Power Lunch - Growth fears simmer ahead of major jobs report 9/5/24

Episode Date: September 5, 2024

Stocks struggled Thursday as investors dumped risk assets and concerns mounted over the outlook for the U.S. economy ahead of Friday’s keynote labor report. We’ll track the market action for you.Plus, the 2024 NFL season kicks off tonight, and CNBC just released new data on team valuations – and the numbers are staggering. We’ll speak to NBC Sports legend Mike Tirico about that and much. 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 alongside Kelly Evans. I'm Dominic Chu, and we've got a mixed market so far today, Kelly. Yes, we do. Let's take a quick look at, I was going to say the big board, but that's old-fashioned New York Stock Exchange. You can still say that, though. Only for the Dow? We know what you're saying when you say the Big. Okay, let's check. It is, or the Dow is down 153 points, a third of 1% this hour, so it's given up earlier gains, trying to rebound from this week's losses. The S&P down just four points right now. The NASDAQ, Dom, is actually up about half a half a lot. percent. I mean, if you take a look at that, the yields that the situation there, they're falling this morning with the economic data that we saw, ADP private payrolls number, well, sort of the estimate, and the smallest job gains in three and a half years, worries about what might,

what that might mean for tomorrow's government jobs report, the big non-farm payrolls number. Indeed. And as we're just showing there, the two year and the 10 year, so we're now 373 on the 10 year. So the curve remains somewhat inverted. It goes back and forth. I mean, it's essentially flat. We're talking two to three basis points. We're looking for the signal amid the noise. We've disinverted once in August. We've disinverted earlier this week. Then there's the question about how much signal or noise there is even with the yield curve, given everything that's going on these days.

100%. But again, actually, to put the curve aside for a moment, just look at the sheer level of the 10-year. 373, you know, Canada's 10-year went below 3% today. There is more talk in just the trading community about whether our 10-year yields could also go below 3%. It's also changing a whole bunch of things. dynamics between where people are moving money between sovereign bond markets around the world. Absolutely. It has a huge impact on capital flows.

So that's the macro side of things. Let's turn now to the chip sector, which has had a bad week so far, that SMH semiconductor ETF is now down more than 7%. But Goldman Sachs is out with a note this morning on artificial intelligence, saying that the tech sector is not in a bubble and will continue to dominate returns. Invidia shares are slightly higher today. You can see they're up by about a percent, but still down 10 percent so far this week. But Bank of America says, buy the dip, saying that recent headwinds provide an attractive opportunity to get into Individia.

And then finally, Broadcom is reporting its results after the closing bell today. About two hours from now, for more on what to watch from Broadcom and all the other chip choppiness out there, let's bring in Ben Ritesis, the head of technology research at Mellius Research. Ben, this is a scenario where Nvidia is rightfully in many people's minds, the stock that is driving the entire market right now. How scared or optimistic should we be about the chip sector? Hey, Dom. Well, look, seasonally, this is a time where a lot of folks digest big first half expectations. And the chip stocks, just like actually last year, ran ahead of a lot of AI hype. And now it's time to deliver. And we're seeing some cracks in terms of. a PC demand, and a few of maybe the applications that investors wanted to see take off, such as

Microsoft co-pilot and a few other things, be a little slower on the uptake. But I feel like we are in the early inning still of this and feel that the sector will find its legs and get going as a lot more applications come out next year. Okay, so let's assume, let's just say, for argument's sake, that you're right, and this is a longer-term story that's playing out that we're in the early innings for. How much volatility could we expect for people playing this particular trade? Are we going to say, hey, it's a long-term uptrend, but you can see a 30% drawdown, hypothetically? Well, 30, you know, I don't know if anybody's smart enough to think that's something that traconian will happen, but I do think it'll be a ton of volatility.

This is a little bit like the 90s. We have a paradigm shift. There's a lot of learning on the fly. You know, I think it's a lot like the 90s where you're, this is a new market and people are figuring things out. There's a lot of new technologies out there. However, I do think we're in a multi-year shift where market cap is shifting towards semis and even some of the old hardware names. And I don't think that's going to stop. However, at times like this, where there's a market cap is shifting towards semis and even some of the old hardware names, and I don't think that's going to stop.

where there's just a few pockets of air, maybe, you would say, folks get a little worried, but I think long-term we're on a freight train. And I would be buyers on dips of the leaders like Nvidia and Broadcom. I mean, that said, as you know, and as you're talking about, a lot of the community is questioning whether this year or next year could be the peak investment year on AI as some of those returns. I don't want to say they don't play out, but they have to think about whether it's enough to justify the massive spend, if it moves the needle enough, or if there's, you know, smaller ways of kind of investing in the technology.

So for Broadcom tonight, Ben, what's at stake? What do you want to hear from them one way or the other? Well, I think people will be laser focused on the AI revenue. Last quarter, it was about $3.1 billion. We want to see that the company has a lot of momentum there, not only in the custom silicon, but in the AI networking space. And they last said that it would be $11 billion plus. And if that goes towards $12 billion, even $12 billion plus,

we think investors can be happy. And the other thing we'd like to do is see some upside in AI and not have to cut other numbers, such as more in the slower-growing parts of their more traditional business. So Broadcom, though, seems to be executing very well. And they also have the VMware acquisition where they're executing. And Hocktan does a really good job over there. So, you know, we feel like this is one that should be bought on dips because they're a long-term winner. All right, you've got buy ratings on both Broadcom and Nvidia, two names we talk about the most arguably in semiconductors right now. Are they the top picks in the business or are there other places that might be a better catch-up trade at this point? Well, we've said that AMD could be a very good catch-up trade in the back half.

So far it hasn't worked. There's been some concerns about the PC business and their ability to compete with Nvidia in AI. I think that AMD is the more volatile name. if you can even say that, such a thing. Obviously, Nvidia, you know, with that big sell-off on the other day, you know, people may laugh at that kind of comment, but I think AMD might be actually a little more volatile into your end. That could be a catch-up trade. I think that Lisa Sue is doing a great job there, and there is room for another two. But a number two. But Broadcom and Invidia really are the dominant plays because Broadcom's got this beachhead and customs. silicon and networking, which should soar next year. And then obviously,

NVIDIA is the market leader, really driving the entire AI revolution. All right. Ben writes us with the outlook for computer chips. Thank you very much. We'll see you soon. Hey, thanks, Dom. He said it could also benefit the networking partner, Arista Network. So again, many ways the ripple effects. The whole ecosystem will be tuned tonight into these results. Coming up, deal or no deal, whether it's mergers, breakups, or deal disputes. We're seeing lots of headlines in the M&A space. We'll discuss. us with Herb Greenberg next on Power Lunch. Dow's Down 147. Stay with us.

Welcome back to Power Lunch. Let's talk deals and broken deals. A few making headlines, including Top Golf Callaway brands and tending to split in two. We've got a lot to say about that one. Verizon said to have finally acquired frontier in a $20 billion deal and the ongoing Steel saga where the U.S.

could block Nippon Steel's acquisition of U.S. Steel. To talk about it all, let's bring in Herb Greenberg, editor of Herb Greenberg and on the street on sub-stack. I don't think I messed that up, Herb, or they did. Anyway, welcome. So where do you want to start? I mean, which is most consequential or telling?

Well, I think the one that I find interesting because I've been writing about it since May of 2023 is top golf, because it actually could be a trend that's fascinating in the sense that it is indicating deals that shouldn't have been done in the first place in those heady days of 2021 that are now unwinding and coming undone. I mean, I read flagged this company in May of 2023 and my red flag alerts, which is part of my substack. And the stock has lost half its value since then because, look, it was heavy in debt.

You know, the glory days didn't go. It was a poorly conceived deal. And now they're going to break it apart. So I think you have to look to see if we're going to see more situations like that, which is, you know, very different than, say, a Verizon and Frontier where, you know, Frontier had an activist investor in there that was looking for them to do something over time, Verizon's looking, you know, to build out bandwidth and so and fiber. So, you know, that's a specific situation. And then, of course, you have the political aspect of something like U.S. Steel, which is just a one-off in that regard, but could be very interesting because as we go forward from, you know, an election standpoint, right? You know, what really matters? The FTC matters and

antitrust matters. And if you wanted to wonder whether this market is going to become a bigger deal market, Kelly, I would suspect that that is probably the one thing. People will be watching along with interest rates, which obviously, if they went lower, would bring in private equity, which have been sort of stuck in the mud. Right. That's true. That's been kind of a key catalyst on the sidelines. I think the regulatory environment has been a buzzkill in many of these deals. So let's dwell on my favorite of these, the top golf, Calaway situation. What do we take from this? What do we learn from this, Herb?

Well, I think you learned that a company that, you know, and again, in the go-go days of, I come back to 2021, where people were, you know, rates were low, lots of debt was spent on this deal. It literally did not bring this company into, I mean, it was just, I never understood the deal. When I wrote about it, and I read flag that, you saw high debt, low free cash flow, net income really falling off. And the company started to, if you look, if you go back and you actually start watching, the company. company was actually starting to come up with what I call made-up metrics that it was telling the street to look at. And as you saw these things happen, it was under increasingly a lot of pressure. And as the stock continued to fall, they had no choice. But to try to now split themselves apart, obviously there's no buyer. So they split themselves apart. So I think you find out that these

deals that shouldn't have been done are now coming under fire, especially in a market like this, which is I would call a much more jittery market. Herb, I mean, maybe your focus on this is because you live in the right part of the country to focus on this. They're not that far from where you are residing right now. No, they aren't. No, they are not. Just up the road. Okay, so here's my question. My question is this is now going to become more of a company, pure play for golf equipment and apparel, and then one that's going to be focused on this golf entertainment side of things. How much do you think that a Cushnet's outperformance during the span of 2021 till now played into the decision because then people say, hey, you know, we can value a pure play golf equipment

and apparel business more readily than we can a conglomerate like Top Golf Callaway. I think that's key to it because, you know, you obfuscated what the real business was. I mean, you know, Top Golf, you talk to people about something like a Top Golf, they'll say, oh, it's a great experience. I love going there. It's just very expensive. And again, top golf was a post-COVID play. And these are, you know, it's like bowling or anything else. These were things that did exceedingly well at that point of time. But it's not inexpensive to use and go to, and it's something that did really well during the pandemic. And, you know, again, you know, they're building an enormous facility here in San Diego.

So it's not going away. But I think you have to separate the two of those. Otherwise, you're not going to get the pure play. And if golf is, you know, look, I've followed Callaway for, I think since it was public. And it was a controversial name all the way, you know, from Big Bertha on, it was. an up and down type name. And this, you know, from my perspective, this deal, I just never understood this deal. But by the way, and I do know people who bought the stock and loved the stocks and really smart

people who loved it as as it was with Topgall. But I think you need to separate the two. Herb, in the quick remaining time we have, not to give short trift to a major issue, but because it's a developing story, whether they end up blocking Nippon Steel's takeover of U.S. Steel. I don't know which hat you want to speak to this from. Is it as a shareholder? Is it as, you know, is there's the politics?

of it. The national security. And yet, Fred Kemp last hour told us, you know, it could sour relations with Japan, which is a key ally. What do you think? Look, I'm not an expert on international relations. I think it would be a shame if anything soured relations with Japan. I think it's a situation where, look, U.S. Steel did a great job building itself and rebounding from what it was. But I don't think you can get beyond right now the populist issue, the isolationist issue, and I think you have to get through the selection to see, you know, how this evolves. You know, calling it a security issue. I don't know. You know, this is, this is, this is an odd time for any of these issues right now. And I think, I think things could change once so we get past this selection.

All right. So we just wait and see. Do they try it? I mean, so if you, would you buy U.S. deal on this, on the cella, on this potential blocked deal? What, would I, I often long, I don't get into recommendations, Kelly. I just, know U.S. Steel as a company I looked at when I was doing a newsletter that was long biased as a company that I thought looked very attractive. And, you know, but that was two years ago. Can't speak to it today. All right. Fair enough. Sure. Thank you. Always good to check in with you. Herb Greenberg. All right. Still to come on the show, reflecting on the Invidia trade, market navigator is coming up next. Welcome back to Power Lunch. Let's get a quick check on the markets right now. The Dow Industrials are

down roughly 150 points. Now, that's a good thing. because if you looked at kind of the depths of the session so far, we're well off the session lows there, which happened right around the noon to 1230 people hours. So keep it on what's going on there. The S&P 500 down one-tenth of 1% as well, and the NASDAQ composite up one-half of 1%. The 10-year note yield, by the way,

again, as Kelly pointed out, at the top of the show, 3.727%. So a big move there in government bonds. Well, coming up ahead of the much-anticipated NFL kickoff, CNBC is releasing new data on team valuation, and the numbers, they're staggering in the billions. We'll speak to NBC sports legend Mike Tarrico coming up after the break. Keep it right here.

All right, welcome back to Power Lunch. The market navigator viewers out there will remember that last week, one of our traders proposed a protective options play ahead of Nvidia results. Now, you can see it right here. It actually turned out to be a correct and profitable trade, but now it's time to continue to manage around and risk manage that trade. Tony Zang is back, the chief strategist over an options play. He's ready to explain what has.

happen with that invidia strategy and what we should do about it now tony what can you tell us yeah dom what we did that back then is we bought a september 123 110 put spread for around three dollars and 75 cents and earlier this morning it was trading it around nine dollars and 75 cents that represents about a hundred and sixty percent return on that put spread but going into the job numbers tomorrow i think it makes sense to actually adjust this strike price now basically rolling down the the debit spread to a lower strike price i'm advocating in going down to the same expiration, but moving it down to the 104.92 put spread. So very similar to the trade structure we put on last week, but we're just re-centering it based on the current

price because Nvidia is now trading around that 107 level versus that 125, 126 was trading at about a week ago before that earnings report. All right. And so how much is this trade going to cost? So you've realized a nice gain on the value of that last put spread, you got money to play with. How much are we taking out of that profit to put this new put protection in place? Yeah, so we've gained about $6 on the put spread that we put on last week, and this one's only going to cost us about $3. So we're actually taking $3 in profits off the table and still getting further downside exposure going into the job numbers tomorrow, which is really why I'm putting on this trade. You know, we saw the job numbers last month cause quite a bit of volatility in the semiconductor space. I think that we could potentially see some softness going into the job numbers tomorrow,

especially if you look at the Jolt State that they came out earlier this week. You look at the Fed survey number here for August, showing fair amount of contraction in both manufacturing and services. I think we could see another disappointment tomorrow. And I think semi is getting hit is likely going to be a trade that's going to play out with that type of theme, which is why I'm playing this. I'm moving the strikes lower here and trying to get further protection for NVIDIA. or especially if you're invested in this particular stock, this would be a good way to potentially

protect for further downside. And Tony, again, this is what traders like yourself call a debit spread. It means you pay out for it. It means the most that you can lose is the amount of money that you paid for the option strategy. And then what is the upside? Can you tell us from there? Yeah. So in this particular case, we have a $12 wide debit spread that we're paying $3 for.

And that means you have about $9 of potential profits or $900. of potential profits versus $300 worth of risk. So you have about a three to one risk reward ratio if Nvidia is below $92 at expiration, which is in about 15 days or so. All right. Tony Zhang with the new trade on Nvidia. Thank you very much. We'll talk to you again soon. Thank you, Dom. All right, that's the Navigator. Let's get over to Bertha Coombs for a CNBC news update. Bertha. Hey, Dom. The 14-year-old suspect in the shooting at Appalachie High School in Georgia has officially been charged with four counts of felony murder. He will make his first appearance in court tomorrow morning at 8.30 Eastern.

Authorities say the teen who used an AR-style weapon killed two fellow students and two teachers yesterday before surrendering immediately. Justice Department prosecutors are opposing Hunter Biden's surprise offer to enter a plea in his federal tax evasion trial. It's a legal maneuver that would allow. him to plead guilty but avoid admitting any wrongdoing. It's not clear this afternoon whether the judge will accept the offer or move ahead with his trial. And two-time women's World Cup Champion Alex Morgan announced her retirement from soccer today. 35-year-old Forward also shared that she is expecting her second child. She will play her final game with the San Diego Wave

football club on Sunday before hanging up her cleats. Good luck to her, Kelly. I know. I'm always curious that they'll unretire. You know, after about a year with, you know, the baby, like, you know what, maybe soccer, no, thank you. But Tom Brady effect. Yeah. Bertha Coombs, we appreciate it. Join CNBC and boardrooms game plan conference on September 10th in Los Angeles. It's a high-powered event bringing athletes, owners, investors, and innovators to explore the dynamic intersection of business, sports, music and entertainment. Just scan that QR code or visit cnbc events.com slash game plan to register.

And power lunch, you'll be right back. Welcome back. The NFL season kicks off tonight on NBC and Peacock at 7 p.m. Eastern with the defending champ Kansas City Chiefs hosting the Baltimore Ravens. The NFL itself is coming off a strong season with the highest viewership in eight years. Mike Tarrico is host and play-by-play announcer for NBC Sports. He'll be calling tonight's game in Kansas City, of course, for NBC. Mike, thank you for making some time for us.

today. It's good to see you. Welcome. Yeah, good to see you, Kelly. Happy NFL season. Here we go. Here we go. It's so many different things. I want to actually start just to clarify something that I heard. Are they changing the kickoff rules tonight? Is that? So what's it going to look like for that first opening play? Yeah, we saw it in the preseason. So they wanted to do two things. Kickoffs were at the lowest point ever in terms of return kickoffs in the history of the league last year. and the kickoff has been a play that indexed higher in terms of injuries than every other play. So they wanted to address both. So what you'll see when you start to watch, if you didn't see in the preseason, teams will still kick off from the 35-yard line.

But all the guys covering the kick are going to be a lot closer to where the ball has to land. And essentially, they want the ball to land in an area between the 20-yard line of the goal line. If it lands and you catch it in there, you've got to bring it out. You have to return it. Wow. If it goes out of the back in the end zone, it's a touch. touchback and instead of the 25, it's at the 30-yard line. I'm getting the sense early on. You're going to see a lot of touchbacks early on until people get a grasp of this rule.

But it's going to look different than any kickoff you've seen before if you haven't watched the NFL in the preseason. It is. It is a big change. Yeah, Mike, it's Dom here. You've been covering football, and this is no reflection on your age. You're just a veteran with regard to how much you've seen over your sports career. I'm curious. A lot of these changes have been made to make the game more entertaining. The game has evolved over the course of the last 20, 30, 40 years. I wonder, in your lifespan covering football, is it more entertaining for you now, given what you see today?

Or was it more entertaining to you as a kid watching the game as it was during that span? Dom, I think it's evolved from a rough physical where the, collisions were almost celebrated to a game that is, one, a little more understanding of player health and safety down the line as we've learned more. Litigation certainly is probably factored into that somewhat. But I see the NFL efforts on a regular basis. They use a lot of data, a lot of studies, look at a lot of plays, and when they see behavior that's leading to injuries, they've tried to change that.

When you watch football, the quarterbacks play with a different set of rules than the rest the players on the field because you want to see passing. You talk to a defensive coach, they'll tell you almost every rule that's been pro passing and anti-defense. I think there is the understanding that this is an entertainment vehicle, and I think we've seen more of that. Now, scoring came down a little bit over the last year or so.

So I think you're going to watch closely to see if the games are high-scoring because that keeps what? Fantasy football players involved. True. Just an exciting up-and-down game on the field. You enjoy it a little bit more. We are a society that has taken a long time to warm to soccer because people used to say a one-nil or two-one game was boring. Now we're more educated.

More of us played soccer growing up so we understand it. But I think it is more of an entertainment vehicle that it was the gladiator physical type football that it was back in the dark ages as you said, Dom, when I was growing up as a kid. But, Mike, that's a great point that you've made about the scoring coming down. And we're going to talk to Contessa a little bit later about, you know, the betting angle on all that. And to your point, Tom Brady has been kind of outspoken about how he thinks this is dumbed down the quarterbacks. They're just not getting the kind of training that they once. I mean, is that all of us kind of being, to follow the joke, a little bit old and pining for the days of your? Or do you have to respect when a guy like this is coming out and saying you're not going to end up with the same quality and kind of, I don't know,

he was suggesting even mental acuteness of some of these players that he kind of implies he was. Well, Tom's got a microphone on Fox now. So you can say whatever he wants. I think he's going to be great, by the way, as their lead analyst working with by friend Kevin Burkhard. I think Tomlin has got an interesting point. College football, if you watch a college football game, you'll see it placards on the sideline.

You'll see players looking over to coaches and getting hand signals. College football only is 20 hours a week with the players. They want to make it as dynamic and exciting as possible. So a lot of it is hand signals. What does that mean? It means the quarterback at the line of scrimmage doesn't handle things the way Tom Brady or Peyton Manning did, or Drew Breeze or the quarterbacks of that era. So the quarterbacks are coming in and having to learn.

Put that multiplied by the reality that these players, when they come in, you draft somebody in the first round, like Jaden, Daniels in Washington, Caleb Williams in Chicago this year. They're expected to come right in and play. So they've got to make a really quick jump. And sometimes if that jump isn't a good one, you're looking for another quarterback in two years. So Brady's point is a multitude of things factored in there. I still think the quarterback position is played it at an extraordinary level. It's the most important position. It's like hiring the wrong CEO.

You hire the wrong CEO. Your company's going to get talked about on Power Lunch, right? You hire the right CEO, your company's going to be talking about, and the CEO's going to be on and talking to you guys, right? It's going to be a big story. You get the right quarterback. You have a chance to win in this league. It's that simple.

And we're going to see that with Lamar Jackson and Patrick Mahomes tonight. They're two of the best in the league. And Baltimore and Kansas City are regulars in the postseason. Mike, the NFL is undoubtedly a tour to force when it comes to popular culture in America, and it's only grown stronger over the last 20 to 30 years. It wasn't that long ago when it was mired in controversy around the kneeling, around the national anthem, and Colin Kaepernick. It seems to have now shaken all of that off and is stronger than ever.

Can you speak to just how much football is part of our American fabric and why we keep tuning in every single week. Yeah, Dom, I think part of it is it fits our lives. You have five hours a week. You can be an ardent fan of any one of the 32 teams. You can have a fantasy football league where you're rooting for the L.A. Chargers quarterback and you live in Charlotte, North Carolina. It's just that reality.

It happens on a Sunday when most people are off, when most people are enjoying time with family. It happens later on in the years. The weather gets cold and you want to be inside, buy a fire, if you're in the Northeast or the Midwest. It just fits our very busy chaotic schedule. There was a time 50, 60 years ago where baseball was the perfect fit, a daily companion on the radio. Nobody has time, I shouldn't say nobody. A lot of people don't have time for your baseball team seven days a week anymore

because you've got the kids in their soccer practice. You've got your job, you're traveling, family, all that stuff. Football, you find a way to carve out those three and a half hours to watch your team, half hour to take care of your fantasy football team, 45 minutes to watch a pregame show or something else, and all of a sudden, five hours of your week, you're an ardent fan. You know about the backup left guard,

and you can live all the way across the country. This is the one true national sport because of the infrequency of the games, only 17 of them in the year in the regular season. You feel like if I miss one, I'm missing a lot, and that's just urgency on top of fantasy football, people feel like they're invested, wagering people feel like they're invested.

And then you get Taylor Swift dropping in the middle of this whole thing with the biggest team in the NFL, the hottest team, I should say. And it's become one of the biggest stories in the league. And Taylor's supposed to be at the game again tonight. So here we go with year two of old announcers with bad dad jokes trying to use Taylor Swift lyrics in their calls of games. Well, it's working. Whatever you're doing, Mike. The highest viewership last year for the NFL since 2015. And as we've been reporting all day long, the valuations on average are now six and a half.

billion dollars, 11 billion for the cow by the way, Mike, Kelly, just to put a point on this, my wife wishes it was only five to six hours a week that I spend. Yeah, I heard 30 minutes on fantasy football. I think that might be a hundred. That was the minimum. That was the minimum. Now, you can, and we encourage you to exceed the five hours, by the way. It helps the bottom line.

But you're right, especially now with private equity involved, Kelly, who knows where those valuations of these teams are going to go? I think we're entering a new era. It's a hot property and a hot product. Can they keep growing? Every time we say no, it does. So let's see what the next couple of years will break with the NFL. Mike, thank you again for making the time. We look forward to seeing and hearing from you tonight. Really appreciate it. NBC's Mike Trico. And be sure to tune in for NFL kickoff on NBC and Peacock. Live coverage begins at 7 Eastern.

NFL commissioner Roger Goodell will be on Squawk Box tomorrow morning at 8 a.m. We look forward to hearing that as well. All right. And one big reason the NFL is America's favorite sport is gambling. $35 billion is expected to be wagered on the NFL this season. $35 billion with a B. Now let's bring in our gambling correspondent, Contessa Brewer, who just spoke with the CEO of Draft Kings. Contessa. Chief gambling correspondent, I think, is the word that we were going for there.

Look, it's not just NFL season. The expectations for sports betting total addressable market are expanding. Draft Kings projects online sports betting, which accounts for about 95% of the tournament. total coming through on mobile will be a $30 billion market in 2028 based on the existing states alone. I just asked Drafking CEO Jason Robbins about the growing opportunities. We put out a number our last investor day and really feel like, you know, we're seeing signs that maybe it's even bigger than that. Obviously more new states will expand the tan. We didn't

have quite as many of those this year, but it was an election year and that's always tougher. We've seen that even in established states, there continues to be. growth. I wanted to ask you, we came out today with the valuations for the NFL teams. The Dallas Cowboys blows everybody else away. It's $11 billion. Does, is there a correlation between the valuation of an NFL team and how much action you're getting through the sports book? Absolutely. Cowboys are one of the most popular teams to bet on even though we do not yet have legal sports betting in Texas. There is also, you know, there's multi-movie parts if the teams not very good, that will obviously offset some of that because people aren't as likely to

bet on them if they don't think they're going to win or cover the spreads. But assuming all things be equal, definitely see that. Draft Kings counting on more touchdown-related offers on their website. And what keeps him up at night? He says the threat from state's hiking tax rates on the online sports books. Dom, Kelly? You know, Contessa, this is one of those situations where the amount of money that we're going to see transacted over the course of the season.

is going to be massive and record-breaking. How much then is the game you think going to be affected from a viewership standpoint because there is so much more active involvement in gambling across all of these games? It's circular, right? It's circular. What you see is if you put money on the game, you're more likely to watch the game. If you watch the game, you're more likely to hear the play-by-play announcers or your friends on social media talking about the bets that they've made. All of this is one big circle, and that's one reason why the total addressable market

is expanding in this case. What we know is that when the games are exciting, when they're close. And to Mike Tariko's point, the higher scoring they are, what we see is that more bets come in, people are more engaged in it. And so the sports books also want games

that are lively, active, and where there are player narratives that are really driving action on the sports books too. Big action for sure. Contessa, thank you very much for the report. We appreciate it.

Sure. And remember, you can always hear us on our Power Lunch podcast. Just listen and power. follow wherever you go and on whatever platform you use, and we'll be right back. Rising home prices are a problem across America, but in Montana specifically, they've risen so much that housing prices have become a key issue in a hotly contested election race. Our Emily Wilkins is in Missoula, Montana with a look at this issue and this Senate race,

which could have a major impact nationally. Emily. Hey, Dom. Well, yeah, if you love the view you're seen here, you can by the house behind me for about 3 million. And that might be higher than you'd expect for Montana. But the state has seen a 66% increase in home prices over the past four years, well beyond that national average of 50%. Now that's due to a combination of more people moving into the state and a labor shortage. Housing has become a key issue in Montana's Senate race, which could ultimately decide which party controls the chamber. Andrew Weekend, a home builder, said he's had to pivot away from building homes at some lower price points because the market just isn't there right now.

The young professionals weren't able to afford it and we've seen those houses in our existing inventory remain in our inventory for longer than we would like to see. Democrat John Tester, who is facing the toughest reelection of any Senate incumbent is campaigning on housing affordability. He's proposed a tax credit for developers if they sell their property to a resident-owned co-op or a nonprofit. and he's also backed federally funded grants to expand and repair affordable housing. Republican Tim Sheehee has blamed higher prices on inflation, but in a recent debate, he also talked about the need for more trade jobs to help increase the supply of homes. The race is currently rated as a toss-up and a new AARP poll out today finds that Sheehe has an eight-point lead in the matchup, but that is within the poll's margin of air.

So, guys, a very close race, a very important issue. Of course, whoever wins the Senate next year is going to have a lot of control when it comes to things like that tax package. Is it? Emily, is it telling it. I know it's Wyoming, but Liz Cheney, I believe, did come out and say she was going to vote for Harris. She did. And to be honest, when you kind of see Liz Cheney's evolution here, I mean, the fact that she was on the January 6th committee definitely shows her a lot of concerns that she has had with Trump. I think it was the new step coming out and actually going ahead and backing Harris at this point. Look, I mean, there's certainly folks who are in the states of Montana and Wyoming who do kind of subscribe to a little bit of the Democratic philosophies. They enjoy, you know, certain things like you've seen Democrat talking points on abortion, do really well in states out west like Kansas. And so there are air messages that lawmakers and candidates are kind of putting forward to try to invigorate voters in the state.

But I think really for Montana, this isn't a competitive seat when it comes to the presidential race. But the fact that John Tester, who is a Democrat, is currently holding one of those seats, that's what really makes this competitive. And honestly, Democrats looking at the map, there are so many places where they could potentially just lose one person and lose control of the Senate. But this race in Montana, it is definitely the hardest on the map when you look at just the difference between how folks voted for Trump and then how they voted for the Senate candidates. Do you say how much that house behind you is again? $3 million. The $3 million? And there's one here that's also a new, $3 million.

And then the one I'm actually standing on right now is $2.8 million. It does come with a wine fridge, though. So you're getting your money's worth 100%. We unplugged our wine fridge. The kids just open and throw the bottles everywhere. Emily, thank you very much. And they cost like $100 on Amazon. They don't even spend $2.8 million on a house.

Emily, thanks. Still to come, fantasy picks to power your portfolio. We drafted our own teams to drive big games this season. We'll bring you our special own lineup when Power Lunch returns. Welcome back with the football season just hours away. Now everyone's drafting their fantasy football team. I'm not actually in one. I'm in two of them.

I'm so sad about this. So I said, you know what? It's CNBC. We do stocks, but we're going to do one too. We're going to lean into the Buy What You Know theme here. So Dom and I are drafting our starting line. Not kind of what we love to have, just kind of what we have to have in our lives. Products and services we can't live without.

And we said no mag seven names because it turns out everything I use is basically from Big Ten. They're already off the board. Exactly. So we started my quarterback is Costco. Dom. I had to grab this one. I'm not the only one we're going to get there, August sales after the bell. All right. So my quarterback is an easy one. The company that pays the bills. I'm going with Comcast. As much as we talk about Mag 7, kind of jokingly, kind of not jokingly, it's the only stock I really care about that.

On to the wide receivers, the catch-all for our house, it's Carter's no explanation needed. Thank you to my mother-in-law. Well, with the Costco trade off the board, for me, it's Targeet. Target, narrowly edging out Walmart just due to geographic proximity to our house. Target's just closer. I've got some formula on order from them today. Okay, so for running backs, I went with Honda Motor because we're obviously always running around in that Odyssey getting a lot of mileage. And our household doesn't have any EVs, so we run on ExxonMobil. I thought about doing that one, too. For the tight end on my roster is Verizon.

Dependable, solid gets the job done. They do my TV. They do my mobile phone. They're everything. For me, too, but it's off the board. So I'm going to go with Colgate, Palm Olive. And though there are lots of products from the company we use, most importantly, our dogs consume a lot. lot of Hills pet food products, which is a Colgate brand. There you go. On defense, which is

necessary to win championships, PSE and G, they keep the lights on in our household. Well, defense for me is literally going with defense, progressive insurance, literally defending against a lot of things in my life. That's doing very well right now as well. Both utilities and insurance, surprisingly on the up. And for the kicker, stretching a little bit here, but come on, Dom, can I pick coffee and chocolate? Okay, you can do that. It gets me through the day. Yes, you can do that. My kicker also went with two, which will soon be three. It's a Cushnet, Tickr, golf. It's tidalist parent company. And then, of course, Top Golf Callaway brands. You know how much I love golf and how much those stocks get of my disposable income. Okay, these are our

teams. So again, Costco Carter's Honda, Verizon, PSE and G, and G, coffee and chocolate. And Comcast, Target, ExxonMobil, Colgate, Paul Molo, Progressive, a Cushnet and Top Golf Callaway. By the way, yep. Tune in tonight. 6 p.m. Eastern Time on Mad Money. Jim Kramer is going to combine his love of football in stocks and give you his fantasy team. And when Tyler gives back next week, he has his picks as well. All right. So let's bring in the draft grader for the three stock lunch today. We asked our trader to check our teams and see which ones he loves or hates. With our trades is Boris Schlaasberg, managing director of FX strategy at BACA asset management. So first up, wide receiver pick,

Target, Boris. What's your trade on Target? Love target. Target, I think, is back. It's, you know, it's the preeminent merchandiser. I mean, it's the only place in the world where you can go for a half gallon of milk and come back with three outfits and a pair of slipons. You didn't know you need it. They've done a couple of things I think are really, really good right now. They have really improved their logistics. They've improved their digital commerce quite a lot. The app is working really well. And they went to private label brands. I bought like five buttoned-down shirts. Love them. I think you probably love them too dumb. So I think Target has bright future ahead of it. They're back in business. Love the trade. So of our whole list,

you like Target. You also like Exxon Mobil, Boris. Why this one, Energy has not always been, especially this year, the best trade. Yeah. I think this is a widows and orphan stock. Great company. I think ICE is here to stay as much as EV has evangelist for it, I think ICE is still here for quite a long time. And ExxonMobil is obviously predominant sector leader in the energy space. They've done really, really well. They're doing $1.3 billion out of the Permian Basin right now. The market is very excited by their Guyana development, which has 11 billion possible recoverable barrels going on. All of this is really good relative to the fact that we have all this tension in Middle East and Russia. So I think they're in a very

strong shape. All right. And finally, it's my kicker. Top Golf Callaway brands. It's the one that we want to talk about. What's your trade on Top Golf Callaway? Sorry, Dom. It's, it's buying a catching knife. I think golf is a disaster right now. They're facing a lot of macro headwinds. They've got it down quite substantially. A lot of people maybe want to buying it as a, because I think all the bad news was in it. I don't think so. You need to wait a little bit to see if golf kind of recovers. Golf also has a lot of competition now. Pickle ball on the up end and, you know, extreme sports and video games on the lower end. So it's kind of hard to get motivated

on the macro side for golf. So I think, you know, they have a lot of problems ahead of them. I'd rather wait and see until they recover before you get loaned on that stock. I hope you're right, Boris, because I got to take Dom down. And this is the only fantasy team I've got this year. And, you know... Did we notice that Kelly is in a Raiders jersey?

A Charles Woodson... This is the only one we have in the household. Woodson, come on. Let's talk. Raiders black. It's the best. Even the husband's the husband. from Los Angeles. So are the Raiders. That's how we get to the fandom.

All right, Boris Lasburg. Thank you very much for the three-sock lunch there. Great kickoff to NFL season coming up. Go 49ers. That's all I'm saying. Tom, thank you for being here. Closing Bell starts right now.