Power Lunch - Game of Chicken, Casino Cyberattack 9/14/23

Episode Date: September 14, 2023

We’re just hours away from a looming auto worker strike. If the UAW doesn’t reach a deal with the big 3 auto makers by midnight, we could see workers walk out. We’ll check in on the bargaining table.Plus, another Las Vegas casino has been hit by a cyberattack. Caesar’s says it paid a ransom to hackers, while MGM says it’s still trying to get back up and running. We’ll get the latest details from Sin City. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome everybody to power launch. Alongside Kelly Evans, I'm Tyler Matheson. Lots of news to get to today, including a looming strike by the United Auto Workers Union. If they don't get a deal by midnight, there could be targeted strikes as soon as tomorrow. And judging by the comments from both sides, they really don't seem close at all. Plus, another Las Vegas casino company hit by a cyber attack, Caesars says it paid the ransom to the hackers. MGM says it's still trying to get back up and running after it was hit. earlier in the week. We'll get to all that. Plus, Dr. Scott Gottlieb, joining us to talk COVID and decongestion. Congestants. Kelly, a busy hour ahead. Indeed, let's kick it off with the check on markets, which have been in a much firmer tone lately. Not only do we have almost

1% gains across the board today, but the S&P and NASDAQ are trying to put together four gains out of five as the tone has improved of late. Now, AT&T shares are also higher today. The CFO was speaking at a conference, with some bullish commentary. on free cash flow. Investors may be taking that to mean the dividend is safe. The significance of that as well is that AT&T is one of those stocks we talked about yesterday, where the dividend yield, there it is, 7% on your screen, is higher than the forward PE, which is, oh yes, just six times forward earnings. AT&T up 3% today. Netflix, though, is continuing to fall after comments from its CFO yesterday about the slow pickup of the ad tier. With this 2% drop, the stock, Tyler,

now down almost 9% this week. All right, Kelly, and the big stock story of the day, the ARM IPO opening at 56 a share, five bucks ahead of where it priced, trading right now at 59.74. That's $8 ahead of where it priced, or 17% higher on this opening trading day. Let's bring in Leslie Pick up for the details.

Hi, Leslie. Hey, Tyler, the biggest IPO of the year up and running. Arm getting a respectable boost in its first day of trading with a listing here at the NASDA. Its owner, SoftBank, sold all $5 billion worth of this offering, and its customers, Apple, AMD, NVIDIA, and others have indicated interest in purchasing roughly 15% of the float. Now, this is a seamless debut. You can see the stock is up about 17% right now in a relatively shaky market for new issuance.

The market's been closed for the better part of the last 18 months. So to minimize risk, SoftBank opted to sell a small amount of the company, just about 9%. of the total valuation as being sold in this deal. They signed up strategic investors, those customers I mentioned, and they didn't price too aggressively relative to the range they had been marketing, just at the high end there. Now, a smooth debut bodes well for the other IPOs in the pipeline, shares of large banks. Those are trading higher today,

with bank investors really looking for a bona fide reopening of the IPO market. You've got marketing tech from Clavio on the road, grocery delivery, company Instacart currently marketing its deal. Birkenstock just filed its F1, waiting in the wing. So there's definitely activity. I would see it's a little more than green shoots. We're starting to see some real activity come to the market. But, of course, that's why the stakes were so high today.

And that is why today's performance bodes well for the other IPOs waiting in the wings. Arm is a money-making company, correct? Money-making, but those profits did decline. in the first six months of the year. All right. Leslie, thank you very much. We appreciate it. And now we're about 10 hours away from the UAW's deadline. If they don't reach a deal with Ford, GM, or Stalantis by midnight, we could see auto workers go on strike.

Phil Abo is in Detroit for it, and Phil doesn't sound like they're close to a deal, and this strike might look a little different. Is that right? That's correct, Kelly. We do not think that there's going to be an agreement by 11.59 p.m. tonight. We could be wrong, indications from the people we've talked with is that the two sides are still far apart and they're not going to reach an agreement. So we will see some type of a strike likely with each of the automakers. Here's the latest on the UAW contract negotiations. For General Motors, it was a new offer this morning.

We don't have the details of that offer, but they have been increasingly going back to the UAW with new offers. And Ford has been doing the same thing. Jim Farley, CEO last night at an event here in Detroit, expressed his frustration that the UAW is in his opinion, not coming back to the table with genuine offers. As for the UAW, President Sean Fain says that he will unveil a list of strike targets tonight at 10 o'clock. And while they are not saying what those targets are just yet, a source is indicated to us that there are eight transmission and engine plants in the upper Midwest that are likely to be hit starting at midnight. And these are big plants, talking about Ford's transmission plant in Ler, Livonia just outside of Detroit. There's the Stalantis facility in Kokomo, Indiana, and GM's transmission plant in Toledo. Those are massive plants that supply transmissions, engines to the

most profitable models. By the way, the UAW, when we asked them about this, said we have not finalized our list. As you take a look at chairs of GM, Ford, and Stalantis, keep in mind that the strike deadline is at 1159, and it could be at midnight that we start to see UAW members walking the ticket line. Guys, back to you. There are different negotiations going on with all three of the different companies, correct? And is one of the big three, Ford Stalantis or GM, closer to a deal with the UAW than either of the others? Your guess is as good as mine, Tyler. We were told over the last couple of days, and I even had people tell me, look, I think Ford is the closest to getting a deal done with the UAW. And then yesterday, UAW President Sean Fain blasted Ford again.

And that was it. That was enough for Jim Farley, CEO of Ford to say, forget about it. We've had enough of this, of him posturing in public. We are not getting the negotiations that we need from the UAW. So that blows that idea out of the water that Ford is closer to a deal than GM and Stalantis. My gut tells me, based on people I've talked to it, we're going to see some form of a strike at all three of the automakers. Not all of them walking out en masse, so it won't be 150,000 UAW workers going on strike, but targeted strikes. And we're talking about anywhere from 7 to 12,000 workers in total if all of these plants in the Upper Midwest that we've been told will be hit. If those are hit, that's what we're looking at. All right, Phil, thank you very much.

And I know you'll be all over it over the next 24 hours and probably longer than that. So how will the United Auto Workers strike hit the big three automakers? Joining us now is Tom Narayan. RBC, he's with RBC. He's done the math on a 20% wage increase and said it really wouldn't have a huge impact on Ford's earnings. also joining us as former Ford economist, Ellen Hughes Cromwick, who says a long strike could set back the big three in the EV transition, among other things. Ellen, let me start with you and specifically talk to us a little bit about Ford. How far apart do you think these two sides are? And has the atmosphere been sufficiently poisoned that there is very little chance of a settlement before midnight tonight?

Well, I think Phil had a very good summary of where we stand right now. If you had an opportunity to listen to the live stream of UAW president, Sean Fain, last evening, I think you may have walked away with the impression that there are substantial differences across all three companies and what the UAW is demanding. And, you know, bear in mind that these are demands. that come after a period when the D3 have really recovered from the global financial crisis. It took many years before they were really substantially profitable again. And so now they're in a very healthy position. And, you know, let's hope that they come to some agreement so that we can move on to what is really at stake here,

which is our competition. in the EV market. I mean, we have got to be ready to invest big time in retooling these plants and getting EVs on the road. All right. So, Tom, what do you think here? Is the UAW seeking, well, obviously they seek to benefit. Another phrase would be take advantage of, but to benefit from some of the profitability

that Ellen just referred to there. They deserve their fair share of it, and anyone would say that. do they want to effectively go back to the way things were pre-financial crisis with respect to wages and particularly pensions, which are part of this deal? They want pensions, not just 401ks, pensions. Yeah, I mean, I think the way to look at this is we're in a different world now. The auto industry is very different than what was pre-GFC, certainly. It's way more automation. I actually think the OEMs have a lot more bargaining power than maybe we give them credit for. The other thing I'd like to note is, sure, they're a lot healthier now post-pendemics.

They're really a lot healthier. They're better earnings drivers because of high pricing. So what happens if there is a work stoppage? That means volumes actually stay down, inventories stay lower, pricing goes higher. I do think what's missing in a lot of this is the automakers could actually keep pricing elevated and keep record profits high. I know it sounds optically bad to say for GMs, the Lantus, and Ford to say a strike is bad for them. But we can't forget what's been happening. Remember, we've had three years of shutdowns, right? Pandemic, semis, Russia, Ukraine, and record profits because of it, because volumes are lower.

So in a weird way, I actually don't think this will be as bad for the OEMs. Look what happened in 2019. Look what happened to GM. Quick snapback right away. As you mentioned, I did some math on the labor costs. Labor costs a lot lower than what it was historically as a percentage of cons. A 20% labor cost increase for Ford only results in less than 100 basis points of margin decline. And they can offset that with the higher prices that come with lower production.

So I think a lot of this may be kind of overblown. I actually think it can actually make these OEMs bizarrely healthier than a lot of people give them credit for. If we take a step back, as we were told yesterday, Stalantis is trading it one and a half times EBITDA, basically. Ford shares are single digits and have been for years. GM's gone nowhere and China's now at risk of flooding the market with cheaper electric vehicles. I mean, what's the long-term prognosis for these companies who are trying to sell $120,000 electric F-150s or whatever? I think you're absolutely right.

I think a lot of people are missing another big thing. the IRA is a huge transfer of capital from the U.S. government to consumers and to these OEMs. I used to be the European auto's analyst for four years last year before that, and I could tell them in Europe, you don't have this sort of support from the government. The U.S. automakers stand to really benefit significantly. For GM, it's $73 billion to consumers over the next 10 years to buy EVs. So I actually think that the U.S. OEM structure really well positioned. They're doing GEVs with battery makers in the U.S.

In Europe, you can't do that. Why? Because they have to export to China, and they don't want to anger the Chinese, and they're allowing the Chinese entrance to come in. So, yeah, I think the U.S. OEMs are actually poised to do very well with electrification, thanks to the IRA. Ellen, why don't you react to what Tom just said? And specifically, I don't mean to put words in his mouth,

But if I'm hearing him correctly, I infer that he thinks a strike might not be an unmitigated disaster for the OEMs. Yeah, Tom, I guess I would sort of disagree with that premise. I think, you know, really in some sense, depends on how long this strike lasts. If we're talking about 30, 45 days, 60 days, and we still don't have a contract, that leads to substantial cash outflow. I mean, right now, for example, Ford has cash net of debt at about $10.3 billion. That's as of the second quarter. GM has $8.9 billion. Now, granted, they have a lot of liquidity because of their credit lines. Ford has 47 plus billion in liquidity. GM has 38.9 billion. So they have, you know, funds, they have cash on their balance sheet. But it

If you're talking about a strike that's really hitting transmission plants, engine plants, and now we're talking, you know, 30 days, 45 days without an agreement. Now we're talking about the CAPX that they have in place to make the transition to EVs. That CAPX is at risk. So I think a persistent strike is not good. And, you know, secondly, it's not good for morale. It's so important when you make a transition on a technology. to have aligned incentives.

And everybody's on the same team because they have to make sure they can be competitive. They have to go into this. And, you know, China is moving into Europe. Europe's going to respond. We have the IRA. They're going to have their own EV policy

coming down the pipe. So, you know, the competition isn't going to be easy when it comes to EVs. All right. Ellen, Hughes, Cromwick. Thank you. And Tom Narayan, thank you very much. Thank you. And coming up on closing bell overtime, Ford CEO Jim Farley, that's at 4 o'clock today.

We'll get the latest from the head of Ford at 4 p.m. on closing bell overtime. Looking forward to it. Coming up, crude oil climbing back above $90 a barrel for the first time this year. We're still above that level. As you can see by a couple of pennies, what's causing this latest rally? We'll talk about it and a power check as we head to break. Norwegian cruise lines on the positive side on an upgrade today. Redburn's saying the pandemic ache is finally over. And meanwhile, Visa is one of the worst performers on the S&P 500 and on pace for its worst day in nearly a year. Also the only name on the Dow in the Red.

We're back after this. Welcome back to Power Lunch. AI is back in focus this week in Washington and on Wall Street. The so-called Magnificent 7 up 95% this year while the S&P's up just 17%. And those companies, Apple, Microsoft, Nvidia, Amazon, Google, Tesla, and Meta, they account for most of the S&P 500 gains. But our next guest says there are many other opportunities being ignored by chasing those trends. Let's bring in Richard Bernstein, CEO and chief investment officer of Richard Bernstein advisors. It's good to see you, Rich.

I didn't take you for a mag-7 chasing kind of guy. No, certainly not, Kelly. I think, you know, there's notion of the Magnificent Seven. I would just ask rhetorically, I would ask people, are there really only seven growth stories in the entire world? And clearly the answer to that is no. So I think people are missing many of the opportunities around the world, even in the United States, but around the world, simply by being so myopic on these seven companies. Let's back this up for a second, because some might say, well, the biggest opportunity in the world is NVIDIA. You know, we've just never seen a company double revenue in a single quarter.

when we're talking about from the scope of $7 to $14 billion, and it's still only at a 35 times forward multiple. Right. So I think, Kelly, you know, I think we have to separate out, when people talk about artificial intelligence, I think we have to separate out the story from the investment opportunity. And I'm not talking about investment opportunity in the next two weeks or two months. I'm talking about, you know, the next year, two years, whatever. And I think that a perfect example, a perfect analogy would be, the technology bubble in 1999 and 2000, where there are all these promises made about the internet. And the internet changed the economy in more ways than we could ever have imagined. I mean, what I'm doing right now with you, nobody could ever imagine that was going to happen 20 years ago.

But the interesting thing is that if you bought into the tech bubble a year before the bubble peaked, you still didn't break even for 11 years. I strongly doubt that people are being caught up in the AI hype right now saying, eh, it's okay, I'll break even over the next 11 years. No, they think they're going to make a lot of money very quickly, and it's going to be sustainable, and that these are the great growth stories going forward. I think we have to separate out what's going to happen in the economy

from what's going to happen in the stock market. Let's talk a little bit about those other growth stories that you refer to in your first answer. Where are they? What are the names that people should be considering in what sectors are they? if they're not, the sort of the magnificent seven of technology. Right. Well, Tyler, my favorite example of what we're talking about, I don't want to name individual companies, but I think my perfect example of what's going on is

I'm sure everybody watching us today knows Arc, A-R-KK, the Arc Innovation Fund. The Arc Innovation Fund came public in October of 2014, so it's coming up on nine years now. over that nine-year period, small and mid-cap industrial and small and mid-cap capital goods companies have outperformed ARKKK. So I think the market has turned the page sort of underneath the surface here. The market has turned the page and is looking at new growth stories. I would argue those related to more real productive assets than to the hype of cute weiner dogs in the metaverse and AI and all that kind of stuff.

So the sexy, you don't have to be sexy to be good here. No. I think that's great. It's good to be both, right? I mean, I have to say. I think the way to think of it, using your sexy analogy, I'm not going to take credit for that one, but your sexy analogy is think of the market as a seesaw. And on one side of the seesaw, we've got all the sexy investments going on right now. They did very well in 2020. 2020, the seesaw kind of leveled out, or 2021 rather. 2020, the seesaw went in the other direction and all the non-sexy stuff did very well. Clearly in 23, the seesaw has gone in the other direction again, but now we're down to like, you know, seven or ten companies. I just can't be that bearish to say that there are only seven growth stories in the entire world. I think the opportunity set on the other side of this seesaw is maybe historically broad and historically attractive. Rich, thanks very much, Richard Bernstein. We thank you. Great seeing you. You bet. Same here.

All right, there's much more to come on our program, but as we head to break, be sure to join us for our Delivering Alpha Summit. is just two weeks away, September 28th in New York City, investors, business leaders are going to provide ideas and insights to help you balance risk with maximized return. The content is going to flow like a fire hose, man. Scan the QR code on your screen or visit CNBC Events.com slash delivering alpha. It is bound to be enlightened. Welcome back. Another hotter than expected inflation read out this morning, but bond yields not really reacting. Let's ask Rick Santelli, why, out in Chicago. Hi, Rick. Well, I don't know if they're not really reacting. They're certainly reacting a bit different

than yesterday. Let's go through it, shall we? Today, we had a couple things that we should point out with regard to PPI's August release. Up 7 tenths month over month was the highest month over month change since June of 22. If we look at year-over-year PPI, X food, energy, and trade, it was 3%. So it's higher than expected, a higher revision. And at 3%, it really does underscore some issues with regard to lingering aspects of inflationary pressures. And it isn't only energy, although to say energy is less important or non-important or to strip it out and ignore it is definitely a big mistake. Let's look at the intraday of tens. You see all that volatility around 830 Eastern? And what happened afterwards, we moved higher in yields. Look at

yesterday when you pair of two-day. Yesterday, it was the exact opposite. in my opinion, a much hotter, more important CPI, and yields moved down afterwards. The problem with these things are, Kelly, is that markets don't send out memos. They don't say the reason market yields move down is because of X, Y, or Z. So many put it together. The markets were happy with yesterday's CPI. I disagreed yesterday, and I disagreed today. There are other forces at work here.

And yesterday's yield high intraday, and you pointed it out, was 4.34% before it. drop. Guess what? Open the chart up one month. The high yield close on the 21st of August was, you guessed it, 4.34%. That is a very key level, and even though this is a slow moving motion picture of higher yields, the session we close above that is going to be another technically significant session that pushes yields more to the upside. Finally, all of that and the perception that the ECB is done after their 10th consecutive rate increase, whether true or false. Well, the euro currency broke, interest rates moved. They closed at the lowest levels pending their close in six months, which usually means, and it does, the dollar index is pending

its best close in six months as well. Tyler, back to you. All right, Rick, thank you very much. We got oil, 90 a barrel. Pippa Stevens here with us now to explain what's behind that. So tell us. Well, so this is the first time that WTI has topped that $90 level going back to last November. Brandcruid is right around 93. 72 right now. And so this comes after the latest reports from the IEA and OPEC both said that we will see supply deficits through the remainder of the year. So on one side, we definitely do have this tightening physical market supported by strong demand, as well as Saudi Arabia, signaling that they will do what it takes to keep a floor under prices. But on the flip

side, you could argue that this tightening market has been very well telegraphed. And so the big run-up we've seen in oil is already priced in. And now oil is overbought for the first time in a year and a half. And so it really does speak to just how quickly the sentiment has shifted from very negative to maybe perhaps a little bit too positive here. Now energy stocks are higher. One area to watch here is the services names because with WTI now at that $90 level, we could see some of the private players bring production back online and there are about half of the rig count. So it's definitely a meaningful statistic to watch there. Finally, clean energy stocks also higher today. I actually just got back from the RE Plus conference out in Vegas, which is the largest clean energy

conference more than 40,000 attendees. And the mood there was very optimistic on the long-term side. But, of course, in the near term, still seeing a lot of challenges, particularly for residential solar. And they keep pushing out, you know, when is the bottom going to be? And we keep hearing, maybe next quarter, and then that keeps getting pushed out. How much carbon was expended at that conference? And then people getting there.

Everyone walked. Yeah, everyone walked or took electric scooters. Exactly. Vegas is known for electric scooters. Yeah, right, exactly. And energy efficiency. How is the winter going to affect oil prices? Not just the winter heating season in the United States, but around the world and factor in the ongoing issues of the war in Ukraine.

Well, we see that there is the relationship, of course, between oil and gas and even coal and renewables, whereby if one goes up, then you start shifting to other sources, and that makes that one go up. And so I think right now things are looking, you know, more or less pretty stable, given that Europe especially is very full in their storage. They're over 90% now and their head of schedule there. But I think that what we've seen in recent years is that the increasingly erratic temperatures we're seeing means it's very hard to plan. Now, we also had the IEA saying that we're going to see peak fossil fuel demand. And so what kind of signal does that send to fossil fuel companies and in terms of infrastructure investing and risks around stranded assets and things like that?

So I think one of the issues is that it can seem very steady right now. But all it takes is, you know, a storm that knocks out some refineries, that then pushes up gas prices that kind of, you know, changes the dynamics in the market. So a lot still to watch here. Snowballs. All right. Thanks, Pippa. Appreciate it. And let's get over to Steve Kovac now for the CNBC News Update, Steve. Hey, Kelly. Yeah, federal prosecutors indicted President Biden's son today on gun charges. Hunter Biden faces three counts tied to possessing a gun while using narcotics. The case is being overseen by Special Counsel David Weiss. Each of the counts carry a five to 10-year maximum sentence and a $250,000 maximum fine. Also, India is stepping up contact tracing and testing

some 700 people as it tries to control the outbreak of a deadly virus in the southern state of Kerala. Two people have died from the Nipa virus since August 30th and two adults and a child are receiving treatment in a hospital. It is spread through contact with the bodily fluids of infected bats, pigs or people. And finally, NASA is planning to name a new chief for UFO research. The announcement came today during an expert panel on what the government calls unidentified anomalous phenomenon. A UFO study found no signs that recent reported sightings were extraterrestrial, but NASA administrator Bill Nelson did say he personally believes life does exist beyond Earth. Kelly, the truth is out there. You know, everyone, I hate these stories. I do. But I love it.

I know. I'm the only one who does like, Steve, thank you very much, Steve Kovac. Ahead on Power Lunch, new COVID booster shots hitting the market. The CDC recommending them for everyone six months and older as new cases begin to climb. What you need to know about the newest variant, the latest vaccines, and more with former FDA commissioner and Pfizer board member, Dr. Scott Ghaly. We're back after this. Welcome back to Power Lunch, everybody. A couple of key stories in the health care and pharma industry that caught our attention today. first. The New York Times out with a story saying a decongestant in many cold medicines is ineffective,

according to an FDA advisory committee. And also this week, the CDC endorsing COVID-19 boosters for everyone ages six months and older as cases rise and a new variant takes hold. Here now to discuss Dr. Scott Gottlieb, former FDA commissioner, CNBC contributor and board member, I believe it, Pfizer. I'm right on that, aren't I, Scott? That's right. All right, fantastic. Let's start with phenolephrine, which is the ingredient in question here that kind of replaced decongestants with pseudoepidrine, which went sort of behind the counter.

Am I right here? And why is we now finding out, belatedly, years later, that phenolephrine may not be effective? Yeah, that's exactly right. So back in the 2006-2007 time frame, pseudoephedrine was put behind the counter because it was believed that people were making methamphetamine from it. Now, the methamphetamine crisis really has resulted from the drug product coming across the border with Mexico and not necessarily people manufacturing it off pseudoephedrine. But nonetheless, that product was put behind the counter. Before that event, phenylephyne was, I wouldn't say a seldom used product,

but it wasn't as widely used as it is now, certainly. after pseudoephedrine was put behind the counter, phenyliferin became more widely used as companies reformulated their cough and cold medicines with phenylephrin in it. Now, this was never believed to be a very effective product. The presumption always was that it was weakly active and it was short acting.

The effect lasts about four hours with oral phenylphrine. But it was believed to be active nonetheless. We looked at this very closely back in 2006, 2007, when Sudafed was initially put behind the counter. But the studies were never really well done. by modern standards. There's been some subsequent studies since then, none of which have really shown a strong treatment effect, and so it's caused FDA to re-adjudicate this, reassess it, and come to the conclusion that the advisory committee did that there's no strong evidence suggesting

that this drug's effective. Now, that said, there were a lot of methodological problems with the studies that looked at the efficacy of this drug, not least of which was that it looked at patients with allergic rhinitis, which we know it doesn't work in that setting. There was small studies, and the finding of nasal congestion itself is a very subjective finding, especially for a short-acting drug. So we take a very large, well-powered study to really tease apart a treatment effect here, and we just don't have that kind of evidence. So if I have a cold or flu and I have nasal congestion, what should I do about it? Should I just use some aphrine or something like that, an over-the-counter nasal spray that does the trip? Well, look, I still believe personally that with the totality of the evidence that phenolephrine probably is providing a treatment effect here, albeit a small one and a short-acting one, so it's not providing long-term relief.

But I think it is providing an incremental benefit for some patients. But if, in fact, this product isn't available, people don't want to use it now. And just keep in mind, the FDA didn't raise any safety questions about the product. So the product's safe. It's just a question of how much efficacy is it delivering. But if people don't want to use it or it becomes harder to get, there's other products on the market, all of which have shortcomings. You can use nasal preparations like nasal steroids. You can use things like aphrine, which has oxymotaziline in it.

That can cause rebound if you use it for a prolonged period of time. I suspect if phenolephrine's taken off the market, you're also going to see more homeopathy put on the store shelves on cough and cold aisles, which is providing probably no benefit at all. So I'm not sure that there's a really good alternative here for an oral formulation that can provide some incremental benefit. Now, all that said, I don't think FDA is going to withdraw these products in the market. I think in all likelihood, what the agency is going to do is probably relabel them to maybe take out the indication for allergic rhinitis, which is an indication that we know these products don't work in. They only work in the setting of a common cold causing some transient nasal congestion. Is pseudoephedrine more effective, the stuff that has been put behind the counter?

Is it more effective? And should I ask for that? That's certainly the case. I mean, if a consumer doesn't have side effects associated with pseudo-oephedrine, that certainly is a more effective product. Now, it's more expensive. It's behind the counter now. Prices have gone up since it's been positioned there.

And that's part of the challenge, having something accessible for people to relieve some of the symptoms of a cold so that you can improve productivity and just general well-being. Dr. Gottlie, what? So maybe I'm not the only one of slightly confused about what to do on the COVID front now. The cases are everywhere all around us. But there's some misunderstanding about whether if you've had the boosters, I guess going back a year or two ago, are you fully boosted? How long until they wear off? Do you need the new boosters and so on and so forth?

What's the latest advice? Well, look, I think these COVID vaccines are going to be like a flu paradigm in terms of receiving updated boosters on an annualized basis. to have protection for that season. We know that matching the vaccine to the current variance provides some incremental protection in terms of protection against infection. And we also know that recency matters, having a recent vaccine and also a recent infection

for that matter provides stronger protection. The protection from the vaccines do wear off over time. I think you can expect to get three, four months of more robust protection from a recent vaccine. After that, the protection against infection is going to decline. You'll still have some residual protection against, getting more symptomatic and severe disease.

So for people who need the protection, people who are at risk, people who want to reduce their chance of getting infected to the vaccines still do that, but on less of a basis, certainly than they did when they first came out, getting an updated vaccine this fall is something that's prudent. And I would urge everyone to consult with their physicians and make an informed choice about whether or not they're going to get an updated vaccine. You've just hit on something that's sort of interested me for a while. Did the public misunderstand, did drug companies not know, or did drug companies oversell the effectiveness and protectiveness of vaccines against COVID?

In other words, when we typically think of being vaccinated against an illness, we think that means we're not going to get that illness. And it turns out that in the case of COVID, while the vaccine did much, much good and prevented lots of more serious illness, it didn't seem to confer the kind of immunity that we, bless you, she's good, mask, not COVID, that you see what I'm driving at here. Yeah, it's a great question. Did the public not understand it or where? What is it? Well, I wouldn't blame the public for not understanding it.

I think public health officials didn't communicate this very well. When the vaccine first came out, people were very careful not to say that the vaccine protected against infection because we just didn't have data. The data initially showed the vaccine protected very well against symptomatic disease and severe outcomes. There was subsequent data initially out of Israel showing that it was very effective at preventing transmission and infection, all infections. And that really gave people a lot of optimism that the vaccine could be used as a tool to effectively end the pandemic. And so you saw the messaging change. I think what people didn't anticipate is that the virus was at that time starting to mutate. And once the virus mutated

to more infectious forms, it was going to become much harder to develop vaccines that were going to provide the same level of protection against infection. That's, in fact, where we are today. This vaccine is much more infective, and coming up with a vaccine that's going to afford the same level of protection against infection as what we enjoyed initially with the original strain of the Wuhan virus and the original vaccine, that's probably going to be very difficult, at least with the vaccine technologies that we have today, it's going to probably take a different technology that vaccinates against more epitopes on the virus to be.

before that level of protection against infection. Now, that doesn't mean you're not getting any protection against infection, but is substantially reduced from what we initially had with that first tranche of vaccines when we were doing with the old Wuhan variant. So we're dealing in a different environment today, and I think it's a lot like the flu. When you get the flu vaccine, you're going to get protection against symptomatic disease. Hopefully, you won't get, if you get the flu, it won't be as severe. You'll also get some protection against infection with the flu.

Now, we know people still get infected after being vaccinated, but the flu vaccine does provide some protection against infection. So your chances of getting infected, infected go down. I think the same thing's true with the COVID vaccine. It does provide some protection against infection, but substantially less than what we had when we first rolled out these vaccines against that initial variant.

It's really the mutation of the virus as much as anything that explains this potential misunderstanding. Scott Gottlieb, doctor, thank you very much for being with us. Thanks a lot. And coming up, arms reach. Arm Holdings finally makes its long-awaited public re-debue. It's a big win for SoftBanks, Mossa Sun. The shares are just under $59, opened pretty well given the $51 IPO price.

We'll talk about that and more when we return on Power Lunch. Welcome back to Power Lunch, Arm going public today and having a pretty successful debut. The stock pricing at 51 last night. It opened around 56, and right now we're trading at 58. It's a big win for SoftBank's Masa Sun, and he kind of needed it. Let's bring in Deerjibosa for today's tech check. The market cap, though, Deirdra is still in the neighborhood of what he paid when he took full control last month. Yeah, and so that's why I want.

I don't think we can call it a win just yet. I mean, maybe it's a successful IPO because it's up more than 10%. It's a healthy pop, I guess you could call it, but a lot more than this. And you could say that South Bank of Masioshi Son left money on the table. As you mentioned, Kelly, it is below that. $64 billion that Saupank just paid to get a piece of it from the Saudis not too long ago. So still have to see, but you are right in that Masoci Sun really does need a win, right? He has really hung his entire legacy on him being central in this shift to artificial intelligence.

He's been talking about it for many, many years, not just when it became really hot and buzzy this year. But there's been some missteps along the way. I mean, he's talked about Nvidia, and yes, if he was able to sell armed to Nvidia a few years ago, that would have been a huge win, much bigger than what we're seeing today, undisputable. However, remember that he did buy some Nvidia back in 2017, and he sold it about a year later. He made $3 billion, but he could have made tens of billion dollars. So I guess it leaves us sort of with a question that many ask about Masa San's legacy these days. Is he a great investor or is he just lucky?

Remember, going back to the turn of the century, he invested in Alibaba for $20 million. At one point, it was worth more than $100 billion. dollars. He needs another win of that scale to keep that legacy going. Is he kind of, in the same sense, I mean, you follow this much more astutely and acutely than I do. Venture capital companies have put money to work, they may invest in 10, in 10 startups, in 10 embryos, and seven of them fail. But if they get one right, and really right, they're set for the next decade. Is he that kind of investor? is that investor on steroids? There's a phrase that we use called spray and prey. So maybe a decade

ago, investors would, VCs would look at 10 companies and get one win. He looks at 100 and hopes for one win. So this is in a different league. This is akin to a different era, the baseball era, when, you know, steroids change the whole idea of what it means to get a home run. So this is different, but yes, it's that idea on steroids. All right. Well put. Got it. Thanks, Dee. All right, coming up, we'll ask our trader why she's not touching any IPOs right now, including Arm. Up and Arms. Three stock lunch. After the break. Time for today's three stock lunch. We may just get to two. First up on the menu, Arm Holdings, open for trading. 56 a share after setting its initial price at 51. It is now at 58, almost 59, a share up 15%.

Here with our trade, Danielle Shea, Simper Trading VP of Options. Danielle, you recently said you wouldn't be a buyer of any IPOs right now. Why not? And why not this one? That's right, Tyler. And it's because of the IPO environment. When you look at the last 50 IPOs that have hit the market, only five of them are trading at or above your IPO price. So I think that traders and investors can get a much better price on this stock later on. And ideally, they can buy them by purchasing some cash secured puts and getting into the stock in the stock in the market. And getting into the stock in that manner. All right. So we seem to have lost your video, but we've still got your voice, Danielle.

So stay with us as we move on to the next stock. Right, which is Netflix. And Danielle, this is another interesting case where is it emblematic of an entire industry or not. So Netflix is down for the second straight day. And about 9% in a week now seem to be concerns about pricing, profitability. What would you do with it here? So when you look at Netflix, yes, it's admittedly a little bit dicey. We have some high volume selling right now. And right now it's at the $400 price point.

So here's the thing. I'm looking at Netflix and I generally do like the stock to trade higher before earnings. When we're hitting next week, we're going to be entering the 21 bar time frame prior to earnings. And so I still like it for a buy, but it has to hold 400. If it holds 400, then you can look for on average about 5% up move going into the next earnings report. But a break of 400 will see a flush down into 375. And then anything else you'd say, you know, by extension for the rest of the space, or you'd just kind of leave it as a weak link?

So the thing about Netflix is that it can have these moves lower on bad news, right? But historically, over time, looking at the probabilities more often than not, it still trades higher going into earnings. If you look at the October season in particular, that one, can be weaker out of the four quarters, but I still like the stock. And I think that if it can hold up above support, I still want to trade it higher going into the next earnings report. All right. Danielle, thank you very much. We appreciate it. Danielle Shea, sorry we lost the video there, but we got the meet of the discussion. Coming up, speaking of which, the hack attack that's crippling

Vegas. Welcome back. Las Vegas casinos are dealing with a crippling hack attack. The stocks are slightly higher, though, but Contessa Brewer joins us with more in this curious story, Contessa. Yeah, well, Kelly, MGM, in fact, is still struggling to get its systems back up and running, and I'm told the regional casinos have recovered computerized gaming systems, but Las Vegas is still working manually, though offering casino and dining and other guest options. The FBI, other federal law enforcement are involved in the investigation. And earlier today, Caesar's entertainment revealed it, too, was breached, and criminals last week demanded a $30 million ransom payment. I've learned that Caesars has paid half of that 30 million.

My sources tell me it was the best possible outcome for the company. I've confirmed that ransom demands have been made to MGM as well. Intrusions hit different systems. Seizers says criminals took some customer data. It's not been publicly exposed, though. MGM's operations and the communications were affected. What they have in common is that the criminals didn't hack their way in. They actually were let in by a human being by social engineering criminals, targeting an employee either at the company or third-party vendors. It's still a casino heist guys. Are these casinos insured against these losses quickly? They are. They are. And it will come in and pay, generally cyber insurance pays for a big part of ransom. Thanks, Katessa. Thanks you for watching

Power Lunch. And that's why the cost of cyber insurance keeps going up. Closing bell starts right now.