Power Lunch - Jobs Friday 3/8/24

Episode Date: March 8, 2024

Stocks have turned lower this afternoon as markets digest the jobs report. 275,000 jobs were added in February – which was more than expected. Wages ticked up, but less than forecasted. And the unemployment rate jumped to 3.9%. Looking at the weekly market numbers, the S&P 500 is the only of the major averages set to finish the week with a gain. Plus, Bitcoin is on pace to close out a strong week with a new record, crossing $70,000 for the first time ever. 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. Welcome to Power Lunch. Alongside Courtney Reagan, I'm Tyler Matheson. Glad you could join us. Stocks have turned lower this afternoon by a little bit as markets digest the jobs report. 275,000 jobs added in February. That was more than expected. Wages ticked up, less than forecast, and the unemployment rate did jump to 3.9%. Looking at the weekly market numbers, all the major averages set to finish the week in the red. Bitcoin turning to close out a very strong week, though, with a new record crossing. 70,000 for the first time ever. We were just talking about it crossing 61,000. A little bit off to 70,000, but there it is at 68,000 for something that may or may not have value. We begin this hour with a bunch of news on big tech. Most of it not so good. Microsoft still struggling to deal with a hack attack.

U.S. companies increasingly targeted by disinformation campaigns, a threatened ban on TikTok and a look at the troubles brewing inside of Google. First up, though, Amon Javers on that Microsoft. hack, Amon, it happened in January, but I guess the ill effects are still affecting the company. Tyler, that's right. Microsoft updated their 8K this morning disclosing that they've been unable to stop this ongoing cyber attack by an entity that's believed to be the Russian SVR, which is Moscow's formidable foreign intelligence agency. Microsoft says the attacker, which in cybersecurity circles is known by code names, including Midnight Blizzard, Nobellium, and Cozy Bear, has been using information stolen from corporate email systems to gain access to some of the company's

source code repositories and internal systems. The company says the Russians have stolen secrets shared over email between customers and Microsoft that Microsoft has been reaching out to its customers to assist them in mitigating the damage here. Now, the company also says the volume of some aspects of this attack have increased by as much as 10 times in February. So this is clearly a serious an ongoing situation. It's worth noting that Microsoft first saw this campaign in January, and now here we are two months later, they still have not been able to push the attacker here out of their systems. Microsoft's language around this attack has been particularly dire, saying in January that given the vast resources of a nation-state attacker, we are shifting

the balance we need to strike between security and business risk. The traditional sort of calculus is simply no longer sufficient. and saying today that this attack reflects what has become more broadly an unprecedented global threat landscape. Tyler, back over to you. All right. Damon, thanks very much. Wow, I mean, Amon, while you're here, we want to ask you actually about a couple of other things. About a new warning specifically for U.S. companies from the intelligence community. This is, gosh, got a lot of dire news for us here today.

Yeah, that's right, Courtney. A new warning today to American companies from the U.S. intelligence community, the alerting corporate America of the threat of targeted Chinese disinformation campaigns. Normally when we think of nation state disinformation efforts, we think of these vast media campaigns designed to affect election results or to sow division in society broadly. But these are narrowly tailored local campaigns designed to oppose company plans to open new plants or mines or facilities. These can take the form of phony nimbie-style opposition to development or even phony

environmental activism online, complete with fake American personas designed to inflame real opposition in the real world. Now, China's goal here, they say, is to slow down U.S. development of resources that are crucial to the American high-tech industry. Now, in an exclusive statement to CNBC, National Counterintelligence and Security Center Director, Mike Casey says, some Western critical minerals firms competing with China have found themselves targeted by disinformation operations designed to damage their reputation. and undermine new projects. This can impact a company's bottom line.

In today's world, companies need to be armed with response plans that they've tested and are ready to action when the disinformation targets them. Now, this warning follows a speech that Casey gave to business executives in Alabama earlier this year, in which he cited an incident in Texas where fake social media accounts sprouted up claiming a rare earth project in that state would expose residents to radiation and environmental damage. The incident, which happened in 2022, was codenamed Dragon Bridge by cybersecurity experts at Mandiant. The firm found that Texas campaign was part of this global effort targeting rare earth projects in Malaysia and elsewhere around the world, guys. So something else for companies to watch out for.

So these attacks would be to achieve a kind of commercial advantage for what, for Chinese-backed companies and state-owned enterprises? What U.S. intelligence tells me is that this is all about just throwing some sand in the gears for U.S. manufacturers of high. tech equipment, delaying their access to these rare earth minerals and other products that high-tech manufacturers need inside the United States. So the idea here is if you can throw up fake NIMBY-style opposition or environmental opposition, that can tick off real opposition by real local people who see that online and say, hey, wait a second, I'm against that project too. And that can cause problems for American miners, American businesses, plant owners, and the

like. The whole thing here is geared toward China's strategic advantage in that area. All right, Amon Javers, thanks very much, reporting on threats today. While U.S. companies find themselves being targeted by foreign governments, the U.S. government is targeting Chinese companies, specifically momentum gaining against TikTok as the House Committee unanimously voted to approve a bill that could lead to the platform being banned in the United States. Lawmakers argue the bill is more of a national security measure against TikTok's owner bite dance

and less really to any threat posed by TikTok itself. Let's bring in Danny Savalos, NBC News and MSNBC legal analysts and Andrew Sellepac, social media professor at the University of Florida. Professor, let me begin with you to sort of describe what the sensitivity is to TikTok and bite dance its parent. Well, there's a couple of different issues that are going on. The first is from a data security perspective, and that's one of the big issues that we're hearing about. And it's how the Chinese government could, in essence, get access to the 170 million American users who are on TikTok their data and use that data for various potentially nefarious purposes, including spying on journalists, spying on politicians, depending on who's using it. The other big and significant issue is how the Chinese government could essentially manipulate the algorithm and provide different content to an American audience or a foreign audience, as opposed to, to the content that the Chinese audience sees.

So we know, for example, that China, young people are seeing content that encourages them to be engineers, doctors, good citizens. Whereas here in the United States, the content is much more about having young people create provocative dances or having a lot more sort of dissensus when it comes to our political system. So we know that there's two significant issues

from those two perspectives that Congress is sort of very worried about, and justifiably so. Danny, you know, banning TikTok would make a lot of parenting decisions very easy. But that aside, obviously there are significant free speech issues here. There are censorship issues here. Walk us through a couple of those items that ought to be of concern. Well, the First Amendment is certainly implicated, but how? On the one hand, a foreign company doesn't necessarily have First Amendment rights here in the U.S.,

But the rights that may be implicated are the rights of those 170 million users in the United States. They may have not only a right to speak on the platform, but also the Supreme Court has said that people have a right to receive information as well as part of the First Amendment, and that can include a right to receive that information from abroad. One major case in the Supreme Court many years ago involved a situation where Americans had a right to receive communist literature from. other countries in the mail. So there is this First Amendment right. It is implicated, but the First Amendment is not absolute. This is only stage one.

Stage two would be deciding whether or not the government, their interest, is substantially related to this legislative fix. In other words, the government has to have a really good reason to infringe upon First Amendment rights. And their reason would arguably be that they are protecting the United States from foreign governments. Andrew, earlier on in sort of the beginning answer, you were talking about collecting data from journalists or from politicians and that the worry is it would be used in nefarious ways. But didn't President Biden just recently joined TikTok as part of his election campaign? I mean, what kind of data would be gathered and used in potentially harmful ways?

And why in the world did Biden sign up for TikTok then? Well, there's two questions there. And I think probably the more significant one is why did he sudden sign up for TikTok? And I think that is an obvious answer, and that's to reach a younger audience. You can look at all the polling data that indicates that his numbers with younger audiences has been hurting. And along those same lines, one of the issues that I don't think has necessarily received a lot of attention is the fact that a lot of the younger people who are upset with him have been upset because of his response to what's going on in Gaza. and we know from research, we know from a lot of discussions that are going on online,

that a lot of the discussions about what's going on in Gaza has been on TikTok. So if we look at it from that perspective, yes, he's trying to reach younger voters on the platform, one and two, one of the reasons why potentially the Biden administration might be behind and might be supporting this legislation and a lot of members of Congress is because of the content that is actually being produced on there and how it's creating a negative reaction for them in the upcoming. coming election. As for the data, which is, you know, again, the significant issue, we also have to keep in mind that all apps, all websites sell data, and it's accessible to our government,

any government, any company that wants to purchase it, including the Chinese government. But what I think a lot more of this concern kind of comes from is what data is TikTok specifically collecting that might be different than data that, say, Facebook or Instagram or Snapchat is collecting and then how they're using that data to see maybe who journalists are contacting Hong Kong, mainland China, or around the world. Danny, what is the bill refers to national security interests. What are the national security interests that are threatened by TikTok? Well, the reason that wording, that language is in the bill, of course, is they are trying to

insulate in advance a constitutional challenge by putting in the bill saying, hey, in case you're wondering future court that hears this case, national security is our compelling interest. And that is why if the court finds whatever court in the future hears this issue, if the court finds that this is infringing on the First Amendment, we've already put some of the magic words in there. Because if the interest is important enough, it can withstand what's called strict scrutiny, the highest test of constitutionality whenever fundamental rights like the First Amendment are being infringed upon. But again, it is a two-step process. First, the First Amendment has to actually be involved here.

It may be the case that users don't have a constitutional right to access TikTok. But there is another Supreme Court case that even gave convicted felons the right to access social media. So the courts have recognized that social media has become such a part of our culture that there may be an increased right to access it in a way that we just didn't think about maybe two or three decades before social media even existed. Danny, how likely is it that TikTok will be banned here in the United States if it does not divest from its parent company, bite dance? That's the magic question, really because the second part of your question was the conditional divestment.

An outright ban would be more susceptible to constitutional attack. So that's why legislation is cloaked like this to say, well, okay, if you divest, you're not banned. That's just an additional step to try and keep this federal legislation from being overturned by a lot. court. And just as a little asterisk here, federal legislation is more likely to be constitutional than state legislation, as we saw in Montana. Not only is the First Amendment implicated with state legislation, but also is something called the Commerce Clause. An individual state can't unduly burden interstate commerce by saying, for example, if Montana said, only red cars in the state of Montana, that would obviously unconstitutionally burdened all kinds of commerce because so many

trucks with any red on them would have to pull off on the exit and avoid. Montana. Wow, fascinating stuff. Thank you so much. Danny Savalas and Andrew Salapak. Thanks for joining us on this one. Now we're going to turn to Google, the company firing an employee who protested at an Israel tech event, part of growing dissension inside the company. Jennifer Elias wrote that story for CNBC.com and she joins us now from San Francisco. Jennifer, first of all, just sort of give us the rundown of what happened here, what the employee said and why the employee was fired as a result. Sure. So as Google Israel director was making his keynote speech at a tech conference in New York Monday, a Google Cloud engineer stood up and protested Google's Project Nimbus, which is a billion-dollar artificial intelligence contract with the Israeli government and military.

He was escorted out of the building and it was captured on camera, went viral online. We found that the company fired him yesterday, reasoning that it was interfering with an official company's sponsored event. But we also found this week that Google prematurely shuttered an internal discussion forum in the company ahead of a planned International Women's Day summit after a swarm of comments about the Middle East crisis and Palestinian women gained popularity in the forum. One example was claiming the company's new AI chatbot Gemini was showing bias in its search results. And those are some things that we found happening this week and you can tell the dissent has been growing and it's been harder for. the leadership to kind of quell this.

If that was just this week, I mean, I imagine there might be other incidents that we may not know of right now or yet. I mean, is this part of a wider culture issue at Google? I somewhat recall back around the 2016 election, there were issues as well, sort of with free speech among employees supporting different candidates. Right. Well, Google has always, since its founding, fostered this sort of open source, open discussion culture and you know as it's ballooned its workforce it's you know needed money in

other areas that hasn't kind of grown on trees for them very easily it's had to kind of crack down and become what is you know a normal corporation however it still tries to keep the spirit of openness so it's always struggled to have this balance more so than other companies because of how essential it was to the culture I mean employees were recruited on this you know idealism and speaking out dissent. The founders did it themselves before stepping down. So, yeah, this is something that was sort of inherited to current CEOs, Sennarpa Chai,

and something he's had to balance. What has Google said either about the termination of the employee? I assume it is simply that this individual was disrupting a company function. It had nothing to do with the content of the messaging that that person said. but in the other case where the chat or messaging service was swamped with comments about the Hamas-Israel conflict, what does the company said there, if anything? Right. So the company actually hasn't addressed specifically the Gemini example.

For example, the Gemini chat bot kind of showing bias according to what the employees had found and what we found too when using it. As far as the firing the employee, they claimed it was an official company-sponsored event and it created a disruption that violated its policies, though it didn't tell us what the policy was. But it's a little tough because at the same time, you can see in that video, as he's being escorted out of the building, the Google Israel director is actually saying one of the great things he loves about working at Google is the democratic values and the ability for employees to have differing opinions. And so you really have the leadership, and this has been an ongoing problem, saying two different things and kind of acting two different ways and expecting the employees to kind of catch up to that. So what was the chatbot asked and why was its response, if any, and why was that response regarded as insufficient or biased?

Well, one example we found was an employee tested asking Gemini chatbot if women in Gaza deserve huge. human rights and it actually didn't have results. It said check it out on Google search or look it up separately. So it gave no response to that. But when asked about other countries, including France, for example, it came up where Gemini responded saying, absolutely they deserve human rights and had several bullet points showing why they did and backing up that assertation. So doing things like that, that's just one example of what employees found.

So it was the absence of an affirmative response in response to a question that was posed about Gaza specifically and then posed in a different context about France and whether women should have human rights. And it was a pretty straightforward question, yeah. All right. Jennifer, thank you very much. We appreciate it. Thank you. All right, coming up, despite the Fed's hopes, the economy is still running a little hot. The jobs report coming in higher than expected. More on that ahead. But first, as we had to break, a quick power check. On the positive side, Etsy up around 5% on the negative. Costco, sales coming out a little lighter than expected.

I've been doing my part. That's your power check. We'll be right back. Welcome back to Power Lunch, everybody. Let's get back to this morning's jobs report. 275,000 new positions added in February. Mr. Santelli looking at the reaction in the bond market. Rick. Yes, Tyler. We have a special guest today. Peter Cher from Academy Securities. He's the macro strategy. and I like going macro. Peter, welcome to Chicago, one of the few people exchanges at the CBOE. It is awesome. It is awesome.

Okay, here's what we're calling today's piece. Truth or Scare, with respect to January data. Now moving into February, we had today's jobs report. Next week, CPI, PPI. What did you think of today's jobs report, considering jobs last month was $353,000, and boom, $167,000 and two-month revisions? I was with the jobs report in that scare category. I think it was very underwhelming. Not only did you see unemployment rise, you saw, even within the jobs,

a lot of part-time jobs were created and a lot of full-time jobs were lost. That does not seem healthy in this environment. You know, we had a discussion about this this morning on Squawk Box, and it was brought up and accurately that when you look towards history, many times a strong economy sees increases in part-time jobs. But you've said it a little different this time. Right. I think in the past you see the economy growing, so you hire people part-time,

then you make them full-time. I think a lot of things have rolled over and travel, for example, is rolling over a little bit. So you're turning people from full-time jobs into part-time. That is negative. It's slowing. And it's happening at a really bad time where debt's rising again. Consumers are getting tapped out. And the other thing that I was really looking at this week was on the Jules report, they come out with the quit rate.

And the quit rate was now lower than it typically was throughout 2016 to 2019. So the job data is not this great job market anymore. You can't turn around to get a job. I think we have to start facting that in. You know, in another area that disturbed me today, now I understand that last year, we had a 3.4% unemployment rate. Okay? Now, this year, so far the low has been 3.5. However, to get a lower unemployment rate than 3.4, you're going back to 1953.

And all of a sudden, now we see 3.9% today. Basically, it jumps a half a percent from 53 to a two-year high. What do you make of that? It always makes me nervous when you see that rate of change. Did people who needed that job lose their job? And if it's true that the hiring's going down, part-time jobs are all that available, what happens to spending? So I think consumer spending, which has been a big driver of this,

and frankly, a surprise many people, is no longer looking that good. Credit card debt is back above trend line. All these things that we talked about for two years post-COVID no longer exists. So I think we see rolling over. And another thing, we've been showing charts while we're talking. And if you look at twos and tens together, what you'll notice is that they both dip, but now they're both coming back. Two years actually coming back a bit stronger.

Short maturities have taken the lead on being a little stubborn with regard to going down and yield. What do you think that's all about? So one, I think people are starting to realize it's a pretty narrow window for the Fed to cut. I do not think they can cut in September or November meeting ahead of the election. It will be viewed as political, whether it is or otherwise. So I think you're starting to think maybe one, maybe two cuts is all you get. And then at the long end, I think as people start campaign mode, and maybe the state of the union last night is the start of the campaigns,

people are going to get scared about the deficits again. And I think we're going to see tens go through 450, maybe towards 5% like we did last September, when all anyone focused on was the deficit. Right. And the long-term charts right now very quickly, we see that we're basically at a four-week low-yield close in twos roughly, about six weeks in tens. But we're still holding 4% and I agree. Next week, CPI and PPI is going to tell the story. Peter Cher, thank you for joining me in Chicago.

Courtney, back to you. Always great energy from Chicago in the pits. Thank you very much, Rick and Peter. Well, the stars are aligning for Hollywood. the Oscars air on Sunday, putting a close to a film season filled with strikes and controversy we'll discuss on Power Lunch Returns. A major theme in the oil patch is consolidation with more than $230 billion worth of upstream U.S. deals in last year alone.

Pippa Stevens is here with what that means for investors. So we've seen a record year consolidation in what some are now calling Shale 4.0. And a major driver of this is the need for companies to secure inventory. So they're looking for the best acreage, the best undrilled resources so that they can grow, maintain, maybe even grow their production looking forward amid concerns about peak shale. And so now that's led to a lot of consolidation in the Permian, of course, by far the most important oil basin. And so we have this chart from Rastad Energy, which shows how large the largest players have now become. You can see Exxon and Pioneer once that deal closes, if and when I should say it closes.

They're by far the biggest driller there, followed by Chevron, Diamondback, and Endeavor, as well as Oxy and Crown Rock. And now, looking forward, more than 60% of the remaining drilling resources in the Permian are now owned by just these six players. And so what that means for investors is Evercore ISI has talked about this theme of winner-takes-all within the global upstream sector. So as you can see there, average market cap has about doubled over the last decade for the S&P energy constituents, while the number of companies in the sector has been all but cut in half. And so that's, again, created this extreme concentration with Exxon and

Chevron now making up about 43% of the overall market cap. And also, we have to remember that energy has been very much out of favor. And so it's hard to attract new money into the sector. And if you are a generalist investor with a very small allocation, you're going to focus on the biggest names simply because that's what you know. However, and there's always a however, this also creates opportunity. So Rob Thummel said that investors should look beyond just these upstream players. They should look at things like gas and, you know, focus on EQT, the peak. Dan Pickering said that if in one energy comes back into favor, investors will look further down market cap names like Permian resources, vital energy. So concentration, everyone flooding

into the same names can also create opportunity. Did you say in terms of acreage, Exxon, and Pioneer have the most acreage out there? And who's next and next and next? Exactly. So they're both the biggest thrillers in the Permian once that deal goes through. And then they also have the longest term looking forward. They have the most undrilled locations. And that's what's really important because now that, you know, shale has been around for some time, all the best locations have been drilled. And so the ones that are still the most profitable, where you get the most bang for your buck, are dwindling. And so that's why companies are focused on specific companies within specific basins within the Permian. You really want that prime acreage to show

investors, show Wall Street that you can continue to grow your production looking for without spending heavily on new exploration. As we look at the production there, you can see that Exxon and Pioneer are way ahead of the others. The others are kind of bunched, but they're not insignificant, but bunched. Pippa, thanks. All right, shall we go to Bertha Coombs for a CNBC News Update? Why not? Why not? Thanks, Tyler. An American jury has found the former president of Honduras guilty today of conspiring to import cocaine into the U.S. Prosecutors say Juan Orlando Hernandez received millions of dollars from trafficking organizations in exchange for allowing large amounts of the drug to pass through his country on the way to

the United States. The United Nations claimed today Iran is to blame for the physical violence that killed a young woman in 2022. Masa means death while in custody of the so-called morality police triggered massive protests led by women and girls in the theocratic regime. The UN also said Iran committed crimes against humanity in its response to the protests, including murder and torture. And the Pentagon releasing a report to today claiming sightings of UFOs over the past century are not from alien spacecraft. The congressionally mandated 63-page investigation also found that there is no evidence of the government covering up knowledge of extraterrestrial technology. I'm sure on Reddit that they

are disputing that, Tyler. Yes, how much of it do we believe? There'll be plenty of suspicions there. Bertha, thank you very much. All right, coming up, the state of the Union, and the markets following President Biden's address, investors trying to figure out what it all means, the election that is, for stocks. We'll discuss that, and more next. Welcome back to Power Lunch. The major averages turning lower, despite a strong jobs report overall. Our next guest just raised her target on the S&P 500 for this year to a range of 5,400 to 5,800. That's up from her original forecast of 5200 to 5,400. Marianne Bartels is chief investment strategist at Sanctuary Wealth.

Marianne, thank you very much for joining us. I guess we'll start there. What gave you the impetus to want to raise your S&P 500 forecast? Well, earnings came in better than expected. We've been of the belief that earnings were troughing and growing. And what's really amazing is that with the higher interest rate environment that we've been in, and with the inflation environment, we've been able to be in. You know, margins have actually been able to slightly expand.

In addition to that, we're seeing stocks respond. And I'm seeing moves that I have not seen in decades in terms of price behavior. And not just here in the United States. There's something going on globally. We have Japan breaking out to a record all-time high that we haven't seen in 34 years. We're seeing Europe breakout to all-time highs, even though their economy still remained pretty weak. Even Australia broke out to record all-time highs.

So there really seems to be a global momentum. that is really benefiting markets. And I wouldn't be surprised if markets are factoring in how AI is going to add productivity to businesses, and that's going to trickle down into earnings for companies. But we still have two sizable events that you sort of didn't mention. We've got the election. And, of course, whatever the Fed decides to do for the rest of the year. How does that factor in?

The S&P 500 under 5200 right now, 5800, a long way to go from there. So with the election, I understand people are very passionate about their candidate. But at the end of the day, it's about earnings. And when we look at the legislation that President Biden has put into place between the Infrastructure Act, the Chips Act, and the Inflation Protection Act, that is adding to businesses' bottom line. I think that's baked in for this year. That's another reason why I have confidence that markets can go higher. and getting to the ability for the Fed to be able to cut rates.

We had jobs data today. I think that data had something for the Bulls and something for the Bears. I think it's really a Goldilocks. I do think that the Fed will do a checkmark that it will give them the ability to eventually cut rates. I think they want a little bit more data. So maybe as we move into more of the summer months, like going into June, we may actually see rate cuts. And that will be also very positive, I think, for the market. If I'm reading my notes right, you're basically saying go with the Mo. And the Mo, as in momentum, has been growth, big cap and tech. Why do you favor those areas over value and smaller cap?

You know, Tyler, that's a phenomenal question. I believe we're in a secular bull market. Secular bull markets last 15 to 20 years. And you have to look at the leadership and where that leadership is because that's going to maintain throughout that secular trend. And that's the technology sector. And when you dive down into that, I know we keep talking about the Magnificent 7, the Mag 4, it used to be Fang. It really is semiconductors. And I'm keeping my eye on the semiconductor space as the major leadership, and I still think we're going to see significant high. So I do think that there is a pivotal change that's coming from artificial intelligence or AI that we're all trying to learn and factor in.

So those are my thoughts on that space. All right. Most of the, just pointing out, we have to leave it there. I'm sorry to say, Marianne, but meta, advanced micro and Taiwan semi are among your picks in that area. It doesn't get much bigger than those. Mary Ann Bartels. As I said, I still like the mega caps.

I still think this is going to stay mega caps. When you still have scarcity of earnings, growth outperforms value. And I think as long as the banks struggle in here, especially with concern around regulation, although it looked like Powell dyed that back a little bit, I think that's going to put a cap on financials. And I don't think you can have a strong rally in value without the banks. All right. Marianne Bartels, thank you very much. Sanctuary Wealth, Chief Investment Officer.

Still ahead, streaming strikes, snubs. Hollywood's tumultuous year coming to an end, but not without some major recognition. Our Julia Borsden will give us her 2024 Red Carpet Report from the Oscars. That's next. It's that time of the year again. The Oscars are on Sunday night.

So what does it all mean for the movie industry and the media giants? Our Julia Boorston joins us now with the latest. I definitely need your expertise and rundown. I got to win my Oscar poll. I got to get that in soon, Julia. That's right, Courtney. I'm here.

I'm on the red carpet, but it's covered by white plastic. And this year's Oscars on Sunday come at a pivotal time for the entertainment industry as concerns about AI ripple through Hollywood with big questions about the potential impact of new generative AI tools such as Open AI SORA. And while the debut of Warner Brothers, Dune 2 last weekend, doubled the domestic opening of the first installment. And it's already surpassed $200 million worldwide in just six days. It comes as the box office year to date is still down 13% from last year's numbers. So now investors and industry watchers are looking ahead and wondering if the studios have any franchises that could yield a surprise like last year's Barbenheimer or whether the box office will continuous decline from pre-pandemic levels. So now the race is on for the traditional studios and

the streamers to prove the critical value of their content investments with the awards that are key for attracting top talent. Now going into the Oscars, Disney Studios have the most nominations. 20, including for its films, Poor Things, while Netflix has 16 bolstered by Bradley Cooper's Maestro, which has seven nominations. Universal has 18 nominations led by Oppenheimer and the holdovers, followed by Apple with 13 and Mortar Brothers with 9 for Barbie. But Oppenheimer is expected to sweep the show. It has the most nominations of any film with 13 total. It's followed by Poor Things with 11 and Killers the Flower Moon from Apple TV with 10. With the blockbuster performance of Oppenheimer and also Barbie, ABC is hoping to keep up the ratings rebound.

The last two years saw a bump in viewership for the Oscars after the show hit an all-time low in 2021. Back over to you. Well, what about the, I mean, I'm amazed that we now consider Netflix and Apple Studios. I mean, that tells you all you need to know about the transition in the world. I could have, Oppenheimer could have been a little longer for me, you know. It was only three hours and a quarter. But is the betting that Oppenheimer is going to sweep the table here pretty close to? Yeah, I mean, that's the expectation.

If you just look at the critical acclaim of the movie, and it really sort of hits all the key boxes when it comes to an Oscar movie. You have these sort of epic performances. It's based on a very famous book, our very successful book, as well as the fact that it's really touching on some key issues for society. It's really expected to get a lot of votes there. And then, of course, there's some concern that Barbie, though nominated for Best Picture, did not see Greta Gerwig nominated for Best Director. A lot of people have said about that, including myself.

I thought that was a really phenomenal film. So I think we've had these two movies last year that really defined the summer, defined the box office. I think people are going to be tuning in to see how it all turns out. All right, Julia, we'll be watching. Thanks so much. Appreciate it. All right. shares rising nearly 5% today on strong holiday earnings. Our three-stock lunch trader will tell us

if now's the time to mind the gap. We'll be back. Welcome back to Power Lunch. It's time for today's three-stock lunch. Today we're trading three names that are moving higher in the intraday session despite the mixed trade coming from the broader indices here with our trades. Gina Sanchez. She's leader advisor's chief market strategist. Also, you know her as a CNBC contributor. So first up is Biogen. The stock jumping after the FDA delayed its decision on Eli Lilly. rival Alzheimer's treatment, but shares are still down over 10% this year. So Gina, what's your trade on biogen? So we're still a sell on biogen.

This is a tough one because there was a lot of expectation going into the launch of the Alzheimer's drug, Lecombe. And the challenge there was that their sales did not meet expectations. So they underperformed there. They argued that they had patient access issues and other logistic. issues. The postpartum depression drug also has not performed as expected, and so they've announced efforts to cut costs by the end of the year. And while that will save around $400 million and help earnings, it's not the sort of story that investors can get behind. All right, let's move on next.

So that one is a sell. Let's move next to DocuSign. Shares are higher after the company beat fourth quarter estimates on top and bottom lines, provided upbeat guidance for the first quarter. Shares more than 30% since the start of December. Can DocuSign keep on rolling? So we're neutral on this one. We could get, we could get excited about it. The challenge to doxy sign was that it was a really, really, it was a pandemic darling. It came out when, you know, having to sign things remotely was a challenge. They came out with a very, you know, nice, beautiful, slick, simple product. The problem was was that Adobe quickly caught onto that train and Adobe Sign has really proven a significant competitor in quite frankly a much more mature

ecosystem that Adobe has built out. So DocuSign has actually done better than I would have expected because they have continued. They have kept their base of customers and they are continuing to focus on operations. What could get me more excited would be to see them continue to improve and expand the product. But they are doing everything that you should see. They're building a solid base and their margins are now positive. So this is all good stuff for DocuSign, but I think we need to see a little more to get really excited. Okay, so you like it, but you're giving this one a neutral. DocuSign is higher by 5% intraday. Finally, we have shares of Gap Gap, Inc. shares are popping after the company's holiday earnings beat analyst expectations and Old Navy returned to growth

for the first time in over a year. The stock's still down. in 2024 despite today's move, but shares are up more than 80% over the past six months. Gina, where do Gap shares go from here? Obviously, they've got a new CEO and sort of reworking the strategy. Yeah, so we're a buy here. And clearly the new CEO is getting things done. But there's actually a big broader move across retail and Gap is a beneficiary of that. And they are benefiting from feeding into the trends. And so they're making the right moves idiosyncratically, but the broader move in retail is very strong. And we think that that's being lifted by two things. Number one, you see positive real wage growth continuing. And so

people are making more than inflation in their wage growth. And that is clearly benefiting retail. There was a lot of conservative guidance, in fact, going into Q4. And they smashed that guidance and were able to provide less conservative guidance going forward. So that tells you that those wages are feeding into retail sales and the inflation trends still continue to fall. Yes, we saw that uptick and PPI, but margins are expanding and GAP in particular has seen margin expansion. And so those two things are going to benefit Gap, but it's going to benefit the broad industry. Yeah, the margins were particularly impressive there. They said they're trying to keep their promos under control. And the CEO said to me, and I just have to read this quote because

I think this was funny. He said we devolved from a pulp culture brand to a clothing retailer. Today, we're getting our vibe back. All right. I like that. All right. Gina, thanks very much. Gina Sanchez. Have a great weekend.

Thank you. Well, stay right here. Power Lunch is coming up next with a little bit more. We've got three minutes left in the show. A couple of more stories you need to know about. Let's get right to it. Shares of Amling's pharmaceuticals plummeting 80% today. After the company said it's ALS treatment, failed phase three trials,

and the company may withdraw the drug from the market. Co-CEO's Justin Clay and Josh. Cahawain said they are surprised and deeply disappointed by the trial results. This was an interesting one. The FDA had initially and controversially approved this drug for use against ALS in a second stage trial. But now the drug has failed a stage three trial. The company is now suspending it. Regulators in Europe had similarly withdrawn approval from the drug.

Frustrating for everyone in the ALS community for certain. And a potential scandal brewing in college basketball. U.S. integrity, which is the gambling watchdog, flagged yesterday. today's game between UAB and Temple for unusual activity. The game opened with UAB listed as a one and a half point favorite. That spread ballooned as high as eight before closing with UAB favored by seven. At this point, no one is alleging any wrongdoing, but a move like that is very unusual. So what happened? Maybe like what happens in the options market, people see a lot of action on one side

and decide to follow the sharp money. More nefarious possibilities, though, do include someone knowing non-public information about one of the teams, or, in the worst case scenario, point shaving. UAB did cover the inflated spread, winning the game 100 to 72. CNBC reached out to Temple and the NCAA. Both say they are reviewing it, but can't comment. This opens up a lot of questions as sports betting becomes more prevalent. The betting on college basketball, all kinds of college football,

pro sports is just really growing amazingly. And it does open up suspicions sometimes when you see a spread move like that. It has to, right? That's a strange move. Well, today is equal pay day, the date that symbolizes how far into the year women must work to earn what men earned in the previous year. Women in the U.S. earned about 20% less than men, 83.6 cents on the dollar. On average in 2023, that's according to the Labor Department, that amounts to a difference of $10,000 a year, about a half a million dollars throughout a career. The gaps are even bigger for many women of color.

The gender pay gap is slowly closing, narrowing from 82.81 cents. a decade ago. We're making progress, but we're still not there. And of course, today is International Women's Day. It is slow progress, but obviously an important thing. It is. All right, folks, we're going to leave it right there. Thanks for watching Power Lunch today. The market's a little bit tepid reacting to the Jobs Report. Thanks for watching Power Lunch. Happy Friday. Closing bell starts right now.