Power Lunch - Ebbs & Stocks Flows, WhatsApp, Doc? 7/25/24

Episode Date: July 25, 2024

Investors are still digesting yesterday’s breakdown in tech. And now some of today’s earnings results are  sending up even more red flags. We’ll dig into that. Plus, we’ll have a rare interview with head of Meta’s WhatsApp. The company is releasing key U.S. data for the first time, and they’ll share it with us. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch. She's Kelly Evans. I'm Dominic Chu. Coming up on the show, ebbs and market flows. Investors still digesting yesterday's breakdown in technology stocks. Some of today's earnings results sending up more red flags will discuss coming up next. Plus, he's the head of Meadows WhatsApp. Coming up, a rare interview with the company releasing U.S. data for the first time. They'll join us live to talk about it and tell us what we've learned. Before all that, though, let's get a check on the markets. Following the NASDAX's rough day, we're seeing somewhat of a bounceback, call it half a percent. Most of those Mag 7 names higher today, with the exception of Microsoft.

All right, speaking of the NASDAQ, its new listing, lineage is currently you can see there up roughly 3% or so right now. We're watching lineage shares. Again, big IPO today on the NASDAQ. Meanwhile, on the earnings front, we've got airlines and autos getting hit pretty hard, Ford, Stalantis, American Airlines in Southwest, you can see moving lower to the auto side of things, but we've seen some now gains on that airline trade. We'll have more on that later on the show.

And some other earnings movers, Honeywell dipping on weak guidance, Hasbro surging on strong guidance, and carrying Dr. Pepper beating expectations while Align, I think the maker of Envisaline, falling on a disappointing forecast. Those shares, Dom, down 5%. All right, let's begin with the growing signs of weakness emerging in this earnings season, fueling yesterday's massive sell-off and tech shares.

Here now is Brent Shudy, the chief investment officer, with Northwestern Mutual Wealthy. management. Also, Mark Newton, Fundstrak Global's head of technical analysis and strategy. Brent and Mark, thank you both for being here right now. Brent, we'll start with you with regard to the CIO-type view on the setup. Is this something where we should be worried as investors that there is even more downside ahead? I do think there's more downside ahead because I do see the economy continuing to weaken, despite today's GDP report. So if you think about the airlines, you think about the autos, and you think about the services side of the economy, which has held up the U.S. economic growth, you are seeing

some weakening there. I remind people the ISM-PMI services has been below 50 or in contraction for two to the last three months. And historically, than that occurs, you are headed more towards a week time period. And so I do think as interest rates remain elevated, as that debt reprises, you're seeing credit card and auto loan delinquencies increase. I do think that you are likely to see an economy that continues to weaken as well as a stock market that has trouble pushing higher in the near future. Mark, let's bring in the chart side of things. Is it more important? And I know on a short-term basis, things can change. But on the longer medium-term basis, is it more important for us to see strong leadership out of those Mag 7 tech media and telecom stocks? Or is it better long-term,

medium-term, healthier to see a broadening out of the rally to small midcaps and either other S&P 500 companies that are not in the top seven? Yeah, hi, Dom. Look, I would argue actually both are very healthy. The large-cap technology represent a majority of many of the indices. So it is, of course, great for the indices to see these stocks continuing to show excellent earnings and very good technical strength. However, with the recent drop in interest rates and some weakness in CPI, we have seen a real broadening out. It's helped small caps. It's helped mid-caps. That certainly helps to add a lot of confidence to this rally at a time when many are concerned for a lot of the right reasons.

reasons, but we haven't really seen any evidence of really technical deterioration to suggest that we're going to see a larger pullback. I mean, it's been healthy to see that pullback in technology. Meanwhile, sectors like financials, very important part of the market, industrials, reeds have all started to climb back, and I think that's actually a very good sign. Elaborate on that mark for a moment for those who are concerned that we're seeing some defensive tone to the market today. Well, we did see some defensive tone to the market in the last week, But, you know, technically we did not see any real technical undercut of the uptrend lines that have been in place. I refer to this as a great rotation.

And as Tom Lee has talked about, this is the summer of small cap. We've seen an amazing period of outperformance by small caps versus the S&P 500. And I think that bodes well for the next four to six weeks to see continued gains at a time when many people are starting to get more cautious. So really, the technicals haven't given us anything to be concerned about breadth level. are in great shape, good participation, but that minor pullback in technology, you know, we didn't do any damage, but it pulled back exactly where it needed to, and now we're starting to turn higher. So look, we are entering a time going forward when it is going to be a lot choppier. So to the bear's credit, you know, the time between September and November historically

has been difficult for the Bulls. Some of that was due to 2008, but in general, it should be a choppier period in the months to come ahead of the election, but I'm still bullish. I don't think we've seen anything that would really deter us from staying along on this market, specifically on the small cap side. Well, Brent, because Mark opened the door or window, whatever you want to call it and brought up the election. Let's talk about the election. You sound so excited. I know, and whether or not, we've heard so much commentary about whether or not we should be putting the election aside, not really caring about it, or focusing more on it because it'll have fundamental impacts on certain industry groups. Is the election something that's going to be a focal point for

you as we approach this fall, given the seasonal chop that could happen? Or is the election something that we really don't care that much about as longer-term investors? I think as longer-term investors, you don't care about it as much. Certainly it has an impact on things that you mentioned, like sectors and industries. But from an overall perspective, the U.S. economy is rather large. Companies and CEOs think beyond four years. And so if I look historically the most important thing that happens when a president's in office or when they take office is where are you at in the business cycle. And this is something I hope we can all agree upon is that it does appear we are later in a business cycle. We are not early or in a business cycle. And when someone takes office late in a

business cycle, they tend to preside over a recession, and they tend to preside over markets that still are positive, but much less so than if you are in that office early to mid. And so it's certainly important, but it's not the most important thing. I think it has more of an impact on sectors, industries, and companies than it does the entire or the overall U.S. market, which I want to make Just one quick point. Despite my outlook for more of a recessionary type of an outcome, we do agree with Mark on small caps in the summer of small caps. We ironically like small and midcaps because one way or the other, rates are going lower. I don't think the economy can continue to withstand the impact of higher rates. If we have a soft landing, it's likely because the Fed lowers rates,

and I would expect the economy would broaden back out and the market would broaden back out. If on the other hand, we have a recession, I would imagine the Fed acts aggressively and cuts rates, and people will start thinking about the opposite side, which is what markets tend to do, not think about what has been. And we'll start thinking about the economy rebroadening also. Can I just follow up, Brent? The downtraft that we've seen in the last couple of weeks now, how much of that do you attribute to some of the fundamental and perhaps interest rate type narratives that are floating in the marketplace

right now economically versus what some traders may view as a prediction, or some kind of an impact because of future expectations for the election? Is it more tilted one way or the other? I think we all think about politics. We all think about the impacts and the markets in the economy, but I think we all think about the economy more. And to me, that's the most important thing that's out there. Certainly there'll be some sort of impact from the election.

We've seen market volatility from elections around the globe, but then I think we kind of move on past that. And so I think the most important thing is that you have seen the economy narrowed just a bit, notwithstanding that GDP report, you're seeing the labor market weaken, which is catching the eyes of everyone. I think the big question that's still out there is can the Fed arrest that, or is it too late already? Does the labor market already portends something much more recessionary on the outlook, which I still think we're headed towards that. Mark, last word to you from the chart set up. What's the most attractive part of the market

right now, and what's the part you'd stay away from? I still love technology, Dom. I still love industrials. I think that's a phenomenal group. Financials has done well. I think energy makes sense to consider trimming and or void, given that the current administration likely is going to continue to pump output to get inflation down. And I think the new administration potentially would also ramp up U.S. energy infrastructure, and that could be negative for energy. So that's an area I probably would avoid. All right, tech and energy. Brent Shudy and Mark Newton, thank you both very much. We'll see you again soon, guys. Thanks. Thank you. And Treasury yields are moving lower, especially in the longer end today as new data shows GDP a little better than expected.

Rick Sanselli live at the CBO. Rick, we were debating this last hour. So I'm curious to hear your perspective and what the traders are thinking today. Oh, absolutely. You know what's interesting is the reversal of almost everything from yesterday, whether it's the equities, how the yield curve looks, the strength in the twos versus the weakness in the tens and 30s. That's reversing, of course, and the VIX.

The VIX yesterday closed at the highest level since April. And if you look at a chart, as you should be looking at, we had October high, April high, and a lower high yesterday, but still relatively firm. Let's go talk to a trader, Jim. Hey, Rick. Kelly has a simple question for you. What's changed? Why did yesterday look so explosive? The Vick's been hibernating like rip-fan volatility, and then all of a sudden today it's like yesterday didn't happen.

Tell us what you're thinking. There's a lot of really important things going on with dispersion under the hood, this rotation that we've seen away from tech into the Russell in particular has been driven by the ball complex. There's a ton of ball supplied on the index level, the S&P 500 specifically. That's pinning relatively to the rest of the market, the index. What that means is that certain things as they move in one direction, tech in this current situation, means something has to go in the opposite direction. That paired with all the calls that have been bought in the Russell prior to this has led to a massive squeeze in the Russell relative to the tech. The problem is it's not an equal, you

reaction on both sides. Everybody's piled into those AI names. It got really heavy. And now when you get a painful rotation like this, which could go on for a while, by the way, it can really hurt the indexes writ large. Pared with that, the index ball is vulnerable. It's offered well in the time being,

but out in September, out in November with the election, there's a lot of lack of ball supply. So if this starts to keep going like this, eventually the index will unpin as well. So don't forget, ball is at the center of this decline. The AI move, in our opinion, is not over. and the Russell move could continue to go the opposite way, so that rotation could be very painful for some time.

You know, it seems like everything in life these days is a Roarshack. I'm sorry, but I see that the anecdotal evidence, the weakening in the economy, doesn't present a much stronger case today than it did a month ago or a month before that. Your thoughts? Well, it's so much about money supply, right? And the Fed says they don't target the markets,

but the reality is the markets are money supply. The wealth effect is real. It's bigger than people realize. When the market goes up, the GDP turns out better than expected. But what happens when the market goes down, right? The market doesn't leave the economy in the sense that it sees in the future. It actually leaves the economy in the sense that it is money supply and drives a lot of output in the economy. And on the inflation numbers, everybody was celebrating today.

The pricing index came in below expectations and below last month. On the core, it was higher than expectations below last month. And both indicators were lower in December. Your final thoughts? I think the stack inflationary world is here. I'm with you. I'm with you. Again and again.

The structural core inflation numbers keep coming in a little bit hotter while cyclically was clearly slowing. If this market comes down, the cyclical slowing will continue. So I think that's what you've got to be aware of. And the slowing glide path is like from New York to California, it seems. Chm, always a pleasure to talk to you. Kelly, back to you. Great stuff, gentlemen.

Thank you so much. We appreciate it still to come. Health care. One of the few groups in the green yesterday. Some big moves today as well. Viking up 30% on a new experimental obesity drug. Edwards' life sciences, though, look at that stock down 28% on weak guidance. We'll dive a little deeper into it all next.

Plus, crypto moving lower today as Bitcoin bulls flood to Nashville for that major crypto conference. We'll take you there live when Power Lunch returns. Welcome back to Power Lunch. We're just about a month away from Medicare unveiling the prices of the first drugs that's ever been able to negotiate or have the authority to do anything. negotiate. And Angelica Peoples has more on that story. Some would call it the ultimate in terms of collective bargaining. What exactly are we looking for? What can we expect? Yeah, Dom, so remember,

there are 10 drugs in this first wave, and these prices won't take effect until 2026, but you'll still probably hear a lot about them since they'll be announced by September 1st or two months out from the election. Now, people in D.C. I'm talking to fully expect the Biden administration and the Harris campaign to make a big deal out of this announcement, since it's something. something they can point you to say that they're lowering drug prices for seniors. Now, there are some nuances there and how big of a deal this really is depends on who you ask. At least for these initial 10 drugs. Here's what AstraZeneca's CEO had to say earlier today.

And almost concluded, actually, as you could expect. In the end, this outcome for us is not extremely irrelevant because the product will lose patent protection in the United States in 2026. So the impact of the price revision will be short-lived. There are some drugs that we are watching more closely, and one of those is the blood thinner elquist from Bristol-Myers Squibb. That's by far the biggest drug on this list, and we'll listen for any updates there when Bristol reports tomorrow. Guys.

Angelica, thank you very much. Health care, one of the few groups holding strong amid yesterday's sell-off, higher again today, helped by Molina, for instance. Our next guest says the pullback and the Maleficent 7, as he dubs it is positive for the healthcare space. Joining us now is Jared Holtz, healthcare equity strategist at Mizzuio. One of the great,

Maleficent 7, Jared, is genius. We were just trying to figure out the difference between maleficent and malevolent. You know, what's your take? It was just the first word that kind of came to mind, Kelly, honestly. They're probably interchangeable, but just thought of it first. No, I tease, but in all reality, a lot of investors are feeling that way

as they watch the declines. yesterday and wonder if they need to get these things out of their portfolio and maybe rotate into something like health care. Yeah, exactly. I think that's what we're seeing. I mean, for the first six months of the year, you know, the market orientation felt like it was the same pretty much every day. So we finally got to July 1st, you know, and there's been a massive rotational effect that's benefited health care. Obviously, it's taken some of the momentum out of tech and some of these other high-flying industry verticals. And so there's been a benefit here for sure, kind of

across the board, whether it's managed care, providers, even pharma has traded a little bit better, and biotech as well. So, you know, finally seeing some sort of willingness by the street to come out of, you know, the technology sector and other verticals and into health care. But, Jared, there's a reason why they're going to health care and certain maybe a handful of stocks specifically, and it's all tied to obesity and diabetes-related drugs. It's like the AI of healthcare. That's what's drawing it in. Is there anything to be excited about in health care, a reason, a catalyst for more inflows

into health care funds beyond just GLP1 and obesity? Dom, for sure. I mean, the GLP-1s have been just unbelievable stocks for the last year or two. You know, obviously, Lily and Novo had been monsters. Some of that love is spreading through to other names in pharma, other names in biotech. But I think as we come to some sort of clarity or partial clarity on the drug pricing within the next month or so, as you alluded to a little while ago, I think it's going to wind up being a positive for health care, because we're finally going to be able to draw a line on the sand with respect to some of the pricing mechanisms and what the differentials are going to be. I think investors in this sector just really want certainty, not to say that we're going to have it full-fledged, but at least partially as this list comes out.

All right. Jared, we've got to leave it there. Unfortunately, for some breaking news here, but we'll have you back on to debate this a little bit more because it's certainly a big topic for discussion. Jared, thank you. We'll see you soon. Great. Thanks. All right. So we've got some breaking news right now on OpenAI, speaking of AI. And Chat GPT and Steve Kovac has the details. Steve. Hey there, Dom. Yeah, Open AI is getting into the search business. they just announced here in a blog post minutes ago that they were testing a prototype version of a search product. You can see Google shares just reacting here down better than 2% now as soon as this announcement crossed.

This looks like it's an early version. They're having users sign up for a wait list. If you've ever used the app from the startup perplexity, Dom, you're probably very familiar with how these AI search engines work. You ask a question. It gives you the direct answer. You can ask follow-up questions. you're seeing some examples here from the Open AI product here.

And then it also pulls in real-time results from the web and gives you the sources from those results as well. Open AI here says they are working with publishers and other websites to make sure they have proper access to all of this information and properly credited and so forth. It does sound like early days, but just the fact that Open AI here is getting involved in the search business. You can see what it's doing here to Google.

By the way, opening I's biggest investor of Microsoft, they own 49% of Open AI. They just announced a similar feature that I'm talking about right now for their Bing search engine just yesterday. So this is a very hot item for search. By the way, the alphabet earnings just a couple of days ago, Dom, they were talking about their AI search product and how that's driving engagement, but still very few details, whether or not that's going to be a big moneymaker for Google. but we clearly see what the market thinks with Open AI getting into the search game, Dom. Steve, this was also something people were worried about a while ago, and now it's finally here. But I think it goes to the broader anxiety about whether AI is a friend or foe for big tech. And I think the assumption is it's mostly a friend.

They have the resources. They can bulk it out. They can, you know, do whatever they need to. But between the spend on the buildout that Alphabet spooked people about the other night and now the fact that OpenAI is launching a direct competitor, it makes for sort of unhappy considerations this week. And look, we've heard this over a year ago, too, Kelly, when Microsoft put out their OpenAI-powered version of Bing, it was a chatbot. And remember at the time, this was early last year. Microsoft had a bunch of great things to say and predictions.

This is going to help us gain market share against Google. This is going to be a big boost for Bing. That never materialized. We haven't seen it really eat into the market share of Google. It's so early to tell what this Open AI product is going to be able to do or not do compared to what Google. is already working on, but just the fact that the leader in artificial intelligence is out here announcing formally that is getting into the search business, that's enough to rattle. It's almost down two and a half percent now, Kelly. Steve, this is also not just about the actual product itself,

these generative AI type models and applications, but also the distribution of them to get them into the most amount of hands possible. Big tech seems to be the best poised for that distribution of generative AI, artificial intelligence in general. What exactly do we think we need to see in that distribution side of things? Yeah, well, we're already seeing that with Open AI. They have that deal with Apple to put chat GPT on just about every modern iPhone starting with last year's phones and presumably on into this year. So that's part of it, but that's just the chatbot.

They would need the kind of deals that we already see Google making with the platforms like Android phones, which is, of course, owned by Google. and then also on iOS and other computers and PCs to get into those web browsers and cut a deal and say, hey, you know, include us as at least an option for the default search engine. Google has most of those deals locked up to be the default search engine. They pay enormous amounts of money to folks like Apple, Firefox, and so forth to be that default search engine. Open AI doesn't necessarily have that kind of cash to pay for it. But again, this is just a test.

they plan to distribute it later, whether that's an app or something else. I'll point, go back to perplexity, though. This is a really hot startup that's got a lot of attention. It's a really good product. They've run into some issues about sourcing and things like that. But that seems to be, and that's just a standalone app and a website, doesn't have any distribution deal, and it's relatively successful. So we'll see if there's interest in this, and you can sign up and try it.

But it's a little too early to tell, but you are right, Dom. They do need to have a distribution deal in order to at least even, think about getting into Google search market. And then we have more time. We've got to talk about the content that goes into it as well and the deals that news organizations are signing with all these companies. And they're claiming they have those deals and they're saying that they're going to credit them properly. That's what Open Air says in this blog post. Can we use it now, Steve? Is it live? No, you can sign up for a wait list.

Okay. All right. Okay. Thank you very much, Steve Kovac for the news there on, I guess, search GPT, we're going to call that, right? So as we head to break, a quick check on energy stocks overall, traditional oil names like ExxonMobil, also EOG, SLB, all leading the XLE higher today, while renewables like First Solar and Nextera, to a certain degree, will drill down further into the energy market and the trade when Power Lunch returns after this break. Welcome back to Power Lunch. Energy stocks are higher today. The Spider Energy ETF, the ticker XLE, is up a little over a percent or so. Pippa Stevens has been tracking the action in the overall industry. What exactly can we see thematically developing here? And is energy going to be

one of those places that sees a little bit more volatility, or was it just tech? Well, perhaps, because we know that people haven't really been all that interested in energy, but the real outperformer today is Valero. Those shares are up by about 5% after the company beat earnings estimates. Although profits were down year over year, they did have some pretty interesting commentary. They said U.S. gasoline demand is flat year over year. They saw some freight weakness earlier this year and also said that pockets of slowing economic activity have meant a slowdown in diesel demand, but they think that Q3 will be stronger based on refinery utilization and also just a side note on the refining margins. We also heard from Total energies this morning that also had their

results dragged down by weaker refining margins. But on the call, they basically said, hey, guys, these aren't weak. These are just normalizing after two years of exceptional results after Russia invaded Ukraine. So they're saying this is just normal activity, a readjustment back to the normal level. Moving over to Nat Gas, take a look there because it's about to hit a one handle. You can see it just keeps, yeah, it just keeps coming down. So the middle of the country has been cooler, relatively cooler than June. And so that's led to less power, burn, demand. Also, we had an injection into storage today that was higher than expected. And so just really overall bear sentiment here, but you're about to break below too. And then finally, silver.

This is an interesting one to watch because it's done really well this year. But today, it's down about four and a half percent. Kriel Kyrlanko over at CRU said it's, investors taking profits fueled by gold, another record for gold last week, as well as covering some of the losses from yesterday. But it's actually done better than gold so far this year. So silver is one to watch. I always watch it for the economic indications, a little bit more in that vein. Pippa, thank you. We appreciate it. Pippa Stevens. Let's get to Contessa Brewer now for that CNBC News update. Contessa. Kelly, the U.S., the UK and South Korea issued a warning today saying North Korean hackers are trying to steal military secrets to bolster

Pyongyang's nuclear weapons program. The country's issued a joint advisory today saying the hackers have targeted or breached computer systems at a broad variety of defense and engineering firms that includes manufacturers of tanks, submarines, missile, and radar systems. President Biden signed a bill into law today that strengthens oversight of federal prisons. The law establishes an independent ombudsman to field and investigate complaints. It also requires the Justice Department to conduct inspections of all 122 federal prison facilities and assign each one a risk score. And Boeing's crude Starliner spacecraft will remain docked at the International Space Station into August. NASA officials said today they can't set a return date because the mission

remains on hold while Boeing and the agency's steady problems that arose during the flight. One possible solution, using SpaceX's dragon capsule to bring those astronauts home. Huh. Wow. Kelly, send it back to you. Thank you, Contessa. Meta is set to release data for WhatsApp and its 100 million U.S. users for the first time ever. And we will hear from the WhatsApp head himself about that when Power Lunch returns. Welcome back to Power Lunch. For the first time ever, Meta is releasing data about WhatsApp usage here in the U.S. As of this month, WhatsApp has over 100 million users in the U.S. and is becoming one of the leading platforms for cross-device messaging. messaging. It's also launching its new Lama 3.1 Gen A.META that is on the WhatsApp platform, just ahead of its second quarter earnings, which are scheduled to be released next Wednesday after the market close. Joining us now in an exclusive interview is WhatsApp head, Will Cathcart, alongside our own Julia Borson. I'm extremely excited to hear about this as a avid WhatsApp user

myself. Welcome to both of you. Julia? Thanks so much, Kelly. And Will, thanks so much for joining us for this exclusive interview, You also have a rare interview. You almost never give interviews here in the U.S. I want to talk about why this 100 million number is so meaningful. It's the first time we've gotten a number, but it's still also a small percentage of the overall number of users you have around the world. The most recent time you announced users was about 2 billion users, and that was back in early 2022. So it's been two and a half years since then, and I'm guessing that that number has grown. So the U.S. is still a tiny fraction of your overall usage. Why is this

number meaningful and what does it actually mean? Yeah, well, thank you so much for having me. I mean, we're excited because, you know, one of the places WhatsApp has historically not been as popular is the U.S. and we're excited to talk about the number because that's changing. We're seeing growth over the last few years. We spent the last year or so being really loud in the U.S. about WhatsApp and why it's a better way to communicate, why if you have friends who are on iPhones and Android, you should be able to talk to each other. And so we're excited to share that we're having success that we're seeing growth. We still have a long way to go. There's a lot of people in the U.S. that we hope to reach, but we're growing at a double-digit percentage year on

year and have passed a really exciting milestone. So can you give us a sense of how fast you're growing, how quickly will you get to 200 million users? And what does that mean for your parent company, Meta's bottom line? We don't know. I mean, we're hopeful to get there, but we don't know what it will take, how long it will take. Like I said, we're seeing double-digit percentage growth in users, in messages being sent per year. We're really excited about it. We're really excited about that. We're in particular seeing strength in places like California, Texas, New York, Florida, with younger audiences 18 to 35. A majority of our users are on iPhones who want to talk to people on Android's. And we're hoping that from there, they'll spread the word to their friends.

And we'll show up in states all across the country. Dom, you have a question here? Well, this is very resonates with me, I guess, is the best way to put it, because my family lives in an area where there is very limited cell phone coverage, but I have very fast Wi-Fi in my house. Therefore, I get text messages from those green dot friends I have, and I don't see them until the next morning when I'm driving into work, nor can I respond to any of these things. How much is that kind of transitionary bridging type trade going to drive WhatsApp usership going forward? Because I'm trying to get all my friends on WhatsApp just so I can get their messages. It's a huge part of how we grow, right?

Someone like you finds WhatsApp, finds a reason why it's helpful. Being able to get your messages on low network connections over Wi-Fi is a huge part of our success historically, especially internationally in a lot of parts of the world where cell phone networks just aren't as built out. But then when you get it and you want to talk to your friends, that's what brings more people onto the network. So part of why we're telling the story,

while we're celebrating 100 million monthly active users, is to create that buzz and help other people know that they should tell their friends to download it. And so that someone who hasn't used WhatsApp, if they hear from a friend like you, you should download that. WhatsApp, they know a little bit about why. They know the security features we offer, they know why it's a better messaging experience. They've heard of it before so that when you

mentioned to them they should download it, they say, oh cool, let me try it. So one of the other differentiators though, in addition to that cross-platform component of this is the function of AI. And Meta just announced earlier this week that the new Lama 3.1 generative AI chatbot is going to be rolling out on WhatsApp. What does this mean for WhatsApp users and for the business? Yeah, it's incredibly exciting. Everyone's hearing about AI. They're seeing amazing tools. They can go try.

But one of the things we hear from a lot of our users is they don't know exactly where to go or how to use it. And so by having a chat thread in WhatsApp where you can just talk to Lama, ask it questions, do really cool things like generate images. Actually, one of the things we just started testing this week is you can make images with yourself in them. So if you want to create an image of yourself surfing or climbing a mountain or flying in space, you can do that really, really easily.

And we think that's really helpful for people understanding how they can try AI for the first time. And it's really helpful because a lot of the cool ways people want to interact with AI have to do with talking to other people. You want to make cool photos and share them with your friends? It's easy to do that in one place. So from a business component, you've allowed businesses to interact with people on WhatsApp for a long time. Now businesses can use AI generated chatbots to interact with their customers on WhatsApp. How is that going so far? And how will this help with Mark Zuckerberg's effort to better monetize WhatsApp? So really well, if you zoom out and look at WhatsApp outside the U.S., in a lot of countries where we're really, really popular, people naturally talk to businesses on WhatsApp.

They talk to a plumber to book an appointment or a hairstylist, but also a big business, an airline to change their tickets. There's already a lot of businesses that have chatbots where they're using WhatsApp to reach customers and talk to them, and we're starting to do tests where they can take Lama and use AI to make that experience more natural, easier to do. You can answer a customer immediately before they have to wait for a customer service. And you're charging for that? So we charge for two things right now. One is for large businesses who want to use WhatsApp. If a small business wants to use WhatsApp, they can download it on their phone. It's free.

But if a major airline wants to answer messages from customers on WhatsApp, they're not going to answer all of those on one phone. So we have an API where they can integrate receiving messages from customers on WhatsApp into their customer service system. And we charge for that. We charge per conversation. And then additionally, a lot of small businesses use WhatsApp for the first time. And then they say, this is great. I'd love to get more customers. and we actually upsell them to running ads on Facebook and Instagram.

And so between those two, we're driving a very healthy and very quickly growing business. Certainly important for onboarding those small business advertisers. Will we appreciate you taking the time to talk to us about this milestone and what's next for WhatsApp and AI. And we hope you'll come back and do more interviews. Thank you. I'd love to and thank you for taking the time to talk about it. We're really excited. Guys, I'm going to send it back to you. All right, great conversation.

Julia Borson and Will Cathcart. Thank you both very much for that. We've got more Power Lunch. Keep it right here after this break. Welcome back to Power Lunch. Let's get a quick power check on Alphabet and Microsoft shares. They're still lower as Open AI announces they are testing search GPT, which could rival both of those companies' search platforms. You can see right there, both stocks down Alphabet down by 2%. Microsoft down 1.5%. Keep it right here. We'll be back on Power Lunch after this.

Welcome back to Power Lunch this week's market weakness may just be the start of a more volatile cycle, especially as we move closer to a highly contested election this November. But in this period of heightened tension and uncertainty, how do you emotion-proof your portfolio? Sharon Epperson is here to tell us how you can emotion-proof your portfolio. Yes, I am, Dom. You know, a lot of people are worried about their investments. According to a survey from Betterment,

more than half of investors are feeling anxious about what the upcoming election could mean for their portfolio. And 40% of them expect to move or pull some of their investors. based on who is elected. To keep election jitters in check and emotion proof your portfolio, financial therapist I spoke with recommend doing this.

First, picture your goals. Literally, post a photo of what you hope to achieve with your investments on your front door or in your office, a picture of a house, a business, where you want to retire. That's your vision.

Then separate fact from fiction. Write down what worries you about your finances and investments. Mark it with a T or an F for true or false. Deal with what's true what's necessary to help you reach your goals, put aside everything else. And most important focus on what you can control, review and evaluate your investments, and keep in mind your time

horizon. Also, spread out the stressors, write down what stresses you, then map out steps you can take to address those issues. Use that exercise as an outlet for your stress and anxiety. Back to you guys. Well, I was thinking about, I think Doug is the perfect person to bounce Mr. Bone Parth, welcome to you. I'm always looking for a little bit of that. You know, your financial advisor, president of Bonefied Wealth, a CNBC as a council member. Build on that for us, Doug. Yeah, absolutely. I can't disagree with anything that was said there. You can have my job. It makes my life easy here. But seriously, focus on what you can control and what, you know, ignore everything else for the most part.

But what's going on right now? Listen, guys like me preach diversification all day every day, right? You're seeing this rotation out. out of these large cap growth technology companies into the broader market, actually, right? We have quite the rally on small caps, mid-caps. This is why we have diversification. This is why we can absorb the volatility that we're seeing out of those larger companies right now. Is there, okay, so now we're getting into election season somewhat. The people are going to hear a lot back and forth about this portfolio and that portfolio. And is there anything to be said emotion-wise or otherwise about how politics should or shouldn't affect your investment choices?

Yeah. What I was going to say is what people are telling me is we wouldn't have just be impacted. cash. We're going to just park it in cash because we don't know what's going to happen. And I think that's probably a really bad idea. Wow. Probably a very bad idea, right? Imagine you were, you know, behaving one way or the other over the last few election cycles. Look how the market has done, specifically over these last eight years. 2022 being the blemish here on the record, but you've had a pretty ripping market for the most time here. Under both administrations, under both administrations. You think would be very different. Right. So if you're thinking that, hey, I'm going to make a

decision because of one versus the other, you would have been sorely mistaken here. So we want to continue on with that advice, right? We don't want to get emotional around politics in our portfolios. We want to be consistent and disciplined investors throughout, which is why you want to pay particular attention to what your investment time horizon is, what your risk tolerance, all these classic things still hold true. It's just you're going to be tested more now than before. As a financial advisor, though, it's not just about investments and picking stocks or mutual funds or ETFs. It's also about advising clients about how they can craft financial plans for the life that they want to live now and in the future. That's huge. What does it mean then to then

focus on the investments and how much then do you focus on the other aspects of someone's life, including their employment, their savings, what they spend on, what they save for? How are those strategies permeating more into an FAA's plan as opposed to just buying S&P 500 index funds? Absolutely. So a lot of bias in what I'm about to tell you here, right? I'm a financial planner. We put forward financial plans for our clients. But this is going to show you that the investment planning piece is just one part of the overall puzzle. You've mentioned a lot of them dumb. But we have estate planning. We have protection planning. How to actually get to financial independence, cash management. I could go on and on. Sending your kids to college is another great example of this. So if you're working with someone or you're doing this yourself, both perfectly fine and you're visiting all of these areas, you can make smart decisions when it comes to your money. aren't just based in how the market is doing on any given day. If you're literally managing your financial life because of how the market is doing week to week or day to day, you're going to drive yourself insane. Like, you're going to need a therapist at the end of that one there. Totally. So being holistic, working with financial advisors or creating your own plans that

cover these areas, it's probably the way to go about it. And I go back sharing to your comment about how when people are a little bit concerned or don't know what to do, they want to move to cash. And a comment Doug made on the show a couple weeks ago about how millennials are very conservative. And sometimes they have to be talked up the risk spectrum into things like stocks. And I wonder what that tells us about people's propensity still, as well as the market's always done, and we talk about it, there's still this sense of, well, it's almost too good to be true. And I don't want to be in it at the wrong time. Absolutely. People work very hard for their money, and they don't want to part with it. They don't want to see it go down. And I've heard this time

again from people saying, you know, I'm invested, but I don't want it to go down. Well, the market's volatile. So you have to expect some of that. And also now with high yield savings offering four or five Some people are like, I'll just stay there. I'll just stay here. Well, the only thing we know is you get paid for risk. That remains true. If you want higher returns, you have to accept higher volatility. Just don't look.

Just keep the eyes covered. And talk to somebody. I think it is really important to talk to Doug, to talk to a financial advisor, a certified financial planner who's looking holistically at all the aspects of your finances. At the very least, it's therapy. Exactly. Say, we're not going to therapy.

We're going to financial planning. Doug Bonepar, Sharon, Sharon, thank you both, really appreciate it today. And be sure to sign up for Sharon's free Money 101, eight-week newsletter by scanning that QR code on your screen or going to CNBC.com slash Money 101, and you will get much more advice on reaching your financial goals. All right, the Bitcoin 2024 conference is kicking off in Nashville, Tennessee,

will take you there live when Power Lunch returns after this. Crypto investors are swarming Nashville as Bitcoin 2024 kicks off. It's not just Bitcoin Bowls, former President Trump's Saturday speech attracting a ton of attention and supporters as well. Mackenzie Segalos is down there already to talk more about the buzz. And you've heard the rumors, Mac, Bitcoin National Reserve. Now that that's the rumor, he can only fall short of expectations unless he actually announces it. No, I've been talking to a lot of people on the ground.

Some of whom say that they've been advising the Trump camp on what he might say on Saturday. What we do know, though, Kelly, is a 20,000 Bitcoin bulls. are descending on Nashville for this flagship event of 2024. This year, the conversation is overwhelmingly about politics. You have tangible progress on Capitol Hill toward crypto regulation, including bills on market structure and stable coins. Washington is also here in force. Republican senators Bill Haggerty from Tennessee and Cynthia Lemmes from Wyoming,

as well as Democratic Congressman Rocahanna of California, are attending. And then there's former President Donald Trump. And that keynote we were just talking about that's happening on Saturday. He's expected to lay out his vision for how he would treat crypto if he wins. Now, Trump has pivoted hard toward the sector in recent months, and it seems to be paying off. He's raised millions of dollars in donations from the crypto coalition. Some of those contributions have been directly in Bitcoin. And Trump is hoping to rake in more thanks to a fundraising event that he's holding in Nashville,

where the top ticket is going for more than $800,000. Now, conference organizers say that they extended an invitation to Vice President Kamala Harris, and she ultimately declined. But her campaign team is apparently asking Mark Cuban a lot of questions about crypto, which speaks to the fact that Bitcoin has gone from being a sort of niche in a political interest for a small group of people on the Internet to something that is a national debate in the U.S. Although no Harris, Mack, and I think if there's anything that would probably be the most bullish for the Bitcoin community, it would be to see bipartisan support here.

Right. And we have started to see that. I mean, on Capitol Hill, you've got Democrats coming across the aisle to support Republican legislation with Fit 21. So that was a really interesting shift. And I have to say, Kelly, this is a small but very vocal group of voters. Many of them are single-issue voters living in battleground states. They have more money than they used to during this bull market.

And a lot of them overlap with the Silicon Valley elite. Yeah, Mackenzie Sagalos, thank you. We'll check back in. How are we going to watch it Saturday? I don't know. I really am curious about what kind of commentary comes out of this, especially in that Trump keynote for sure. Oh, yeah, looking forward to it. And, Tom, thanks for being here. Really appreciate it. All right, thanks. We'll see you tomorrow. Thanks for watching Power Lunch.