Power Lunch - Gold Demand, Big Tech & College Admissions 11/22/24

Episode Date: November 22, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody, alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us for a Friday. Today we are joined by Sarat SETI. Welcome, Surat. Good to have you here, managing partner at DCLA. We are focusing on your investments, beginning with stocks. Higher again, the Dow leading once again, all three averages higher by nearly 2% for the week. Getting close to those all-time highs, Sarat, what do you make of this? Two percent gains this week. There was a little bit of a breather post-election, but back on track. The like most about this is the rotation. If you look, the Dow is up point eight today, the S&P lower, and the Aztec even lower. And that's what we really need.

I mean, because the market, as we know, has been driven by a handful of stocks. But if you get some of the other participants, the non, you know, top seven, I think that's really... Financials, healthcare. Whatever it happens. Utilities. Industrials, actually, so financials have done really well. They're leading the way. Healthcare is sold off with RFK.

Consumer staples have sold off. So those are areas. where we could see some opportunity, but industrials are doing very strong, energy is doing strong. So I think the broader market doing better is really good for the overall market, because then you'll see more capital still flowing to the market, and it's not as narrow. I mean, today, Nvidia is down 3%. Wow. And the market is still up. Yeah, the market is still up. Tells you something that that wasn't the main headline being flashed across everything. And Google was down five yesterday. Stop the presses. Exactly. Exactly. By the way, of the stock market.

Is it like presses? I don't even. You know, we get newspapers every morning. Yeah, yeah. There's still someone out there, you know, churning it out. I get one every morning. If the stock market valuations, by the way, are a little much for you these days. There are some attractive yields in fixed income. We're going to talk to the president of Guggenheim investments about treasuries, private credit. Corporate credit has just been so incredibly strong, Sarat.

It's actually at the point where I'm like, I'm not sure if you need a bigger stomach for stocks or for credit with some of these valuations. Yeah, look, I think there's an important part for everybody's portfolio, depending on your risk profile. And I think the opportunity is incredible. are pretty big right now, but it's where do you want to play it? So that'll be an interesting question too. And again, in the stock market, you don't necessarily just have to buy the S&P. You can still be in different parts of the market. And the one thing we've learned over the last decade is the place to be is more U.S.

So really you could diversify into more U.S. stocks, move away from X India, and then you can have other opportunities, whether it's gold or crypto or credit or- Indeed. And we want to talk, get into gold and get into Bitcoin in just a moment. but you mentioned Europe, and that's where today some of the data that is coming out of Europe, and the underperformance that we're seeing over there, I mean, it's been negative for European equities. We have contraction for all of these, you know, business sentiment indices. We have Germany.

I mean, a lot of people have been trying to look for value over there for a very long time. But at some point, do you just throw in the towel? I think you have to look at fundamentally the European structure versus the U.R structure here. And when the stakeholders are different, the stakeholders in Europe are more the people that work for the company. The stakeholders here are more of the equity owners or even the bonds. So I think that when you start driving there and you say, where am I going to go with margins, where am I going with cash flow? And as those companies become more profitable, it goes back to the stakeholder. So you have to... It's also a minor matter of Russia lobbying intermediate range ballistic

missiles into Ukraine, which would destabilize a lot of people in Europe. And slicing undersea cables? Yes. You know, sending the price of energy source. So you're right. Not all this has been brought upon themselves. So you take a combination of that and you say, where can I allocate capital? For similar companies, I mean, you look at BP and Royal Dutch and you look at Chevron Exxon, the multiples of Chevron Exxon are twice what they are for BP. So the market's telling you something there. And today you can allocate capital anywhere.

So I think they've been kind of sold off. I think the European market's up 3%. We're up 25. But that's just this year. If you look at 3, 5, 10. So if you look at 401Ks, where do you want to be? And if you want to be in emerging markets, do you really want to be in China? Right.

So where does the capital flow? It flows here. Yep. And if you look at kind of where we're going in terms of the economy, and the economy drives a stock market, and our economy is pretty strong right now. Yeah, 2.5%. Flows are also going into, well, we'll talk about it. Yeah.

We're watching Bitcoin continue. It's slow and steady march toward 100,000. We've also got our eyes on gold, rising once again and having its business. best week of the year. The CEO of Barrick is going to join us. Surratt, before the program began, we were talking about Bitcoin and gold. Are they proxies for one another? Do they compete with one another? Is it a zero-sum game? If Bitcoin is winning, does gold not, but both have been moving higher now. Yeah, gold took a little break when we have the new president elected, but it has a kind of continued. It's a continuous rally. And I think gold and now Bitcoin, and we're still

trying to figure out what crypto is going to be in everybody's portfolio. But gold's always been there as, hey, we need a hedge for more volatility. And I think you're seeing more capital going to gold. And plus, as the dollar gets stronger, commodities do well. Gold's a commodity. So you've got a lot of tailwinds on that, too. I think it's a good sign that gold is rebounding, if you want to believe in the sustainability of this Bitcoin move, because it tells you that there's something to be more cosmic going on that striving. When we had this big pullback in gold and you felt like, well, maybe it's because the real value of the dollar is appreciating. And maybe at some point that means that Bitcoin's going to go through a correction phase as well.

You see gold get another bit under it and you think, all right, or maybe. Because think about it, this is happening, even as Europe's about to go under parity to the U.S. dollar, the fact that we can have gold in Bitcoin doing as well as they are, when the dollar index is at 108, what does that tell you? It just tells me that we're risk on right now. And people want to be invested. They want to be allocated. And these are two areas that, especially for people who've never invested in there before, I mean, you want the crypto exposure just because we know you have an administration that's really

favorable for it. And it's kind of like the AI trade in the sense that we're going to find a use for it as soon as we find a use for it. Do you want to be invested when the use comes? Right. Or do you want to be invested before we find out? And at least if you put a small part of your portfolio in there, then you get that exposure. And it's diversification, right? It's the same thing we talk about all the time.

Don't put 80% of your portfolio in seven stocks, don't put a huge amount into crypto or gold. But if you have the risk profile and you are a long-term investor, you could get exposure through there. And there are many different ways to get them. Let's bring in Nancy Tangler, CEO of Laffer Tangler Investments. Joining us by phone, Nancy, welcome. Good to have you with us. I don't know how much of the preceding conversation you've been able to hear. But equities have had a pretty doggone good week.

And Sarat points out that one of the good parts of it is, is that the market seems to be broadening out. Yeah, no, agreed 100%. And I think we started seeing that in the summer, really, when we got the tech swoon and tech stocks sold off. And even a little bit before that, you started to see the broadening out into industrials and some of the consumer discretionary names.

But then, you know, after the election, we saw financials. And I didn't hear, so if I'm repeating what Surat said, I apologize. But we're pretty happy with earnings season. and how, you know, we saw not only that the estimates beat, well, they always do, right, two-thirds of the time, but, you know, doubled estimates from Wall Street, and we saw margins expanding. I think this is a pretty sweet spot for equities for the next couple of years. And a sweet spot for the U.S., right?

Absolutely, yep. We're underweight global equities pretty significantly, and we did that a number of years ago. But, yeah, I think you want, you know, if we get any of the impact, like we're, we saw from the Tax Cut Jobs Act. So if the president, the new administration is actually able to go in and cut corporate tax rates further, we'll see continued improvement in margins, continued improvement in earnings growth. And the government will benefit because corporate receipts doubled from $200 billion to $400 billion under the TCJA. So I think that could be pretty compelling as an equity investor. Was that because, do you believe that was because the corporate tax rate came down and it spurred

growth or because there was repatriation of profits and it was a one-time kind of hit, benefit? I think it was both, Tyler. I mean, certainly there was repatriation, and we started to see reshoring and on-shoring. So I think, I mean, it's hard to know, but that has sustained at $400 billion through last year. So I think the one-time effect would have been in the earlier years and we're continuing to see growth in corporate tax receipts.

So, you know, that is good for everybody. And if we continue to see productivity improve, and that's what we've been hanging our hat on, as you know, this will be one of those economies like we saw in the 90s where you can get, you can kind of coexist with higher rates and maybe higher than expected inflation or higher than target inflation if you get the productivity-driven growth that we think we're going to continue to get. Nancy, one thing that Steve Offs said in passing that I thought was interesting was he said he thinks next year could be the year of software. and he owns Salesforce because of that. And of course, a lot of people have walked away from this segment entirely thinking that AI is going to kind of put it out of business. I don't know if you have a position on that or if there's stocks there that you think are interesting and kind of worth having in the portfolio. Yeah, no, definitely. In our 12 Best Ideas portfolio, we own ServiceNow.

We own Adobe, which has not been a best idea lately. And we also own, you know, Amazon and Microsoft. and that's really it on the software side. So we are big believers. Microsoft has taken a big long pause, and so we would expect to see some acceleration in stock performance in that stock next year. So I'm 100% there. And we've already seen it.

Service now has been a workhorse in our portfolios. It just continues to outperform because the CEO continues to outperform. So I do think you want to own those names that are directing traffic and really driving the cloud computing portion of generative AI. All right, Nancy, glad you could join us by phone, sorry we couldn't see you in person. Next time we'll do that, Nancy Tangler of Laffer-Tangler investments. I always love a contrarian take on the big themes of the day. Coming up, not all that glitters is gold.

With gold up 30% this year, that's nothing compared with Bitcoin's 130% gain. We're going to dive more into their performance after a break. Welcome back to Power Lunch, everybody. 40, stocks are higher today, and so is dot, dot, dot, dot, Bitcoin right now just shy by about $400 of $100,000. It is up more than 40 percent, 40 percent since the election. That was November 5th. Yeah, two weeks and two days ago, I think. And while Bitcoin continues to soar, gold is now rallying as well.

The precious metal has jumped 5 percent now over the past week for its best week and over a year. Their strong safe haven demand in the face of further escalation in the Russia-Ukraine war. Some doveish remarks from Federal Reserve officials could be driving it. It's all helping boost shares of gold producer barrack. The company holding its investor day at the New York Stock Exchange today. And here at a first on CNBC interview is Mark Bristow, the president and CEO. Mark, it's great to have you here. Welcome. Thank you.

Can you tell us what's driving the gold buying lately? What did you think about the post-election slump? You know, I think what we've seen is that gold is always a measure of risk. A global risk and I think we saw a little correction with the elections, but I think what gold's measuring is much more fundamental and on a global basis, de-dollarization, concern about risk, move to hard assets. I think Bitcoin is a completely different commodity. Did you ever look at owning Bitcoin, ever think about getting into the crypto game?

I'm a gold miner. I don't own Bitcoins. Just real quickly, when you said it's a proxy for risk, does that mean to you that when the price of gold rises, the risks around the global rising as well? Yes, and I think the big gazillion dollar question now is you've got a high stock market and a high gold price, and what is they're telling you? And, you know, I think when you look at the world today, it's not a cohesive family. And we're going to see, you know, more challenges and certainly some of the concerns about the U.S. and the elections is, is it going to create more issues in the fragmented world that we live in today, or is it going to play a unifying role? And that's the big challenge. And I think everyone's worried about that. And I think the other thing is driving gold really. is the big, when you look at budget deficits across the Western world, China is not in a good place economically, so lots of things to worry about, and gold always does well in those circumstances.

Do you also think that as the dollar gets stronger, you've got more money coming out of the other currencies that moving to gold as more of a hedge? because we've always talked about gold being the safe part in your portfolio and diversifying, like you said, from risk. And then the other question is, do you feel that goal's now competing with crypto? Because in the past it was, hey, you want other assets in your portfolio. Do you think it's complementary or does it now say for some people I can have either or? Yeah, I think, as you've seen, Chris, crypto goes up and down. And it's been all over the place and certainly it's responded to the election. but I don't think it has the same fundamentals as gold.

When you look at the global monetary system, paper money, the debt that we see, you've seen a lot of big investors around the globe, you know, liquidate some of their investments and move it into gold. We've certainly seen the emerging market central banks look to lighten up on the exposure to the US dollar and bar gold. been a good trade. And so I think we're going to see more and more of that. I think the important thing is, you know, the U.S. dollar is still the world's go-to currency. Everyone would like to have an alternate. And right now, it appears that gold is that alternate.

Let me come back to what Sarrant just asked you about and maybe pose it in a slightly different way. I understand that people would buy gold for a different reason than they would buy a cryptocurrency, but is there a way in which cryptocurrencies and gold are competing for the same sort of pool of capital or people with the same sorts of sensibilities about where to put their money? Yeah, I think that there's a lot more of a trade in cryptos, as we saw the big spark post-elections. You know, the gold attracts the more cautious money and It's a longer, and it's really outperformed over, if you look over time, back to 1972, it's outperformed most asset classes.

And as you know, crypto is a recent entry into the market. So you see crypto is a trading vehicle. You see crypto is a trading vehicle without that element of store of value, which gold has certainly had forever. Yes, and I think that's correct. and, you know, crypto, you've got to, you know, it's used for many different things. It's a currency. It's not, it doesn't have the same classification as gold.

Yeah. And it's certainly, it's the ultimate currency that's not backed by anything, it would seem to me. I mean, I guess, but Mark Bristow, back by anything except fingers crossed. Anyhow, Mark, thank you so much for your time today. We appreciate it. Pleasure. You got it. Up next, living in the shadow of speculation,

NVIDIA dominating the tech and chip space right now. But our next guest says there are overlooked names out there worth paying attention to. We will discuss in The Market Navigator. Ooh. Next. All right, we've been, welcome back. We've been talking a lot this week about NVIDIA. What week do we not talk a lot about NVIDIA, it seems to me?

But another big tech company that reported earnings the same day is not getting as much attention. Our next guest thinks traders may not be looking hard enough at Palo Alto networks. That stock is up more than 40% in the past year. Jay Woods is chief global strategist at Freedom Capital Markets. Jay, why is Palo Alto overlooked? I mean, this is a sector that is, boy, if I had to bet on one sector, this might be it. It would be right up there. Yeah, I happen to agree with you.

But, you know, you're not in Viti of the biggest stock known to mankind. So it's going to get lost in the shuffle. And it's been a very interesting ride since the earnings came out. They beat on EPS. They beat on revenue. But what people are focused on is that year-over-year billing cycle. It came in a little light, 13% down year-over-year. But they restructured how they're doing things.

They're going to a more annualized approach. So their free cash flow may be slowing down over the near term. But this is a long-term story. And I believe in it. They did catch a downgrade today. And I think this gives us an opportunity to really dig in and buy the stock on sale. Stock is going to split as well. What's your trade or play here beyond just going along the stock?

Yeah, well, I love the fundamental story. I love the sector. As you said, this is best in class. But I think from a risk-reward setup, this is set up beautifully with this drop today. Watch the 50-day moving average. Right now, I think it should hold this 375, but it could fill that gap at the 365. I would buy here and on that dip and instead of stop a little below, a couple percent below that 50-day moving average. The upside, this is what I love.

The risk is a small decline. The reward, this stock has grown 26 percent year over year return-wise for the last 10 years. It's up 28 percent year-to-date now. I think 450 target is easy over the next six to nine months once we get through this little chop. And that's a 20 percent gain, and that's below average. So I love the setup here, and I think it's a good opportunity for someone to jump into the name. Theron, any thought here? Yeah, question for you.

I mean, one thing is obviously don't have the same day as earnings as Nvidia because you get shadowed. But when you look at its competitors, you know, CrowdStrike, are they getting more business away from CrowdStrike given what happened over there? Or do you think the space is so big that you can have multiple competitors there? Well, I'll answer both questions. First, CrowdStrike reports next week. So watch their subscriber growth. 2% of their subscribers after that glitch with Delta and Microsoft last quarter. Let's see if they can hold on to that user base.

If not, they're not going to just ditch cyber. They're going to go other places. Palo could be a benefactor of that. So if you see those numbers decline, maybe that's a good thing for Palo Alto. And then cybersecurity, it's a need that continues to grow. We see that. They're saying, Gartner survey says they expect $215 billion poured into cybersecurity. security, information data and places like the New York Stock Exchange behind me, it's their number

one concern. So this is a story that has legs. And if you look at the ETFs, Sirot, you know, I'm a technician. We saw breakouts in the hack and the cyber ETFs. So I believe there's a great tailwind as we head into the next year, not only in Palo Alto, but in the cyber stocks altogether. All right, Jay, on that note, we will leave it there. Jay Woods, thank you very much. Have a great weekend, sir. You too. All right, my friend. Kelly, back to you. Thank you, gentlemen. And whether you're looking to take advantage of rising yields or to hedge the big run-up in stocks, fixed income could be a good bet, but what are people buying? We'll get you the answer when Power Lunch returns. Welcome back to Power Lunch. I'm Pippa Stevens with your CNBC News Update. Texas's

Education Board voted 8 to 7 this afternoon to allow Bible-infused teaching materials in elementary schools. It's optional for schools to adopt the so-called Blue Bonnet curriculum, but they will receive additional funding if they do so. faced criticism from parents and educators who say they alienate students of other religious backgrounds. Supporters say the Bible is a core feature of American history. An Irish jury awarded $250,000 today to a woman they found was sexually assaulted by MMA fighter, Connor McGregor. In the civil case, she claimed he brutally raped and battered her in a Dublin hotel penthouse in 2018 after a night of partying. McGregor testified he never forced her to do anything against her will.

he says he'll appeal the decision. And the CDC confirmed the country's first case of H5N1 bird flu infection in a child today. California health officials first reported the then suspected case earlier this week. The CDC says there is no evidence yet of human to human transmission of the virus, but the agency will continue contact tracing. Kelly, back to you. All right, Pippa, thank you very much. Pippa Stevens. Quick check on the markets right now. It's really Bitcoin that everyone's watching to see if it'll hit 100K as we've hit a new fresh high, in the past 15 minutes or so. Meanwhile, the Dow, the S&P and the NASDAQ

are all higher the Dow by the most. Right now, the NASDAQ is only up nine points or so. And for bond markets, they've been a little bit quieter this week, the 10 years sitting around 4.4%. Let's get to Rick Santelli in Chicago. The dollar's a bigger story, Rick, but I don't want you to digress. Yeah, no, the dollar is a big story.

Two-year high, clothes, it looks like it's on pace for. But maybe this week, the big story is the two's versus the 10 spread. There's a week-to-date chart. You can see how it's gone from an intraday high of nearly 17 basis points wide to where it's hovering right now around four basis points. And why is that important? Well, look at a two-year chart. Two years are guns hot, meaning right now, if they were to close, they'd be at the highest level since the end of July. We'll call it four months.

But if you look at the longer dated treasuries, which you alluded to, two-year note yields are up four on the week. Ten-year note yields, well, they're down for on the week. And they're hovering near the highest yield close since early July. But this is the ninth session in a row where the low 440s have been in the trading range. So yields aren't going down in a 10-year. They're just not going up. And that dynamic is really all about the Fed. The Fed most likely is going to ease less.

Investors are sending that message through the markets. Today's a perfect example. S&P, global PMIs. Now, they were all sequentially higher, but maybe the most important issue is how strong the services and composite were. Now, if we look at what's going on in Europe, a completely different story.

You look at German GDP on a year-over-year-adjusted basis. Lots of negative months in a row, lots of negative quarters, and that caused boon yields to drop dramatically. If you look at 10-year U.S. minus boons, you could see it is almost near the highest, widest spreads since the fourth quarter of 2019. What does that mean? That means that our borrowing costs are higher and most likely we're going to be competing with other countries and other economies

to fund many of the debt and deficits we're going to continue to run no matter how the next administration tries to deal with it. Kelly, back to you. Rick, thank you. That's fascinating. I did not realize how flat the yield curve was right now. now, Rick Santelli in Chicago. Talk a little bit more about where the best opportunities in fixed income are right now. Let's bring in D. Lorenzo. She's president of Guggenheim investments and managing partner of Guggenheim partners. Guggenheim, of course, has over $335 billion in assets,

primarily in fixed income. Dina, welcome. Sirrat Setti is still with us. So credit has been so strong pretty much across the board. You know, maybe you can talk a little bit about where people still find the most attractive segments of the market. I mean, spreads have really come in a lot. So kind of where might the best opportunities for performance be? Well, you're right. I mean, private credit markets have been in the news often and a lot, but for us, it's not all that new. We've been, you know, managing private credit assets for over 20 years. And, you know, where we focus mostly is where we find relative value outside benchmarks. Sure.

As it relates to the private credit markets, we see, you know, four areas that we focus on, one private debt to infrastructure, real estate, as well as structured credit. Yeah. Well, and private credit is one part. You can kind of broaden this out to the whole fixed income landscape. We know we've seen high yield, those spreads are so low, right? Investment grade, some of the lowest on record, you know, that whole complex. So it seems like there's just this insatiable demand.

And maybe it's because yields are still relatively high. Well, we find real opportunity in the smaller sectors, like security. credit and the private markets where there's relatively, you know, elevated spreads. And really, in the, like going back to the structured credit, there's real opportunity there. And it's an asset class that we believe people, you know, it's been around for decades, but it's somewhat still mystifies investors because it's somewhat complex. But it, we find it has a lot of attractive qualities where you can find opportunity. Count me among the mystified.

So how do I, if I'm tempted to get into these markets, what's the best way for an individual investor of some affluence and some sophistication, but not an institution, to get in? What's the best way? So the best way is one to obviously hire a manager like Guggenheim, who has a very deep, rooted team. Do you like that ball anywhere else? You like it right about there? That was a very big pitch. I mean, thanks for laying that up. I appreciate it, especially on Friday.

No, seriously, though, it does take some institutional know-how, and we've been practicing that for 20 years. And I do think that it requires, you know, it is a complex asset class, but it does deliver three primary qualities that we always tell our clients are important to consider. One, it allows, you know, it gives investors protection for diversification. so it obviously gives them access to a differentiated set of assets. It also gives them a higher risk-adjusted rate of return relative to similar credits in other alternative, you know, fixed-income alternatives. You know, three, it's uncorrelated to traditional fixed-income asset classes. So we have found that including those in the allocation finds those opportunities.

So when you look at your demand, where is it mainly coming from? Is it institutional and now retail? Has that grown kind of over the last few years? So that's a great question. And we definitely see an increase in retail demand for a variety of different products. It's generally in two places. One, it's definitely the private credit markets. And products that will allow them to have a certain amount of liquidity so that they can meet their objectives.

It's really important for retail investors to understand the private credit products, one, because they're not as liquid as some of the public market products, and therefore, over time, they want to be able to rebalance their portfolios since those types of products don't price as regularly as public markets. The second area we get, and so therefore we offer products in BDC's interval funds to get access to the private credit markets. The other area that we see retail clients looking for flexibility and customization is in retail SMAs, right? Our traditional fixed income products now, the advisors want to have those not just in the packaged products like mutual funds or ETS, but they really want that customization for the retail clients, particularly in Core Plus, limited duration, and unisibles. How much do you need to pay to play in this game? So what what what the typical customer who comes in yeah how much are they putting to work here? So for the right allocation to a retail SMA for each strategy it's probably $250,000, right?

Well that's a less Lord and I would have maybe guessed. That's yes. And more accessible. That's right. And we have a way that we actually achieve diversification within those retail SMAs through completion funds, which is sort of a marketable, it's a non-marketable mutual fund within the retail. SMA that achieves the right diversification. In the interval funds, though, you can actually go at lower, you know, ticket sizes, probably around $50,000. And in the private BDCs, it's probably

around the same amount. So, you know, as we move into a new administration and regulation now is being removed, how does this help you guys in terms of getting to the end customer? And where does that work? Well, first of all, I think with the new administration, we've identified that, there's probably going to be policies focused on increased infrastructure, investing, and hard assets, right? So we are advising our clients really pay attention to investments in infrastructure and real estate. We also think that identifying investments where you really can find the return outside of the traditional indices is also really important.

And so going forward, appropriate credit selection. is going to be more important than it was in the recent past because the new policy changes are most likely going to create some volatility. And therefore, we want to be able to manage that risk and maximize the return. So having that diversification within a fixed income portfolio through really actively managed strategies is going to be key going forward. Tina, thanks for being with us. It was a pleasure.

Thank you. Thank you so much. We'll peek into the booth. Just one last thing. tomorrow is a very important game. Yep, it is. Yes. It's Lehi Lafayette.

Go Lehi. Yes. And I thought you were talking about Indiana. Go Indiana. That too as well. Kelly, you have an important game too? No, I don't. Nope.

Okay. Well, go Lehi. Yeah, well, go Lehigh and Indiana. Yesterday we discussed duct taped. The banana art piece, which sold for more than six million. And while it's easy to laugh about it, there's a growing sort of anger around the amount spent on this as a joke. During a time when inflation makes it difficult.

for families to afford groceries and maybe even regular bananas. Is this level of spending gone too far? We'll talk about that and more when power lunch returns. Welcome back, everybody. Time for a quick power check on the positive side. We can't seem to shake this name, Super Micro, up 13% continuing its streak of wild swings on the negative side. You got into it.

A weak forecast hitting that name, and that is your power check. Still to come. College admission season is upon us once again. But the industry is, shaken up. The continuing student loan crisis, a white-collar recession, driving admissions down and in turn the decline in the appeal of the Ivy League's. We'll talk about that and more when we come back. Welcome back to Power Lunch, everybody. College admission season is here again. And for many,

having financial ability to pay for school is the most important factor. The University of Texas system just approved a plan to provide tuition-free education at all nine of its campuses for students from families earning less than $100,000 beginning next fall. This comes as millions of student loan borrowers face an uncertain future as a new administration makes its way to the White House. For more on this is an expert in the field of admissions and U.S. the founder of Application Nation. She's known as America's college counselor, Sarah Harborson, is back with us.

Sarah, welcome. Good to have you with us. Thank you so much. How is this application season stacking up versus others? Are applications down? Are they down to the ivies? What's happening? Well, we know that at least at Yale, the results for the early round for them, that single-choice early action, they're down 14% in applications. We want to keep in mind that this was a change.

This year, they changed their standardized testing policy. They went back to requiring it? They were test optional for about five years during the pandemic, and now they are requiring testing once again. And so is Brown, Dartmouth, Harvard, U.T.R. Austin, Caltech. So we're seeing some- Do we know whether those institutions have seen applications decline the same way Yale has or not? Yale is really the only school that we have early results.

Yeah, and that was from the student newspaper. And they are good journalists. Yale Daily News is good, man. You got it. One of the best papers around. But I would suspect if a college, you know, went from test optional to testing required again, we have to anticipate that they're going to see application drops. That is to be expected.

When a college has a test optional policy, they tend to see a surge in applications. They tend to see higher average scores for their admitted students. And they also see a better cross section of the students that they want on their campuses. So test optional policies definitely help colleges. The only issue is, especially the IVs and the Ivy-type institutions, haven't really adopted test optional in the way that it was created. They are clearly giving advantages to students who are reporting high test scores in the admissions process. Have you seen a difference in how students are applying to college now, especially through COVID, with the cost of education over, you know, for some of the schools of 80,000?

Are they identifying more trade schools or schools with outcomes? Is any of that happening right now? The four-year degree is still valuable for a lot of families across the country. But interestingly, you know, the IVs are very very important. expensive and they have great need-based financial aid, but there are a lot of middle and upper middle income families that don't want to pay that price. So a lot of students are very attracted to the big Southern universities, and their price tags are usually a fraction of those Ivy League.

But some of those schools are charging roughly what the, what the ivies do. The University of Miami is one of them. USC in California is another one of them. But the public... Vandy. The public universities in the South are a great... great deal. Great honors programs as well. They're a pipeline for those big international academic scholarships like the Rhodes Scholarship. The last couple of years, we've seen at least

once, sometimes multiple students coming from one of the larger public Southern universities getting chosen for the roads. So these are schools we've got to really be aware of. They are kind of the new elite and they are very popular among students, not just in-state students and Southern students, been students coming from all over the country. Oh, sure, just take a tour around my block, and I live in New Jersey, and it's filled with southern schools where everyone's excited to go to school. The question around the ivies is actually just about how their sort of culture is creating some backlash.

So I'm glad you mentioned this issue about tests, which might factor into any declines that we've seen, and we'll wait to hear from the schools beyond Yale. Yale wasn't so much even in the spotlight as Columbia and some of these others. So can you tell from your, sort of the students that you talk to in the parents, maybe, if the preference is shifting away from the Ives or do you think that's going to be a short-lived type of thing? I think the ivies are always going to be highly desirable, especially for our students who are coming from college-educated backgrounds. It's the prestige of it all. But these Southern universities are going to be the ones to watch moving forward just since 2019. So right before

the pandemic hit, those Southern universities were doing great. But in five years, we've seen application totals double, triple, quadruple. Give you an example, Auburn University, has seen a 172% increase in application since 2019. Wow. That also affects the acceptance rate, though. And so for a student who thinks it's easier to get into these Southern universities, they sometimes are surprised because it has gotten so selective. Yeah, very, very interesting.

And, of course, there are a lot of public ivies and non-public near ivies, including USC and California, Boston College and others that are increasingly popular. Anyhow, we'll have you back soon. Excellent. Thank you very much. Sarah Harborson. And remember, you can always hear us on our podcast. Just be sure to find and listen to Power Lunch on any platform wherever you go. And we'll get some final thoughts from Sarat next.

Welcome back, everybody, to Power Lunch. On yesterday's show, we talked about the man who bought for $6 million a piece of art, the art being a banana duct tape to a flat surface, a wall. Banana not included. Now, I joked that this was a sign of the coming apocalypse. But on my way home last night, I began to think. think a little bit more deeply about the investment. We should mention that the buyer of the work, Justin's son, is being sued by the SEC for fraud

related to crypto trading. But setting that aside, Sun or anyone else with money, if legally obtained, can spend it however the hell they want. And a buyer of art can decide what to them is art. To me, art is art, in part, because it is enduring, lasting, even eternal, not perishable like a banana. Now, it's fair to ask, what's the difference really between a banana for $6 million and Monet's water lilies, a version of which sold this week for $65 million.

My answer is that Monet has stood the test of time. The banana won't stand the test of a single week onto the tape. To me, having money is a privilege, not a license. How you use it, whether on a banana or a $200 million yacht, which at least can take you somewhere, says a lot about who you are. Those $6 million could have done a lot of good. Instead, Justin's son, in pursuit of art or publicity or both, went bananas. To me, that's an egregious, almost tragic waste.

Surat, what do you say? Well, I think people have options, and it looks like that was a decision he made and could have been used for a lot of better purposes, too. It's a question of right and wrong, or right and not right, to me. Well, we're also in a world of social media, and people like to get attention to do things that bring them attention, and that's the 15 minutes of fame that he's probably going to have. He's going to have 15 minutes of fame, and he's going to buy a lot of bananas. He got you to give him a couple minutes of fame as well.

Give him a little fame there, didn't we? Well, you know how I feel about it. Very much. Much as you. Now, I would be more excited if there were some really great art lately that we could all be excited about and was also doing quite well. And Robert tried to bring some of those examples from the auction, but when everything devolves into stuntary, if I can coin the term. I find it a little less reassuring,

society. I don't mean to be a scold here, and I obviously I applaud people who make a lot of money and show enterprise, presumably this individual did, notwithstanding SEC charges against... You know what's going to happen? You know how houses used to get teped? You might get duct taped. You know what I use duct tape for? We have a broken lid on our washing machine in the basement, and I'm able to duct tape that lid down. That's an effective use of duct tape. And if Joe doesn't stick a banana under that duct tape, she's not. Yeah.

From that to an appropriate next topic of checking Bitcoin, which is about to hit $100,000. Now, we haven't done so yet. We've been getting so close, including over just the past hour or so, we've pulled back a little bit. We're just under 99,500, which is roughly where we've been churning all day long. Final thoughts? I think final thoughts are right now it's risk gone. And the market's doing well, money is flowing in, people are pretty optimistic about the economy. You've seen all the PMI numbers.

You've seen the employment numbers. The question is how sustainable are earnings going to be. Earnings are going to drive this market. But the other part is you can expect some volatility. We have not had a 10% correction since August. So as a long-term investor, you could probably say it's coming at some point. Can't time it. But it will be there.

Yeah. Lehigh? Tomorrow? Tomorrow? You going? I am not going, but we will be, I will be watching. You will be watching. Lehigh, Lafayette, big game. One of the oldest rivalries.

The most played rivalry. Most played rivalry in college football. Most college, so. So it would be interesting. We have a good team, so we're hoping. That's good. We'll get some positive results. My son will be all eyes on Indiana.

Go IU. All righty. Thanks for watching Power Lunch, everybody.