Power Lunch - Green Light For Stocks?, and Hack Attack 7/12/23

Episode Date: July 12, 2023

Stocks are rallying today, after today’s CPI report backed up hopes that inflation is slowing. Will the latest Fed beige book provide more support for the idea of a “Goldilocks economy?” We’ll explore. Plus, Chinese hackers breached the email accounts of government officials. Microsoft and the government have been scrambling to assess the damage. We’ll bring you all the details. 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 with Kelly Evans. I am John Ford Stocks, rallying today after this morning CPI report backs up the hope that the Fed won't have to hike much more. We're just about to get the latest beige book on the Fed. Will it provide more support to the idea of a just-right Goldilocks economy? Plus, Chinese hackers breaching the email accounts of U.S. government officials. Microsoft and the government have been scrambling to assess the damage. We will get much more on this cyber attack coming up. Kelly? John, thanks. First, let's get a check on the markets where stocks are up 134, so the Dow's about 200 points off session highs. This rally after the inflation report has tech leading the way as bond yields fall, and even the small-cap rustles are doing quite well today. NVIDIA shares are rising again, 3% today and now nearly 200% so far this year. They're reportedly in talks to become an anchor investor in the ARM IPO coming up later this year. They're also investing $50 million in recursion pharmaceutical. The goal is to train recursion's AI models for drug discovery. We have an 81% pop in RX, RX shares today. And check out shares of dominoes, which are jumping after they signed a deal with Uber. Customers will now be able to order

dominoes on both Uber and Postmates, DPZ up 12% leading the NASDAQ. Uber, interestingly enough, only up half a percent, John. Oh, lots of reasons for some investors to be happy. We start with a key read on the economy. The beige book is going to be out momentarily, but in the meantime, the market's getting a boost from better than expected inflation data out this morning. CPI gained 0.2% month over month in June up from the 0.1% increase in May, but below expectations. Let's bring in Michael Froeley, chief U.S. economist at J.P. Morgan, and Rick Santelli is also with us. Michael, what is the most interesting number kind of getting beneath the surface on the CPI, you think, and the one that has investors here most excited?

So obviously the core number came in a low side two-tenths, and I think when you look in some of the details there, it was a pretty broad-based slowing. So when you look at measures that strip out some of the more volatile components, those also were near, you know, two-year lows, let's say. So overall, it wasn't dominated by one single factor, like used vehicles or some kind of, you know, quirky factor like that. So I think that's probably something that is giving encouragement to people as they look at the inflation network. Bear in mind, of course, it is one report, but it definitely is a move in the right direction. Rick, what's got your eye in the bond market's reaction? Well, I totally agree with that assessment that two-tenths was the lowest since February 21, but what really caught my eye was the year-over-year-over-year.

And if you look at the headline year-over-year at 3%, that's down 60. 37% from its high watermark, which was 9.1% in June of 22. 12 consecutive months, it had its moved lower, down 67%. Now, if you look at year over year core, a bit of a different scenario. It's down 27%. 6.6 was this high watermark in September. So we have nine months there, and it's been down eight of nine months. And I understand that that is the sticky part that is going to be the lynch pin with respect to what the Fed may or may not do with rates. But ultimately, they keep coming down. And I think that the central bank should be very cognizant of the fact that if they wait one year and look at the inflation rates against an aggressive move by the Fed to keep tightening,

I think they will have basically passed up the rate of inflation with their overnight rate. Mike, it's Kelly here. One of the things I find interesting is that people are taking today's report as evidence that inflation was always transitory, when in fact, the Fed had to sharply hike rates in order to make it so. Yeah, I mean, transitory would be a very long period now. But one thing I think you can say that, you know, maybe in that defense is that we've achieved already a pretty decent disinflation. The numbers, Rick pointed out, without really any pain in terms of unemployment. So I think, yes, it did require a aggressive move here by the Fed.

But you have seen, you know, it's still, you know, for... couple innings here of the disinflation process, but those innings have been relatively painless. You know, like Chair Powell, I think transitory is probably a word that probably should, you know, stay locked in the chest. But I do think there are some things here that are consistent with that narrative from a few years ago. And I guess the reason why I press it, Mike, is to say, if the central bank kind of, you know, took a bigger break here and stopped hiking rates, they might say, hey, this did go better than expected. We haven't seen a huge increase in unemployment,

but the longer they go, the more they're going to push us in that direction, ultimately, don't you think? Yeah, obviously, this didn't happen just, you know, exogenously. But, you know, I would expect that they're going to stay pretty vigilant here. As I said earlier, this is one report, and it's a report that still leaves the run rate, you know, decently above where they want it to be. So I don't think, you know, anyone on the FMC is going to look at this

and say mission accomplished. And I would expect actually two weeks from today, they're going to stay at it. Rick, I might be taking a risk asking you this, but do we have to give the Fed credit? I mean, this is exactly what they were trying to do, at least thus far. We haven't fully achieved the soft landing yet, but they were so many voices saying the Fed doesn't know what they're doing. They're going to tank the economy. 375.

Well, no, I'm counting. It's four. We've got basis point hikes. And yet, here we are. Okay, so let's say, where are we? Where the fact that my kids have to take a 7% mortgage, as opposed to a 2.5% mortgage, no pain there. They can't afford the same house they could pre-COVID.

No pain there. The fact of the matter is that the reason that we have sticky core, one of the big reasons, is because the Fed Left Interest rates so low, and they manipulated mortgage rates so low for so long that they now have people trapped in houses they don't want to sell at a time where we didn't build enough houses. So to think that the sticky part of why they need to tighten is partially shelter, to me, is a bit hard to fathom. There's a bit of a conundrum there.

Mike? Oh, not to mention commercial real estate. Okay, he wanted to talk about soft landing. The interpretation is transitory because I think there's a whole lot more pain when I go walking down Michigan Avenue. or LaSalle Street and see most of the buildings half empty. Mike? There's a lot to unpack there, but I think a lot of these things are unrelated to monetary policy. I think what's happening in downtown office space, well, I think what's happening in downtown

office space in some cities, I wouldn't necessarily pin that on the Fed. And there's definitely been a lot. Look, and I think the Fed, by their own admission, was late to get going here, particularly in 21. But, you know, had they gone six months earlier, I'm not sure the landscape would be entirely different with respect to some of these, some of these other issues. And if they went at half speed, the counterfactual is that Kelly said, well, you know, they, by raising rates, they made rates and inflation rates move lower, but it is a counterfactual. If it is something that was caused by an exogenous COVID, if the Fed only raised rates half,

as much we still might be here there really is no way to know and the credit conditions slowing is just normally a function for some of the issues that we had like supply chain yeah i didn't think you're going to give them a ton of credit but we didn't end up with the worst case scenarios at least that so many predicted the federal never figure out their way out of this soft soft landings never happen we still don't have it yet c minus yeah c minus are you They're grading their overall performance or from the point where they had to start hiking. I don't know. Well, I guess we can.

I'd say overall performance post-COVIDC. I was going to ask Mike, but we'll let him off the hook for that. Let's go to Amon Jabbers for details from the beige book. Amon? Kelly, here's some highlights from what the Fed is saying in the beige book. Overall economic activity, they say, increased slightly since late May. Overall economic activity, they say, increased slightly since late May. Reports on consumer spending, they say, were mixed.

was generally observed in what they call consumer services, but some retailers noted shifts away from discretionary spending. Tourism and travel activity was robust, and hospitality contacts expected a busy summer season. Manufacturing activity edged up in half of the districts and declined in the other half of the district, so awash there. Transportation activity was down or flat in most districts. Banking conditions, they say mostly subdued as lending activity continued to soften, Despite higher mortgage rates, they say demand for residential real estate remained steady, although sales were constrained by low inventories. Overall economic expectations for the coming months generally continued to call for slow growth. In the labor markets, labor demand, they say, remained healthy, though some contacts reported that hiring was getting more targeted and selective.

And on prices, they say prices increased at a modest pace overall. Price expectations generally stable or lower over the next several months. as people were looking ahead, guys. Back over to you. It's tough to get a lot of headlines out of the beige book, you know? But, Aymann, would you say overall, the cooling economy, fine economy, pockets of strength economy? It sounded like a cooling economy overall.

When you sort of summarized this, the one sort of, you know, silver lining, I think, there is they're talking about prices increasing at a modest pace overall. And the expectations for prices were generally stable or lower over the next several months. So that gives you a sense that maybe inflation, the expectation anyway for inflation, moderating as we go forward. So one silver lining, but when they talk about hiring being more targeted and selective,

you know, that is still a robust jobs market, but maybe a slightly less robust jobs market than we've had. So things continue to cool off there. Maybe you could argue another, you know, arrow in the quiver for Aiman. Thank you very much. Can I throw a quick last one to Mike Santoli? Maybe we should let him go. But another, they're gone. but another quiver, arrow in the quiver, potentially for not hiking in September.

Indeed. And, you know, we call this Goldilocks scenario. I like to remind everybody, it's actually baby bears. Goldilocks stole it. Right. They're porridge. But that's, you know, the one in the middle. That's sort of what you want in this situation. My son asked me that day, why did she steal from the mama bear? Wait, which was the little bear?

It's the baby. Why did she steal from the baby bear? Like, he was confused about whose was actually the porridge that she would find the most satisfying. Kids. Thanks, everybody. Coming up next, we will stick with today's information. The inflation report diving more specifically into where food and ingredient costs are right now with none other than famed chef Marcus Samuelson. Also on the menu, we'll talk commercial real estate, his initiatives to support black-owned businesses, and more. Power Lunch. We'll be right back.

Welcome back to Power Lunch. Today's read on inflation was lighter than expected, but many restaurants are still grappling with high food costs. At the same time as consumers are starting to cut back a little on dining out. Digging inside this morning's report, flour, bread, sugar. and salad dressing are still pricey, up about 10% compared with last year. Frozen vegetables still up 15%. There's some relief, though, in the cost of eggs in particular, bacon, milk. They're all down on a bacon 10%. My next guest owns over 12 restaurants worldwide, including Red Rooster Harlem, Marcus Montreal,

and much more. For more, let's bring in Marcus Samuelson, the acclaimed chef restaurateur and New York Times bestselling author. Welcome. Thank you very much for having me. We don't need the beige book. We could have just asked you what's going on with food inflation and the consumer and all the rest of it.

Yeah, I mean, it's been a tough ride after, you know, post-COVID, a little bit of changes in consumer's behavior. But we've been very fortunate with our restaurants. And actually, there's been opportunities, and we grabbed some of those opportunities, and we were able to grow as well. So I think, you know, it's a tough market, but also I see a lot of potential for growth as well.

You've got a lot of geographic diversity. So that's what I want to ask you about. Marcus B&P, your newer, restaurant in Newark, New Jersey. It's actually close to me. But, of course, you got famously Red Rooster, Harlem. You said he just opened up a location in Chelsea as well. What's the difference in this recovery between Newark and Manhattan and Manhattan, right?

Newark was always sort of up and coming, maybe struggling. Manhattan's Manhattan. How are they doing? Well, I mean, it's just in a place post-COVID, a place like Newark feels a little bit different, right? Because people are still not coming back. You have three major or three-four major companies there, right, between Russia. auditors, audible, and prudential, and, you know, when those offices are 30, 40 percent filled, people are still working mostly at home. It impacts a community like Newark, downtown

Newark a lot. You know, Manhattan is always strong and resilient, you know, where there is. People are working maybe 40 percent from home, but still there's tourists or other people coming in, filling in Manhattan and our Chelsea restaurant. We're doing extremely, extremely well. We're very fortunate. But, you know, it's also about helping others in our community in terms of food. You know, for me, being fortunate with my restaurants, but also as a black chef, as a black person in the hospitality space, I see a lot in terms of my colleagues. And a lot of young chefs and a lot of black, young minority-owned businesses wants to start. And it's very difficult to get access to capital.

So for me, it's always about how can I be an ally, how can I really come up with products that helped that? Well, that's fascinating. Real quick, before we dive into that, you mentioned that during the pandemic, you were kind of opportunistic. What does that mean? And is there anything now, as we see massive vacancies in office or maybe some changing patterns? What do you think is the next kind of real area of opportunity in your space? Well, I don't know if we were opportunistic in the sense, but we're really thinking about what would growth look like. And landowners came to the table

property owners came to the table in a way that they hadn't done before. So it changed really the demographic of how growth could look like. And when you have strong brands, you could grow post the pandemic in a way that pre-pendemic it was very difficult because property was just filled. And that changed during the pandemic. And still you can see now, actually, that there's a lot of open spaces, not just in Manhattan,

but around all urban areas. Let's talk about access to capital and the role of reputation in that because for decades now, you have had your brand, your reputation as a top-level chef. How did that help you to be able to open up a Chelsea location? That's a tough commercial real estate market. How can you, how do you use your reputation, your resources to help some of those minority chefs who don't have access? Reputation works on mental levels, right?

Of course, your stuff, your restaurant's got to be great and people can enjoy. But you also have to return to the investors, for example. So there's many levels, then you've got to have great bank statements. When you go to traditional lender like a bank, or if you have private equity or what, you know, your bottom line got to make sense. What you do in the restaurants, the culture, people got to want to come and work for you, right? So there's not just one way to look at reputation.

You create a community where your bottom lines got to make sense. The culture of the place got to make sense. And most importantly, guest wants to come back, right? because guests, you guys truly decide, you know, going out is a luxury, you don't have to do it, so we gotta build experiences. And you know, with our product here, that we started together with Jay Norris,

guest Open Doors Initiative, was really looking at, you know, how can we break down the barriers for minority-owned businesses? How can create a platform where both the property owner and the entrepreneur, the smaller entrepreneur, that it's easier for them to work together by having flexi,

flexible leases, right? Space, you know, when most food trends, you hear about the maybe online, you go to a pop-up, maybe you experience it through a food truck, right? But going from that to a real restaurant, to a bigger space, it's a big, big step. Because just because you have a successful food truck

does not mean you can sign a 10-year lease, right? And the property owners doesn't necessarily know specifically in the black and brown space about these incredible talents. So no having access to the talent, knowing the property owners. What we really came up with here at Guest Open Doors Initiative is really a platform where both parties can come to the table and landlords can have flexible leasing structure three months, four months, six months, and that's how a small brand can really become, and like, you know, the journey on becoming an iconic brand a la a shake shack because it can come into an A space versus to be. or C space. Or I think about halal guys.

You know, a food truck on 6th Avenue and now is everywhere. You mentioned the cost of the dining out experience. Have we reached the limit of what consumers are willing to take? I mean, your restaurant scales a little bit more, you know, high-end. So are people still accepting higher price? You're still trying to push that through or where are we on that pendulum? I mean, pricing is super important, but it's all about creating, going out has to be an experience. If I provide experience for you, you might not go out four times a month.

You might go out twice a month. but if we create experience as far as well, right? Then you will come back. So for us, in the restaurant space, we've got to create experiences as matches really guest expectation or go beyond guest expectation. And do you have the labor force for that? Is that getting easier these days or still a challenge?

I'm an immigrant. Nothing is easy. I don't think it's easy. You can't be entrepreneurs. You think it's going to be easy. But, you know, that's a challenge. But I actually love the labor market right now because it forces us as,

as chefs to create a really sticky, great culture, right? Where people want to come and work for you, if you don't create a great working environment, you're not going to get access to the best staff. Marcus, great having you. Let me take you out to dinner sometime, but you pick the place. I'll pick the place. I know a small place in Chelsea that you might want to go there.

All right. All right. Easy. Do you think your chef looks for anything easy? No. I can't even cook for my household. Yeah. Wow.

All right. Marcus, thank you. Thank you. The constant fight for cyber control. never seems to be easing Microsoft revealing a Chinese hack on government emails that went unnoticed for a month. Details next. Welcome back. Microsoft revealing Chinese hackers intent on collecting intelligence on the United States gained access to government email accounts. And while China, along with other bad operators, are constantly trying to breach U.S. systems, the most shocking

thing about this hack, it went undetected for a month. Amen Jabbers here to discuss, along with Kevin Mandia, founder of Mandia, to discuss the significance of this hack. The State Department addressing this today. Amon, it went undetected for a month, but a lot of times the hackers will get in and intentionally lie low for a while before getting active. Is that what happened here, or is there a sense of what might have been lost? Well, we don't know. And in a lot of cases, what you find is that when it's detected, you then have to go back

in time to find out when the intrusion actually started in order to figure out exactly how much of a window the hackers had to get access to the email. What we know here is it was a vulnerability in Microsoft. It affected about 25 organizations, including they're saying government organizations. The State Department did put out a statement not saying a whole lot about this, John. They just say the Department of State detected anomalous activity, took immediate steps to secure our systems, and will continue to closely monitor and quickly respond to any further activity. So we don't know exactly what the scale and scope of this espionage activity, allegedly by the Chinese government was here. Also, I should mention, we are getting additional insight into Chinese pressure

on American organizations today. That coming from Christopher Ray, the FBI director, who's testifying now up on Capitol Hill. A short time ago, he addressed a concern that he raised with me a while ago in a conversation that we had about this pressure that the Chinese government is putting on American corporations to include Chinese Communist Party cells inside their own firms in China. As a matter of law in China, that is mandatory, increasing pressure for American companies now to comply with that. So take a listen to what Chris Ray just said about this. Any company of any size in China is required, required by Chinese law, to have what they quaintly call a committee, which is essentially a cell inside the company whose sole function is to ensure that company's compliance with Chinese communist,

Party orthodoxy. So, John, I can tell you that there is some concern now that some of those Communist Party cells had been sort of relatively benign entities inside these American companies for years. There's concern now that those cells are now in Xi Jinping's third term being used to assert more control over internal operational type things inside some of these companies, not necessarily all of them. So a lot of pressure coming from a lot of different directions here from China, John. Okay, Eamon, stay with us.

Kevin Mandia. anything surprising about what we know so far about this hack? And isn't this what zero trust security is supposed to detect? Is even if you have somehow have stolen the credentials to access the system, your activity, whether it's from an odd place or in an odd pattern, is going to raise alarms? Yeah, I can tell you, just looking at this, first time I responded to the cyber espionage from China was in 1996.

And since then, pretty much we've been responding to it on a daily basis. And what we're seeing here is the evolution of Chinese cyber espionage. Gone are the days where there are a tanked through a cornfield. And every time we responded to them and did our Quincy forensics to figure out what happened and what to do about it, we could see everything in plain sight. The OPSEC has improved now. The innovation, I can show with you this. Last year, there were 55 zero days or attacks that did not have a patch.

And they were just going to work. Well, China led the world. in discovering these zero days and using them. So I'm not surprised by what happened, but realize this is kind of like SEAL Team 6 type of attack here. This is something that was multi-stage, that, you know, when you read the blog, there's not a whole lot of detail because there's nothing cybersecurity professionals can do right now on this particular incident. It was cyber espionage.

It was conducted by a group that clearly can innovate. It was new and novel. There's multi-stage. There's no way to patch it right now. Microsoft's taking steps to mitigate the growth and spread of this thing. But again, this is not somebody coming through the front door. This is a very intentional act by a nation that has modernized its offensive capability in the cyber domain fest in any other nation in the last 12 months. Hey, Kevin, it's Eman here. You threw out a spy term there. Opsack. I just want to clarify that's operational security. That's the,

the degree of carefulness, I guess, that the Chinese took in deploying this. And I wonder, as you look at this attack, based on that operational security, how long it's going to take U.S. government agencies to figure out exactly how badly they were hacked here, what the damage assessment is. It's very early days now in terms of figuring out what happened. But you've done a lot of these investigations yourself for some of these same agencies. You know how long it normally takes. Is it going to take them longer now to figure out exactly what it went out the I can only, yeah, I can only speculate from the outside looking in, but I'll do that, even though I was trained not to.

In general, when email is the target, your damage assessment is really good, meaning you know what email's been taken. It is more probable than not that right now we have a very good view of what's been actually taken by the adversary in this case. And I think the time consumption will be what was taken, what's the content of that, and how can that be used? All right. Got a wonder if Janet Yellen brought this up over the weekend because they've known about

this before they posted the release on Tuesday. Amen Jabbers, Kevin Mandia, thank you. Let's get to Courtney Reagan now for the CNBC News Update, Courtney. Hi, Kelly. Well, as the two-day NATO summit in Lithuania comes to a close, two senators are reaching across the aisle to try to ensure the United States never leaves the military alliance. Democratic Senator Tim King and Republican Senator Marco Rubio reintroduced a bill today that would require an act of Congress or Senate approval for the U.S. to withdraw.

A cluster of Southern California homes is under threat right now from a large landslide. Residents in 12 homes say they started to notice cracks in the earth and their homes this weekend and were only given 20 minutes to get out. Since then, another 10 homes in the city of Rolling Hills started sliding and 16 more under constant watch. It's not clear what caused the landslide yet. And soccer star Lionel Messi is expected to make his MLS debut in Miami later this month, so fans are hoping to make sure he gets a warm welcome. They showed up to the stadium this week to share their excitement,

and the city unveiled a new messy mural in Miami's art district. News of Messi joining the team sent ticket prices soaring by more than 1,000 percent. I've seen one professional soccer game outside of the United States, and it was in Barcelona, and Messi scored three goals. It was very exciting. Kelly, back over to you. A messy mural, that's actually kind of neat. Very cool. Thank you, Courtney.

ahead on Power Lunch, Bitcoin's payback. The cryptocurrency above 30,000, there you see it. Some expecting a move towards 32. It all comes as a long-awaited Bitcoin ETF could be approved. We'll discuss with strikes. Jack Mallor's next. Welcome back to the exchange or to Power Lunch. Is Bitcoin still the inflation hedge many crypto evangelists believe.

The crypto crossing the 30,000 mark today as inflation appears to be cooling. But the SEC is close to maybe possible. possibly approving the first Bitcoin ETF. Let's ask Jack Mallors about that. He has strike founder and CEO. Jack, it's good to see you again. Welcome. Kelly, thanks for having me.

How are you? Been too long without this energy. Bitcoin has surprised a lot of people with its resilience this year. What do you think is driving that? And are you a fan of all these ETFs they're trying to launch? Yeah, of course I am.

Uncle Larry, pump my bags. No, in all seriousness, Kelly, things like time, things like precious metals, things like collectibles, they're scarce because of their unforgeable costliness, they're valuable because they're scarce and because of their unforgible costliness. So Bitcoin is an asset that is in the class of things like a gold, things like antique art, and something as valuable as time because it's definitively scarce. So I think it's going to rally no matter what environment it's in because it's scarcer than

all other assets on the planet. And it doesn't surprise me that someone like BlackRock wants to get involved and sees the same thing we've all seen. But it hasn't rallied in every environment, though. Every year, maybe even every quarter, seems to bring a different set of explanations for what causes Bitcoin to move. Is there any kind of unified explanation,

or is it just sort of like you either believe or you don't? You know what? When the money is, Bitcoin really simplifies the concept of money. It's really just about supply and demand. And I would argue that it has rallied across every environment because it's the highest performing asset that ever since it's been in existence in over a decade now, if you just take a step back and look at its performance, all it's done is just gone up and to the right. Now, if you condensing it was at

65,000, and now it's down at 30. I mean, that's hard to swallow if you bought it at 60, 65, believing the people who said it was going to go to a million. Yeah, well, ask Silicon Valley Bank, how hard it was to swallow high interest rates. I mean, if you live in an era of monetary policy that since 1971 is the Federal Reserve Central Bank, in coordination sometimes with our government, just creates money out of thin air and then shrinks liquidity out of thin air. We have boom and busts in the economy. Banks go under. We have hyperinflation in emerging markets and record inflation in the U.S.

What do you want Bitcoin to do about that? That's not Bitcoin's problem. All Bitcoin has done, if you average Bitcoin out, if you take a zoom out and you're looking to hold and save and accrue wealth, traditionally that's been done in things like real estate recently it's been done in things like apple stock because the dollar has been so poorly performant it's done a tremendous job it it cannot solve the problems that central banking has created in the just volatile what we all have to go through in interest rate rises your interest rate environments there's nothing bitcoin could do about that but what it can do is consistently persist and appreciate against us

dollar which has done a phenomenal job at i mean bitcoin at 30,000 right now is a tremendous achievement for this asset class. And we're on the cusp of BlackRock and an ETF. This is a huge deal. I don't know anyone that holds Bitcoin that has an issue with that. But there also do still think Jack needs to be clarification on the regulatory front. I mean, you've seen all the memes. It's been like on the one hand, we're cracking down on every kind of crypto platform. And on the other hand, we're going to let these, you know, Bitcoin spot ETFs launch. It's a little bit confusing. Yeah, I think we're all confused. I've been on the show, Kelly and I've called altcoins.

an arbitrage on the trend. These things, in my opinion, are arbitraging the opportunity of regulatory uncertainty and information, just knowledge. People don't really understand Bitcoin. People don't understand this asset class. And so there was an arbitrage opportunity over the last decade to create the faster Bitcoin or the smart contract Bitcoin or the pink Bitcoin. And because there wasn't proper regulation, you can get away with issuing a lot yourself, manipulating the market, wash trading it, like SBF, and scamming people. And now I think you're seeing proper regulation where Bitcoin is clearly, it has an immaculate conception, it's clearly a commodity, it's clearly a digital version of gold.

And then regulators are trying to understand, like, how do we regulate what is, in my opinion, just violent levels of crime and fraud? And so I don't think it has anything to do with Bitcoin. And if anything, it just is a net ad where if, you know, if you're just a technology trend trader, and if you're following how humans have been able to harness electricity and energy to innovate through technology and add. net products to humanity, this is another one. We took energy and we built airplanes. We took energy and we built television, radio, the internet, the light bulb, and now we did it with money.

And so I think the trend is wash out all the crap. All those things are garbage. And then Bitcoin will have the clarity and be recognized as the real computer science and technological innovation that it actually is. It does seem to be the tacit admission from regulators, even as institutions have been less cheerful to adopt it. Jack, we'll leave it there. Thank you so much for your time. We appreciate it. Good to see you again.

Awesome. This was a peaceful one. Thanks, Kelly. Great to see you, Jack. Coming up on Power Lunch, today's working lunch, takes a look at a company that offers firms insight into its dealmaking by analyzing sales calls and team conversations. We'll be right back. Welcome back.

A pressing question for businesses now is how to use their own data to improve performance, how to have smarter interactions with potential customers. In today's working lunch, let's get up close with an entrepreneur whose startup Gong scored a $7 billion valuation at the peak by helping customers connect the dots. Gong's co-founder and CEO is Emmett Bendoff, who grew up in a small town in Israel, where he dreamed of being a lead guitarist and a rock band. He started paying attention to computers in the 90s when they first showed promise in music production and, on a whim, applied for the computer science program at Tel Aviv University. Amit then took work as a coder, then a manager, and then came to the U.S. as his career advanced. I think for my family,

like, if I would like stay to this day, selling at a store, it would have been just fine, right? It's a job, right? I had this, like, desire in me, like, do want more? Why? I was, like, I was, like, dreaming. Like, I told it as a child,

I was reading about, like, you know, like, it sounds like Miguel-a-Maniac, but, like, you know, Alexander de Great and Julius Caesar, and at big empires and the inventors and Edison. And I kind of, I had like bigger dreams and I read a lot. And I felt at some point at first, I'm not gonna be like amazing in guitar

and it's not like a day job, but definitely not a small country. Now, Amit's ambition is for Gong to sift through data and generate insights that customers can use to be more nimble. That's gonna mean pulling data from multiple sources, including publicly available data out on the web and social networks,

third-party industry data, and the company's own proprietary insights. All of that can help craft a pitch to make a sale. There's like intent data. You could listen to last earning calls, or if you're in security, let's say that they have like a security breach, I mean, or, you know, they posted something on social. So, yeah, that data is important, but the ability to use it in the right context and personalize it is key. and definitely I think there's room for data play,

which is like where we're investing. You need to combine publicly available data, third-party data, and first-party data. So at Gong, we see trillions of transactions and interactions. All that data is used to train a model to be more effective rather than the general purpose models. And Kelly, that's the idea behind Gong engaged with the company launch, last month, it asks, it sort of acts as an AI assistant, helping teams to know which leads

to follow up on, to actually, it actually crafts responses to. And this is sort of the primordial soup where the early use cases for artificial intelligence are evolving, right? We're getting different data sets together, training and trying to see, can it actually make our company's performance better? If I were a company, I would be both excited and my head would be spinning right now because how do you possibly pick from all of the different providers rushing into the space and you know probably any one of them can help to optimize your business, but you've got to stick with one and stick it out for a little while, train your workforce. And then there's kind of stickiness if you want to transfer to another, to another, to another,

and they're also new. They probably don't have a long list yet of proven clients and things to go on. So, you know, it's an exciting time to be, you know, a provider of this technology, but I think it's probably an overwhelming time to be a company. It is, and CFOs right now want to deal with fewer different vendors. Right. So that's why you're starting to see some consolidation in these areas, particularly in data when you saw ThoughtSpot making a buy. You saw Databricks making a buy. Even if you're a smaller startup with really good technology, your go-to-market isn't that developed. Maybe you want to combine with something bigger because there's only so much attention that the CFOs are

going to spend because they want to deal with a few and they want to get the bank for their buck. I just keep thinking about Salesforce or the cloud platforms, you name it. And unfortunately, this AI itself is at the risk of being commoditized and being something that so many different people can offer. So setting yourself apart, I think it's going to be difficult. Gong's a good size, though. So they're one of the potential, you know, acquirers in the space versus being acquired. Go ahead. To watch.

John, thanks. Still to come, T.J. Excellent checks. Loop Capital doing a round of store checks to gauge how retailers are holding up right now. And they say T.J.X. is the star of the show. We'll trade that name in three-stock lunch. Welcome back. Time for three stock lunch. And today we're starting with Draft Kings. It's up over 5% on an upgraded Bank of America. They say the fantasy sports company, well, it's more than fantasy, really, but that they're near an inflection point and could rally another 20%. Does our trader agree? We are joined by Jay Woods today, Freedom Capital Markets Chief Global Strategist. Jay, it has been ages. It's great to have you here. Welcome. It's great to be here. Good to see you, Kelly. So let's get right to it and start with Draft Kings. What do you think about the stock? Yeah, ironic we're talking about it on a day where there are no four major sports having any games,

but the stock has been on a tear. It's up 170% year to date. Long term, this stock, 2022, we want to put that in a rearview mirror. It's turned around. It had a nice rounded base, broke out when it gapped above 22. The momentum continues. It had a nice gap today. So those near-term investors, they may want to take some profits here. I think it has an upside of 34, 35, and a little bit of a pause. I'd use 29 as a stop on the downside. But for the long-term play, listen, they've had profitable quarters four times in the row.

The first four times they've had profits on their earnings reports since going public via SPAC. I think the story is still to be told as we go into football season. It has a lot to reverse. It's still 60% below its all-time highs. So Draft Kings over the long-term, I love it. All right. Jay, good to see you. Also up on an upgrade today, TJX companies, ultimate bargain hunter's stock, at least for those who are actually in the stores.

Luke Capital says, recent checks, give it confidence. T.J. X. is going to increase sales and earnings. Also adjusted its price target from $75 to $95. What do you think, Jack? Yeah, I saw Courtney Reagan talking about it earlier, how with the back-to-school sales are expecting a little bit of a dip. But I have to agree with the upgrade here.

The stock looks great on price action point of view. It's kind of gone sideways for a little while. Year-to-date, it's slightly underperform in the retail sector. But year over year, year to date, 52 weeks ago, it's gone up 47% and where was it the strongest at the end of the year. So we're coming to that seasonal strength for T.J. Max. And it just broke out. It broke above 82. It looks like to me it has room to run higher. And from a risk-reward point of view, how I measure these things, I think the stock could run to 95. But if it breaks back below 82, I'd probably get out and minimize my loss. Interesting. All right. Let's see where you come down on Cisco then, which is slipping after Bank of America downgraded to neutral from buy.

They're saying estimates are too high. I don't know. What do you think? Well, I don't have a lot of great things to say about Cisco. Cisco's been in the Dow since June 2009. The Dow's up 293% since then. Cisco's added 1.16% to the Dow over that period of time. So it really hasn't been that leader that we look for.

Over the near term, if you bought it in 2019, congratulations. You're even because it's trading back to where it was at 2019. It's not one of these stocks that tends to move. I think they're better places to put your money to work. So, yeah, Cisco is something I would kind of pass on and go straight to dessert. Jay, thank you. We'll let you go and get that dessert. Jay Woods at the New York Stock Exchange.

All right, Zuckerberg, flexing on Musk, literally. Closing times next. Welcome back, less than three minutes in the show and a couple more stories to get through. So let's get right to our headlines. Prime Day continues today with summer usually a good, time for sales just into the fall. But this year, back-to-school spending is set to decline for the first time. And get this, John, nine years as shoppers across all income levels pull back on non-essential purchases and prioritized necessities and sticky inflation. By the way, I've heard

retail investors specifically warned they think it's going to be a bad back-to-school season. Which is why it's interesting. We got Prime Day happening now during July, which is usually kind of a big dead spot for retail. Maybe some people are pulling some of those back-to-school purchases forward. Maybe people get, you know, two pairs of shoes instead of three or three shirts instead of four. We'll see. Yeah, they think the DeLoy thinks that we can be down 10% back to school. Yeah. Not good for the retailers.

Our UBS says shares of Netflix could jump nearly 20% as they anticipate a rosy forecast and growth in the second half of the year. Interesting on this one. If I have not mistaken, they're positive on earnings. So is Laura Martin who thinks they might get a boost from the writer's strike if they weren't paying people in the very near term. This is a longer term case, but there's maybe some short-term enthusiasm going in. to that results as well. And maybe, you know, the big continuing to get bigger. If you know that there's something that you want to watch,

plus they got this advertising strategy, which there are a lot of hopes for. Are you a Netflix subscriber? I am. Okay, I thought so. The fight between Elon Musk and Mark Zuckerberg seems closer and closer to maybe actually happening, but does Musk want to reconsider? Zuckerberg's training with UFC fighters and who's this, Israel? Adisania, yeah.

Thank you. He posted this picture from the training session where Zuckerberg looks pretty ripped. Let's see the, do we have the picture? I don't know. Can we show? Are we, okay, all right, well, I told you, there it is. Wait, you see in the middle there? You can't zoom in on the abs there on Zuck's ad, but I told you Elon does not want this smoke, right?

Like, I know he's taller in everything, but we had the yacht picture with Elon and we've got the UFC picture with Musk. Just don't do it, man. It would just be fun for society if this happens. I'm rooting for it on that level alone. All right, a bonus headline, Elon Musk, starting another company announcing the launch of XAI, the stated goal, understand the true nature of the universe. The team so far, 12 men, zero women. We expect to learn more in a Twitter space is on Friday.

The nature of the universe is not 12 men, zero women, though. Well, we have a lot more to learn about whatever XAI is, because there's been no details yet. And is this just another distraction tactic? There's been a lot. Had they fixed the Twitter thing with people, how many tweets they can see on the... With people not joining? No, they have not fixed that. I'm telling you right now, I keep trying with threads, and I just can't.

but it's growing, which is something that Twitter could learn a thing or two. Desktop. Thanks for watching, PowerLone.