Power Lunch - Dow’s historic losing streak, Delta CEO Live 12/17/24

Episode Date: December 17, 2024

The Dow entered the history books today, with its first nine-day losing streak since 1978.we’ll cover all of the angles for you.Plus, Delta Airlines CEO Ed Bastian joins us in-studio to discuss holiday travel demand, the future of flying and much more. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Launch, everybody, alongside Kelly Evans. I'm Tyler Matheson, and we are joined for the hour by Sirat Sethi, DCLA managing partner. Stocks lower across the board today, the Dowdown for the ninth straight session. The longest losing streak, this is hard to believe. Can you believe it? I can't believe it, actually, since 1978. But remember the S&P and the NASDAQ are broader indexes, and they are still just off their record. So, eight-day losing streak, we had one in 2018. They're somewhat common. Nine days, very uncommon.

Been 50 years. 78. Wow. Yeah. I wasn't even working in this business. That's a long time ago. It is. And by the way, United Health is a big reason for that. If you're wondering why the bifurcation between the Dow and the NASDAQ, which has been at record highs, United Health is down 20% over this nine-day stretch, accounting for more than half of the Dow's point losses. It's down another three and a half percent today.

We're also a little bit later on on the program going to be joined on set by Delta CEO Ed Bastion. Wow, eight times is their P.E. ratio. So much to talk to him about with the state of business, travel consumer, their ongoing spat with crowd strike. Maybe ask him about the drones. Yes. The government says it's nothing to worry about those drones, but do airlines need to be worried about them? And Bitcoin topping $107,000 today. So does Bitcoin have a place in the portfolio of a long-term investor? We'll tell you what financial advisors are telling their clients. We shall see about that. It's been such a frustrating point for them as it keeps clients. So yes, 106,000 for Bitcoin today. All right. Meantime, we start with the Fed as we are less than 24 hours away from the final decision on interest rates for 2024. So let's check with our mock Fed panel.

Five of our seven panelists voted for a quarter point rate cut. But Don Peebles is out there, as he has been for some time now, in voting for a half point cut. Roger Ferguson voted for no change at all. So will there be a similar sort of diaspora or dissension on the Fed? Markets will be listening very closely to the press conference to hear what Chair Powell telegraphs about the next meeting coming up in January. Let's get some insight now from Peter Bookbar, Chief Investment Officer, Obliquely Financial Group and a CNBC contributor as well as Surat SETI. I assume, Peter, you're in the quarter point camp here, but what people will be listening for is the idea of whether the Fed is going to pull. in January. Do you think they will? Do you think they should?

So I am not in the 25 basis point cut. I think they should wait. Not because I don't think that the economy may need more rate cuts. I just think that there is such a cloudy situation when you try to marry the economic data that they're looking at, those who they are restrictive for, and those that they are not restrictive for, like the markets, for example. And I think reconciling that right now is very confusing. And if there's one thing that Jay Powell told us before he started cutting rates in September, as he needed confidence that inflation was not only just coming down, but was going to sustainably stay down. And I don't see how he has enough confidence to say, okay, let's cut rates again,

which would be 100 basis points since September, rather than maybe bringing in more information, particularly on the new incoming administration's policies on taxes and tax. and then wait till January. I mean, that they're going to cut ahead of that information, which is hugely important for the economy over the next couple of years. I'm not sure why they're going to do that. But let me just mention something that one of our guests yesterday said, and that person said fundamentally that that's not a bad posture to take, that they shouldn't cut,

but that the market isn't prepared for that. That's not what the Fed has been signaling, and that if they don't cut, it will be a real upset in the investment markets, among other places? They will cut because the market has essentially bullied them into cutting. So they're not going to bypass that. It will be interesting to see if Michelle Bowman, maybe dissents again, or I doubt will get a second dissent, but who knows, particularly with the voters. This is their last meeting, the presidents before they become alternates.

But they will cut because the market is basically priced it in, and they're not going to go against that. Even though I sympathize, I still hear the intellectual case being made. People, like Paul McCulley, who was on yesterday, Sarat, and said, you know, said to him, why lower? If you just look at the facts, why lower? He said, because you still want to help the yield curve get positive. You're looking out six to 12 months. You want to, you know, kind of get to closer to where neutral might be. So I think there is a justification that they are making, whether it's accurate or not, time will tell. I think the messaging is going to be so important. I think the 25's baked in. I agree with Peter. I said, if you didn't have a new incoming president,

I think you would have probably stayed where you are, and the message would have been like, we're ready to cut, but we need more information. But the market will not be prepared for that. And I think you don't want to, so it's like a lose-lose. Like if you don't cut, the market will get upset. And if you cut, the market will say, why did you do it? But you're kind of doing it, I think, even more for political reasons. And then you wait. But if it were political reasons, why not wait? And keep your cuts in, you know, as ammo for the, new administration. I mean, are you think they're openly trying to defy Trump and raise rates to appear independent? Well, I think Trump has said we need rates to be lower.

Right. So why not wait? And say, after he takes office, we'll do the cost. Because then you might give him ammunition to say, wow, I can't believe you didn't cut. Now you have to cut even way more the next time. So you kind of say, we already said we're going to do this and then wait for the information. So what will be interesting in the messaging going forward, if they tend to be more hawkish in their message, I think the markets will not like that either. So tomorrow's going to be an interesting day, just on what happens to the yield curve, what happens to the 10-year, what happens to equities, and where do we go with that? Peter, are there numbers in the numbers that worry you?

Okay, let's use the word restrictive. A lot of the Fed members, they like to believe that. Now, for a certain part of the economy, they are. If you're paying interest on your credit card bill, if you're trying to buy a house, if you're a small business that's paying $9,000, to 10% to borrow money, yeah, you're pretty restrictive. But there's a party going on in the markets. There's no restriction whatsoever with respect to monetary policy and what's going on in the markets, particularly credit spreads and the valuation in the S&P that's approaching March 2000 highs. So it's restrictiveness is in the eye of the beholder right now.

But I want to get back to my point of that. Yes, I think the economy may need some more cuts, particularly the pace of hirings in the labor market has slowed. If the Fed reads their own beige book, it sounds like an economy that's growing like one to one and a half percent. Absolutely. There is no correlation between reading the beige book and a two and a half to three percent GDP number. But all this is confusing if you put it all into like a bowl here to try to figure out. That's why I think the Fed should wait. And also, the Fed should be listening

to the message at the long end of the bond market has sent them since they cut in September with the 10-year yield being very persistently above the, you know, the Fed should be listening. this four and a quarter level. I throw out the four and a quarter because it's sort of half of the 5% on the upside, the 360%, 3.6% on the downside that we saw a few months ago. And also, we had a new administration. I'll say this again, who's going to have tax policy and tariff policy. Don't we want to wait to see what this looks like before we move again?

But isn't that the theory here that they will wait in January? They might wait in March. They might not cut again until deeper into the next year. Isn't that the weight? Yeah. I mean, if they do, they will cut tomorrow, and the bond market's only pricing in two more cuts next year. Yeah. Saying only 50 basis points more, which over the past called six months, the market had taken away an additional 100 basis points.

I mean, the Fed Fund's futures in the December contract, we got down to 280 early, you know, a few months ago. Now it's 380. But I think the bond market, the long end, is telling us that... What is your thought about the tenure? Well, it's also coincident with tips, break-evens that have risen of late. You have food prices now that are near an annual high right now, that this path to not only just two and staying at two, you know, is becoming much more bumpy. And if I'm long the 10-year, I don't want an easy fed.

I want a Fed that's tough against inflation. And it's not just the U.S. 10-year. It's rising rates in the U.K. The U.K.K. 10-year yield today closed at almost a one-year high. We're going to have the BOJ. If they don't raise rates this week, they're going to do it in January. The 40-year JGB yield is near the highest level since 2008. This is a global bond bear market.

Except for China. I think the other thing to add to that is what's going to happen with our budget deficits. Totally. The 10-year is going to really reflect that, especially if we get tax cuts. And we get, you know, things to grow the economy, but they're going to be taking away from paying down our debt. So we got to watch that. And the 10 years is going to be very interesting. Sirot, real quickly, we had Biggie Chata last hour who has a 7,000 price target on the S&P.

I don't think you do anything formal like that. But what is your kind of base expectation for stocks? I think we're going to get the Big 7, the Fab 7, doing a lot of the hard work again. But we really do need what I call the soldiers to start doing well. And we haven't seen that. I mean, you've seen the equal-weighted S&P down in the last two weeks. you know, close to 3.5%. So it's going to be really bifurcated because your valuations are going to get totally

skewed. You already have 23 times earnings, and like we mentioned, credits rather so tight. You can't have that happen to get to 7,000. You're going to have to have the rest of the stock market come with. The rise of the rest. Yes. All right, Peter Bukvar, thanks very much. And staying with us for the remainder of the hour. Someday you'll graduate to stay with us for the remainder of the hour, I guarantee you. Why haven't we done that already?

We'll do that. I promise you. And then it's going to be in the new year. Watch. Just your watch. Thank you. We're all fed all hour long tomorrow, starting with the interest rate decision at 2 p.m. Right here on CNBC, right up to Fed Chair Powell's press conference. That begins at 230. You've been through this drill before, folks. You know not to miss it. 2 o'clock is the decision. 2.30 is the presser. And that's the store. We get fireworks one or the other. Yes.

After the break, we'll be joined in studio by Delta CEO Ed Bastian. We'll talk holiday travel, demand, the future of flying, and the topic on everyone's mind lately, drones. Power lunch. is back after this. Welcome back to Power Lunch. It's been a solid year for Delta Airlines. The shares are up nearly 50% to double the gain in the S&P. The company is actually entering its 100th year now as well, facing plenty of competition, but also planning for its future. Here to discuss all that and more and much more is Delta Airlines CEO, Ed,

Ed, it's great to have you with us. CNBC's Phil Leboe joining the discussion to help us guide things as well, and Sarat Setti, of course, is also still with us. Ed, maybe you could just kick things off. by talking about what you expect for 2025. The years of the Taylor Swift kind of revenge travel are over. Your shares have obviously reflected kind of a nice recovery and some of that. But what is next year hold?

Well, we live in the experience economy, and the experience economy is healthy and sound. As you mentioned, whether it's Taylor Swift concerts or going out to restaurants, finding new places to travel and explore. We saw over the Thanksgiving holiday, our strongest travel we've ever seen. The Saturday, Sunday, Monday of the Thanksgiving,

break were three of the 10 highest revenue days in our history. Wow. With Monday being the highest revenue day in our history by 20%. And so all that's boating into a very strong holiday period. And we're seeing that in our bookings and 25 looks really healthy. By 20% that's incredible. I believe that Monday was your highest day because I was at Newark Airport at 5.30 a.m. My son was getting on a Delta flight to Indianapolis, I believe, on that day.

My siblings won't come anymore because it's too busy. Can I switch the gear just because it's on the top? top of my head. We had a tragic shooting of an executive last week in Manhattan, as you surely know. I wonder if and how that has changed what you do, how you are protected. You're a very public CEO. You've been very generous to come here on CNBC many times. People recognize you. Have you done anything differently? And how are you, your board, and others prioritizing security in a different way today. Well, you could have been in our boardroom last week, Tyler. It was one of the topics of conversation with our board, and you're right. I'm very, very public. I don't intend to

change that, but we have to be smart with what's going on. So I travel on our own airplanes. I don't have a private fleet on private security following me around. I don't have a driver. But all those questions now are coming up in terms of how do we protect our brand, protect me personally. And, you know, we're obviously not going to talk publicly about how we're going to do that, but it's top of mind. Yeah. Let's talk also then about computer security. You obviously had an activity, I guess, you would say, a snafu during the summer. I realize that there is ongoing litigation here that would sort of narrow what you can say. But how are you addressing the question of computer security and how close is American critical infrastructure, whether it is the airlines or telecommunications, or telecommunications? businesses or other businesses, how close are we to a kind of doomsday event? Do you worry about that a lot? Well, we are dependence on technology and automation like never before, and it can shut down businesses.

It can shut down and we've seen it. As it did. As it did for us. So the tune of $500 million or something is your business travel period of the summer. That matter, we're actually in litigation because we believe there is fault to be shared. We're pursuing that with CrowdStrike, as you mentioned. But with respect to AI and the coming technologies of the future, it's really critical. And one of the challenges we have is that the critical infrastructure providers have their own security challenges. The technology providers themselves give us the software. But we cannot have the technology producers not incorporating the security needs into the product as compared,

because there's always a rush to market. And speed is of the essence. We can't do it with the risk that we've seen in some of the technology. Bill LeBoe is waiting on his perch somewhere out in the middle of the country, I assume. Phil, jump in. Ed, good to see you. A quick question regarding the Consumer Electronics Show. You're going to be out in Las Vegas shortly after the new year as the show is taking place.

This is not the first time you've gone out there. What is it about CES that you believe is so important for Delta, expanding its brand beyond the core airline business. Well, we've been given the opportunity, and been invited to do the keynote for the Consumer Electronics Show, and we're doing that the first week in January. CES is the biggest event that Vegas puts on all year long. It's a week of incredible innovation and excitement,

whether it's electronics, whether it's new brands, new opportunities, and it's global. So we're going to be doing the keynote. We're doing the keynote from the sphere. It's never been done before. And it also happens to be our heart. hundredth year next year. So first U.S. airline to hit 100 years. So we'll be launching that in the sphere. It's going to be a two-hour production that we're working on. And so it's not a,

it's not a normal presentation. We've got a lot of great guests coming and a lot of partnerships that we'll be announcing and new, new opportunities. So the sea of the CS is about the consumer, and that's who we are. We are a great consumer brand. We serve 200 million people a year. We're looking over the Christmas break from the Friday before Christmas to the Monday afternoon. years serving approximately 10 million people and doing it a great style with great experience. And so Delta needs to be in the center of a lot of consumer activity. You got the lounges, the shake shacks, go ahead. As a longtime shareholder and proud to be one, a question for you as to can you talk to

the premiumization of your consumer and the partnership that you have with Amex, which has turned out to be phenomenal from both sides. And how is that kind of working in your strategic plan for the next few years? We consider our brand, Sarat, to be a consumer brand as well as a premium consumer brand. And our demographic are consumers with household income of $100,000 or more, which, by the way, makes up about 40% of the U.S. population. So it's not a, it's not a small, small segment. That demographic has accumulated since 2019 over $40 trillion of net worth since the pandemic.

Just in capital expansion. Just in terms of their wealth expansion, the market, their 401K, homes, or whatnot. And when you speak to that demographic, one of their top priorities for discretionary spend is travel. And the experience economy, as we were talking about earlier. So whether it's American Express, which is the travel brand of choice amongst consumers, or it's Delta Airlines, which is the brand of choice on the premium sector, that's where we're putting all of our growth, all of our investment into. and it's something that candidly has never been done before.

Because our industry has been commoditized over time, and we've broken out of the pack, and we're going to stay out of that pack. And one of the things that's interesting about your business now is, I think it was 10 years ago, 20% of the business class seats were bought, and now you've changed that. Can you talk about how you change that? Because that by itself is adding to your bottom line, but also adding to the experience.

Well, go back 15 years ago, business class was basically seen as upgrades, and no one was purchasing it. Everyone was being upgraded into as a benefit, which is a nice benefit, but if you're giving your best product away for free, how can you have a stable franchise? We actually brought the price points down to that they're accessible so people actually can't afford to pay to sit up front. And they do. We've improved the quality of the experience.

So today, close to 80% of our seats in first class across the board are paid for. We still have some room for upgrades, but we've flipped it on its head. Can we talk about drones a little bit? If you'd like. Do you know something I don't know? No, I was going to ask you the same question. Do you know something we don't know? What, if anything, can you tell us?

What are your pilots telling you, if anything, about what they are seeing? How concerned are you? What is the government telling you? Reassure us if you can or not, if you can. Drones are not new to the aviation industry. We've had drones for years or birds, but we've had drones for years. Our pilots are trained on identifying them, watching them, reporting them, working with the FAA and the authorities to make certain we understand that. I don't know, candidly, anything more than you know, honestly, in terms of what the government has.

The government has told us this is not a security concern. We know the FAA, we know Homeland Security is involved in trying to understand this. Have your pilots ever seen them or had to be redirected around them or anything like that? Well, again, we see drones not infrequently in the sky, and when we see them, we report them, and we try to find out what they are, and the authorities try to make certain they identify the owners and operators. Has the number of occurrence has been higher than usual lately? Well, obviously, with the attention here in the Northeast, it's been higher. I can't explain the phenomenon, but I know the authorities are looking into it.

Yeah, it sounds the government's language has been extremely, to me, very careful. It's not a security risk. Well, that's not exactly a forthcoming answer, in my humble opinion. But I don't. Yeah, again, I know as much as you do, probably less candidly because I know you guys live up here and I don't. Yeah. Phil, you want to jump in with another question? You know, I hate to go back, you know, away from drones because I know everybody's fixated on that right now.

But, Ed, I was just over in Europe, and the airports, as people are flying there, when you get there, the number of people you see from North America, you can tell the Americans are there in different cities. It's just astounding. Do you expect that to slow down in any fashion in the next year? Because it kind of blew me away a little bit compared to past times when I've been in Europe. You know, transatlantic travel has been by far the highest growth that we've seen of all of the forms of travel. And guess it's all demographics. There's a secular move to travel. And transatlantic has been the area we've seen the greatest growth in. We anticipate next year being another step up. And it's not just transatlantic, but it's Asia, whether it's South America.

The only place in the world we haven't seen that is China. There tends to be not a lot of demand on either side between transit there. So that's been a change, but we've taken those planes and we reroute them to other areas. But the transatlantic's been great, and we look forward to another year ahead, Phil, of great growth. One more quick, he, Sarat. So just on that point in terms of aircraft, you know, given the lack of supply coming on, are you changing your planes around to satisfy the demand for Delta 1, which is kind of the premium package? How is that working? And does that affect kind of the supply you have going forward?

Well, Delta 1 is principally driven. towards international travel and it's the first class international cabin on our planes. I know we've talked in the past about the Delta One experience, the lounge of JFK or L.A. or Boston that we've opened, the improvement in terms of the overall product on board the planes as well as the service levels. That's where we continue again to you. The planes we're bringing in today, particularly international planes, one third of our overall product is premium on plane. That number used to be less than 10 percent if you go back 15 years ago. So we're continuing to move in the premium sector.

The secular trends are in our favor. We see no let up insight. You know, I think people, once they are back traveling and they're traveling at levels we've never seen before, I don't see that changing anytime soon. Ed, thank you so much for being with us. Ed Baxter. Thank you for having me.

Appreciate it. Phil LeBoe. Thank you as well. And Sarat, thank you for bringing your friend, Ed, along. All right, shares of Alphabet have surged more than 40% this year as the rally for tech stocks rolls on. But is there even more room to run? We will check the charts in our market navigator. That's next. Be right back. Welcome back finally to Power Lunch. Quick check on the market. Stocks are lower across the board. The NASDAQ down only slightly after

hitting a record high yesterday. There you see it down four-tenths of one percent. Dom, are we going to talk here? I don't know where Dom is ready to talk about the NASDAQ rally. But why don't we just look at those those lovely numbers there for just a moment as we work out some technical issues that we're trying to solve here at Power Lunch. We'll be right back. All right. Let's talk with our market navigator a little bit about Alphabet. The stock is up 5% in two days, 16% so far in December. And we're going to get one argument on why the stock is set for a big AI catch-up and how the technicals and fundamentals support that case. Joining us now, Jessica Inskeep of Stockbrokers.com. Jessica, welcome. Good to see you.

Great to see you as well. Why have you narrowed down on Alphabet? What do you see? So first and foremost, Alphabet showed up on every single one of my technical scans that I ran on a weekly basis. But it's all about AI agents. We've had a lot of excitement about this hypercomputer and Gemini 2.0 that came out last week. But TPUs, those tensor processing units, are what actually fuel and train large language models. It accelerates those large language models.

So if we have an acceleration that has better performance, four times more performance, 62% more energy efficient, that actually plays into those AI agents and enterprise solutions and positions Google or Alphabet to actually compete with Asher in AWS as we have AI agents like Salesforce starting to come to life. I think it's a key theme we're see in 2025, Tyler. What do all of those lines behind you tell you? I'm looking over my shoulder at them. And then it looks like there's a high pressure system moving in over the East Coast. And that would be the cloudy area. What is that?

What is all this going on here, Jessica? I'm confused. Yeah. Such a great, great question there. So here, this is a key moment right here. This is around 191. This is the moment that I have been watching entirely for Apple and what confirmed that breakout.

This here, the cloudy area, Tyler, is Bollinger bands. These are standard deviations. We deviated away from this. the 13, 26, and 40 weekly moving averages. I utilize this quite often. When we deviated away, we then went below this. This acts as our area of support turns resistance. So now we had a flipping over.

This orange line here is our 13 weekly moving average, which is one quarter worth of prices. This becomes support. So now we've, and here, we've overcome this. It's now support, and we overcame this clear 191 area. And this tells me that we are primed for a break-up. out from here. You explained that so well. And I just want to say that if this technical analysis

thing does not work out for you, meteorology. Meteorology, you've got a future in it. It's awesome. Sounds great. Jessica, thanks. Appreciate it. And thanks for her patience today as well. Jessica and Skip. Over to Kate Rooney now for the CNBC News Update. Kate. Hey there, Kelly. Police say they are looking into the online activity of a 15-year-old girl. They say killed a teacher

and student yesterday at a Christian high school in Wisconsin. Investigators are working to authenticate whether writings circulating online are actually from the suspect. Police say identifying the motive for the shooting is their top priority right now. Israeli Prime Minister Benjamin Netanyahu said today, Israeli forces will remain in a Syrian buffer zone until they can ensure the region's safety and security. The comments came in a briefing today from the strategic Mount Hermann in what appears to be the first time a sitting Israeli leader has entered Syria. Israel sees the stretch of land

along the border with the Israeli occupied Golan Heights days after rebels ousted the Assad regime. And those loud pings, everybody knows these, that remind you to fasten your seatbelt in your car. They're about to get a lot more calm. The National Highway Traffic Safety Administration finalized a rule yesterday that requires the warnings for passengers in the back seat, as well as the front seat, it's going to go into effect September 2027, guys. back over to you. This is my biggest fear. So it was annoying. Especially relevant.

We're matching today, Kelly, by the way. You and Deirdre. This is what it's in the atmosphere. We all do this. It's amazing. Kate, thank you. Kate Rooney reporting. Meantime.

The stocks are lower across the board as we await the Fed meeting and its decision tomorrow. The bond market eagerly anticipating that and comments from Chair Powell. Rick Santelli is out in Chicago for more. Ricka, what can you tell us this afternoon? You know, this is a very unusual setup for Treasury yields. going into the Fed meeting. If you look at a chart that starts on basically a week ago Friday, what you'll see is every session in tens, every session, including today, has had a higher high

than the previous day. So for 10s, seven in a row, for twos, six in a row. But the other issue that all Treasury Yield share is they've had six consecutive higher yield closes in a row. Today we look like we're going to break that pattern, but it's still awfully close, Kelly. We're only basically down a basis point or so on the twos and a little over a basis point in 10. So we're hovering very close, actually, to neutral. And if you look at the 10th specifically, yesterday's close was basically a four-week high-yield close. And all of that, of course, is taking a bit of a pause in front of the Fed meeting tomorrow. We all know that the future, what the Fed's going to do has changed rather dramatically, not only in the mind of investors, but also how

it's starting to show up in the marketplace. And finally, the dollar index. This chart starts in October of 22. To give one an idea how we are on the threshold of really breaking out to the upside and the dollar index. And as it sits right now, it's up 5.5% on the year. And tomorrow, I fully suspect that after the Fed speaks, statement, and Fed conference, I believe that yields not only will climb, but I think the dollar index is going to have.

have a wild ride for the rest of the year. Tyler, Kelly, back to you. Rick Santelli, thank you very much. Sarat, what do you think, what's your outlook for yields the 10-year? There have been some that say, well, it's going to go back to 5%, maybe higher, maybe even 6%. I think it goes higher. I mean, we talked about it earlier in the show. I think you've got a few, whether you call headwinds or tailwinds, I mean, depending on where you want rates to be. I think inflation's here to stay. So what is your real rate versus your nominal rate? We've got deficits. So how do we grow our way out of the deficit. We don't know that hasn't been proved yet. We don't know what the policies are going to do, whether tariffs will add to it or take away. We don't know where the economy is

really going to go. I mean, we've already seen hiring slow down, but if GDP doesn't grow as much as we expect. So, and the other thing, Tyler, like, if you look back over the last 50 years, 10 and a, four and a half percent of the 10 years is normal. So it's really, we're not talking about something, oh my God, we haven't seen this. It's just that we've had 14 years of zero to two Yes. So we get back to some type of normalcy, and of course nothing ever stays in the middle. So you could have the, you know, we could have the pendulum swing to close to 5%, 4.5%. But I think as long as the markets can digest it in corporate America can do that in terms of what they need for extra capital, I think we're okay. You have this kind of normalcy, in other words, in other words, a yield in the fours, mid-fours, maybe even up toward five. But the economy seems to be doing just fine despite that. Yes. And it is. And look at spreads.

Spreads are one of the first indications, mainly as equity investor, I look at spreads, and that market is a lot more efficient than our equity market. So today, and you have a lot of capital going in there because having coming out of the 2% world, a lot of investors are looking for fixed income. They're looking for yield. But again, it has to be what's your real rate versus nominal? And I think that's where people also start forgetting, right? Because the cost of everything has gone up so high. More later, Surat. Thank you.

And Bitcoin has surged more than 50%. since Donald Trump was re-elected, rallying along with the rest of the crypto sector on renewed optimism for deregulation under the incoming administration. But is crypto a safe play for the average long-term investor? We will explore that when power lunch returns. Welcome back, everybody.

Another big day for the crypto market. Bitcoin hit a new record high this morning, topping $108,000. So how are financial advisors positioning their clients in crypto? for 2025 and beyond. Can it be part of a long-term investment strategy, or is it just a trader's play? Sharon Epperson joins us now with more.

Sharon. Well, Tyler, you know, Bitcoin and other cryptocurrencies have soared since the November election. If you take a look at this CoinEx 20 index, it's made up of mostly Bitcoin, also are XRP, Ether, and Solana, along with several other smaller cryptocurrencies, it trades 24 hours a day,

and it's doubled since the election. Still, many advisors are reluctant to recommend, men crypto. In July 2024, when crypto prices were half of what they are now, an annual survey of 2,000 financial advisors by Seruly Associates found that more than half of advisors, 59% said they don't use cryptocurrencies or plan to in the future, while more than a quarter said they don't use it now, but expect to in the future. About 12% of financial advisors said they use cryptocurrencies based on clients' requests. Yet less than 3% of advisors said they use crypto based on their own recommendations.

Advisors who recommend it are increasingly using exchange-traded funds for crypto exposure, and while over one-third of advisors use ETFs in 2023, Ceruley Associates expects the vast majority of them to use Bitcoin ETFs next year. Advisors say whether to have crypto in your portfolio really depends on your time horizon, your risk tolerance, and, of course, your financial goals. Tyler? Sharon, thanks very much. Therat, where does Bitcoin or crypto fit?

in your investment thesis? Well, I think 100% it depends on the client's risk profile, because this is an extremely volatile asset class that can have in a very short period. So if clients have that risk tolerance and do they really want it in their portfolio or not, because this is not something that is going to be linear for, you know, it is very volatile. And I think given where we are in the markets, equities are volatile enough. So you really need to understand your client's needs. And as a fiduciary, really, is that what they should have or not? So I think that's where we're going to go with the crypto space. All right.

Let's move on to three-stock lunch now with Surrott has our trades today. First stock is United Health Group. The shares are down nearly 15%. Over the past week and have been a major drag on the Dow, the latest bit of potential bad news, President Elect Trump's comments on the drug industry and its middlemen. Hope for UNH? I do.

I mean, full disclosure, we own it, I own it. I think the stock's down 10% in the last year. But it is a good company that does good things. It is right now in the crosshairs of a lot of negative press, and I think you just have to wait until kind of things settle down. Until your end, if you're a momentum person, it's very hard to step in front of it. Do you care if they divest the PBM? I think that would be better.

Really? Okay. Yeah, I think you have to take away the opakness, make it more transparent, and there is a place for health care companies and for insurance companies, but I think we just have to make sure that now we find out what exactly it is supposed to being too opaque. All right, let's move along to Netflix, which has just been on an incredible run. It's doubled in the past year. The co-CEOs are expected to meet with Trump at Mar-a-Lago today. What do you do with the stock?

It's a great stock. I would hold it at this point. I mean, Netflix is one of these things that you buy on the dips. They are the leader. I don't see many dips on that chart. Well, maybe in May. I think you have to magnify it. No, over three, five-year period.

There are always times when, you know, the ads, they don't add as many subscribers. But it is the leader, and I think you get the opportunity every once in a while. but I would hold it at this point. All right, and let's move on and conclude with Workday, the financial management company, up more than 30% over the past six months, going to be added to the S&P 500. Next week, your take on Workday? Look, I think it's work in progress. The stock hit a couple of tailwinds there that we saw,

but I think if you look at their business, which is HR, which is, you know, financial management, huge demand, double-digit growth, growing internationally. It trades at something like 25 times cash flow, but it's growing a double-distance. So it's not a cheap stock, but it's not expensive stock. It's what I call growth at a reasonable price and a huge amount of cash flow. What does 2025 look like to you? For workday? No, no, no, for the market.

I think you get mid to high single digit returns, but I think you're going to get quite a bit of volatility, especially as we have a new administration. We don't know what the policies are really going to be. We know what they've said they're going to be. We have to see where commodities go, where energy goes, where does the dollar go, where does the 10-year go. So there's a lot there, but I'm still a long-term investor. I'm bullish.

Just the one thing I always tell clients is stick within your allocation. Because if you've done really well this year, maybe you need to peel back some. Not because I think you shouldn't be in equities, but it's always good to do that. If you've gotten out of balance just through inertia. And whether it's in your 401K plan or it's in your investable portfolio, just stay within the allocation. I look what you said, the MAG7 is still carrying a lot of water. Sirot, great hour. Thank you.

Always enjoy it. Thank you. See around. Thanks for watching. Power Lunch, everybody.