Power Lunch - Fed Week & A Must Own Stock 01/29/24

Episode Date: January 29, 2024

It’s Fed week. Investors are preparing for the first decision on interest rates of 2024. No change is expected this time, but the markets are split on what will happen in March. Plus, Costco is the stock many analysts think is a must-own for any kind of economic environment. We’ll talk to one analyst who says it’s his top pick, and why account sharing isn’t just a problem for Netflix.  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 alongside Dominic Chu. I'm Tyler Matheson, and this is Fed Week. Investors getting ready for Wednesday's Fed decision. No change expected in interest rates this time, but the markets are split on what will happen in March, Dom. All right, plus the stock market, at least the stock that many analysts think is a must own for any kind of economic environment. It's Costco. We'll talk to an analyst naming it its top pick, and account sharing isn't just a problem for Netflix. We're going to get to that too. But first check on the markets right now. It's been a relatively calm day so far, but generally higher. You can see here, meta platforms up about 1.5% right now. The other big thing that markets are watching, of course, is big tech. And that's the reason why we're showing meta platforms. It's up 1.5% hitting an all-time high, by the way, ahead of its results.

So Big Tech, Tuesday and Thursday. Those are the days. Those five companies in the Meg 7. Speaking of big tech, you don't get any bigger than Microsoft expanding its lead over Apple in the market cap race. But both those companies will also report results. results this week. And while those MAG7 names continue to lead, there's also been a flood of money into other high-quality names outside of the tech sector. Let's bring in Mike Santoli for more on this high-quality problem. Michael. Yeah, Tyler, I mean, among all the major investment factors, whether it's value, momentum, dividend, yield, quality is the one that has performed the best, right up there with growth over the last year.

And it's happened as there's been some unevenness and overall earnings growth as the MAG-7 trend has taken hold. But it's not just big cap tech that really is benefiting from this. You guys are going to be talking about Costco. That's a perfect example. High quality within retail and consumer staples vastly outperforming. J.P. Morgan over the other banks. These are just examples of this. And the question it leads to is, our investors kind of overpaying to own the best,

the best financial strength, the best balance sheets, relative to what the other opportunities are out there. So to me it feels mostly a defensive instinct to own these types of stocks. Of course, there's some momentum factor in there, too. with AI excitement and Eli Lilly on the obesity drugs. But right now it feels as if you're starting to stretch that relationship, the premium of quality stocks over the rest of the market is at least a one decade high. Mike, stay right there as the markets try to balance the Fed and earnings.

Our next guest says he is expecting earnings to accelerate for at least a couple of more quarters. We want to bring in Dan Suzuki, Deputy CIO at Richard Bernstein Advisors. Dan, welcome. Good to have you with us. So there are a lot of people who think that growth is great. going to slow and that earnings may slow along with it. Why do you take the opposite point of view? Well, Tyler, it's nice to see you. I think eventually you are going to see earnings growth, but I think for the time being, people have been calling for this peak and roll over in earnings growth,

this entire recovery. But when we look at the data, people forget that we came out of our earnings recession. And so it's actually easy comparisons coming out of the earnings recession. And all the data that we look at that tends to correlate with earnings, suggest that everything's actually quite strong still. So we don't have visibility, too much visibility beyond two quarters out or so. But for the time being, we think people should be positioning for this ongoing earnings acceleration and the companies that are going to drive that earnings acceleration. You say as earnings accelerate, you have been investing in companies that are least priced to benefit from that acceleration. In other words, the market hasn't recognized

their earnings growth power. Where do you find them? That's right, Tyler. I mean, I think there's two areas of the market where you're really not being compensated for that bullish corporate profit outlook. You know, those two areas would be, you know, corporate spreads within the corporate bond market. And then within the equity markets, the expensive, you know, mega cap growth companies, those are areas that are likely to benefit from the cyclical improvement, but already pretty much price perfection. I think all the other traditional cyclical areas of the market out there, whether that small caps, merging market. markets, industrials, energy, a lot of these areas are areas where they should benefit from that earnings acceleration, yet they're priced at historically low valuations. Hey, Dan, it's Dom. One of the things that a lot of investors and traders are looking towards is this idea that there might be a recession. We've been looking for one for a while. It just hasn't come. Are there any signs out there that a recession could be in the card sometime down the line? Are you looking at things like bond spreads, credit quality? Are there any warning signs?

there or is it an all clear for the time being? Yeah, Dalai, it's a really good question. I think it depends on your time horizon. Clearly, you know, economists have been calling for a recession for over a year now, the recession that never came. And so all the signals that they were seeing back then that would put us into a recession, some of those are still with us, right? We have the inverted yield curve that now looks like it might move back into positive territory. We have, you know, areas of delinquencies picking up. You know, you have some of these signals. You have the ISM, which has been quite weak. But I think that the reality is if you look at the levels of the data, most of those areas of

data are showing improvement and resiliency. So not to say that you're not going to get a recession. And again, if we're talking back half this year or into next year, I think that visibility is a murky. But everything that we look at suggests that there's no recession imminent anytime soon. Mike Santoli, you know, Dan makes a very interesting point here. and that is that there are sectors of the market that are going to have good earnings growth, but have not been rewarded for that, that their valuations are not the same as the mega gap techs. But momentum is sometimes, Mike, a hard thing to break. And the momentum seems to be with, frankly, a lot of those big cap tech stocks and not with emerging markets,

for example, something that Dan mentioned. No, that's exactly true, Tyler. And also you have this situation where those big cap tech stocks are also providing a huge percentage of the expected earnings growth. So it isn't such a case where they're purely defensive and meaning that they're slow growth and they're not going to hurt you on the downside. They have both going for them right now. But to Dan's point, there are other parts of the market that aren't really giving, given a lot of credit for any cyclical upturn. Maybe we're going to remain kind of in this late cycle mode of just waiting and waiting and waiting for the economy to soften up enough

for us to say that a recession might be imminent. I always think it takes multiple things to go wrong to actually get an outright recession. You have to keep watching private sector payroll. they're kind of decelerating pretty quickly and all the rest of it. But in the meantime, the market seems like it's not really willing to make that leap to say that we're out of the woods. So if you think we are, then those cyclical stocks look like they might be cheaper. Mike, what about this idea that inflation is still front of mind and that much of the run-up that we saw late last year was tied to this idea that interest rates could be headed lower and that central bank policy could change? how much of that then is the driving force behind anything else we see in the market rally that is hypothetically to come, or is it all going to be fundamentally driven and earning season is going to be key? Oh, no, no, that's part of the backdrop, Dom, no doubt about it. The idea that financial conditions have loosened and may loosen further still, whether that means the Fed's going to cut as much as the Fed funds futures imply right now, I don't think that's the point. The point is yields are off their highs significantly. The Fed is probably going to make its next move lower.

whatever pace makes sense. And inflation is, at this point, has some downward momentum that I think the market has feasted off of. So, you know, in the last two months of last year, that meant an everything rally. All stocks went up. This year it's been much more about that narrow group of acknowledged leaders that's still carrying things. All right, Mike Santoli, Dan Suzuki, thank you very much for being with us, both of you. Thank you. All right. As mentioned before, bond yields are falling today ahead of the Fed's two-day policy meeting. So what are the traders looking for out at the bond pits in Chicago. Rick Santelli is joining us now from there with the action. Over to you, right? You know, they're looking at everything, pretty much everything.

Today, 3 o'clock Eastern, the Treasury's going to let us know what their bowering needs are. But the real announcement for the February refunding will be on Wednesday, and everybody knows that we're going to be at higher levels. In the year 2021, right post-COVID, we saw big supply. That's when we saw 61 billion twos, seven's worse over 60 billion. These sizes haven't been around very long, and they're coming back. Now, if you look at the last Fed, meaning D's 11 and 12, look at a two-year. Two-year yields have dropped down, the notion of Fed easing. But look at a 10-year, much stubborn, more stubborn, being a little less, more resistant to the notion of what rates are going to do,

even if the Fed eases. We have lots of debt. The 2's 10 spread is almost 30 basis points less inverted since last Fed meeting. Let's go talk to a trader. Jason. Hey, Rick. How you doing? Very good.

All right, we have a Fed meeting this week. We have jobs report. We have the Treasury announcing of the refunding on Wednesday. We get some notion from Treasury today on borrowing needs. What should we be paying closest attention to? Yeah, it's a busy week for sure. Over 20% of the S&Ps reported earnings this week. All the big names, Microsoft, Google, Amazon, Apple,

You know, we're going to have a lot of data points that the Fed can look at as far as how is the economy doing. Can they, you know, finally start lowering rates or do they have to stand still and stay status quo and just wait? Now, do the traders and sources that you talk to, do they think that the Fed is going to just go with the recent trends in inflation? Do you think they need to wait until it actually gets to a 2% level? Well, I think the market is anticipating, you know, five to seven cuts while the Fed has said, we're only going to have three. So it is this push and pull. And overall, I think they're going to wait for more data. And we'll wait until March to have a real chance for them to cut rates. Are we seeing a big build and volatility considering that March, of course, is the big quarterly expiration?

I remember at the end of last year, Dease really built up some pressure. Are we starting to see that, considering March is a quarterly cycle? And, of course, it's when the next Fed meeting is that really looks like a possibility of a rate cut. You know, the VIX is currently trading right around 13.6. And over the last few weeks, anytime it has hit this point of like 12 and a half at VIX, we have seen an immediate pop. So there's plenty of people out there calling that there is a bottom and that something probably should happen in the new term. And I would anticipate some fireworks in the future.

Excellent. Jason, always a pleasure talking to you. Tyler, back to you. Rick Santelli, thank you very much. In the latest front in the economic battle between the U.S. and China, AI, growing concerns that regulation could. cost the U.S. in the long run, that story is next when we return on power. Welcome back to Power Lunch. Regulators in Washington, D.C. have been looking at ways to

rein in artificial intelligence, but doing so in a way that will not put U.S. companies behind their Chinese rivals. Our Megan Casella joins us now with more on that burgeoning conflict in AI between the U.S. and China. That's right, Dom. The Commerce Department issued a new rule today that would require tech companies. to disclose to the federal government any time a foreign actor uses their cloud to train a large new AI model. The agency has also asked companies

in a separate survey to share safety results and data anytime they train a new AI system. Commerce says the new rules are aimed at preventing what it calls malicious foreign actors from using U.S. cloud technology to undermine U.S. national security. And essentially, the concern is that a country like China could access our AI systems

and then use them against us as they train their own models. So that's what this would prevent. Well, Commerce has already issued expert controls to try to block China's access to physical technology by way of semiconductors. This is a new step aimed at regulating the cloud itself. The new action stem from the executive order

President Biden signed in October, and at the time the pushback from big tech companies was that too much regulation of US companies would stifle innovation and hurt their competitiveness. And while these rules would require US companies to disclose the information on their users, The goal in doing so is to stop China and other foreign actors from outpacing the U.S. Dom?

All right, I'll pick it up from there. Megan, thank you very much. Megan Cassello reporting from Washington. So with Washington, pushing for more regulation of AI, are U.S. companies going to be hampered by it? And will this give China the lead in the AI race? Here to discuss is Jonathan Crane founder and chief executive officer of Crane shares, a major player in the investment world in China, among other places. Jonathan, welcome. Good to have you with us. Is the U.S. still ahead of China in AI, or do you disagree with that?

Yeah, I mean, first of all, AI is a transformational and probably the most impactful innovation of the century. It's compared to like the steam engine before. And I think countries will develop AI and there'll be multiple leaders out there. Obviously, everyone compares U.S. and China, and I think U.S. will be a leader. China will be a leader. I think Europe will be a leader. Even Israel can be a leader. A lot of AI is really developed by its data-driven. So when you have a large population, 1.4 billion people in China, you have access to a lot of domestic data. And a lot of this is going to be organically developed. I mean, every company in the United States, every company in China has to have an AI strategy. You know, the employees across all these. Whoops.

Looks like we lost them. Jonathan Crane of Crane shares. We'll try and reestablish our connection with him. But meantime, we're going to take a quick break. We'll be right back when we figure things out. Thanks. Let's bring back Jonathan Crane. We've reestablished contact, founder and chief executive Crane shares.

Sorry about the interrupt. Pardon the interruption, Jonathan. We're back. Yeah, that's good. So I guess what I heard you say in answer to my first question. question is China may not be leading in the AI race right now, but they have certain advantages there. Does the rulemaking out of Washington enhance the ability of China to compete, or do you think it will be helpful? And can the U.S. and China cooperate on AI instead?

Absolutely. So, you know, China advantages are their population. It's, you know, 1.4 billion people feeding all the data, also very strong government support to develop. AI. Okay, so they will be a leader out there in AI, like the United States will be a leader. And as I mentioned, Europe can be a leader too. So there'll be multiple leaders all creating AI domestically, organically. And that's for positive AI to help corporations and, you know, efficiencies. But it also, countries need to cooperate. In the U.S.-China relationship around governance of AI is going to be very important that we're working closely together to prevent anything around negative AI in terms of uses of AI.

And I think the U.S. trying to communication and relationship around AI in terms of global governance is going to be very important. And that includes all countries. Hey, Jonathan, it's Dom. There's one thing that's very clear right now is that the U.S. is trying to regulate and throttle back access to technology that could help China gain even more of an advantage in artificial intelligence. I'm talking about computer chips, right? There's going to be export controls and everything else. How long does it take China hypothetically to grow its own

semiconductor business that could rival the likes of our chip giants here in the U.S.? Sure. So obviously the measures that are been put in place around not allowing China access to U.S. high-end chips is actually forcing China to actually develop their own industry faster, okay? So that's the response. But I still think there'll be some cooperation. I mean, you had Navidia CEO recently was in China meeting with various companies there like Badu, and they're going to come out with China-specific versions for AI chips. So I still think there'll some cooperation, you know, from trade between U.S. and China. But look, I mean, with the race around AI, I do believe it forces China to develop their chip industry very quickly.

If I want to invest in artificial intelligence through domestic stocks, which would they be? Would they be the big household names we've heard of or something a little more below the radar? Yeah, I think it's both. I mean, I think the, you know, the larger companies that are developing AI strategies, or, you know, these could help those companies grow even faster. And that's both in the U.S. and China, but then also early stage companies that are very focused on certain types of applications. Those companies are, you know, also have, you know, great growth opportunities.

And we're seeing that both in the U.S. and China. You know, we even, you know, each country will. have its version, Badoo, for instance, which is a leader in AI in China, their chat GPT version is called ErnieBod, and they quickly have over 100 million users and counting. So I think you'll see a lot of innovation out of both U.S. and China and a lot of opportunity to invest in stocks in both those countries. So we put up Chinese Internet stocks. I'm not sure that those names are ones necessarily that you endorse, they included Baidu, Alibaba,

10 cent, I believe, yes, 10cent and J.B.com, excuse me. Are those ones that you would say would be investable for U.S. investors? I mean, the Chinese market has kind of stunk lately. Yeah, I mean, and that

creates the buying opportunity. I think the China market is oversold, and a lot of it is not fundamental. So those companies, Baidu, Alibaba, Tencent, a lot the K-Web names or all have AI strategies. And they all play into, you know, the 1.4 billion people providing data and fueling the AI in China. So I think those are very good opportunities. If I'm persuaded that these are good opportunities, am I best served by trying to assemble a

portfolio of individual stocks on my own or going with a fund like the one you run, which is U.S.-China Internet, crane shares, that, or what? What would you suggest I do? Yeah, I think I think you take a portfolio approach. K-Web, you know, which is Cranecher's China Internet, is the top 31 companies in China Internet using AI. So, you know, that's a good way to approach the China market through an ETF that has the whole industry. All right, Jonathan, thanks very much. We appreciate it. Jonathan Crane of K-chairs. Thank you. Oil falling today, despite violence in the Middle East over the weekend. Pippa Stevens here to explain what is. happening. Oil was up early, then lost its...

Yeah, so earlier it hit 79-29 on WTI, which was the highest since November 30th. That came, of course, after the drone attacks over the weekend in Jordan that killed three U.S. service members. And then also on Friday, we had a Russian fuel tanker hit, or sorry, a fuel tanker carrying Russian fuel, and Houthis claimed responsibility. And what was really the first instance of a major energy tank. Who owned the tanker? It was on behalf of Traffigura. And so it was transiting in the Gulf of Aden going up. And so far we have the majority of the attacks have been on the container ships and energy has largely been left out of that. And so that was definitely surprising.

But ultimately, what we saw today is that it's still not enough to outweigh the fact that no supply has been taken offline. And John Kildoff at again, Capital said that this market can absorb a lot of strife just because it is very well supplied. Of course, we also have the Chinese property developer with Evergrand, the liquidation there. China is the world's largest crude importer. and so that's also having an impact today. Do you think as though this is a situation where the supply picture is about as balanced as it can be given the price action, or is it just going to be predominantly to the downside no matter what geopolitical risks happen in the Middle East? Well, based on the estimates that are out there, it seems to be a very well-supplied market.

And I think that the rebound in Chinese demand was what was driving so many of the gains last year, and that never came to fruition. And so that's still very much a wild card. We are going into the lunar new year, and so we should see strong demand there for jet fuel. But I think just right now, until there's actually a disruption, and we did see some Ukrainian drone attacks on Russian oil infrastructure, so that could be something to watch going forward.

But until supplies taken offline, it seems like a very well-balanced market. All right, Pippa. Thanks very much. Pippa Stevens. All right. Let's get over to Contessa Brewer for a CNBC News Update. Good afternoon, Contessa. Hi there, John.

The PGA tour is reportedly on the break of finalizing a $3 billion investment. The deal from the Strategic Sports Group, which includes Red Sox owners, the Fenway Sports Group, along with New York Mets owner Steve Cohen and former Milwaukee Bucks co-owner, Mark Lazary, could have additional investment from the Saudi Public Investment Fund, according to Bloomberg. It could reportedly value the PGA Tour at about $12 billion. Meanwhile, the White House announced $3 billion to combat homelessness today. The fund will go toward more than 7,000 projects that provide housing assistance or support services for people who are unhoused. Federal data released last month showed the count of homeless people in the

United States is now at its highest level on record. And the legal drama suits just beat the office's record for the most streamed title in a single year. Viewer streamed suits for 57.7 billion minutes in 2023, according to Nielsen. That eclipses the offices. 2020 record of roughly 57 billion minutes. Some of the other top shows last year were Bluey, N-C-I-S, and Gray's Anatomy. I mean, Gray's Anatomy, it would take you that long, probably, just to get through how many seasons are there. I remember suits when it first aired on USA Network, which is, of course, a NBC Universal Property. It's amazing that on Netflix, it's found a new life contestant.

Thank you very much for that news update. After the break, Jeffries is naming Costco a top pick, citing the fact that it's business. business model is still working hard and it's holding up. We'll speak to that Jeffrey's analyst coming up next. Welcome back to Power Lunch. Costco hitting all-time highs just this past week, and our next guest thinks it can go even higher. He maintains his top pick rating for Costco this morning, upping the price target to $782 over $100 above the street average. After all this after meeting, by the way, with Costco's CFO and visiting some of the locations to channel check things himself. So joining us now to tell us what he's learned as Corey Tarlow, equity analyst at

Jeffries, covers many of these names. Corey, we wish you were here in office. You've been here before with us, but we'll forgive you for this particular infraction. Take us through why the power lunch for Costco is the $1.50 hot dog or $5 rotisserie chicken. Yep, thanks for having me, Dom. And what I would say is that last week we spent some time with the Costco CFO, as well as their head of IR and my financial planning, and we walked away very positive. And bottom line, the company feels very healthy at the moment. And we feel comfortable buying shares here because we see a lot of upside to numbers ahead. And it's really driven by traffic. And so the company's traffic growth has been up 7% in the

last month or so. And if you look at across retail, many retailers are seeing traffic up, maybe it's low single digits, some are up mid single digits, and some are even negative. And so I think this is really a function of member growth. And the membership is now at $72 million with strong renewal rates that are now at all-time highs, 93%. And so the one-liner here is really simple. More people are going to Costco more often, and they're continually renewing at higher rates, which should drive upside to numbers ahead. Hey, Corey, what exactly is driving the upside in membership?

What are they doing differently, either from a market? perspective or from a product offering perspective that is getting more people to want to sign on for Costco memberships? So I'd say it's two things. The first is the ongoing focus on value that Costco always tends to drive. So their prices are among the best. They have about 3,100 units or different items in their store. And often for those items, people know that they can get the best value for the price that they're paying. And so that value offering that Costco has tends to drive a lot of continued visits and stickiness among a lot of what the consumers want. And having food, which is about 60% of the business and general merchandise, another 40% of the business, is very key to driving

that balance. So people go there for things they need. And then they also have the other side of the box, which is the things that they want at very good values. The second component to this, is auto renewals. And auto renewals, as people sign up for a membership, it automatically renews year over a year. So you get a natural accretion as more new and new members sign on. Yeah, I think that's a big thing. I was going to mention that because I belong there. But once you're in, inertia takes over and you're likely to stay in, particularly if they automatically renew and the charge hits your credit card or whatever it is. But it's very, how bigger that, because I honestly don't know, Corey, how big is Costco overseas outside of the

U.S.? And is that an opportunity for them? It's a very significant opportunity over time. So the business has about 800 clubs. 600 of those are domestically focused. And we spent a lot of time in my meeting with the CFO talking about the domestic opportunity because, frankly, most of the new openings of the 30 or so openings that they're going to be doing this year are going to be focused on domestic infill opportunities because the demand at some of these units that it has is just so strong, and they need to build new units to be able to alleviate some of the pressure on the existing units that are just performing at such a high level. On the international side of the business,

that's the other 200 units that they have, are performing more broadly very well. And we've seen some promising data points out of geographies like China, Mexico, and the UK, as well of Spain. So they've talked positively about all these regions recently. And there's also the benefit of slightly higher margins in some of these regions, too, because of lower labor costs. Hey, Corey, like Tyler, I, too, am a Costco customer. I'll be fully transparent about that. The one thing that they've done that I've noticed over the last several months is they'd no longer just check my ID at the door. They also check it when I'm checking out as well and match my picture. sure. It's the password sharing crackdown, that sort of thing. How much is that? When you leave?

When you leave? And they do all of these things. Is this going to move the needle for Costco, this idea that they want everybody to get their own independent membership and they can't just share it with other people? So it's interesting that you bring that up, Dom, because when I visited the warehouse that is nearby the corporate campus, I actually got a first look at one of the new pilots that the company is running. And this is a member scanning. technology that as the where you get at the door where you walk in, it's basically like signing into a concert using a key at a concert or ticket at a concert to sign in and basically get checked at the door. So it'll hopefully alleviate some of that potential friction at checkout,

bringing that out front with this new member scanning technology pilot, which is now in three stores with the potential to roll out more broadly. Corey, it looks like somebody cleaned out your office while you're away. It's my brand new office. It's your brand new office. You need to go to Costco and furnish it up, my friend. Correct. Thanks for being with us.

Cory Tarlow, Jeffries. You noticed that? I did. There was nothing in there. He needs more stuff. He didn't get the memo yet. Get a good cheap LED TV. Come on, Jeffrey.

Give him some furniture. Let's go. All right. Still ahead. Running out of time. M.H's first ever watch week is underway in Miami. But could cooling demand mean the brand is a little too late to the luxury watch party? Our own Robert Frank has the details when Power Lunch returns.

Some of the watches really expensive. Welcome back to Power Launch, everybody. LVMH trying to attract attention for its high-end watch business. And what better way to do it than by renting a Miami mansion? We sent Robert Frank down to Miami to check it out. Hi, Robert. Tyler, those shares up again today after rising. 13% on Friday. So LVMH can afford to rent this $50 million mansion on Star Island off Miami Beach.

Now, the company is really making a play for the global watch industry. Those sales rising to $28 billion last year, expected to go to $37 billion worldwide over the next decade. LVMH already owns 10 watch brands, including Tag Hoyer, Zenith, and Ublo. But what they really want is to crack that top tier that includes Rolex, Patech, and Odomar Pigay. Now, executives say that while overall sales slowed last year a bit, they're already seeing positive signs that 2024 will be a rebound. The beauty of America is that the cycles are very short. We go through ups and downs and all that, but I can reassure you today,

Zinnit is definitely on a positive upstream and definitely with good traction within the U.S. markets. So today marks the start of LVMH watch week here in Miami. All the top executives are flying in from Switzerland and France to show off their latest models. Tyler, you were talking about how expensive they are. They start anywhere from $2,000 go all the way up to the millions. We've seen watches here that are released that are $500,000 where there is a waiting list. So at that very high end demand remains strong, but that is the market that all these watchmakers, are trying to crack right now, guys.

Wow. I mean, are these, are these collectibles, or are they kind of ready to wear? That's a great distinction, Tyler. What they really want are collectible, investable watches. So if you look at Rolex, Autumar Pige, Petek-Philippe, those watches typically gain value after you've bought them. And some of these top brands do if they're limited production, but what Tag Hoyer, Zenith, and Ublo really want is to have a watch that when you buy it, it's worth more one, five, ten years later. And that's not really the case now, but that's where they want to get to, where you can call it an investment, not just a timepiece on your wrist.

I didn't know that at all. That's fascinating, that they go up in value. Robert, thank you, Robert Frank, in Miami. And Robert is not the only one in Florida today. So can up the sun. Melissa Lee is in Miami Beach at the I Connections Global Alts Conference for a special edition. of fast money. Got a first look, Melissa, at the big hitting lineup you got tonight at 5 o'clock. Tell us about it, Melissa. Sorry, you can join us here, Tyler, if you're a little left out, I'm sure. We're here at the Fontaine Blue Hotel in Miami Beach for the I Connections Global

Alts Conference. It's a who's who of hedge fund managers, wealth managers, VCs, a lot of asset allocators also, altogether in one place. We'll be joined by Altimeter Capital founder and CEO Brad Gersner to lay out what to expect out of big tech earnings. this week. It's like the Super Bowl of Tech earnings, right? With Alphabet, Microsoft out tomorrow. We'll find out where he sees tech heading next. You'll be surprised at who he thinks might be poised for a pullback. We'll also hit the sports betting boom on the back of the NYSC listing of Fan Dual Parent Flutter Entertainment. Draft King's investors, Rick Heitzman will weigh in on this debut and something a little spicy. The co-founders of Hot Sauce Company Truff, how they landed

an investment from Kim Kardashian. We'll also do a little taste test of our signature blend there, Guy Dami and Dan Nathan will be with me for the entire hour. Jam packed two days for us, Tyler, all here in Miami Beach. That sounds terrific. I use trough. You use trough hot sauce? Is that right? It's good stuff.

Oh, good. And Gersner is always terrific. Melissa, we'll be looking. We'll be watching. Thanks. All right, coming up, SoFi, just posted its first ever quarterly profit. Shares are off a whopping 22% as a result. So it's now the time to get in on the stock?

Our trader will tell us how he's positioning on that name and a couple of more next. All right, folks, time for today's three stock launch. We look at three big movers of the day. And here with our trades is Boris Schlossberg, BK Asset Management's, managing director of FX strategy. He's also a CNBC contributor. Up first, let's look at SOFI technologies. The stock soaring on earnings, the company reporting, well, its first ever quarterly profit. The stock up as much as 22% today.

Boris, your trade on SOFI, the FinTech company. SoFi is a really interesting story. It's clearly proving that an online only... bank is starting to resonate with consumers quite a lot. Growth has been tremendous. They added about 580,000 new customers, about 41% growth rate. They've recovered most of their loan book to student loans. So I think business is really cooking on all cylinders right now. Management is also, I think, very conservative in terms of how they forecast their numbers forward. Now, stocks really run. So definitely very expensive at this point. But if you have,

I would say, a two-year time frame to 225, it's probably going to very much catch up with its earnings because it's now starting to enter that stage where it's actually going to really pretty much every additional dollar is projected to produce about 20 cents of gross earnings. So I think it's very, very feasible that you could see by 2025, you could see 10, 11, $12 on the stock, given its growth potential. All right, Boris. So that's the trade on SOFi from fintech to media. Let's go to Warner Brothers Discovery.

Wells Fargo analysts are downgrading that company from overweight to equal weight on what it's calling a risky earnings setup. Shares are down about 3% or so, as you can see there today. What's the trade on WBD? So I probably have a little bit more of an out of consensus for you. I think this could be a value trap for a lot of people. And I know the bullish case on Warner Brothers is they're the second biggest spent on content right after Disney.

They have a stellar library of assets, so on and so forth. But the bottom line is they're basically still in the broadcast business. And the broadcast business is just dying with the actuarial. tables. I mean, one of the great examples is that when you look at news ratings for the election season this year, they're 50% down all across all the networks. Nobody, literally nobody's watching TV anymore. And I think that's a very big problem. And the old adage that content is king, I think, is false because what Netflix, I think, is proving that in the streaming world, it's actually subscribers that are king. You can always buy content later. I think that's the danger

with Warner Brothers. So I would be a hard pass right now on the stock. Hard pass. All right. And bad news for television watching. All right, finally, ResMed shares, except for CBC. I mean, come on, man, give me a break. All right, ResMed, shares of that company moving as competitors, sleep apnea products are pulled from the market. ResMed CEO also saying that weight loss drugs have not lessened the need for sleep apnea treatments. Shares of ResMed up about a percent today and 12 percent so far this year. Your trade on ResMed. Right. So this has been, I think, actually a gift to investors in many ways because they are in a business that is very, very much going to be in demand going forward. The company projects that there's almost a billion people across the world that

have various sleep disruptions, including sleep apnea. So the demand going forward is just going to be very steady. And I think the fear that the GLP1 drugs were going to essentially eliminate the need for this product is proving to be very false. Even at the worst case scenario, it may be just a 15% hit to the overall market. But what they've actually found when they did the study is that most people who actually took JLP1 drugs actually increased the demand for these products probably because they want to just maintain their overall health once they get to a sort of a better position. So overall, this has been a great scoop for investors.

It's actually bounced quite a lot since then. But again, I think a long-term, very, very steady, almost a recession-proof business, obviously because this is sort of a demand that's completely outside of any kind of consumer taste. So it's not a snore. I see what you did there. Talk to me about where you see the market headed. The Fed meets later this week, as most people think, does nothing? What does that do to the market, if anything? Not much. I think the market expects the Fed to do nothing. You know, I think the Fed is going to be

far more cautious. I mean, everybody in the world has already talked about the fact that the market is in disfitting way too many rate cuts than what the Fed is actually going to do. But I don't know if that's really going to matter because, you know, at this point, if the economy, if the economy economy continues to chug along and we still continue to see earnings growth, it may not matter as much for the Fed to cut race. They will probably ease at very minimum. You know, it's in everything in the markets is a matter of relativity. The fact that they stop tightening is already created a lot of loose conditions for the market. People are already saying that their lending is much better. So all of that should actually point to a more positive market move in the near term.

The mind spins. Don't sleep on ResMed, says Boris Schlossberg. Thank you, my friend. Still ahead. The San Francisco 49ers, Dom Chu, Dom Choo, are officially set to take on. the Chiefs of Kansas City in the Super Bowl and Taylor. But just how much will it cost you to see the big game in person? We'll break down the prices next. All right, we've got three minutes left in show, and there are several more stories that we want you to know about. First off, Amazon says it will not move forward with the planned acquisition of iRobot,

the two companies saying there was no path to regulatory approval for this deal. The Roomba Maker also announced it would lay off 31% of its employees and that its CEO would step down effective immediately. The future for I-Robot, what is it going to be? I mean, that looks like heading for the exits investors. Self-cleaning is one thing. Maybe it's lawnmores, they said, other cleaning-type products. But, you know, what's the path to work?

All right. Reddit is being advised that its hotly anticipated IPO should consider a target valuation of at least $5 billion. This, according to a report from Bloomberg, the social media site filed for its IPO in December of 2021. It was then valued at about $10 billion in a funding round it completed that year. So now, half that amount. What does the comp look like? What's its competitor? Is it meta? Is it you know, like snap? I guess. How do you value that? Right? That's going to be the big one. Well, anyway, New York City's return to office trend, gained steam at the end of 2020. The average visitation rates at 350 Manhattan buildings in December rose to 67% of the 2019 levels,

according to the Real Estate Board of New York, that's up from 65% recorded in November. The visitation rate mean that I've gone there to visit a colleague or visit a friend? What is that? Oftentimes they look at turnstile swipes and things like that, but a lot of Wall Street firms are getting their customers and employees to want to go back to physical locations. Yeah, yeah. All righty, the mobster who confessed to stealing Judy Garland's ruby slippers from The Wizard of Oz

was spared prison time. He'll look good in those slippers at prison, man. Terry John Martin stole the slippers in 2005 from the Julie Garland Museum in Minnesota. He thought they were worth a million dollars. He'd look like a million bucks in those slippers, man, because they were adorned with real rubies. They're not. It's just glass. But Martin is very ill and on hospice care.

So prosecutors agree he should be spared prison time. I don't know where to go with that. I don't know where. I think I'm just cost myself a job. I want to talk about football. I'm going to talk about football. The San Francisco 49ers are set to take on the Kansas City Chiefs and Super Bowl 58 and tickets to the big game. They're going to cost you a pretty penny.

According to Ticket IQ, the average ticket price for all tickets is a whopping $10,752, which is the highest ever average price for the Super Bowl 16 days ahead of the game, except for 2021. When the stadium was at reduced capacity, the most expensive single ticket, $80,130 for a swing. at the 30 to 35 yard line. Wow. Go Niners. You're a big San Francisco. Thanks for watching Power Lunch, everybody.