Power Lunch - Jobs Report, Weight Loss Drug Approval & Mega-Cap Stocks Mature 2/2/24

Episode Date: February 2, 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 Friday afternoon, everybody, and welcome to Power Lunch alongside Courtney Reagan. I am Tyler Matheson, all three major averages. Higher right now, set to end the week in the green as well. Let's call it the first week of February, Groundhogs Day. For the Dow, that is up 13 weeks of the last 14 if we end higher. The Dow has only been down one on the week once since the end of October. Markets reacting to a stronger-than-expected jobs report. Also, some strong tech earnings. Look at meta. up 20% on a trillion-dollar company that is $200 billion of market cap gained. Zuckerberg did not have a good day in front of Congress on Wednesday, but his stock is having a good day today. No company has ever added $200 billion worth of market cap in one day.

Court? Wow, that's pretty incredible. Results also in from Amazon and Apple, Amazon higher by 8% that's boosted by higher holiday sales and Apple off its worst levels after concerns about slowing iPhone. sales. Lots of movers in that text base, Tyler. We start court with the markets and the strong jobs report that is causing investors to adjust their thoughts on when and how fast the Fed might cut rates. 353,000 jobs added nearly double the expectations. Wages also came in stronger than expected. That giving the market a little bit of pause. Let's bring in a new face to power launch.

Frank Marzano. He is managing director with Wealthspire advisors. And our friend Sirat Sethi is back, managing partner and portfolio manager with DCLA. He is also our guest host for the hour. Surat, good to have you with us. I'm told that you and Frank know each other. You have a history here. We have a good history. We have a good history here. Is he all right? He's a good guy. He is a great guy. All right, Frank. What do you think here? You're collectively, you say you're underweight equities and overweight fixed income. What does that mean in practice when you're looking at someone's portfolio, and why do you have that position right now? Well, you know, there is a clear gap between the hard data reflecting how the economy is currently performing and the soft data,

which is polls, surveys, and the expectations for how the economy will perform in the future. And we are very confident that the Fed is going to lower rates in 2024. We're very confident also that it's not going to happen until the hard data weakens. And as you can see by today non-farmes payroll report, hard data is very robust, and soft data is not reflecting the same thing. So we think that the rate hikes over the last two years will ultimately result, in a normal economic cycle leading to lower growth, lower inflation. And there's asset classes in sectors that typically outperform in that environment. And there's asset classes in sectors that don't perform so well in that environment.

So as a result, we are underweight equities, overweight fixed income. Yeah, and I see you also like gold among the things you like. So let me drill down just a little bit more tightly on what underweight means. Does underweight mean that you would typically be advising your average? customer to be 60% equities and 40% fixed income, and now you're closer to 50-50. What does it mean in practice? So each one of our clients has a target policy asset allocation, which means over time, for instance, with regards to equities, this is the amount of equities that we would

expect them to have in their asset allocation over time. So relative to that asset allocation, our clients are underweight in equities. Got it. So, right, you're with us here, too, when we started the show talking on. about talking about some of these big moves that we've seen in tech. And obviously we focus a lot on the Magnificent Seven. Moving forward, how much do you think we should allocate to those big growth names? Or is it finally time for somebody else to come in and catch some of this growth in equity prices?

So I think it's fine to own tech, right? And it's part of the Magnificent Seven. But it's the size that worries me. It's the if you own it as much as the S&P index, because when they do come down, they're going to come down hard. And, you know, if you own Facebook, you're very happy today. But, you know, if you own Tesla and you own a couple of the others. So I think, you know, to Frank's point, there are other areas.

And I know he likes staples and he likes health care, which are areas that we like, too. Because right now the generals are leading the charge. But what about the rest of the soldiers? And I think that's the opportunity in the market. So it doesn't mean you don't own tech. You can have tech in your portfolio. You just want to be diversified at this point and own some of the other sectors that haven't done as well. Frank, you like, among other things, private credit, as opposed to private.

You like private equity as well, but private credit. What does that mean and where do you get, where do you go to get it? What kinds of companies, firms, investment managers do you patronize to bring private credit into your customer's portfolios? Well, just in general, I'm not fixed income allocation. We are overweight, high-quality, short-term fixed income. And that's because the spreads in the liquid bond environment are very tight, tight at historical level. So investors aren't getting rewarded for the extra risk that they're taking in fixed income in the liquidity markets.

That is the contrary with private credit. The spreads between treasuries and private credit investments are at historical highs. And you can invest in private credit and get equity-like returns with first lien type positions. We also like private credit because we see private credit as a bridge to a brighter day for private equity companies that are looking for some type of liquidity event in this environment. And they're finding it very challenging. Banks aren't lending as aggressively as they once were. And they're going to private credit for the bridge to a brighter day where maybe interest rates were lower and they could achieve the valuations that they see. Why gold, Frank?

Gold because gold typically performs inversely to real interest rates. Real interest rates right now at very high levels, and that would mean that you would think gold would be at very low levels. Gold is at an historical high, which means that there's a tremendous amount of demand for gold, and it's likely due to a lot of the macro uncertainty that's out there. And we feel that as the Fed does lower interest rates, that will lower the risk rates, that will lower the real interest rates, and that could be the environment that could bring gold to a whole other level. Frank, thank you for being with us. Surrath said I needed to ask you about your

golf game. How is it? It's pretty good. It's better than Sarat's. Oh, there you go. All right. He said you did well at the Amex Pro Am, right? Asked what you did last year. Last year, I think. I'm a former champion. All right, former champion. Former, emphasize. All right. Thanks, Frank. Appreciate it. Thank you very much for having me. I appreciate it. You're very welcome. the surprisingly strong January jobs report having ripple effects across the bond market. The U.S. Treasury yield topping 4% today. As investors question, when the Federal Reserve can start cutting interest rates.

So let's get over to the CBOE, where Rick Santelli is standing by. He's got a special guest for us here today. Hi, Rick. Yes, hello, a very important guest. This is Casey Mulligan, economist, professor at University of Chicago, and he was chief economist under the Trump administration with the White House Council of Economic Advisors. Welcome, Casey. Beautiful trading floor, isn't it? I love this, Rick.

All right, so today we had this whopper, wopper of an employment report, $353,000, up 6,10 on average hourly earnings. If you look at year over year, up well over 4%. But I noticed the work week took a drop to 34.1. And outside of COVID, that's the smallest work week in 14 years, and the data series started in 2006. Thoughts? you know, anytime you have an outlier, that's subject to revision.

Expect them to revise that. And that also has an effect on the wage because, of course, they're taking the earnings divided by the work week to get an hourly wage. So that's an outlier on the upside. I think we'll see those both revised more normal. That makes perfect sense. It's just a numerator and denominator. And by changing the work week down with the same pay, it makes the pay look greater than it is. Now, the next topic, we've had productivity out this week.

And productivity is acting quite solid. But yet, there's lots of aspects to the economy that don't seem very productive to me, whether it's industrial policy or all the debt. The debt's huge. We're running 21% over last year, and last year was a trillion dollars. So for the first three months, we're that much higher. Your thoughts? Well, I'm a little less worried about the debt as long as these guys and ladies here are willing to buy it.

And it seems like they are. The yields are pretty low. Price is high. The demand is there, so it's a little bit hard to object to the supply yet. Okay. and on the productivity front, do you see any flies in the ointment or is productivity that's solid? Well, Sal's not the way to describe it. We had terrible historical productivity in 2021 and 2022.

And so finally, recovering some of what we forgot how to do. But we're still not recovered to our previous trends in terms of getting better and better at what we do. The other trends we're seeing is out of private business and into nonprofits and into government. And there we can't even measure productivity. So if you can't measure productivity, so there are distortions that get into the system. What about the value of the dollar? Even on a quite simple term, the value of the dollar is potentially the stronger it gets. That will have an effect on the output with respect to how they put together productivity.

Will it not? Well, it depends on the sector. So it very much affects our sectors that export internationally, yes. Okay, so international corporations. Now, next week we have threes, tens, and thirties, and that package is 121. billion. It seems like everybody pays attention to the auctions. And it's hard to dispute your thoughts. If they want to buy it, you know, if they like cake, let them eat cake. But some of these auctions have been a little bit iffy. Is the Treasury going to keep a super close eye on this?

It certainly seems to me that in the future, T-bill issuance isn't going to moderate. Right. And they have a tough job trying to place all these securities. It's a massive amount that no underwriters ever had to place before. And they have a challenge in front of them. Now, with respect to Janet Yellen and where they put the supply, where the maturities are, the market wasn't very happy that we didn't do more elongated when interest rates were low. Is this now the norm that we're going to continue to see more T-bills than anything else if the Fed's going to be potentially easy? And your final thoughts?

You know, I found resistance in the Treasury Department to that. We had talked about having maybe even consuls like Britain did during the Trump administration. Rates were low. They didn't like that. I understand. Casey Mulligan, it's been a lot. a pleasure, Professor. Thank you for joining me today. Tyler and the gang, back to you. Thank you, Rick, very much. Cort.

Yes, sir, I just wanted to get your thoughts really quickly about what we heard from the Fed earlier this week, obviously, a bit more hawkish tone than the markets were expecting, and then today we got this strong jobs report data. You think the Fed needs more data before they sort of move off of where they are. How long of a trend would you need to see in any of these data reports to see a change in order to make a change in policy? So I think we need more data. like we had today. Okay. I mean,

what it reinforced was exactly what the Fed said. So imagine if the Fed had actually gotten doveish on us. Right. This data came in, right? Because I think the big, one of the biggest mistakes

the Fed can make in an environment like this is to cut rates if inflation is still hot. Because then not only do you slow down the economy, but then you have inflation high and then you get a stackflation area, which is much harder to get out of.

So because it's lagging, I think we're going to have to wait and see, you know, what does the next month say? What does the month after that do? And, you know, if they get, any indication of inflation coming down and we don't know because wages were higher now.

Right. Or you get a slowing economy and we haven't had that. But once they see that, I think they also have to be ready to go. Because the other thing you don't want to be doing is causing a recession. And especially if you're doing it in an election year, one side is going to be a lot happier than the other. One is if you, you know, so I think they have to be very careful as to how they play this. So you think there is still a risk of recession? I think there is a risk of recession because rates have moved.

up so fast so quickly and you're already seeing you know you're seeing delinquencies and the consumer you're seeing companies not really spending cap-ex other than the tech companies that are going crazy but you're not seeing industrial companies do that as well and and you're also seeing you know housing not as robust as it is so you could I mean again a recession has many different flavors to it so you could see a slowdown but that's what the Fed is trying to do because running inflation so hot is just hard to do and especially if the economy slows down We're going to take a quick break, Sarant. Stick around.

We'll have you back. Coming up, big tech coming in hot. Apple iPhone demand weaker than expected, but betting big on the Vision Pro, Amazon punching back into the AI race, and META's year of efficiency paying off big time. We'll tackle all this and more in today's tech check. Meta, surprising Wall Street by issuing its first ever dividend. Could this be a sign of mega-caps maturing? And which others might be next?

That's the focus of today's tech check. with your Drobosa. Hi, Dee. Hey, Courtney. Well, let's talk first about why META's dividend was such a surprise to the street because it really represents potentially this broader shift within tech and Silicon Valley. It used to be that tech companies, they're growthy, they're innovative. They were going to reinvest every dollar of profit back into the business. That mentality met the mentality of the year of efficiency led by Zuckerberg himself.

And here you go. We're at Facebook, META issuing a dividend, which made us kind of think, who could be next. So we looked at the capital allocation plans of the super six. We left Tesla aside for now. You can see that Apple and Microsoft, they've had robust capital return plans for a long time, for decades. The kind of glaring omissions here remaining especially after meta, that's Google and Amazon. Amazon, of course, is almost 30 years old, but it didn't really become profitable until 2015. This quarter, everything kind of came together. Huge operating income, better margins in its e-commerce business, a growing cash policy.

So it probably could issue a dividend. The question is will it. Amazon is still known very much to reinvest back in the business like it did during the pandemic, doubling its logistics footprint. Google, that is an interesting one because Alphabet has done a share buyback, but it's resisted calls for a dividend. And that may be harder to do going forward. Alphabet is kind of your classical Silicon Valley, right?

It has its other bets unit, which looks at big moonshottie projects. But this year has certainly been indication that Google, is getting more efficient. So does that mean potentially that dividends could be next? It's possible, guys. Anything is possible now that META did it. Let me turn to Sarat, if I might, Dee, for just a moment. How much more appealing would Alphabet or Amazon be to you if they paid a dividend?

So I think this signal, and one of the reasons I think META is up where it is, is because what do they signal, capital discipline? If you're going to return, at least in the United States, if you start initiated dividend, you don't cut it back. It's not a flexible dividend. It's not a variable. This quarter, but not next quarter. Right.

So what does that tell investors? It tells us that they're going to actually have a minimum hurdle of this, and we're going to look for it to grow. So that tells you this company's now looking at, you know, maybe the moonshots aren't really out there. It's also telling you that they're not going to spend money just on acquisitions that maybe don't make any sense. Plus, we know that's really not working these days with the government.

So I think if Google did one of those, I think it'd be really good. One of the reasons Google stock didn't do as well, it's not because they didn't have really good expectations. They also said we're increasing our CAP-X. And we're now in the year of, I call it the year of cash flow. Because if you say our capital is going to be less than it's supposed to be or we think it is, you're going to actually get punished. I mean, look at charter communications today.

Look at some of the stocks that I've said. I mean, Microsoft also said that and didn't do as well. But when you're saying we're returning capital shareholders, we're going to start a dividend, you're signaling to your investors that we're really focused on shareholders. their value. And I think that signal, if it came from Google, it would tell people, oh, wait a second, you're not doing all this other stuff. You know, the Waymo, high in the sky stuff. Stuff that back in the day, you may not pay off. Exactly. Two or three years ago when interest was zero and we're just trying to grow revenue and try and find, but you have now good growing

businesses that are high cash flow. It's not saying they're maturing, but you're focused on enhancing the growth. But maybe the management's maturing. That's very true. Deirdre, you want to jump in? Yeah, the other thing I would add is, yes, it shows discipline, but the reason why tech companies haven't returned a dividend is because there's this thinking that they know best, they know how to keep innovating. But in the case of these mega caps,

they've shown over the last few years that they can return capital to investors and they can keep innovating. They can walk and chew gum at the same time. Because think about it, you know, Sarat even said it with the CAPEX numbers. They continue to invest in the business. They continue to stay ahead.

ingenerative AI and spatial computing while returning investors. So you don't have one at the expense of others. And that's also an indication of just how incredibly profitable these companies have become. Yes, they're wading in the broader markets has increased, but they've also been able to execute on that. All right, Deuter, thank you very much. Deuter Bosa, Surat-Sethi. After trading in tandem, lithium and uranium becoming night and day,

lithium tanking uranium hitting a 16-year-high, but is the latter at risk of going bust as well? Well, we will discuss further ahead. Well, welcome back. Time for a quick power check. Edwards' life science is up more than 7%. Wells Fargo upgrading the stock, saying the company's heart valve is underappreciated. On the negative side, charter communications down 16% falling short of subscriber growth projections. That is your power check, Tyler.

Let's go over to the CNBC News Desk for a news update. Take it away. Tyler, thank you. Another twist today in Donald Trump's Georgia election interference case. Fulton County District Attorney, Fannie Willis, acknowledged a personal relationship with a special prosecutor involved in the proceedings. In a 176-page filing,

Willis said any relationship with the prosecution does not amount to a disqualifying conflict of interest. She lodged the defense after one of Trump's co-defendants raised concerns about that relationship. A U.S. Appeals Court blocked Florida from enforcing a ban on Chinese citizens owning homes or land in the state. A panel of judges said that ban violates a federal law governing real estate purchases by foreign nationals. That could be a blow to lawmakers in several other Republican-led states, including Texas and Alabama,

that are considering similar restrictions. And New York's transit system is getting an overhaul, wider subway cars that passengers can actually walk between. The New York City Transit system tested the so-called gangway trains this week. trains like this are common in Europe and Asia, but it's the first time they'd be used in the United States. And of course, people do walk between the subway cars. They're just not supposed to because, you know, it's dangerous. Court? Exactly.

I was just thinking, wait a minute. Why do we need this? But okay, I guess they do it in other areas. They say it will also cut down on what's known as subway surfing, where people are able to go between the cars, climb up on top and take their life. They get killed, yeah. They get killed. Yeah. Oh my gosh, that's so dangerous. Thank you very much. Contessa, thanks. Well, Elon Musk, ahead of the curve with a neuralink,

technology with seemingly endless potential. But can you trust any product with such a controversial figure behind the wheel? Also, it goes in your brain. That's next. All right, welcome back to Power Lunch. Big week for a pair of drug makers. Bristol Myers out with Quarterly's this morning. They topped estimates as its portfolio of newer drugs posted strong sales growth. And Mark's results yesterday also beat expectations. His demand was strong for its blockbuster cancer drug, Ketruda, I believe is the name. Let's get some reaction to that. A few other medical topics that caught our attention this week with Dr. Scott Gottlieb,

former commissioner of the FDA, and CNBC contributor, and Surat-Sethi, is with us as well. Dr. Gottlieb, welcome. Good to have you back, as always. I'm not going to ask you about to criticize or characterize the results of BMI and Merck, but I am going to ask you about their pipelines, as an observer. We should point out that you're a member of the Board of Pfizer. but Bristol Myers and Merck, what do you see in their pipeline? Are they in danger of patent cliffs? Well, look, there's going to be loss of exclusivity across the portfolios of both companies and across the industry more generally.

I think what you're seeing is strong growth of some of the newer products, the inline products, in the case of Bristol Myers, a drug for anemia, another drug for melanoma. Bristol Myers has a lot of strong drugs in its pipeline, many of which had acquired. in the cell gene acquisition, they got a broad portfolio of protein degradators that looks very promising, a number of in late stage clinical trials, as well as the cell therapies, the CART therapies that they acquired from cell gene as part of cell gene's previous acquisition of Juno. So I think that that pipeline is full of a lot of very promising products that's going to continue to power strong growth. And, you know, the other thing that's happening is a lot of the headwinds that we perceived

from the commercial marketplace, from the PBMs, putting downward pressure on pricing as well as sales, and the inability of the drug companies to take the same kinds of price increases they've taken in the past as a result of commercial pressures as well as new legislation. I think a lot of that's flowed through. And now what you're seeing is just that the clinical offerings, the proposition of promise that these drugs are offering patients, is so compelling that it's driving continued growth. Let's talk a little bit about the weight loss drugs and the coverage by insurance companies or state programs of these medicines. earlier this week, North Carolina said that they are going to stop covering weight loss drugs for state employees. Do you think more states are going to follow suit here and deny coverage, or are these drugs likely to get approved for a broader array of conditions,

whether it's cardiovascular disease, kidney disease, and other things, sleep apnea, that may mean that the insurers have no choice but to cover them? Look, I think as these drugs continue to show profound benefit in weight-associated morbidities, like cardiovascular disease, is going to be data coming out from Lilly on their drugs Zepound in the first half of this year, looking at sleep apnea, looking at these drugs in the treatment of heart failure as well. There's studies underway looking at chronic kidney disease, dementia. As these drugs start to show benefits, substantial benefits, I believe, in weight-related

conditions, I think it's going to be very compelling. and I think insurers will feel compelled to cover them. The data coming out of this select trial that Novo did, looking at Wagovi, in a reduction of cardiovascular risk and death in patients who are at high risk, who had previous strokes and heart attacks, and who are well treated with existing medications showing a 20% reduction in cardiovascular risk. That was really a profound finding, and I suspect we're going to see equally profound finding in some of these other conditions.

And remember, also the benefits that we saw in that trial, and the benefits that we're going to see in some of these others, I believe, and also the impact on productivity, productivity improvement on individuals, is going to provide a very near-term return, particularly for employers looking at covering these drugs and employer-sponsored plans. You know, if you're a large employer and you can get your employees who are overweight under control and they show a profound weight reduction, that's going to be an immediate impact on the productivity of that employee, and I think that there's going to be a very economic, economically compelling reason to want to expand use of these drugs. So if, in fact, these companies,

and Novo have to go sort of indication by indication and expand the labels to get some of these indications on the label. On the cardiovascular, the select trial, is going to probably get in the label in the first half of this year. FDA and EMA are now reviewing those. I think even if they have to do that in order to drive utilization and drive coverage, that's still going to be, I think, a very big opportunity for them and for patients in public health. We're certainly going to continue to talk about these weight loss drugs for many, many months and probably years here to come, but I do want to move on to a very different topic, Neurrelink, which is Elon Musk's sort of startup company. It's this brain implant. It seems to have

a lot of promise. The first chip has been implanted in a human, according to Musk. I mean, what can we realistically expect from something like this? What innovations do you anticipate and how long will it take for us to really get some data about this? Yeah, well, we have data right now. I mean, I think it's, in the early innings of these kinds of technologies, we've had technologies that provide neurostimulation to the brain to try to provide certain therapeutic effects in patients, for example, in migraine, a dystonia, with a lot of promise. Now what we're doing is able to implant these sensors that measure electrical impulses to try to drive function in patients

who've lost function. In this case, they're experimenting, they're doing these experiments, these trials in patients who have been paralyzed, trying to read neural feedback from the brain electrical stimulation provided by the brain and correlate it with intended function, the intention of patients to carry out certain functions. And a lot of the technology here isn't just the electrode itself, but the machine learning, the artificial intelligence that sits on top of this. And as we get more experience reading the electrical output of brains and correlating it with what the patient's intended function was, and the software gets better for driving certain

tools that you can actually drive with your intention, with the patient. thinking about things and in that translating into electrical impulses, I think that these capabilities are going to get better and better. It's going to be software-driven, not just hardware-driven, but software-driven. And that could advance very quickly. And you can envision down the road being able to couple some of these devices that measure electrical stimulation with things like imaging devices, you know, pet sensory devices, things that look at brain function on a different level and you can get some very exciting possibilities. I would prefer if Neurrelink was a little bit more forthcoming in some of the medical literature. You know, Elon Musk has put out some tweets and

described the trial and indicated that a patient has been enrolled, but I think that they should be more communicative with the medical community as well, because there's a lot of excitement in the medical community about the potential of these products. Do you see the things like NeurLink coming more from the pharma companies or medical product companies venture? Like, where is the funding? really coming for this and kind of where do we expect, you know, the next couple of years new products to come from? Yeah, look, it's early days. There's a number of academic groups that are working on these functions.

There's a number of medical device companies that are experimenting with these kinds of platforms as well. There's no reason to believe that Neurrelink can't be an innovator in this field. I think that it merges different kinds of technologies, medical technologies around neurostimulation, which are fairly well established. I think this is sort of working in reverse instead of stimulating the brain. You're measuring electrical function from the brain. But there's a heavy machine learning software capability embedded on top of these

that's going to interpret those impulses and then try to drive certain mechanical devices that can help patients restore some of their function or carry out certain functions using third-party devices. And that's really a software machine learning endeavor where I think some of these tech companies could provide a lot of value, edit, a lot of know-how. So, you know, a company like Neurrelink, which seems to be trying to combine expertise in both health care and medical device technology with some of that software capability certainly looks to be well positioned to innovate in this field.

Innovation, obviously, profoundly important in medicine, but I agree. The more data and sort of clarity we could get from Mr. Musk on this topic, the better. Dr. Scott Gottlieb, thank you so much for joining us and covering such a wide variety of topics. Thanks a lot. Well, still ahead. Lithium's pain, uranium's gain. The two commodities traded in tandem for quite some time, but now as lithium stocks dip, uranium is hitting 16-year highs. Our own Pippa Stevens will tell us why that's coming up next. We talk a lot about the big bucks. Big tech is raking in, but don't forget about big oil.

Exxon and Chevron combining to earn 57 billion in profits last year. Pippa Stevens joins us now with more. Hi, Pippa. Tyler, well, both companies beating EPS estimates, although coming up short on revenue numbers thanks to softer commodity prices. Now, net income for Exxon was 36 billion over last year while Chevron was around $21 billion. And as you can see, that is well below last year's 2022's record numbers, but it is still very strong relative to prior years looking back over the last decade. And of course, these results were impacted by softer commodity prices.

So moving over to Chevron, a few highlights from the quarter. Production both in the U.S. and Worldwide hit a record number. The company also returned a record 26.3 billion to shareholders. That was a mix of 11.3 in dividends and 14.9 in share buybacks. The company also raised its quarterly dividend by 8%. Now, moving over to Exxon, the company said it increased production in the Permian and Guyana, 18% year over year. The company also said that its refinery output hit record levels.

And then finally, also a priority for shareholder returns. The company returning 32.4 billion to shareholders. that mix was $14.9 billion in dividends and $17.4 billion in buybacks. Now, Chevron stock has been lagging both Exxon and the broader energy sector, thanks to some weakness in their Permian output as well as a delay in their Kazakhstan expansion. But this quarter, premium production was out of record. And the company also reiterated that Kazakhstan is on track. So we could see some weakness, some support for those shares looking forward.

Piva, we also want to ask you about uranium prices, which hits. a 16-year high. You've given us a lot of education in this area, so keep it going. Yeah, currently, so jumping above $100 for the first time since 2007. And you can see that there was some interest back in 2022 when Russia invaded Ukraine. And then we saw commodity prices, you know, go bananas, for lack of a better word, with oil topping 130. But then the interest kind of petered out before then really starting in 2023. As it became obvious that nuclear is back. we've seen this renaissance. New nuclear reactors are being announced,

and then existing ones are staying online for longer periods of time, all of which means more uranium. And so investors might see some parallels between this market and lithium, given that both have attracted a lot of interest, thanks to their how key they are to the energy transition. They are the commodities of the energy transition. But lithium, of course, topped out in 2023, and then has had this huge drop.

Prices are down 80% in the last year. And so this, of course, begs the question, with uranium going up, is it going to have a similar drop looking forward? But experts say there are a couple of key differences here between the uranium and the lithium market. So the first is the kind of demand that we've seen. So with uranium, it's much more inelastic to price. Utilities have to purchase uranium no matter what the price is. And remember that nuclear is about 20% of the U.S. electric grid.

There's also, of course, the fact that the supply response hasn't been as robust with uranium as it has been with lithium. And then there's also the market maturity. Lithium is a relatively nascent market, which means it is more susceptible to these price swings and volatility versus uranium has been mined for decades and decades. And so we have seen these boom and bust cycles. Jonathan Hensie from UXC told me that while granium might ultimately overshoot to the upside, we are far from those levels. So a lot to talk about here, guys, but essentially uranium prices at a 16 year high. All right, Pippa. Let's get Sarat into the conversation here. These two come commodities, is it really as direct and simple as reactors equals uranium higher, EVs equals lithium

higher until EVs go into a cloud means lithium lower? Right. I mean, I think for uranium, so much of that is because you're seeing all these nuclear reactors either being built or used. People are saying, hey, you know, the demand's going to be there unless something happens. And if it works, it's going to be even more. Lithium is very interesting, just because, you know, three months ago to now, EV all of a sudden, you know, nobody wants to own an EV, all the companies that are doing spin-off.

So obviously, the fast money that's in lithium is now coming out. So if there's a long-term bid for EVs and hybrids, I think at some point lithium will find its bottom. And I think that's when, as an investor, you get in. But that just became a fast trade, right? So the same thing with uranium. Like, if we have any type of slowdown for any of these nuclear, you know, capabilities, it will come right down, right?

That's the sound of uranium. Exactly going down. So again, these are the reason that commodity supply demand and you get traders in there too. So I think you just have to be careful on each side. All right. Thank you. And Pippa, thank you as well. Coming up, supersized earnings ahead, McDonald's stock has had a slow start to 23.

But could the restaurant's latest spinoff venture leave investors hungry for more? We'll give you details on that stock and more when power lunch, Richard. Well, it's time for today's three stock lunch, where we look at the three big movers of the day. Here with our trades is Scott Nations. He's founder of Nations indexes. Up first is meta. Those shares surging after the company reported a tripling in fourth quarter profit and issued its first ever dividend. So, Scott, what's your trade on this name?

Metas a hold. And, Courtney, I mean it's a real hold, not a pseudo sell. Congratulations, up 21% today. biggest gainer in the S&P 500, but it's a hold because of valuation. It's up 150% over the past 12 months. Forward PE is now 26, which might seem reasonable, but how does a $1.3 trillion company grow into that? I think part of the problem is AI. I think the perception has gotten ahead of the reality. The company's cutting head count. That's going to help EPS, but they have regulatory hurdles both here and in your up and you can't discount the ick factor regarding dangers to children that Zuck had to put up with

earlier this week. Yeah, that's right. He has had quite a busy week. Surat, you are a holder of meta. We are. I agree, but I'm also, I will be trimming some of it. It's just gotten so far, so fast. I want to take some of the profits off, but I will still own it. And I also think because you also got the cross currents of, you know, what's going on regulatory, but also you've got a tailwind of advertising this year because you're an election year. So I think, Take the profits. A lot of that's baked in and then kind of see from there. Good points. All right. Let's move on to our next talk, which is Comerica, shares down around 7% this week as well as stemming from that New York Community Bank Corp situation. Reignite Fears for regional banks.

Your trade on this one, should you buy the dip here or is it a stay away? No, Tyler, this is a sell. It's a tough business to be in if you're a small or regional bank. You're under extra scrutiny. We see that going on this week. It's because depositors are demanding. higher rates. And for something like Comerica, the problem is that the price to book is almost exactly equal to what it is for Bank of America and Wells Fargo. And those big banks can enjoy economies of scale that somebody like Comerica can't. Companies also in the middle of its 52-week range for the stock price, so there's room to the downside. Management screwed up a tech upgrade this summer. And then they just need to really be doing a good job when it comes to

the nuts and bolts. They're closing branches. that's great, but it's just an incredibly tough business to be in. And I don't want to be along for the ride as a shareholder. All right. There's a definitive sell. Sirrod. Thoughts on this company or the regional banks general? I completely agree. I think given what we saw with New York Community Bank, given some of the smaller regionals, their transparency is really not there. We don't really know what's under the hood. If you're getting the same valuations, we own Bank of America. We own Morgan Stanley JPMorgan. I'd rather be with the big guys, more diversified, better balance sheets as opposed to. hey, if this thing was trading in a big discount, then one would ask why as well. So I think at this point, you're probably better off, hey, let's just find out what's under the hood and what's going on, especially if the price is the same. I think your friend Frank earlier in the show that we had on also a little apprehensive about regional banks in general.

Well, finally, McDonald's, the fast food chain set to report fourth quarter earnings results. That's on Monday. Shares down slightly today, but up about 12% in the last year. So, Scott, what's your trade on those golden urges? This is a buy. You pointed out they report on Monday. EPS expected to be $2.82 a share. That would be a year-over increase of 8.9 percent, which is pretty good. And I like the fact that they've done a good job of handling inflation. They seem to be able to get the employees they need despite an incredibly tough labor market that we learned more about this morning. Also, I like the fact that they're getting into higher margin products. They're going to be butting heads with star. in that regard a little bit. But, you know, for somebody like McDonald's, higher margin products is just wonderful. It's, I mean, it's a tonic for the bottom line. And it's a wonderfully managed company. It's a buy. All right. Thank you, Scott Nations. But before we wrap it totally ups or out, what do you make of McDonald's? I think it's a great company. It's just valuation for me.

It's just a little more expensive than I would like. I think you want to own a McDonald's type company as we go into a slowdown because consumers will start coming downsize to in terms of what they're going to spend. So it's just an entry point. I think great management team. I think they've done a great job in terms of their product selection. The entry point is what I'm looking at. We'd love to have bought it there in October, huh? That's pretty nice little climb from there. Scott Nations, thanks very much. Surat, thank you as well. Corey? We'll still have break out the fur coats and the diamonds. Mob wife aesthetic in clean girl is in and clean girl aesthetic is out, is what she's trying to say. We'll break down the latest

fashion trend sweeping TikTok and my daughter's closet. That's up next. Two minutes, 45 seconds left in the program. Several more stories you need to know about. Let's get to it. Activist investor Barrington Capital pushing Mattel to consider selling off its American Girl and Fisher Price Brands. No, citing underperformance within the divisions. Mattel shares are up around 4 percent following a letter sent to Mattel on Thursday. First reported by the Wall Street Journal, but the Toymaker shares trade at roughly Surat the same level as they did 20 years ago.

It's breakup value. So a lot of these companies have these hidden gens on them, and they kind of get covered by. by the lack of the other businesses. So I think what some of the activists are saying is, hey, if you've got really good businesses, you might just have to separate them and you get a true value. So I see some...

Get rid of the brush and have the beautiful flowers shine more. Exactly, especially because the capital markets are looking for that, right? And if you've got growth in American girl and all of that does, why not just separate it out and get the value for it? Fascinating. Well, a new fashion trend.

Emerging from Gen Z on TikTok, mob wife aesthetic. It's the style achieved with this bold luxury idea, pieces like large gold jewelry and vintage fur coats, channeling icons like Carmelo Soprano and Adriana LaServea. This replaces the quiet luxury aesthetic, which was marked by expensive materials and brands with very muted tones and jewelry. What do you think of this one, Surat?

And now we get to put on your fashion hat. I mean, this is very interesting, right? It's like when you play the retail world, but this just gives you why retail sometimes is so hard to invest in, right? Because the fad can change really quickly. And I mean, I think the quiet one, you know, is still there, depending on where you are. But this is going to be extremely fattish. This is a thing.

You'd heard of it. This is a thing. I accidentally dressed my daughter like this, and she was totally on trend at my son's soccer practice the other day. Okay. Well, my relatives take note. All right. Half of U.S. renters spent more than, you know who you are, too. More than 30 percent of their income in 2022 on rent and utilities, according to a new report from Harvard.

The report considers those who spend 30 percent. percent or more of their income on housing, rent burdened or cost burdened, and those high costs may make it difficult for them to meet other essential expenses. Rent is one of the areas of the CPI that has not fallen back very much, if at all. And I don't expect it's going to, especially given where interest rates are, landlords are not going to be cutting rents. Maybe they're not going to go up as high. But if on the other side is the renters don't have the capital to go by, So you're still going to see that demand there. And then that's going to take away from the spending.

So talk about McDonald's, et cetera. They used to say 28% was the threshold. They wouldn't approve you for a loan if your income to payment was more than 28%. Whatever it is. Sarat, great being with you, my friend. Thank you. Thanks for watching Power Lunch, everybody. Closing bells starts right now.