Power Lunch - Earnings, The Fed and JetBlue 1/30/24

Episode Date: January 30, 2024

There are two big things that markets are watching right now: earnings and the Fed. Some big results came out this morning. Some huge names will report this afternoon. But the biggest name of them all, Jay Powell, takes the stage tomorrow. We’ll break down what that all means for stocks. Plus, JetBlue just swung to a loss in Q4. We’ll dive into the results with the incoming CEO, and what lies ahead for the merger deal with Spirit.  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. She's Contessa Brewer. I'm Dominic Chu. Coming up on the show, the two big things that markets are watching. Earnings in the Fed. Some big reports are out this morning, some huge names reporting this afternoon, and the biggest name of them all. Jay Powell takes the mic tomorrow afternoon, what all of that means for the markets. Plus, we're going to talk to the incoming JetBlue CEO about that company's earnings and about the fight to get the merger with Spirit approved. Let's get a check on the markets first. The Dow up nearly. 100 points, the NASDAQ lower by 8 tenths of a point now. Shares of UPS lower after mixed results, including missing revenue estimates for the sixth straight quarter, also announcing 12,000 job cuts as part of a billion dollar cost cutting plan, Dom. All right, and check out Super Micro,

one of the at least hottest stocks in the market right now, up nearly 80% just this month. After results, analysts are coming out of the woodwork, basically, in droves to raise their target prices on this company here. At least eight target price hikes. Hank, it came out today with 700 bucks a share as the new street high. Currently, super micro shares are $512 a piece, and it's already up 3.5% again today, so a big move for Super Micro. We are going to start, though, with the Fed as we are less than 24 hours away from the big decision on interest rates. The Fed widely expected to leave rates unchanged, do nothing. But the bigger question is the path for future rate cuts.

We've got you covered on all things Fed, all things economy and all things your money. Seth Carpenter is the chief global economist at Morgan Stanley, and Dryden Pence is the CIA at Pence Capital Management. Seth, we are going to start with you first. The bigger picture backdrop for the economy is one of positivity, generally speaking, the jobs market is still good. Inflation seems to be something that some folks are declaring victory over. So does that mean the Fed can wait a little bit longer before it embarks on its rate cutting campaign if that were to happen? Yeah, absolutely. So I will say, I agree with you, the economy is looking reasonably healthy. I will say we've been in the no recession soft landing camp for a long time since the first quarter of 2022, and it looks like that's playing out.

I do think, though, there are some cautionary tales about when the Fed is going to cut. the market has gone from thinking no cut in March to thinking more than a full cut priced in and now back to less than 50-50. I think the last GDP print, the retail sales report for December, are all cautionary tales for the market that there still is some momentum left in this economy. And so the Fed, they're going to have to have this internal debate about when to cut. Our baseline is June. I can see an argument that it might slip to earlier, maybe the May meeting, but we think

the next couple prints are going to give the Fed a reason to sit on their hands just a bit longer. And Seth, if you take a look at the reasons why you laid out, there's at least a little bit of leash, a little bit of latitude that the Fed can take with regard to this. What is the case to be made of why the Fed would want to move ahead that timetable and cut rate sooner? Is there any reason why they would? Why is the market thinking that they should? I think if I was going to make that argument, it would have to be for one of two reasons. One, there are plenty of people still in the market who thinks the U.S. economy is going to go into

recession. And to be honest, you cannot rule that out. And so part of the market pricing is probability waiting on different scenarios. And so in the event that our baseline view is wrong and the economy does slump early in the year, then maybe they cut more. And that's part of what's reflected in market pricing. I think the other sort of more direct channel, though, is inflation has come down. It's come down a lot. It's come down a lot more than the Fed was expecting. And so if the committee could get comfortable that inflation has not only come down a lot, but is no longer a threat, then maybe they move forward the rate cuts just to make sure that they aren't the ones that cause any damage to the economy. It's not our baseline view, but I could see someone making

that argument. Seth, I understand that you really think it's time for the Fed to change the language around its expectations for inflation? Well, I think they've done a reasonably good job, sort of updating a bit over time, the language that they have in their post-meeting statement. They said that inflation's come down, but it's still elevated at some point. Once we get the run rate on inflation,

the 12-month change back down below 2.5%. The month-on-month run rate for Core PCE has actually been quite low. recently, we think it'll tick back up. But at some point, they're going to have to confront that question, how long do they keep saying that inflation is elevated? You know, again, in my experience, I spent 15 years of the Fed, part of it writing drafts of those statements, I think they'll wait as long as they can, make as few changes to the statements as they have to until the data basically compel them to make that change. What's more important to you right now as an economist, Seth, the harder economic data showing some of the backward-looking jobs and inflation prints.

Is it the softer data that shows sentiment and is improving among consumers elsewhere in the market? What's more important for the forward outlook? So I've been pretty consistently my whole career leaning on the hard data more than the soft data. You're an idiot if you ignore either. But for me, the hard data are really important. We have just gone through such a crazy business cycle. a global pandemic, high inflation, things changing all over the place. The world is just so different from what most people are used to that I'm more skeptical than usual

about the survey responses and what sort of signal they're going to give me. All right. Seth Carpenter, Morgan Stanley, thank you very much. We'll see what happens with the Fed tomorrow. Let's drill down a bit on the markets and where the opportunities lie ahead of tomorrow's Fed decision. Dryden Pence is the CIO of Pence Capital Management joining us now. You heard Seth there talk about how the markets are pricing in. There's not going to be a cut in March.

There could be a cut in March. And now back to it. Give me a sense of the reaction to the jobs data, the consumer sentiment data today, and how you think that leads the market setting up for the Fed decision. Well, I think the important thing to recognize is that consumer sent it in jobs. Jobs is the big number. I mean, people forget that this economy is probably doing better than most people expect. We've added 4.7 million jobs since the pandemic.

We added 2.7 million jobs last year. That's like all the job labor force of the state of South Carolina. We grew South Carolina last year. So the important thing is the underlying strength of the economy, of the jobs market, and all that is probably better than a lot of people are thinking. And I think that that drives this consumer sentiment number. And we look at these improvements. And that kind of moves the date at which the Fed may do something further out and further out and further out.

How that affects the markets is those people that are expecting six cuts this year are going to be wildly disappointed. And it could be maybe three and it could be leveraged towards the back half of the year. That means we'll have a moment where we could get some volatility. But I think that at that moment it's a buy the dip market rather than chase the rally. When do you think the best opportunity comes for investors to get in? I think when the market begins to realize you're not getting six cuts. So that's somewhere here in the first quarter of the year where we are going to continue to get strong data, stronger data than most people are expecting because we have this large employment pool. And so that's going to be where the market or the interest rate sensitive stocks are going to pull back a little bit because they're going to be kind of reacting to that.

That's going to be a good dip. You know, every now and then you get probably one of these corrections. So if you see it in the first half of the year, again, it's probably a buy the dip rather than chase the rally market. Because I think the fundamentals are there across the board. And we see a broadening rally of the entire market, not another magnificent seven, but a broadening rally. Because it's all about earnings. You know, for the longest time, it was about fiscal stimulus.

It's a story of three Fs, right? We had first fiscal stimulus. Then we had everybody's talking about the Fed. We're dancing on the head of the Fed's pin. And now, as we move into 2024, it's going to come back to fundamentals. And, you know, companies are beating. And this is, we'll see another quarter of probably 80% of the companies beat. We have big tech earnings this week, of course, that we're paying close attention to starting this afternoon.

But in the meantime, if you're looking for a broader rally, are there specific industries and sectors you think are set for some nice returns for investors? In terms of the broader rally, this is this time where you begin to look at small caps. So small and midcaps, fundamentals, industrials, those kind of companies are going to begin to come into the floor for the broader part of the S&P 500. should begin to do better. So we're kind of excited about that. And then of course you do have, you know, Amazon's one of the top companies. We think they're going to do pretty well. And we also think we like chips. TSMC is a, is a huge, absolute choke point in this. The largest, probably one of the most important companies in the world. Because when you think of the chips that they have, they're essential to so many other companies that they put in. So TSMC is very important. And we think Amazon, TSMC and small caps are probably a very good. area to be in as we move forward. Hey, Dryden, it's Dom here. If you mention Amazon is the top of that so-called magnificent seven pick, does that mean you're staying away from Apple, Microsoft, meta platforms, Tesla, Alphabet, any of those big

names, Nvidia? I think we would prioritize Amazon because, and a little less, it's all the weightings game, right? Apple's not going to have that much growth. The other ones probably are. Tesla's got some challenges in and of itself. The reason why we still talk about Amazon is because if you take a look at the growth going on an online sales, Amazon's 40% of that business. And because they are, if we move like over Christmas, we have 25% of retail coming on online. If you take that and take Amazon's part of it, that's a $300 billion opportunity that they have.

We think they're going to do well through this. We think Apple has a slowing growth. I mean, Apple doesn't grow much faster than Procter & Gamble right now. So if you take the Magnificent Seven, we would probably still love Apple, but lowerweight it and probably overweight the Amazon's. We think Invidia still does have some room to run. But again, you know, the world is going to have to catch up and chips are going to have to catch up with this massive data that's part of AI and going into everything. So we do believe that we're going to continue to see a broadening rally and then the Magnificent Seven, those that have room to continue to grow, are going to kind of continue to do well throughout this year.

All right, that's Dryden Pence. Thank you very much, sir. We'll see you soon. Thank you. Appreciate it, Don. All right. Coming up on the show, without the biggest six tech stocks, the S&P 500 earnings are actually negative,

negative year over year. Is the market being so tech reliant, a recipe for a disaster is in the mix? We'll discuss some tech check coming up next. Power lunch is back in two minutes after this. Alphabet and Microsoft, the two tech giant set to report after the bell, with Amazon, Apple, and META on deck later in the week.

Dear Drubosa has what to expect for today's tech check and just how important here, dear, the mega-caps results this week. Contessa, let me tell you how important with just one number, and that is 54% the Super Six's aggregate expected year-over-year earnings growth for the fourth quarter. Without them, the remaining 494 companies

and the S&P are forecast to post a blended decline of more than 10% in earnings growth. So not only do the biggest tech stocks account for more and more of the overall markets by weight, but they make up virtually all of earnings growth for the S&P 500. To that question you guys asked before the break, is the market being so tech-reliant

to recipe for disaster? Well, it certainly could be. Of course, earnings is an expectations. Game and guides will be key. Some of them give them, some of them don't. Alphabet doesn't. But these are also some of the sturdiest business models around. And you could argue, and you have argued over the last

last year, that they're more defensive and garpy growth at a reasonable price than what we think of as high growth and riskier tech. But guys, that Apple note earlier today that moved the stock from Ming Chi Kuo, which threw some cold water on their China sales, that's a good example of something that comes out that is perhaps unexpected or a new piece of information. And as Apple goes, so does the market. You can say the same of Microsoft, certainly, and certainly these super six names taken together. When we get to earnings this afternoon, how much is a, moving the needle now for earnings alone. And how much are investors looking to these reports to say,

how are you making money off of AI? Yes, that is sort of like the multi-billion trillion dollar question. How are you monetizing AI? Last year, you could get away with just mentioning it a bunch of times on your earnings call, and that would be good enough. But investors, they want actual answers. For Microsoft, for example, they want to know how they're monetizing copilot. We have very little information from Google so far, even though it's supposed to be in the number one or two position.

And its latest version, its latest large language model, the top tier of it, Gemini Ultra, that's coming out. So we're going to be listening for that. But you know what, Contessa, I would actually argue that it's still pretty vague. And I don't think we're going to get the hard numbers and the hard answers that Wall Street wants. So I think it's going to come down to cloud. And that's what it was last quarter. And I think that's what it's going to still be this quarter because that does incorporate generative AI. efforts. That's where it sits in many cases, certainly for Microsoft and Amazon. So that's

going to be key. And the street wants to know definitively that growth has sort of bottomed, and it's on the up and up again. Wall Street never gets the number of details that it really want. So they should be used to it by now. Deirdre, thanks. Especially not now. No. All right. Let's take a closer look at two of the big tech names on deck to report their numbers, of course Microsoft and Alphabet. Our next guest says that for both companies, the overarching theme will be artificial intelligence, with Microsoft expected to report on its AI investments and adoption strategies, while Alphabet, investors here are hoping to hear more on its AI ambitions, its revenue impact, and its search, and its cloud business as well. So joining us now for more

is Daniel Newman, the CEO of Futurum Group. Daniel, the Deirdre report that you just heard kind of laid out exactly what the expectations are. What exactly then does cause the catalyze, if you will, the next move in this stock up or down. What are they going to say or not say? Yeah, Dom, thanks for having me. Microsoft is going to have to come out and say how the 2% of revenue that Azure cloud revenue tied to AI is growing. People are tired of kind of the AI, AI, AI, AI story. It's lost its meaning. And people want to know, is this going to drive the next wave of growth? You've got to come me with a $3 trillion market cap. And possibly the biggest earnings this quarter and for the entire year. And right now, people are saying, how do we go higher

if AI isn't driving that number up? Two percent last quarter, I'd like to see that double or triple. IBM said their generative AI number doubled, and IBM's just focused on enterprise. Microsoft has the whole industry, enterprise consumer touches everything. Well, it's not just that. They have the second largest cloud offering in Azure. They've got a direct tie to open AI as a huge investor there. Are there any other story within mega cap technology or elsewhere that can rival what's happening with Microsoft right now? Are other mega caps, maybe a catch-up trade in some way? I don't think there's a rival story, but I do think there's a catch-up story. The market's always forward-looking, and it's always going to jump a little bit ahead. Last year, it was all about the GPU.

Invidia jumped way ahead. This year is all about implementation. Last year, Microsoft was the only company that got the implementation story right. So we saw what Google did with Gemini. We saw what AWS did with Bedrock and its story. And you have to say that there is a strong possibility that all the market share isn't going to want. We know that AWS has strong partnerships, and we'll see later this week what they come up with. We know Google has had its eye on AI for multi-decade now.

These companies are going to come out with the monetization story, and it needs to happen soon because Microsoft is running away with a lot of the credit and deservedly so. They got the story right. They got co-pilot right. They got the charge, you know, the pricing into the market right, and people appreciated that, and they're betting on the company. Well, then what should Google be doing differently? Yeah, that's a great question.

Google needs to come out and make it clear. They've made big investments from deep mine and what they've been doing with Google Brain for a long time. They kind of got it wrong out the shoot. They have a cloud strategy, and they have the TPU, the Silicon, they have the solutions in the cloud. They need to explain to people how these customers are onboarding, how it's driving revenue to the company. Is it winning competitively? Are they able to take business from AWS? Are they able to take business from Microsoft?

They are the third by some distance, and they're also competing with Oracle on the other side. Google needs to come out clear and say, our investment in AI is winning business. It's driving revenue, expanding margin, and we see it as a continuation the way Azure was able to do so being very explicit in how it's impacting their revenue. Hey, Dan, before we let you go, Microsoft specifically, why is co-pilot going to be different than Cortana? Well, Cortana was a pretty big failure, in my opinion. I mean, copilot is all about overlaying, you know, work progress over the things we do every day. You know, we've all picked up generative and LLMs by effectively adding it to our average workday experiences, whether it's in our emails or whether it's the way we write or whether it's the way,

you know, we search. It's changing search. Cortana was just, you know, it was like Siri, which is, it's okay. But nobody really cared about it, and it never picked up market momentum. All right. Daniel Newman, thank you very much for the look at both Alphabet and Microsoft and Big Tech. We'll see you soon, sir. Reviews for the Applevision Pro route and our own Todd Hazleton getting his hands on and eyes in.

Is it in? I guess we'd be in. Yeah, the headset. He'll share his thoughts further ahead as we had to break. Check out some of the oil services names getting hit hard as Saudi Aramco pulls back on its production goals. Wow. Welcome back. everybody to Power Lunch. We were just 24 hours from Fed Chair Powell's press conference.

Always a market moving event. Let's get to Rick Santelli in Chicago for a look at how the bond market is trading ahead of the Fed decision. Hello, Rick. Hello, Contessa. Boy, it's all about the Fed. And the market was really shocked at some of the data points on this first of two-day Fed meeting days. Look at the headline for consumer confidence. The best in two years, just a whisker shy of one. 15, the best since Dece of 2021. But it didn't end there. Current conditions even blew that away.

The best in nearly 40 years at a reading of 161.3. And what happened? Well, interest rates popped up over five basis points as we sit right now in two-year yields and about unchanged on 10-year yields. But what's really interesting in the answer your question, Contessa, is normally one would think strong data, better jolts, should have pushed long rates higher. It should have steepen the curve.

What it did was it inverted it more. It inverted it by six basis points because it's all about the Fed. The stronger data knocked down the percentages of a Fed rate cut in March to under 40% from around 50%. And as I said many times, that March meeting is way off into the distance.

when it comes to accuracy of Fed Fund futures. But it's important to see how influential strong data is on the short end, contrary to history. Contessa, back to you. Rick Santelli, thank you, sir. Let's get to Bertha Coombs now for a CNBC News update. Hi, Bertha. Hi, Contessa.

Democratic Representative Cory Bush confirmed this afternoon the Justice Department is investigating her campaign spending on security services. Bush also acknowledged she hired her husband as part of her security team, saying he has extensive experience in the area and can provide services at or below market rate. She says she needed the security because she is a target of relentless threats. Meanwhile, the Illinois Election Board decided today to keep former President Donald Trump on the state's primary ballot. The U.S. Supreme Court will hear arguments next week on whether Trump's role in the January 6th insurrection at the U.S. Capitol disqualifies him from the president. The bipartisan state board determined it did not have the authority to determine whether he violated the Constitution.

And a carnival cruise ship rescued two men stranded on a kayak in the Gulf of Mexico yesterday. The cruise line said the men ended up in the middle of the ocean after their boat sank. The ship provided medical attention and food before turning the men over to the Mexican Navy. Wow. That's not something you see every day out of your balcony. But happy for those kayakers, for sure. Bertha Coombs, thank you very much for the news update there. Coming up on the show, deal or no deal, JetBlue may be terminating its $3.8 billion buyout of Spirit Airlines after continued resistance on the federal regulatory level.

We'll speak to the incoming CEO at JetBlue coming up next. JetBlue shares are sliding today after the airline reported a loss in the fourth quarter and is forecasting lower capacity for this year amid growing uncertainty around the merger with Spirit Airlines. Of course, a federal judge blocked that agreement earlier this month. Phil LeBow joins us now for a Power Lunch exclusive interview, and I understand you have the incoming JetBlue CEO. Hi, Phil.

Hi, Contessa. Yeah, let's bring in Joanna Garrity, who will be CEO of JetBlue, I think in the middle of February, Joanna. I'm glad you're joining us today. I want to talk about spirit in just a bit, but first, I want to talk about your guidance for Q1. You guys are expecting revenue to be down, I think, 5 to 9 percent, a little greater than what the street is expecting. Your capacity is going to be limited, at least in the first half of this year. How much of that is because of the geared turbofan issues with those engine issues that is hurting your ability to fly certain aircraft?

Thanks, Phil, and it's nice to see you. Maybe I'll just highlight. We're really pleased with how we ended the quarter, last quarter. As we step into Q1, we are under some pressure from a capacity perspective. The geared turbofan engines are most certainly impacting that. We'll see about five to seven aircraft on the ground this year, which will lead to a year where we do have reduced capacity. When you think about the revenue side of the house, I'd view it as sort of a tale of kind of two halves. The first half of the year, we're comping against some pretty challenging, a pretty aggressive. of revenue environment last year. A lot of pent-up COVID demand. Second half of the year, we think that will ease. We should see some meaningful improvements. Hopefully, I'm in the year around flat. All right. Let's talk about the proposed merger with Spirit. You guys, meaning JetBlue, and your counterparts at Spirit, have filed for an expedited appeal on the judge who blocked the proposed merger. Why do you believe an appellate court will come to a different conclusion than the first time around in court?

You know, we strongly disagree with the lower court's decision. Our hope is that the First Circuit will recognize some of the challenges that that decision presents. At the end of the day, JetBlue and Spirit are two small airlines trying to combine to become a bigger one, you know, in this world where there are four very large legacy carriers. So we're hopeful that the judge does reverse or the Court of Appeals does reverse that lower court decision. And, you know, and we'll move through as needed. You know, the narrative among investors is that the DOJ blocked this and you're unlikely to get this reversed on appeal. And I know you disagree with that.

But what do you say to investors who look at this and say, look, you took your shot, you took your best shot, and the judges said, this is just not good for competition? Sure. I think the way I'd look at is we have two paths. We will continue to pursue the spirit merger. We will continue to appeal that, meet all the obligations that we have under the merger agreement with spirit. At the same time, we need to be realistic and have a plan B. And so we're focused on our plan B. Spirit was all about accelerating JetBlue growth, accelerating the JetBlue experience, bringing it to more places, more people. Our Plan B will do just that, but it will do it on a bit of a slower pace. We've got a great product, great service.

We operate in some very, very strong markets, New York, Boston, and we need to redouble our efforts around our organic plan, restore profitability. that has got to be our goal and focus on the fundamentals and the basics of this business. Let's talk about that plan B. A big part of what you talked about on the analyst call today was driving greater revenue. I think 300 million is what you guys outlined, in part largely because of growing ancillary revenue, getting more from your customers, if you will. How do you plan to do that? Correct. Yeah, we have $300 million of revenue initiatives or 15 million discrete initiatives. within there. A number of them focus on how we segment the cabin, making sure that we're delivering the right product to the right customer at the right price. We, you know, have a product

that meets a lot of different customer segments from the more price-sensitive customer to the premium customer. We can better monetize the cabin. We can better segment the cabin. And we can better merchandise on how we sell our seats on the cabin and the products that we do offer. Joanna, it's Dom here. You mentioned the segmenting of the cabin. There's an identity issue that has been talked about with regard to JetBlue vis-a-vis the Spirit Airlines merger. And that is if you buy Spirit and take them off the market, that there are fewer lower-cost options around.

JetBlue 10 years ago, 15 years ago for me was a low-cost carrier I could go to find a cheaper fare to get to where I wanted to go. These days, JetBlue looks more like a full-service airline. Mint class, full-class, first-class reclining seats. The price points are very similar to American Delta and everybody else out there. Do you feel as though that identity of JetBlue is one of the hindrances to why the Spirit Airlines deal is facing so much regulatory scrutiny? You know, I don't. One of the arguments that we've tried to illustrate is that we have a suite of products across the cabin. We have a basic economy product that competes very well with Spirit and the ultra-low-cost carriers.

It's definitely targeted to the more price-sensitive customer. We also have a mint product. Our view has long been that you can have low-fair, and great service and a great product offering. We continue to believe that to be true. And the way we've segmented our cabin, we think, speaks to offering products at different price points, including those for the price sensitive customer, similar to what spirit and some of the ultra-low-cost carriers offer. And it's Contessa here. Joanna, if your focus is on returning to profitability, and that's your priority, will that hinder the investments that you make in expanding routes, international and opening up new markets?

The way I would look at is we've got to make sure that every route earns its way into the network. We need to be far more selective where we fly in a world where we are not growing capacity. The Pratt & Whitney engine issue, as we discuss, definitely challenges our ability to grow. And so as we think about our network, we need to be laser focused on ensuring that the markets that we do fly are driving margins for us. and you'll see some changes across our network in that regard. Phil, thank you very much for bringing us, Joanna. It's great to have you on Power Lunch today.

Thank you for your time. Good luck. Thanks. Thanks for your time. All right. We have reports of layoffs in financial technology, and Kate Rooney, of course, is all over it and has the details for us. Kate, what do you hear?

Hey, Dom, so this is the latest round of layoffs. We are hearing about in tech today. It's two FinTech companies, Block and PayPal. Let's start with Block, a source familiar with what's going, on there telling me that these layoffs were announced. In November, they're starting to take place across the company today. Jack Dorsey, the CEO and founder announcing this in a note to staffers. It comes after Title, the music streaming service owned by Block, also recently went through some of these same job reductions. Block laid this out in this goal of capping employees at 12,000

people by the end of this year. That was shared in the Q3 earnings call. So it was forecasted by the company. The size of Block at the time was 13,000 people at the end of that quarter. So it's about 1,000 people. And then over at pay. We are hearing a similar story today. The information first reporting this, but CNBC has now reviewed multiple LinkedIn posts from people who say they worked at PayPal and have gotten word and noticed today that they are being let go. It comes as the company's new CEO, Alex Chris, is on this cost-cutting mission. He talked a lot about focusing more on the core products like checkout. He laid that out last week.

CEOs said they need to get leaner. They need to get that cost bases in line. PayPal announced this 7% reduction almost exactly a year ago at the time it was 2,000 jobs. so it is the latest from both companies in fintech, but it does add to this growing list of tech job cuts everywhere from Amazon to meta to Google and now hitting the payment sector. But stocks up slightly here.

Dom, back in the way. And of course, UPS early into day on the transportation side as well. Kate Rooney, thank you very much for that story. Still ahead on the show, Apple's Vision Pro headset is set to launch later on this week, but is it worth $3,500? We'll give you a first-hand look at Apple's new reality TV or reality headset in general.

general when power lunch returns after this break. Apple Vision Pro headset goes on sale this week, and the company already has 200,000 pre-orders at a starting price of $3,500. CNBC.com's Todd Hazleton reviewed the Vision Pro and says it's the future of computing and entertainment. Todd is hiding behind the Vision Pro right now because it's much cooler than just looking at Dom and I. I can kind of see his eyes through there.

Okay. So what do you see when you put it on? So right away, and Apple did this purposefully, is I can see you. I can see both of you pretty clearly in color. I can see everything in my hands. And then if I tap this crown up top, I see a bunch of apps. So Apple TV, music, Safari, photos, the App Store messages, anything I want that I can install. There's more than a million iPad and iPhone apps that you can install.

How much training does it take for your eyes, for you to get used to selecting, we're seeing the view right now and Yeah, on screen right now. But how much practice does it take for you to learn how to select it with your eyes? It's a good question, Contessa, because I had training a little bit with Apple before we started reviewing it, and I picked it up right away. The crazy thing for me is that all you do is look at the app. It tracks your eyes using sensors inside the headset. You look at the app, and then you tap your thumb and your forefinger, and it opens it.

And then you can close it, open up apps, and put them all around you in the space. So it took minutes. Wait, how does it... I don't understand how that works with tapping your finger when there's no sensor on your camera. So there's cameras on the outside of the headset that can see my hands and what my hands are doing and cameras on the inside that are watching my eyes. Okay.

So here's the question that we teased. It's $3,500, which is way more expensive than what the meta quest was when it first got released and those kinds of other products that are out there. Right. I want to know because you review all of these things and you tweet about, I'm sorry, you X about them at Robotod. I read all of the stories and everything else. Value for the money. Quest, Facebook, it's being discounted right now or $3, $3,500 for that one.

It's a tough question. Look, if you're going for value Quest, right, it's $500, Quest 3. You can do some things like watch movies. But if you want the very best, and I mean, you're watching a screen, a TV, TV screen this big in your house. So you're talking about watching movies in your headset. In your headset. Or you want to work.

You can use a keyboard and mouse or you want to browse the web with your fingers or you want to see 3D photos. This is by far way better. But is it worth $3,500? I think at this point becomes a very niche product. If you have, you know, disposable income, you really like gadgets. You want the best VR headset. You get this.

In the future, I think, I hope Apple lowers the price little. bit and you start to see more people buy these headsets. But at the same time, you're going to see meta catch up. You haven't been on TV with us since before the, do you want to take it off so people remember how you're like. Here's Todd Hazleton, IRL. Yeah. Thank you, Todd for Joe. At Robo, Todd, if you want to see his stories out there on X. Anyway, still ahead on the show. We'll get some technical support. Our chartist tells us which earnings she thinks are poised to pop when Power Lunch returns after this, and we're all going to try this headset in a commercial break. Welcome back to Power Lunch. Time now for some technical support because a picture is worth

a thousand words. Our chart us today is Jessica in Skip. She is director of product at Options Play. And up first, Jessica, thank you very much for being here in person, by the way, with the tablet in hand. All right, so General Motors is our first stock. GM reported results this morning. Shares are jumping after beating estimates on both the top and bottom lines for the quarter. So let's take us through the charts, Jessica. We see some move average lines and whatnot, what exactly is this going to tell us about what the trend should be? Absolutely. So we are looking at the 13 and 26 moving averages, first of all, which are these over here. This 13 week started trending upwards, which represents one quarter of prices, so down here,

which is giving me an indication of this big earnings jump. But this tells me the trading cycle. That's bullish. That's good. But this is the 200 weekly moving average. Do you notice how this was resistance consistently? So in its resistance now, so I'm actually not going to be. bullish on General Motors until it can get out of this consolidation and into more of a longer term bullish trend, which would be overcoming this 200 weekly moving average right here. All right. So, Jessica, just to be sure, this is not the daily moving average. This is the weekly moving average.

I know it says day up there, but it is 13 weeks, 26 week and the 200 week moving average on this whole thing. Great clarification. Okay. So unless we get above that level, which appears to be around the 43, maybe 44 level or something like that. That's right, which is still some room for upwards momentum, but then that's a very, very, very big area of supply, which means psychologically you might have purchased this here. You see how there's a lot of trades there. You may want to go ahead and sell it at that point.

So people are actually putting limit orders to sell at some of those levels to kind of take advantage of that price. Yeah, think about it. You might be breaking even at that point. You've been holding it for a while, so you're likely to get out of the position. We need to see if demand will come in. All right. So there is the chart look at at least General Motors. So we're going to move on to advanced micro devices reporting results later on this afternoon.

The AMD, you've got one line here. This one I do. Okay. And this looks just like a parabolic move off the lows in 2023. It sure does. So this one is the 40 weekly moving average once more. But much like lots of tech, there is a very beautiful and clear cup and handle and a breakout. So that is a base breakout, which is good for upwards momentum.

And that's why we're making higher highs as we've come over. those other levels that we saw in the previous charts, those are positive and overcome already. So for AMD, I've actually got support around the 165, which is this line here. And then our resistance is just right here at the 165 level. So this is where we're at right now, basically, in essence, where we are, not far from this.

Not far whatsoever. So this is good. This is a solid base. I see more upwards momentum for AMD. However, what I'm going to look for with earnings is for that support to be maintained, which is around that 165 level. If it goes below that, bearish. So in other words, from a trader's perspective, you're not necessarily betting big going into this print. You're going to wait and see how this develops before then you take a view on whether you want to see a

breakout happen or whether it goes down towards support. Yeah, absolutely. I mean, I am definitely and with the AI story completely. However, from a trader in technical view, I want to make sure that my support of 165 is maintained in order to keep that bullish thesis. All right, we're going to stay on the tech story here somewhat. Communication Services. Finally, meta platforms, one of the so-called Magnificent Seven set to report later on this week on Thursday. Take us through what you're seeing here from a momentum standpoint. I'm seeing RSI on this chart. Yes. So I actually wanted to switch it up today and give you a different chart than usual because I'm hearing all over the street that this is overbought. And I actually want to debunk that at this moment. So we say that it's overbought when RSI is usually right above 70, which is this line here.

So you notice how it happened here, and it's happening right now. But RSI is a momentum indicator. And what it does is it looks at the higher and lower average periods. So if you couple that with something like Bollinger bands, which is two standard deviations. Above an average. Right, over that period. And so if it's hugging that, then that is actually indicating higher momentum or strength of the trend. And that's what's really important to note here.

So if we are overbought and we're seeing confirmation of a breakout, I actually want to see it overbought. Otherwise, we're not having higher prices. There isn't momentum. Therefore, the validation of this breaking out higher is invalid unless you see overbought territory. So even though it's two standard deviations above whatever mean it is, as long as it stays there, there's still momentum. Correct. All right. Jessica Inskip, thank you very much for being the Chartist this afternoon.

We appreciate it. We hope to see you again soon. Happy to be here. Thank you so much, Dom. All right. Contessa, over to you. All right. Thank you, Dom. Coming up, get back or get out.

IBM is giving its managers an ultimatum to return to the office or leave the company. We'll give you those details next. All right, we only have about two and a half minutes left in show and several more stories you want to know about. IBM is set to get to say to the employees, get back to office or just get out. According to Bloomberg, the tech firm told its managers that they must report to office or client locations at least three days a week. week, regardless of current work location status, managers who do not comply will be asked to leave the company. I feel like this is starting to ramp up, this idea of people going to return to office. I don't know why, because when you return to the office, it's very loud.

There is out here right now. She's mentioned some of the construction outside of our buildings. But it does seem to be, you see, it's the managers who are going to pay. There's also a question about, you know, is there a cost savings initiative if you have certain managers who don't want to come back and you say get out. And also, if it's so important to you, why are you telling them to resign? Why don't you just fire them? Okay. Symptoms of excessive screen time, more than seven hours a day cost the U.S. $73 billion per year, according to a new study. That number comes from the direct financial costs incurred by health systems, the symptoms affect on productivity at work, and their perceived effect on an individual's well-being. I wonder if screen time goes up when

people start buying headsets. And you have this immersive world. There you go. All right. The NFL just reached, believe it or not, a licensing deal with the designer of Taylor Swift's viral custom puffer jacket, Kristen Jusecichick. She's the wife of San Francisco $40.9.4.5. Kyle Eusecheck. Now, Yuce Check has permission to use NFL marks in her designs. Big development for everybody. These jackets have gone viral. They've got to be the hottest piece of clothing. That's athletic-related right now. Let's see what the price tag goes to.

I don't know, but I'm inclined. Netflix is The Crown is the latest production to auction off props and costumes used on set. More than 300 items currently available for online bidding with an additional 160 set to go under Hammer during a live sale next week, including recreation of Princess Diana's engagement ring. Do you think that these producers budget this into production P&L? They are now, you know. A little extra added cash at the end of the... the season or the series.

Oh, there you go. The NFL clothing and the crown. That's it for power lunch. Closing bell starts right now with Scott Wapner.