Power Lunch - Is Home Improvement Improving? 8/12/24

Episode Date: August 12, 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.

Good afternoon, everyone, and welcome to Power Lunch. I'm Tyler Matheson, and we start with a check today on the markets. After a volatile week, stocks are a little bit mixed right now. Dragging on the Dow today, the safer defensive plays like Procter and Gamble, Johnson & Johnson, and Coca-Cola, among them, all with red losses there, as you see. Walmart, the biggest percentage gainer on the Dow today on pace for its third straight update. Its earnings come out later this week. We'll have more on retail coming up shortly. start with the setup for the markets following last week's big moves. The major average is down three or four percent for August so far. But even with those losses, let's keep perspective here, the S&P 500 and NASDAQ are up 12 percent or thereabouts for the year so far. Let's bring in Mike Santelli, Santoli for more. Mike, welcome. Good to have you with us. As we look into this week with a couple of key earnings, most notably from Walmart and a couple of others. What are you seeing?

Well, mostly what we're seeing, Tyler, is some apprehensive action, certainly calmer. There's no more of that mini panic of people trying to get out of big leverage trades. That was a week ago. What we have right now, I think, is a little more akin to a fairly routine growth scare in the economy. So I think what the market needs is some kind of reassurance or it's craving reassurance that the U.S. economy, the consumer, remains relatively healthy. to me, the battlefront right now is, are we still preserving the possibility of a good soft landing? Has the Fed waited too long or not? So in that sense, the inflation numbers are important this week,

but it seems as if they ought to be subordinate to what happens either coming out of Walmart and Home Depot or the retail sales numbers. I do detect a little bit of unsettled activity below the surface, by the way, too. You know, most stocks are down today. Most stocks certainly are down from their open today. even regional banks, which got a bit of a lift earlier on that key corp investment news, have backed away. So it shows you there's not a whole lot of conviction about this having been a real buyable pullback in the markets, even though it still does look fairly ordinary in the context of a longer-term uptrend, as you were saying. Yeah, as you look at it and you look at last week, if you think back to where we were last Monday, it was a very, very bad day.

But then the market seemed to right itself, I guess. It was choppy. It was a lot of buffeting up and down. by the end of the week, you didn't feel like you had sustained major flesh wounds. Not much, no. And I think that really time helps when these types of episodes happens. If you feel as if it's forced mechanical selling, at least in part as an exacerbating factor for a day like last Monday, the more days you go without seeing one of these storms unleashed, again, on the market in terms of heavy pressure on the cell side, it makes you feel as if,

okay, we can sort of have regular old two-way activity in the market and not have. have to worry about it. The question is always, you know, are we in the middle of the horror movie where we think we've outrun the monster or are we at the end where, in fact, we know he's gone? All right, Mike, stay there. Our next guest says last week's sell-off was very likely overdone, but he expects continued volatility and we'll be watching this week's economic data closely. He's David Speaker, Chief Market Strategist at Turtle Creek Wealth Advisors. So last week, David, nothing really to get terribly excited about, a little bit overdone, you say. Yeah, I think the Yen-Carrie trade was a big part of it, Tyler, which I'm sure you've talked about, ad nauseum at this point.

But when you look at where the economy is today, unemployment is still very strong at just over 4%. Wage growth is growing at just under 4%. The Atlanta Fed is estimating third quarter GDP of 2.5%. And let's still forget earnings, Tyler. Earnings growth came in double digits for the second quarter. But importantly, the non-Mag 7 companies produced the best earnings growth they'd done since the fourth quarter of 2022. And that's one of the things we'd been worried about is we needed to see that broadening out. We're seeing that now.

So that gives us confidence that there's room to run here. And yet there has been some earnings caution, hasn't there, David, in some of the commentary of some big companies? Yeah, there absolutely has, Tyler. Think of where we are in the cycle. I mean, the Fed last raised rates over a year ago. So we're really starting to feel these rate hikes. But one of the things you need to do in this part of the cycle is look for companies that have visible revenue and earnings growth. A lot of the commentary was around cost cutting and AI capital expenditures slowing down projected AI growth.

But there's still plenty of good companies out there. And like I said, you're seeing good earnings growth and good revenue growth out of the non-Mag 7. And I think investors need to start being a little more particular about where they're putting their money. We can't just throw it all at the Mag 7. We need to look for other opportunities in the market, the values, the cyclicals, the small caps. And it was good to see those companies start to outperform the Mag 7, even before this most recent downturn. Let's presume that the Fed does cut interest rates

will learn a little more when they go to Jackson Hole, I suppose, in terms of context. But let's assume the Fed cuts rates a month from now. Is that probability all but already priced into stocks? In other words, would you expect to see certain subgroups of stocks or stocks generally go higher on a rate cut, or is it already in the numbers? That's a really good question, Tyler.

I would say 25 basis points probably is priced in, and you're going to see home builders and consumer stocks and certain companies do better on a rate cut banks, financials. The one thing we don't want to see is we don't want to see the Fed overreact and cut 50 basis points because that would indicate that they're panicking, that they believe they're behind the curve, and I think the market would take that negatively. So let's stay the course. Jackson Hole probably won't tell us a whole lot. We're going to get CPI this week. We're going to get August employment report in early September. And these are things that we need to be looking at. But 25 basis points is probably priced in. And quite honestly, we think that's probably the best case right now. And that puts us on that rate cutting cycle, which eventually gets us to the neutral rate for the Fed, which over time is probably around 3%. So Mike Santoli, are you with the idea that, that rate cuts are, that at least a quarter point rate cut is probably already priced into stocks, and to address David's other point, that a 50 cut of a half point would be maybe a sign of panic.

I don't know about panic, but I would say resolve. I think there's an acknowledgement out there that Fed funds above five and a quarter is way above the two-year treasury, way above the rate of inflation. So there's a lot of room in there to cut. to me, it's all about whether when the Fed eventually does ease, is it in the context of an economy that's still hanging in there so that they seem as if they're doing an optional, deliberate, orderly easing cycle as opposed to really rushing because they've fallen behind? So that's to me what, you know, the next five weeks or so, whatever it is, until the Fed meeting in

September, as the data come in, and that's going to fill out the picture as to whether, you know, they're kind of still in their preferred path of doing these insurance cuts and just making the policy less restrictive as opposed to chasing a failing economy. Yeah. Back to you, David, for a couple of stocks that you like, and one of them would be a direct beneficiary, I suppose, of an interest rate cut, and that is Lenar, the home builder. Yeah, that's a good example of a company that's growing the top line, one that will benefit from a right cut. When you look at where we are in the cycle, Tyler, we've still got an under supply of houses in this country, have since the housing bubble collapsed back in 08,

filing mortgage rates have already started to create some activity there. Fed rate cuts will improve the landscape for home builders. And we like Lenar because they're vertically integrated. They're doing more than just building single family houses. They're doing mortgages, multifamily, land deals. And so they've got an opportunity to really benefit from lower rates and from a need that we have in this country for more housing. All right, David, Speaker.

Mike Santoli, thank you very much. Appreciate it. All right. And now let's turn to the bond market as yields are falling ahead of the key. inflation data that comes out later this week. Rick Santelli is in the center of the country, Chicago for us. Hi, Rick. Hi, Tyler, indeed. You know, tomorrow's July PPI reading might not get the same scrutiny attention or move the markets as much as the following day's CPI, but it is coming first and it does draw many eyeballs to one situation, and that is April, May,

in June, on year-over-year-ex-food, energy, and trade have all been over 3%. three in a row over 3%. Even though last November, we're all the way down at 2.5%. So this is very interesting to pay attention to because these year-over-year readings are running a bit warm. Now, we look at the VIX. It did some trading under 20 today, and some of the odds that we've been discussing

from last week might be dispensing, leaving the market for a brief time. But we are definitely hovering, right around 4% in both twos and tens. And if you look at a three-day chart, twos, they stuck. Three days ago, they popped over 4%, and they have been closing over 4%. That same three days ago, the twos and the tens were hovering in positive territory briefly, but the tens have reversed down a bit.

And as you look at the wider charts going back to May of last year, you can see that two-year are definitely hovering at 15-a-half-month lows, 10-year-around-one. one-year lows, but they really are giving up some big ground on the rate side of the equation. And it's causing many to think that should we start to see some convincing trade under 4% in twos, that that really would trigger a lot more buying. And I think that goes along with your last discussion. If we get a rate cut in September, look for the market to think we're going to get lots of rate cuts to follow.

Tyler, back to you. All right, Rick, thank you very much. New numbers from the Treasury Department on Government's spending, we can only imagine. Megan Cassella has those details from D.C. Megan. Hey, Tyler, so interest costs on the national debt. Keep on soaring. That's the top takeaway here.

The U.S. government spent $89 billion in interest on the public debt in July, according to new Treasury data out this afternoon. That's a 21% jump from July of last year, as the debt has grown and interest rates have stayed high. For the fiscal year to date now, interest costs are now 32% or $231 billion above where they were this time last year. Some of the biggest line items on the spending side are directly tied to higher interest rates. Spending at the Department of Health and Human Services was up 10% last month versus last year due to higher costs for Medicare. And spending on Social Security

was up 6%. Those are rising both because of the higher cost of living and because more people are now receiving Medicare and Social Security benefits. But tax receipts were also up 11% overall for the fiscal year so far, while total spending is up only 6%. So top line, Tyler, for the fiscal year so far, the government is running a roughly $1.6 trillion deficit. That's 5% smaller from this time a year ago. Tyler. I guess we can take a little solace, a little heart from that. Thank you, Megan. Megan Casella. All right, coming up, some key retail earnings on deck over the last couple of weeks. We've seen some cracks forming around the consumer, especially here in the U.S., and specifically on the higher end. So what will we learn from Walmart? Not exactly the higher end? That's next.

Welcome back to Power Lunch, and today's Market Navigator, one options trader thinks last week's re-rating of Google has made an already attractive stock even more so, but he's wary of lingering volatility. Tony Zhang is chief strategist at Options Play and a CNBC contributor. He joins us now. So, Tony, welcome. Good to have you with us. What is your Google trade? Yeah, here. We're going out to the September 13th weekly expiry. we're selling the 160 puts. Earlier today, you can collect about $3.33. And with this type of strategy, what it does is it obligates you to potentially buy the stock

at effectively around $156. If alphabets below 160 by that September 13th expiration, it's a strategy where for every contract that you sell, you can potentially acquire 100 shares of with a pretty significant discount using the strategy. All right, so then what are you seeing here that tells you this is an opportunity? time to execute this kind of strategy? Are you seeing that Google is back at a key level?

Yeah, absolutely. So first of all, you're at pretty compelling valuations. Even before the volatility last week, we're already at selling alphabet at pretty compelling valuations. But the fact that we've had this sell-off, you know, you're trading at about a little over 20 times forward earnings at the moment. And given the fact that it's expected to grow faster, both top and bottom line than its industry and it has better margins than the rest of the than the industry. I think that it's the fact that it trades at a pretty significant discount at this point about a 20% discount to its industry means that just from a valuation perspective, it's quite compelling. Out of the magnificent seven, it's by far the cheapest stock to look at,

but also the volatility last week has made options very expensive. And that's to the advantage of an option seller. And that's what we're doing here is we're selling put options to potentially acquire the shares, and now we're actually collecting more premium, which means that we're going to get a bigger discount on the stock purchase. So if this put gets put to you on the September 13th expiration, which is about 30 days away, you're going to be able to potentially buy alphabet here at a little under 20 times forward earnings, which I think is downright cheap, not only relative to the industry, but also relative to the market as well. Quick answer, if you can, for those of us like me, who need to slow down when we start talking about,

options. How does this trade make money? So this makes money in two ways. Either the stock stays put where it's trading right now or moves higher. In those two instances, you're going to collect $3.33, which for each contract that you sell, which is about 2% yield on your cash in just 30 days. That's a really nice yield if Google, if Alphabet simply stays where it is or moves higher. In the other instance, if it declines below 160, now you own the shares at 20 times forward earnings, which I think is a good long-term investment. All right, Tony, you win two ways. If it works, it's great. Tony Zhang, thank you very much. We appreciate it. Thank you, Tom. All righty, two controversial figures sitting down for an interview. One is Donald Trump, the other, Elon Musk, one-on-one. We will discuss what to expect. Will there be fireworks and of what sort? Interesting stuff there. The Musk C interview.

Shares of Donald Trump's media company Truth Social or Trump Media and technology as it's more formerly known are down today, about 7% though up almost 40% year to date. The company reporting results late Friday, a net loss of $16 million on revenue of $837,000. And today the company's namesake is expected to be interviewed by Elon Musk. on a rival social media site called X. Steve Kovac joins us with more. I was going to say you have one guess what's rival social media site that is. Look, this is Tyler going to be the next level in that budding romance we've been watching between Donald Trump

and Elon Musk. Tonight, Musk is going to be hosting that conversation with former President Trump 8 p.m. Eastern. That's going to be on X spaces, audio only. No idea what to expect here with these two men. Musk tried this last year when Florida Governor Ron DeSantis announced he was going to be running for president, well, X kind of melted down on that one.

It was a complete disaster for the coming out campaign for DeSantis. All we know, though, two of the biggest personalities in the world are going to be broadcasting their conversation. In the meantime, Trump today made his return to X posting what seems to be a campaign video. Now, in one case, it was labeled as an advertisement, but also kind of unclear if that is a regular post or not. There are some regular posts as well.

But look, it's unclear who is. really, if he's spending real ad dollars on X. But look, last month, we do know the history between these two. Musk endorsed Trump after the assassination attempt and also has a Trump-supporting PAC that he has been bankrolling. And just today, the Wall Street Journal reporting, the PAC's mission is to convince 800,000 voters to go for Trump. The big question, though, is who is this event for and who is really benefiting on the Trump side, you know, basically talking to his own audience already, similar to that Mar-a-Lago press conference, we saw. last week. But on the Elon Musk's side, you get some good engagement on X and likely more

attention and not to mention potential advertising dollars from the Trump campaign. Is this a kind of welcome back to X? It seems like it. He's, uh, Trump has, or at least it seems to be, um, not him posting, just the way it is and the language they're using a lot of campaign videos. Again, one of them I've asked appears to be an advertisement, a political advertisement. In some cases, it was labeled that way. And if so, that is a big, telling thing for what's going on in X and True Social. Has the former president posted personally on

X yet? It doesn't seem like it. I mean, there... Was he just stuck with True Social? For the most part. Before today, his last post was his mugshot. So he did post that on X. Elon Musk, of course, famously after his account was removed after January 6, 2021, he was reinstated. Restored it. But he's been barely using it. Most of the communications on true social, but you see truth down 7% today. Of course, their earnings didn't look so great, but the fact that the namesake of that company is now going to the rival platform to do this

what I guess is a campaign event or campaign-adjacent event tells you a lot about, you know, the power he thinks of the platform. The relative power. Or it could just be, you know, playing up to Musk and cozying up to Musk. Musk is, of course, providing a lot of money that Trump needs the campaign. You're going to write you $45 million every month. Yeah. That would be a reason maybe to patronize his service. And maybe. put some ads on there as well. All right. Steve, thanks. Thanks. Good to be with you.

Well, let's get to Bertha Coombs now for a CNBC News update. Bertha. Tyler, voters in North Dakota will decide whether to legalize recreational marijuana during this November's election. The state said that early, nearly 19,000 signatures were accepted to place the issue on the ballot. North Dakota voters legalized medical marijuana in 2016, but rejected recreational initiatives. in 2018 and 2022.

Brazilian authorities over the weekend retrieved the remains of all 62 passengers from the wreckage of a plane crash on Friday in the state of Sao Paulo. Investigators removed the plane's two engines from the site and recovered the black box containing voice recordings and flight data. The cause of Friday's crash still unknown,

but a preliminary report is expected within the next 30 days. And gym operator Blink Fitness has filed for Chapter 11 bankruptcy to help facilitate a sale of its business. Equinox owned chain said its gyms will stay open and that it received $21 million in new financing from existing lenders. Employee wages and payments to vendors are expected to continue without interruption. And presumably, Tyler, you would need to keep making your membership payments as well. All right, Bertha, thank you very much, Bertha Coombs. Up next, when it comes to climate change, we often focus on carbon emissions, but methane is even more destructive to the planet.

We will dive deeper in today's clean stock. Welcome back, everybody. We talk a lot about reducing carbon emissions, but methane is actually even more destructive to the planet. One company, however, is working on technology to eat methane. Diana Oleg has the details in her continuing series on climate startup. Hi, Ty. Hey, Ty. Yeah, it sounds gross, but I'm going to introduce you to something called a mem. Not a meme.

I promise I'm saying it right. A memm is a methane-eating microbe, much like yeast that eats sugar and bread and produces substances that make it rise. Mems eat methane and produce fertilizer, all the brainchild of a startup called windfall bio. Methane is a potent greenhouse gas that traps far more heat in the atmosphere than carbon dioxide. Getting rid of it is essential to reaching global climate goals. And while much focus is on reducing methane emissions, California-based windfall bio has come up with a way to get rid of existing methane, naturally occurring microbes that live in the soil and eat methane as food.

We provide those packets of mems, and then whoever has access to that methane can capture the methane themselves, turn it into fertilizer and create the value from it. If a farmer is using the mems, they can turn around and use the fertilizer themselves. If it's an oil producer or a landfill, windfall will buy the fertilizer back from them so they get paid for capturing methane. So it's still a profitable, useful process for them. Windfall has been researching this for a decade, but just launched two years ago. I've actually been honestly fairly shocked at how high the demand is. We have customers now on basically every continent, and we have more inbound interest than we can even supply. Investors, however, say they are not concerned about it scaling quickly.

We've seen the data and feel very compelled by what we've seen thus far, and we'll continue to progress this in a number of pilots across a number of different industries going forward. In addition to Cavallo Ventures, windfall is backed by Prelude Ventures, Amazon Climate Pledge Fund, Breakthrough Energy Ventures, and Mayfield. Total funding so far, $37 million. And another benefit from using mems is that traditional fertilizer production requires a lot of energy and produces huge carbon emissions, especially in making ammonia fertilizer. Windfall Bio says they're soon launching a program with Whole Foods market suppliers, specifically their dairies, to eat up the methane. Tyler? I don't know whether you know the answer to this, and forgive me for asking if you don't,

but how are these mems deployed so that they gobble up the methane? You just sprinkle it around places that methane is produced or what? Exactly. Okay, so let's say you're on a dairy farm. You could put the mems at the end of an exhaust pipe that comes out of the dairy farm. Or if you're putting them on agricultural land, you could use tarps and put the mems underneath the tarps, and they will then suck up the methane. If it's at, you know, a smokestack or something where they often do carbon capture and they do different types of, you know, pipes that come out of that smoke state,

you put the mems there. You put the mems wherever the methane is so it can have it. It's dinner. Is there competition in this space? Anyone else in the methane-eating game? Not in the methane-eating game. There's, of course, a lot of competition in the fertilizer space, and there are different methods now being used to either capture methane or reduce methane,

but not methane-eating microbes. No other mems. No other mems. All right, the mem stocks. All right, Di, thank you very much. Diane Oleg, still to come. Starboard, betting big on Starbucks. We will trade that name and others in three.

stock lunch. Welcome back. Time for today's three stock launch where we look at Starbucks, Eli Lilly, and JetBlue here with our trade. Scott Nations, President of Nations Index. Scott, welcome. Let's start with Starbucks, which is up today on reports that the activist investor's starboard value has added a stake. Elliott management also in that stock. Wells Fargo optimistic on both activists' potential in a note this morning. are you quite so confident? No, I'm not quite so confident.

Tyler, this is a hold. Starbucks as a hold. You don't want to be the focus of activists, hedge funds, and Starbucks is the focus of two right now. As you point out, latest one is Starboard, probably best known for being the ones that told Olive Garden is start salting their pasta water. They both want the company to make changes to boost the stock price. Instead, the company has reduced guidance two times this year. It's down 20% year-to-date. Same store sales have disappointed.

And let's face it, Tyler, if you are a consumer who's feeling pinched by inflation, a $5 coffee is probably a pretty good place to start. And with the forward PE at 20, you can't even say that the stock is cheap yet. All right. So that would be a hold, which sounds a little, it sounds a little like a sell there. Scott? Not quite a gentleman's sell because we're going to let these activist hedge funds do their work. But if we get back to unchanged on the year, then I would be a seller. Right now, I think everybody is saying that they don't care so much about the cheese. They just went out of the trap when it comes to Starbucks. All right. Let's talk about Eli Lilly, gaining 10% last week. Huge earnings beat. Deutsche Bank upgrading the name to buy this morning on Strength in Munjaro and Zepbound.

Do you like what you see in Lilly? I do. Eli Lilly is a buy. Sales are surging because of their weight loss drugs. That is no surprise. But the recent EPS beat was a pleasant surprise. Additionally, concerns about capacity constraints are easing. It would be horrible for a company to have a high margin drug that everybody wants and not be able to make enough of it.

The option market, the only one of the 10 biggest names in the S&P were the option market is bullish. It is certainly not cheap at a forward PE of 52. You're paying for growth, but Tyler, so far, you're getting the growth you're paying for. Getting the growth. And they seem to be, as opposed to some of their competitors, a little ahead on being able to meet the demand, the capacity question. All right, finally, let's move on to JetBlue. The shares there having their worst day ever after announcing a $400 million in five-year convertible senior notes. This comes after posting a surprise profit at the end of July, but a capital raise here on JetBlue, Scott.

Yeah, this is a sell. The company is not profitable. They're raising a total of nearly $3 billion in bonds and loans backed up by their frequent flyer program. Moody's just downgraded the company even further into junk, and their analysis was damning saying it would likely take years for the company to increase its metrics. enough to have some sort of reasonable positive cash flow and earnings in the near future. Listen, all the airlines, Tyler, are really tough businesses to be in. But you don't have to swing at every pitch, and you don't have to buy JetBlue just because we're talking about it.

If you felt compelled, just had to invest in an airline, I would focus on one of the ones that had much more foreign exposure, foreign routes, because those tend to be so much more profitable. All right. Let's get a quick thought on the markets. generally, the Dow is down about a third of a percent right now, a little bit off its lows. NASDAQ and S&P are slightly higher. What are you looking for as we sort of wrap up the summer? Tyler, we've been back and forth, at least in the S&P, above and below the unchanged line today.

Nobody can seem to really get any sort of momentum going. I'm disappointed that the market has not been able to sustain. rallies recently in the S&P, the option market is still not just scared of volatility, but terrified of it. And so I think that we're going to see more of this as August continues, you know, a lot of people away. It's going to be tough to sustain much of any move. So I think that until we get a little bit more guidance from the Federal Reserve, 25 basis points, 50 basis points, I think it's going to be a pretty sloppy August. All right, sloppy August. Scott Nations, thank you, my friend.

Nations indexes. Thanks, Tyler. And remember, folks, you can always hear us on our podcast. Always be sure to follow and listen to Power Lunch wherever you go. We will be right now. All right. Let's give you a quick check on the markets right now. The Dow Industrial is off 161 points, about a half a percent at 39-335.

S&P 500 wobbling a little bit between positive and negative right now a second to go up just a little bit. And NASDAQ, slightly higher. This would be its fourth up day in the past five sessions. following that huge three and a half percent drop that occurred last week. Up a quarter of a percent right now. Meantime, shares of Disney are lower by nearly 20 percent over the past six months, as there are concerns about nearly every segment of its business, including even the money printing theme parks.

Julia Borson has more on Disney's future plans. Hi, Julia. Well, Tyler, Disney's theme parks division did show a slowdown in its earnings report last week, But the media giant is betting that the parks and cruises division will drive growth for the company over the long term this weekend at its fan event, D23, showing how it plans to invest $60 billion in its parks and experiences division over a decade, a commitment which it announced last year. The Magic Kingdom is getting a new Villainsland along with an upgrade to frontier land to expand the Florida park. California Venture is building two new attractions, and Disney announced four new cruise ships in addition to the four-up. others already in the works and the five already at sea. Morgan Stanley with an overweight rating on the stock saying they see the expansion of Disney's Experiences Division as notable, given its long

history of high and rising return on invested capital. As the company's linear TV businesses struggle, CEO Bob Eiger showcased new films designed to keep up the box office rebound that we've seen this summer led by Inside Out 2 and Deadpool versus Wolverine, building on the success. of those franchise films, five of the seven films Disney featured were from popular franchises, including Toy Story 5 and Frozen 3. And as Disney makes its diversification push into the fast-growing epic games, with the strategic investment into the company announced earlier this year, now they unveiled how they planned to really integrate those characters into Fortnite, starting with some new Marvel characters, which will be part of the game as early as this week.

Back over to you, Tyler. One of the things that really leapt out at me there was how much they're investing in cruises with four new boats in addition to the ones that they're already building. They're going to become a big cruise line, not that they aren't already. Yeah, this is really part of their whole experience as business, the idea that if you are interested in bringing your family to the park, whether it's in Florida or California, then those big Disney fans really want to spend more money and more days and have this really immersive Disney experience. while they stop off in various ports. So this is really based on all the research and the data of what Disney has seen about their fans. And what's so interesting to me is the fact that now

they have this additional touch point with their fans. They have the direct relationship with the fans of the parks, but also through the streaming service and to those dedicated fans, they could really start to market things more through Disney Plus. So that's another advantage of having this D to C relationship of the streamer, that they can market things like a, like a cruise ship experience to them.

A little bit short on time, but in terms of scale, the expansions or the new features at the parks, how do they rank? Biggest ever or what? So when they announced this last September, they said they were doubling their investment in the parks to $60 billion over 10 years. So really doubling down on that Parks and Experiences Division.

All right, very interesting. Always interesting to hear about what the House of the Mouse is doing. Julia Borson, thank you very much. And thank you, folks, for watching Power Lunch for a Monday. Closing bell will start in just a few seconds time. We'll see you back here tomorrow.