You can go back a year or two, and he wouldn't even really concede.

that not only that it could be accomplished, but that, that, you know, essentially he was after it. Now he says, he doesn't want to see any more weakening the labor market. Have we been talking about the market is rebuilding that faith in the soft landing scenario? But that doesn't always mean that it's perfect for all stocks or all indexes. I've been pointing out that July 16th when the S&P made its all-time high, it was a moment of maximum and, in fact, excess certainty that we were getting a soft landing. The Fed was going to cut soon and for the right reasons and at the correct pace. I think you now are getting back to that moment, and it's created this broadening rally as everybody wants to embrace.

But as you point out, a little more defensive and a little more kind of lock it in and maybe a little more slippery when it comes to the index action because you don't have the mega caps anchoring these moves. So that's not a bad thing necessarily. Usually it's got positive forward-looking implications. But I do think in the interim with seasonality being a little bit dicey, let's say starting in a couple of weeks, that's why you see a little back-and-forth action within the market. market. Why isn't technology contributing today? I think, Tyler, that technology was kind of hogging all the oxygen in the first half of the year in part because earnings growth was scarce and they had predictable earnings growth at a very high rate in abundance. And so everybody crowded in and gave a big premium to that growth scarcity. And now if, you know, the majority of stocks are now going to

click toward earnings growth, if we do have greater confidence, as most investors seem to, you that we're going to sidestep a real downturn in the economy. I think that net benefits other stocks and technology, you know, essentially is source of funds in the old Wall Street term. I see. Source of funds. So in other words, you sell the technology to move money to redeploy elsewhere. Yeah. All right.

Stay right there, Mike, as we continue our conversation with our next guest who says economic data continue to support 2% growth. Good thing for forward earnings, kind of what Mike was just saying, and for stocks. bring in Stephanie Link, chief investment strategist and portfolio manager at Hightower and a CNBC contributor. Stephanie, welcome. Good to have you. Yeah, great to see you. Let's talk a little bit about not so much how much the Fed is likely to cut, but which is more important? How much they cut or the idea that we are now pretty clearly going to be in a rate cutting cycle?

Yeah, I think it's the latter. I think it's that we don't know what they're going to do. They're going to be data dependent, and the data does support about 2, 2.5% GDP growth. That's a good thing. As you mentioned, a very good thing for earnings. We just came off of an earnings season, by the way, that grew over 10%. I think you're going to do 8 to 10% to 10% earnings growth this year. And to your earlier conversation with Michael, it is a broadening out because you are seeing these other sectors and other stocks that are also now showing very good earnings and good guidance.

So that is important. So getting back to the Fed and what they do. do. We know the market is pricing in 100 basis points of cuts between now and the end of the year. I'm not so sure we're going to see it. However, that being said, he was pretty dovish on Friday, much more so than I even thought. And that's obviously why we rallied. So whether it's 25 or 50, they're coming. That's good for risk on assets. And again, good for the overall economy, but we're all data dependent. How about you, Mike, do you subscribe to Stephanie's point, which is that it really isn't so much the amplitude or the magnitude of the rate cuts as it is the idea that we're in a

rate cutting cycle and that's good for risk assets. Yeah, I think the idea that we're in that mode of cutting rates that we have by most estimates, let's say two percentage points worth of cuts that could be done before you get towards some version of the neutral rate if it was needed. I think that all makes sense. It's a psychological backstop for the market and in fact on some level, a financial energizer as well. I think the more bullish case is that they go slower. That's always been, you know, my contention that you know, you want them to be able to be deliberate about this because it usually means the economy's holding up. Starting last December, good economic news mostly became good news for the stock market. So we're not, I don't think,

as investors rooting for weaker economic news from here on out, because it would mean deeper and sooner cuts. So I think that's what we're at right now. I mean, stocks, and bonds are rallying together, in part because of that dynamic at this point. And Steph, you're looking, I know it names like Truist and Home Depot, for instance, while Nvidia is the one who's going to report Wednesday night. What are you thinking as we head into that? Oh, gosh. I mean, I can't wait for it to be over. Yeah, that's what I say.

But I do think it's going to be good, Kelly. But the stock just rallied in a huge way off of the August 5th bottom. And expectations are so high. And everybody likes it and everybody owns it. That being said, we know the powerful AI trend. The total addressable market is a trillion dollars. We know the hyperscalers and how much they have spent or they will spend this year up 41% to $244 billion. Another $266 billion is planned for next year.

That's another 17%. So the trend is their friend for sure. But we've had a nice rally off the lows. Wouldn't be surprised to see a pullback. And of course, we know it's not just invidia. It would be the SMH. But it is important to remember that an NVIDIA is 7% of the SMP 500 and 22% of the SMH. So we'll have a big move one way or the other.

I thought of you because our guest last hour said he wanted some Broadcom, but he had to wait for it to pull back for him a little bit. Yeah. I mean, broadcom is great. It's more diverse. It is cheaper. It is data center cloud. You know, it is AI, of course.

It's also VMware. It's also software. And that's more recurring revenue for the company and much higher margins. And that's why I really like the story. When they made that acquisition, I really doubled down on the position at the time. It too has had a nice run, though. So if Nvidia sells off, Broadcom's going to sell off, that's your buying opportunity. Mike, would you add anything?

I mean, is Nvidia the tell for the market, much like Apple was or maybe also still is? Or is its significance, especially maybe around earnings this week, overstated at all? I don't know if it's overstated just because of the index effect and the fact that it really is a risk appetite trigger one way or the other. I mean, it's very much replaced. So I'm in the camp and always have been that Apple is not really a market bellwether. It's the biggest. It's gone. Sometimes it goes 18 months, kind of not doing anything while the market's doing fine and vice versa. It goes on these streaks. But I do think that it's like the Tesla was three or four years ago, Nvidia is, which means massive amounts of retail participation,

a very widely embraced story, except it's got the crazy profits. To me, the question looking out, a little bit farther. Is capitalism going to allow margins to stay anywhere near where they are for NVIDIA on tens and tens of billions of dollars of incremental CAPEX going into years to come? I mean, it's not the way it's supposed to work. We'll see if that plays out, though. All right. Thanks to both Stephanie Lincoln, Michael Santoli. Stephanie, sit tight because we're going to talk a little bit more about NVIDIA in just a couple of months. Come back to you. Meantime, Michael, thanks very much. Kelly. Let's check on the bond market now, perhaps as much as what we were just discussing on the stock front.

Yields are dipping slightly lower. We have some big declines on Friday. Rick Santelli in Chicago for us. I mean, Rick, when we get down to 370s, then we start thinking 360s, 350s. We're not quite there yet, though. No, we're not quite there yet. And I still question how much lower long-term yields may go, or may I should rephrase, how much lower they can go and stick.

It really is the question. And let's start with the economic side of the equation. At 8.30 Eastern, we're all rather shocked at the strength and durable goods. Look at the chart. The juiciest number, just a whiskershye of 10% in over four years. But the story doesn't end there. As a matter of fact, when you look at X aircraft, it all disappeared. We went from up 9.9 to down 2 tens.

Why? Well, aircraft were up nearly 13%. And not just any aircraft, defense aircraft. So this really was a washout. And if we look at the response in the marketplace, we see up yields, down yields, which explains as many traders dug into the information, especially orders and shipments. Shipments were really a drag in orders. Orders gave a lot of way on a revision. And then when you look at several months, we're not really stacking up a lot of good capital spending information there.

And finally, if you look at the way the stocks opened, especially the Dow, that explains some of that volatility. But boy, has it settled down and gone sideways to last three or four hours? And finally, the dollar index. There's a two-week chart. It looks like a sterile case right down to the basement. And indeed, we're getting ever close to 100. Believe me, you want to monitor the technical and psychological significance of that level. Kelly, back to you.

Absolutely. Thank you very much, Rick. We appreciate it. Rick Santelli. Speaking of significant price moves, look at oil today up 3%. Israel and Hezbollah engaging in a series of strikes over the weekend. and a possible shutdown of production in Libya. Pippa Stevens here, of course, to break it all down for us.

And to help us understand Pippa, things keep getting more significant, or these are de-escalation-escalatory kinds of moves, I don't know. So two factors, as you noted, are driving the price action today. So the first is over the weekend. We saw Israel launch a massive wave of attacks on Lebanon. And so far, we've been waiting for that Iranian response, which has not come after the assassination of those two leaders, one from Hezbollah, one from Hamas at the end of July.

and Dennis Kisler at BOK Financial said that this weekend attack means the Iranian response is probably now more imminent. So the market is watching that. We have seen some of that geopolitical risk premium come out of the trade. However, the bigger driver today is Libya. And so the eastern government, which is in Benghazi, has now shut down production and halted exports. This is amidst an ongoing row with the Western government in Tripoli. It is that Western government that is recognized by international players.

and the argument is over who will run the central bank and control the oil revenues. And this is a not insignificant amount of oil we're talking about here. They produce about 1.3 million barrels per day, and they export the majority of that. The majority of that is going over to Europe. And so that is a real risk to actual production. You know, it's not just in the clouds anymore and kind of this far-out idea of disruption in supply. This could be very imminent. And so that could have an impact, which is why we're seeing this move higher in oil prices today.

You see there Libyan crude production. the Eastern government, they have taken this stance before and held energy infrastructure hostage as they try to get more out of the Western government. But once again, you know, 1.2 million barrels per day, that's over 1% of global demand. All right, Pippa, thank you very much. Appreciate it. Coming up, the Nvidia effect, the run in that stock, changing lives. Turning casual investors into veterans, we will take a look at one such story next.

Welcome back. InVIDIA remains the best performer in the S&P this year. up 156%. And over the past five years, it's up 3,000%. And if you go back a little further, while a relatively modest amount invested would now be worth millions. And in fact, that's exactly what's happened to some lucky investors. Here's the story of one such person, Mina Bukai. September 16, 2011, I invested in Vedia at 37 cents. And I put it 10,000. $1,000. It is right now probably $3.5 million.

I came to USA because I got married. Always have a dream to come over here. Just to like zoom out, my mom was born in a village in India. She studied engineering at the time. She was one of only two women in her class. A lot of specifically Indian women, first generation that immigrated here, they would have to do the household responsibilities. And a lot of them are very brilliant, very well educated,

but they had to give up their careers to take care of the family. She would do everything for us growing up. She really dedicated so much of her life to us. Around like when my kids were in high school, then I say, okay, I have a lot of time now and I want to utilize my time wisely. She always used to have CNBC on the TV and she'd have her laptop set up, her monitors,

before the market opens, analyzing certain things, earnings calls. I heard Jensen One interview with Jim Kramer he was amazing CEO and I convicted myself no I'm never going to sell this stuff I'm going to keep it for my grandchildren we honestly thought she was in over her head we thought her process was very unconventional my dad's kind of like all of us like scared almost like I don't I'm working hard for all this money I don't want Mina to to lose it on like some trade women started to notice and they started to ask her what are you spending nine to four doing why can't you make it to our lunches anymore?

And she told them, I'm trading. And people were mind-blown. Her friends also start getting into trading stocks because they would see how successful she was. Instead of gossiping, they're literally talking about, did you watch these earnings? Are you investing? And so it's this amazing story of financial freedom

and financial control for this generation of women that had to sacrifice a lot when they moved to this country. I remember her always talking about Nvidia, NVIDIA being her darling stock. And she says, I really believe in it long term. So I invested, I think, the first time in 2017 in NVIDIA. The returns, I think it's that initial 2017 purchase is about 4,780%. Here we have an example of someone who's actually building out the American dream

where they educated themselves. they use resources available to them and made life-changing money. In the end, it's your gut, and I think she's got a great gut instinct. She's the whiz, and we kind of just, like, are trusting the process. Amazing.

Tyler and I have, Mina, we want you to come on and talk to us. We have so many questions about, let's talk to Stephanie about this, who's still with us, whether the Nvidia effect is good for market. Steph, people see her making millions, and they go, I bought some Beyond Me.

meet and it went no, you know, Boeing. I mean, these stocks that, you know, a lot of retail investors have not had the luck that she has. I'd love to know why she didn't sell along the way when she could have made tons of money and whether she's going to sell now. Like I said, we should have her on. What are your thoughts, Stephanie, as you kind of hear that story? I'm in the business 33 years and I haven't had something like this happened to me. So she's an absolute rock star. She clearly does her homework and spends time and a lot of attention and detail. Not a lot of people have that, unfortunately, but she has capitalized on, yes, it's an AI revolution. It is. By the way, it's also a cybersecurity revolution, too, unfortunately.

Those are the two biggest places where CTOs are spending double-digit money on. One, because they don't understand AI and what it means for their business, too, on cyber because they don't want to lose their business. But congratulations to Mina. I would simply say, good for her, but I think the more prudent thing to do, it depends on your risk profile, of course, but to diversify, that's pretty critical. And it's proven to work. You have less ups and downs, less volatility. I think dollar cost averaging is really important. Kelly, you know most people will tell you that they buy low and they sell high. Most people buy high and sell low. Dollar cost average smooths it out. And then finally, compounding does work.

So good for her. I mean, awesome. I mean, why listen to me? Have her on the show for sure. But I think she certainly had a little luck along the way. Yeah, we should invite her on the show. One of the things that in, we do not know or it wasn't in that piece, what percentage of her total portfolio is represented by Invidia. One has to imagine that it's a lot just based on when she got in and what the stock has done since then. It would be funny if it weren't. Yeah. What else is she going on? Then I'd really want her on the show. At what point, at what point does it be, it's very hard, if you've got a stock that has loved you for a long time, you don't want to say goodbye to that lover. You want to hold on to it because it's treated you well. But at some point, we know that the smart thing to do is to gradually reduce the size of that position in your portfolio. At what point does that thinking kick in?

Well, I mean, it all depends on your risk profile. It all depends on how much you're up or not. But I mean, every, It's hard to lock in a profit, but my good friend, Jim Kramer, used to tell me, never apologize for it. So whether you sell a stock and you made money and it continued to go higher, this happened to me many times in my career. But I use that money, that extra money, to actually redeploy elsewhere where I thought that there maybe were better values or some hidden gems, maybe not as popular, with powerful stories and fundamentals, of course. So it takes a lot of discipline not to sell, though. It really does. Then let me personalize it a little bit. And obviously, I read it. recognize that you're running money for other people. You have a fiduciary responsibility to those clients. But at what point in a portfolio that you are running, do you get to the point

where you say, okay, this position has gotten too big? Is it 5%? Is it 15%? What is it? So 5% is usually kind of my threshold, but I have had something like Apple at 1.9% for the time being, but it will never stay that way. Five percent is what I can handle because I only have a a 30 stock portfolio, so it's very concentrated. Yeah, interesting. All right, Steph, thank you very much. Stephanie Link. We appreciate you sticking around for that.

And we'll make sure we get... That'd be fun. That's a fascinating. But further ahead, today marks, believe it or not, the 85th anniversary of the classic film, The Wizard of Oz. But the message of that movie could teach us a bit about investing, when to use your brain, your heart, and your nerve for a trade. That's today's three-stock lunch program when Power Lunch returns right back.

Here, see it. Oh, I love those whooshes. Welcome back to Power Lunch. Quick question. Market Navigator segment, Dow, is slightly higher now, up 9-100s of 1% at 41-211. Record highs earlier in the day. NASDAG moving the other direction down about 1% at 17-714. Let's get to our market navigator and Dominic Jew.

Dom, welcome. So, Tyler, so there's big changes that may be coming to leadership for the big pharma sector. We've been talking so much about Eli Lilly, the clear leader, right? Up more than 60% so far this year. The health care index within the S&P is up 14% so far, so very respectable. Let's now bring in Katie Stockton, a technician, founder of Fair Lead Strategies, and Katie has got some interesting thoughts about whether or not Katie,

we think that names, like Eli Lilly and Novo Nordisk, the ones who are anti-obesity and have been leading the charge in health care, are the ones that will still be leading. six to 12 months from now. Katie? Yeah, you know, I think, Dom, that it's a shift in leadership is likely here, and I say that in part for top-down reasons. When we see market correction develop the winners or the leaders of the market tend to be penalized in that environment. And we are looking for a seasonal correction for the major indices. And that would likely hit the likes of Lilly and Novo harder, I think, than the laggards in the pharmaceuticals.

space. We've also noticed some real recovery rallies in those laggards to suggest that they're on the verge of turning the corner from potentially even a very long-term perspective. And it comes at the same time that we've seen a very subtle loss of long-term upside momentum behind Eli Lilly. So you're not really so much down on Eli Lilly, if I'm understanding you correctly, as saying Eli Lilly may get caught more than others in a market down draft. That is A. And B, is that others in the pharmaceutical space may start playing some catch-up to the likes of Lily. Yeah, I think that's fair to say.

And if you look at the ratio of Eli Lilly to Pfizer, for one, it really looks overstretched. It's been just skyrocketing over the past couple of years. And there are some indications that that ratio, the up trend is a little too steep and not sustainable when you look at the momentum metrics, which had down took really for about four months or so. So we do see a little loss of relative performance potentially for Lily. And it would be only natural after the strong outperformance that it has seen. And at the same time, we have those new indications from these laggards that they seem to be turning the corner. First, looking at Pfizer. Pfizer has an oversold upturn and improve momentum to the degree that it's really impacting our monthly indicators pretty strongly.

So we think that's a meaningful long-term shift for Pfizer. And that's intriguing to us. We like to have some of our portfolio look like that, these turnaround plays as opposed to the winners and leaders of the market. And then if you look further within the pharmaceutical space at Bristol Myers and also Johnson and Johnson, you'll see somewhat similar. setups and that they were both in cyclical downtrends as of either 2022 or 2023. And those downtrends have lost some steam. We've seen very good oversold reactions from those two stocks as well. And this comes on improved as sort of a loss of long-term downside momentum that we find pretty promising. At a very minimum, we think their relative strength should

improve. All right, Katie, thanks so much, Katie Stockton, with Fairlead Securities. We appreciate your time today. Thank you for navigating us through the market. So it's interesting because if you want to look at the way Katie lays things out, it sets up for those so-called pairs trades, right? So if you want to buy one stock and finance it through the sale short of another one. Now, it takes a lot of guts to short a name like Eli Lilly or Novo Nordis. These are momentum plays right now. But if you're looking to find a way to kind of play that catch-up trade, some traders may look at shorting a name like Lilly to turn around and buy a name.

And buy a, yes, Pfizer or Bristol-Meyers. Right, Dom, good to see you, man. Good to see you. Thank you. All righty. Coming up, it is that time of year again. Our powerhouse road trip, the environment has changed a lot for real estate in the past year, especially as we move closer to a lower interest rate environment. We're going to check the pulse on the housing market across the country when Power Lunch returns, and we'll take you to one hot city. I'm talking to Tempric. Welcome back to Power Lunch. It's time. I love this time of year. It's time for our Powerhouse Road Trip series. but Ty, where's the bus with our... Yeah, we used to have a bus, didn't we? They might have retired it.

They retired, but blew a tire. It blew a tire. We're going to check in on real estate markets across the country. And on our first stop, we're going to hit Miami because, according to Zillow, it's number eight in market size out of 100 markets, with a median home price of nearly $500,000. But homes were spending an average of 41 days on the market before being sold, and this upward trend continues in other parts of Florida,

going to 60 days or more in. some places. So for more on what's going on down south, let's bring in Stephanie Magolan. She's a real estate agent at Encona real estate. I hope I said all those names right correctly. Stephanie and welcome. Okay, so we don't want to sound too doom and gloom about it, but is the Miami market slow? It's not slow at all. We've seen a bit of slower months compared to previous years and months, but sales are still happening, exchanges and transactions keep happening. Maybe people have that perception because you see constantly like price reductions online. But let me tell you, the final sale prices across the city are higher compared to last

year. I think of the Miami area, and I think it is as much as any marketplace in the country, a story of two kinds of houses. On the one hand, you got condos, and there are a lot being built down there. On the other hand, you have single family homes that are for sale, and there are many, fewer of those being built. So to walk us through these two different markets and tell us what's affecting them. Yeah, absolutely. I think that's important to notice when it comes to Miami real estate. These two markets tend to defer quite a bit. Let's talk about condo market. And like you mentioned, the main concern of a lot of buyers is there are a lot of properties being built, a lot of buildings being built. And yes, there is an increase in inventory compared

to last year. Prices are being reduced every month. However, like I mentioned, final sale price it's higher than last year. Listings prices are higher than last year, but this is the time for buyers to pick and choose and also have more flexibility to negotiate with a seller. There are some concerns when it comes to the condo market because we do have here a little bit of an issue with HOA. Why HOA? Well, it's been impacted by assessments by the recertification law, here in Florida and also the insurance. There is a big thing with insurance. But with that also comes sellers that are more flexible to negotiate and probably be open to pay these assessments before closing. Yes. So let me just let me make sure I'm understanding correctly. For the condos,

you're finding that the there are price reductions from the initial asking price, but the final sales prices are still higher than they were last year. Correct. They are still higher, not by much, but yes, it's still higher. Okay, take us through the single-family home market. Single-family home market is different. And also, I wanted to emphasize it depends on the neighborhood for both, for condo and single-family property. The inventory right now sits at slightly lower than four months of inventory for single-family properties. Price is still high, much higher than condo compared to last year on the listing and final sale price.

So there is no much room for negotiation on flexibility when it comes to. buyers negotiating with sellers. So it's a different story. And then for condo, yes, so and then for condo, for condo, like buyers do have more power of negotiating with the sellers, but also I will not say expect huge price reductions from a listing price or price reductions when it come to offers. Yes, you have room for negotiation, but the market is not crashing at all. But what I'm hearing you say, Stefania, is that properties are generally not selling above the listing price or the asking price. Let's go look at a house that you, I don't know whether you recently sold it or why don't you just walk us through it. Three beds, two baths, 1,600 square feet. Tell us about it.

Yeah, this is a beautiful property that has been beautifully restored. This isn't a neighborhood that's, in my opinion, very, very good to invest in. It's called Shenandoah. And the property is located in this neighborhood, which is right around the top neighborhoods in Miami, around Crook Gables, Brickle, Coconut Grove, and only five to ten minutes from the airport. So this is an up-and-coming neighborhood. It has been beautifully restored, sold for 1.15 all cash from a foreigner. So those are the type of buyers we still have in here. Even though they keep the historics of the property, they also add modern touches, new roof, new doors, new windows. So you have the historic part of it with the modern aspect.

And it's lovely. But it does sound in general like those costs are adding up. But I heard you talking about the insurance and the homeowners. So you think that's part of what's going on here? I mean, insurance has been an issue all throughout Florida. And, you know, we have that. And yes, it's a concern for several buyers, especially if you're going to buy a home in a flood zone or things like that. It depends of the zip code and many, many aspects.

Yeah, it's a concern, but it's not a limitation for people to move here or relocate. That's definitely not something that we've seen. People still move here. Yeah. Stephanie, it's been great to kind of get a sense of what's going on in the Miami market. Thank you for joining us today. We really appreciate it. Thank you so much.

I appreciate it. Stephanie McGolin with our Encona. All right. Let's go over to Kate Rogers for a CNBC News update. Hi, Kate. Hi, Tyler. The captain of the super yacht that sank off Sicily last week, killing seven people, including British tech titan Mike Lynch is now under investigation for manslaughter.

That's according to Captain James Cuthillard lawyer, who tells NBC News his client is being investigated for causing the shipwreck and that he will speak with prosecutors again on Tuesday. A notice of being under investigation in Italy does not imply charges are about to be filed, but is required before authorities can conduct autopsies. Six undocumented immigrants filed a motion today looking to join the government's defense in federal court of a program which would allow an estimated half million undocumented spouses of U.S. citizens to more easily apply for residency and citizenship. 16 GOP-led states filed suit on Friday to end the program in federal court.

And Walmart is recalling 10,000 cases of apple juice sold nationwide that could have harmful levels of inorganic arsenic. The recall applies to great value brand apple juice sold in 25 states, Puerto Rico, and Washington, D.C. Tyler, back over to you. All right, Kate, thank you very much. Meantime, as the climate heats up, it is getting harder to conserve water to help power some of the world's biggest industries. We will highlight some startups looking to change that when Power Lunch returns. Welcome back, everybody today marks the start of World Water Week.

Maybe you knew that, maybe you didn't. And while you may think humans and animals consume most of the world's H2O, the global heavy industry actually uses up to half of it. Now the race is on to find more efficient ways to recycle water in the face of increasing drought. Diana Oleg has the details in her ongoing series on climate startups. Hi, Dai. Hey, Ty. Yeah, some of the world's most essential industries like pharmaceuticals, food and beverage, textiles, mining, renewables, and of course power all use huge amounts of water. That's why a slew of new companies are finding new ways to reclaim and recycle water as inexpensively as possible. The water treatment industry is expected to reach a half a trillion dollars by the end of this decade. Much of it now involves harsh chemicals and uses a lot of energy.

But companies like Xylem, Violia and a Boston-based startup called Gradient are trying to reduce both costs and energy and eliminate the chemicals. We take highly contaminated wastewater which contains solvents, which contains dissolved salt, which contains organics. and we eliminate the entire liquid waste. Gradients technology mimics how nature creates rain. Wastewater is heated and pumped into a humidifier where it mixes with ambient air. As the two interact, they're heated into vapor, leaving the contaminants behind. The vapor is then transferred to a dehumidifier, gradient's proprietary technology, where it mixes with cool, clean water, and when the two mix, the air cools and drops fresh water

like a cloud dropping rain. The process, according to Gradient, cuts traditional costs in half. Other technologies can recover maybe 50 to 60 percent of water, but we can recover 99 percent of waters. Gradient, the world's first water unicorn, works with companies like Coca-Cola, BMW, Pfizer, and Adnock, and claims to save 1.7 billion gallons of water every day. That's the amount consumed by about 48 million people. It closed over $500 million in new orders in just the first. first half of this year, and its growth trajectory is very attractive to investors.

Scaling these technologies is difficult. It's easy to find a product, but it's much more difficult to find a full end-to-end solution for customers, and that's what Gradient has done. In addition to general innovation, Gradient is backed by Warburg-Pinkus, M&G Investments, Formation 8, Clear Vision Ventures, and GRC. Total VC funding so far, 200.000. $128 million. And part of why this industry is growing so fast as the climate heats, there's more water where there wasn't before, and there's less water where there used to be more. So accessing water is becoming increasingly challenging for industries. That forces them to become more innovative in how they clean and reuse water. Kelly?

We were just talking to advanced drainage systems, I think, about that the other day. Diana, thanks. So we appreciate it. Diana Ollick. Coming up, when to use your brain, your heart? and a little courage to make a trade. A special three-stock lunch is next. Welcome back. It's time for a special edition of three-stock lunch. Sunday was the 85th anniversary of the Wizard of Oz's theatrical release.

So today we're commemorating some of the iconic characters. Here with our trades is Michael Lansberg, the CIO at Landsberg, Bennett. Do you want to pick a character, Michael, for this? I mean, you know, who's available? The lion? No, the tin, no. The tin man. As long as I'm not the little witch, that's the shoes, a bad, bad, bad character.

Yeah, I see, maybe you're Dorothy. Okay. We asked you to choose a stock that you would buy with your brain. And this one, you went with Philip Morris, whose shares are up nearly 30% this year. Yeah, this is not, I don't think this is the heart stock. What are your thoughts here? I think the idea with the brain is it's a really solid company in an industry that nobody really likes, and most people know it's not good for you.

I think they've done a great job of pivoting away from the traditional marlborough tobacco with ICOS, which is the smokeless tobacco. and then Zinn, which is the nicotine gum that unfortunately a lot of teenagers and college kids like. So I think it's a good business, again, taking away the emotions from it. If you just look at the fundamentals, they're doing well, and it's probably going to continue. All right, let's look for a stock that you can buy with your heart, a little amor in there. And you went with Planet Fitness. Stock up more than 30% over the past three months.

Why do you love this one? I did this one more for your heart. You need to be alive longer. And obviously, we have an obesity endemic in the endemic in the, and the, the United States. We owned it before. Obviously, COVID was a reason to stop owning it. And I think they've kind of gotten their mind to write a little bit about some of the social issues that they've got going on. Stock has done well. They have 18 million members. That means there's about 300 billion that aren't members. And it's 15 bucks. They just raised the price. They've got great margins.

We think it continues to go higher as people need to continue to stay healthy. Makes sense. We just heard an analyst upgrade and positive on it as well. It was last hour. And finally, we're looking for a stock that takes courage to own. There's always a lot you could pick here. Ah, you've chosen Crowdstrike, which is up 80% over the past year, but still down 30% since the beginning of July, as we wonder about more fallout from their massive outage. And why this one? I mean, you hit it right on the head.

I mean, the massive outage in July, potential lawsuits. We have to remember that the fallout wasn't because the product was bad. It was because the update was bad. So the business is fundamentally very, very strong. I mean, I think Stephanie Link said it in the last segment as well. Chief Technology officers are spending money on two things, AI and cybersecurity. Crowdstrike still has best-in-breed cybersecurity products. They're just having a little bit of a hiccup here.

I think it's going to last a quarter or two. I think sales may be down a touch. But longer term, it's a great story. Cybersecurity is not going away. All right, Michael, thank you very much. Michael Lansberg with Lansberg Bennett, Private Wealth Management. He's the CIA there. The actors who played the scarecrow, the tin man, and the lion, one was Bert Lahr, the tin man was Jack Haley, and I'm drawing a blank on the third.

We'll have it when we return. If I know our audience, they are going to get calls right now. And I'm sorry I don't know the third, I should. Still ahead, becoming a Bitcoin believer. We've got new details on how former President Trump went from cryptoskeptic to a proponent seemingly overnight. We'll explore that in a moment. Welcome back, everybody. 70 days away from the general election.

Now, a few years ago, former President Trump called Bitcoin a scam. But just last month, he spoke at the year's biggest Bitcoin conference and praised Bitcoin, comparing it to the steel industry a century ago. A great story on CNBC.com today about how Trump went from skeptic to believer. And joining us is a reporter behind the story, McKenzie Sagalas. Mack? Welcome. Hey, Tyler. So for months now, I've been talking to the people who have quietly been helping to orchestrate Donald Trump's total about face on crypto behind closed doors.

The former president's 180 on digital tokens goes back to at least March. Now, that is when three bitcoinsers living in Puerto Rico got in touch with the Trump team and joined a chorus of voices, a group that includes Trump's family and friends that has been actively pushing pro-crypto talking points. We're talking secret meetings at Trump Tower in Nashville and Marilago, plus a slew of sideline fundraising events. Now, all in, they have promised him $100 million and $5 million. They've raised $25 million so far, and I'm told that an updated fundraising figure is coming my way soon. Now, Trump is listening, leaning into increasingly pro-Bitcoin talk on the campaign trail.

People telling me that he's been learning, as experts have explained that the industry is real and not overrun with criminal activities. but there's also the matter of all that cash being raised and donated by crypto executives and businesses. In fact, almost half of all corporate money raised this cycle is from crypto. They're outspending big oil and banks and so far where the crypto cash is going in the primary races, wins have followed. We're talking a more than 85% win ratio so far when pro-crypto super PAC money is involved. So these are pro-crypto forces that are donating this money.

They're not necessarily donating it in crypto. Some of them are actually. A mix of Bitcoin, Ether, U.S.DC, more than $4 million worth of cryptocurrencies going to the Trump campaign. So these would be companies, these would be lobbying groups, professional organizations, etc. And especially the companies that are battling the SEC and Chair Gensler. Ripple and Coinbase are two of the biggest backers of a pro-crypto super PACs, not necessarily the Trump campaign in particular, but certainly Farishek is one of the biggest spenders. Quick response to the Harris campaign. What do they say? on crypto. Last week at the Democratic National Convention, we heard from a senior campaign aide. And when he was specifically asked about her stance on crypto, he said that the VP would embrace

policies that support emerging technologies. Meanwhile, Coinbase's chief policy officer saying that they've been meeting with the Harris team behind closed doors and they're very pleased about those talks. Fantastic. Mackenzie, thanks. It's a great way of recount into how you curry influence and power. Thanks for watching Power Watch, everybody.