Power Lunch - Late-Summer Rally, Speed Bumps for Self-Driving 8/30/23

Episode Date: August 30, 2023

Markets are experiencing a late-summer rally, especially for tech stocks. The Nasdaq is on pace for its 7th positive day in the past 8 sessions. We’ll explain what’s driving the move higher. Plus, the self-driving push has hit a speed bump. Cruise had to cut back its autonomous ride-share program, while regulators are inquiring about Tesla’s autopilot program. We’ll discuss the impact for autonomous driving overall. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody, with Contessa Brewer. I'm Tyler Mathis, and glad you could join us on a Wednesday afternoon. Coming up, a late summer rally, especially for tech stocks, NASDAQ on pace for its seventh winning session in the past eight days and the lackluster reaction to Nvidia earnings last week. Forget it. The stock is up 8% this week and approaching new highs and self-driving cars hitting a bit of a roadblock. Well, not actually a roadblock. Just weeks after cruise rolled them out, it had to cut back after one, collided not with a roadblock, but with a fire truck. Plus, federal regulators are asking Tesla for more on so-called Elon mode. We'll explain that, Contessa. Let's get a check on the markets right now and start with that in the late summer rally for the NASDAQ.

Continuing today, you can see the NASDAQ composite up almost half a percent. The S&P 500 up a third of a percent. The Dow Industrial is hanging on into positive territory. Three M share slightly lower. Moody's weighing in on the company's proposed settlement involving earblocks. It says that the terms are less than expected, but is still credit negative. 3M is off almost 2% on the day. Lyft shares higher after a board member and early investor buys a million dollars worth of the stock.

You can see there that Lyft is up 6 and a third percent. And shares of casinos moving higher today, incredible new numbers from the Las Vegas strip, showing gross gaming revenue there, setting a new record in July. It came in at 830.30. $35 million. Remember, they've been on months of record-setting sprees up against tough comps last year. Their best month before this was December. They beat December's gross graming revenues, Tyler, by $20 million. That's a big beat and big news in that area. All right, two big economic numbers out this morning. The GDP slowing showing slower economic

growth and the ADP report, payroll report, showing slower job growth. So let's get to Rick Santelli Chicago for some explanation and how it's affecting bonds. Rick? Absolutely. We had some top-tier data points out. If you look at ADP on top of non-farm payrolls, of course we're going to get that on Friday, so there's one month missing at the end. But you could clearly see on this one-and-a-half-year chart going back to January of 22 how the ADP's been much bumpier, but the Bureau Labor Statistics non-farm is certainly trending lower, and that is a good thing because bad news is good news, as Steve likes to say. And if we consider the fact that the ADP jobs at 177,000 was less than expected, but do have

a revision of 47,000 to last month. Now, personal consumption expenditure and the core PCE were both embedded in today's GDP. It was the second look at second quarter. The growth slowed a bit from 2.4 to 2.1. 3 tenths is a big revision, actually, from the first to the second look on second quarter. But what you're seeing there is the PCE index on top of core. You can see how they both turned lower. And what did that do to the markets?

Well, here's twos and tens on top of each other. They dropped, and they dropped rather aggressively on both data points. And finally, if we look at the one-month chart, because we're coming to the end, there was some significant technical moves. We saw on the 21st, 10-year hit 434, on the 25th, 5-year hits 508, cycle-high closes, and what's happened since,

while the technicians are caught off sides here, so we really want to monitor how tens eventually look when they test 4%. Contessa, back to you. What is your spidey sense, Rick, of where bond yields sort of hit that sort of stasis point, where they sort of are in the range, and that's where they stay for a while. Are we there now?

You know, I think that we're going to have a creeping interest rate environment. I thought we'd get a lot more kickoff when we closed above some of those levels I outlined on that one-month chart. But we've really been moving more lower because of the data points. But ultimately, I think supply and debt and deficits are going to keep rates a little on the snug side. So I would say if we can close under 4% before we close above 435, I think we go a bit lower, but I don't think that'll be the case. I think we slowly creep up and eventually test close to 5% in a 10 year. Okay.

That's what I was looking for. Clear answer. Thanks, Rick. Well, as we mentioned, the NASDAQ is continuing a stealthy summer rally, and Christina Parts of Nevelace is following all the movement there. Hi, Christina. I like the stealthy adjective, but like Rick pointed out, the softer economic data is contributing to the drop in yields, and that's propping up the

NASDAQ today. It's also chugging along higher this week, beating out the S&P 500, the Dow, the Russell, and on pace, like Tyler mentioned, the 7th positive day and 8, but really when you dig through it, there's only a few names doing all the heavy lifting. And of course, the usual suspects. Apple, Nvidia, Tesla, Microsoft, Meta are the ones pushing the NASDAQ 100 higher based on their weight. But I'd like to point out Broadcom is part of that top six this week. ahead of its earnings, which are out tomorrow after the bell. The street is pretty bullish on this name because Brockham can actually benefit directly from all of that artificial intelligence spending, considering it makes custom silicon as well

as ethernets that are used within AI infrastructures. And you can't bring up AI without bringing up Nvidia. Last Friday, I would have come on air and I would have told you that investors maybe are divided on the durability of Nvidia's growth after the stock closed down 4% and erased all of those post-earnings gains. But that's not the case this week. It closed at a record high yesterday, $487.84. You can see it's higher right now, $49568. Investors really like the chipmaker's partnership with Google. Google Cloud users would have greater access to AI technologies, powered by NVIDIA's GPUs, and that's what's driving the name higher again today. So overall,

some positive business news and some not-so-good economic data are giving NASDAQ stocks a last hurrah as we close out August. Christina, Parts and Eveless, thank you. All right, turning our attention now to Idalia, making landfall in Florida this morning as a very strong category three storm. Now weakening to a category one as it makes its way into Georgia, maybe across South Carolina. NBC's Jay Gray is in Gainesville, Florida, home of the university, tracking it all for us.

Hey, Jay. Hey, Tyler, Contessa. And yeah, we've got a bit of a break here now in Gainesville after a day that was an early morning and late night last night that was spent with heavy rain and harsh winds. Things have eased a bit as this storm has pushed through and it's now making its way into Georgia. I can tell you here that they've got some down power lines. I think most of that power's been restored to this point. Standing water and some of the low-lying areas and trees and branches that had been down

much more severe along the coastline where this storm made landfall as a category three storm and just a couple of miles an hour below a category four, which it was a bit earlier in the morning. The water, a wall of water, 10 feet high in some areas, pushing into places. It's never been before and creating quite a mess. And then that wind at 125 miles an hour tearing up most everything in its path. We still have a big concern when it comes to the possibility of tornadoes. It's something that follows these systems. So we have watches and warnings all along the path of the storm and across much of the state right now.

But as you talked about, this storm starting to make its way into Georgia. And here's what's fascinating and kind of a testimony to how intense this storm was. You know, it's still a category one hurricane. It's been over land, so it's not getting any of the fuel it needs from warm water for hours. So this is a very powerful storm and still capable of doing a lot of damage. We've got flooding already in parts of Georgia. it'll continue to move up and into the Carolinas. And then forecasters say perhaps by the end of the day or overnight, spin back out and overwater and away.

So while it's moved on from Florida, there's still a lot of work, obviously, to be done in some of the hardest hit areas. And teams can't really get into the standing water because they don't know what's there. And Contessa, we've stood side by side through some of these hurricanes. You know exactly how things change and how tough it is. that storm moves through. So that's what they're going to have to deal with now. Hey, Jay, have you heard any follow-up about this contaminated gas and how what the situation is for Florida there and how long it might take for the gas stations to be up and running? Yeah. Yeah, we asked about that yesterday, actually. You know, it was a big issue. Some diesel

got into some of the regular gasoline and it was pumped into some of these cars that were trying to evacuate. What they've said is they've been able to identify. all of the areas where that's happened, they've shut those pumps down so they feel very confident about the gas supply that's available right now. And as a part of the effort outside the strike zone to move in once things started to clear, there were tankers set up and ready to bring in some fresh gas. So that's something that they're dealing with on an ongoing basis. As soon as it's safe enough for those tankers to get in, they're moving in and making sure that there's plenty of fuel. Jay, am I right or mistaken that this, that one of the blessings,

if you can call it that, of this storm, is that it moved fairly quickly. Tyler, I couldn't have said that better. You're absolutely right. It actually sped up a little bit once it got over land. And so it didn't linger, didn't drop as much rain as it could have in some of these areas. So that's a big help. And moving through allows things to start to clear. Right now, we're getting a bit of sunshine, which I didn't think we'd see at this point through some of the clouds. So yes, that is something that if you've got to find a good spot in all of that, that is certainly one of the things that is benefiting this area and others along the path. My friend Tyler Matheson, always a glass half full kind of guy, Jay Gray.

Ask my wife about that. We'll bring in the sunshine where we get it. Jay, good to see you out there. I'll see you out there somewhere in the field sometime soon. Commerce Secretary Gina Ramondo wrapping up her trip to China today. Her message was pretty clear. Talks are nice. Action is better. Eunice Yunn joins us now from Shanghai. So a little less talk, a little more action is the way the song goes. Yeah, that's right, Contessa. I'm outside of the hotel where the U.S. delegation stayed, and they are now long gone, along with the Commerce Secretary, who described her trip as productive.

Now, today in Shanghai, she visited several symbols of U.S.-China cooperation, a Shanghai Disneyland, NYU's local campus, as well as a local Boeing facility. Now, in my exclusive interview with her, I asked her about the concerns that many American businesses have expressed to her about the possibility that China could be uninvestable because of its unpredictable environment. She told me that she had said to the Chinese that there is something that they can do to address this issue. This is what she said.

Action speak louder than words. You know, in all of my meetings, speaking with the Premier and the Vice Premier, they were gracious, they were open. They said that China wants to embrace American business. So now let's back that up with concrete action. I also asked about the cases of Micron, Intel, as well as Chinese expert curbs on key metals, as a possible Chinese policy to retaliate against U.S. companies for her department's export controls. I think that that retaliation, if it is retaliation, isn't good.

Like, that isn't the way to build confidence or attract U.S. foreign direct investment. She also told me that a Boeing deal would be a good example of how the Chinese could take action to rebuild confidence. in the wider American business community. Guys? All right. Thank you very much. Eunice Yunn, reporting from Shanghai for us. Good get. All right, coming up, as Eunice mentioned, another key sticking point in U.S.-China tensions are export curbs on key minerals needed for the technology sector. More on that coming up. And whether it's Beyonce blowing up Sweden's currency or people paying thousands to see Taylor Swift, this has been the summer for live events. But you may have noticed it's been pretty hard on the wall. wallet will look at entertainment inflation ahead on Power Lunch.

Welcome back to Power Lunch. Commerce Secretary, Gina Romando, wrapping up her visit to China. A host of topics discussed, among them, China's restriction on exports of germanium and gallium. Two materials deemed critical. Pippa Stevens is here with more. How are they critical? Well, first of all, germanium and gallium, not things we talk about every single day. So a quick refresher. They're both materials used for a range of assets. applications, everything from military equipment to solar panels to fiber optic cables. They're also really important for the semiconductor industry. Gallium is used for high-performance chips since it's more resistant to heat than silicon.

China restricting exports is a blow since they dominate these markets. The country produces 70% of global germanium and 98% of global gallium, according to the U.S. Geological Survey. The U.S. relies on imports for 100% of domestic. consumption. These are two relatively small markets, but China's dominance extends across the critical material supply chain, including for those key to the energy transition. China processes more than 60% of global lithium and separates about 90% of rare earth elements. The export controls put in place this month show the dangers of relying too heavily on one nation for

materials, but these supply chains take years to rejigger, so it's not an overnight fix by any means. All right. All right, PEPA, stick around. We're going to get a little bit more on the battle over gallium and geranium and other rare earth. Let's bring in Louis O'Connor, the founder and CEO of Strategic Metals. Strategic Metals is a company that sells critical minerals to companies around the world. Louis, welcome. Good to have you with us.

I mean, I can't imagine a worse place to be if you have critical inputs like these metals and basically one supplier with whom you are often in very staunch competition. Yeah, well, directly, it seems, I think it comes back to, for the last few decades, the world sort of has been a little bit high on the globalization drug and didn't realize it wouldn't be such a good idea to allow one country to have the supply of a critical mineral or other critical minerals that are, you know, critical to all nations economic prosperity and also increasingly military capabilities. Are there known alternative, I mean, the idea that we allowed China to have control of these things,

I mean, partly it's accident that that's where the deposits of these minerals are. Are there other known areas where deposits of gallium or germanium or lithium are that we just have not gone in and mind yet, either in the United States or Canada or South America or wherever? Yeah, good point. And despite the name rare earths, they're not all that rare. There are deposits in North America, Vietnam, Sweden now as well, because, I mean, Europe and the US has sort of woken up to the fact that they must wean their dependence of China. But the other side to it is that rare earths don't occur naturally. They're always a byproduct of another raw material.

So they're sort of, they're very chemically similar and you'll find them sort of together. And what's expensive and complicated is the extraction, the separation, and the refining. For example, 95% of the processing of gallium is in China. There's one producing plant in North America, mountain paths in California, but they still have to sell all the raw materials to China for processing. There's no, the human capital and engineering expertise that existed in the US, in the 80s, has been depleted. Just to give you some context, there's about 39 universities in China graduating degrees in critical minerals, so about 200 metallurgists a week every week for the last 30 years, whereas in the U.S. there's maybe only a handful.

PIPA, when we're looking at these rare earth minerals and what's so desperately needed, we know that there's already stockpiling going on, is the supply chain of the existing material already fully satisfied? Well, I think right now there is, and it is being fully satisfied, and we have demand and supply are kind of at equilibrium. But I think when we see some stockpiling starting to occur, as companies are worried they might not have access to that germanium gallium, we can see some price distortions. And so I guess, Louie, that's a question for you. How are these disruptions and companies' actions by securing these minerals leading to distortions in the prices? And what does that mean longer term for producers in terms of price signal? Yes, well, China just announced in early July that they would restrict the export of gallium and germanium. That came into effect just a month ago. It's yet to be seen. I mean, obviously, nations are stockpiling, you know, corporations, you know, everybody needs gallium. It's practically in, you know, it's in all modern technology.

It's got multiple applications. But what we buy directly from China, we sell, you know, globally. We're a global supplier. And what we understand is the producers of gallium, what's changed is they now must apply for a license to export. And we speculate the reason for that is that Chinese government can have a look at the consignee and decide whether they'll allow that shipment to commence or not. All right, Louis O'Connor, thank you very much.

We appreciate your time. Louis is the CEO of Strategic Metals. We appreciate it. Coming up, entertainment, inflation. inflation has consumers of all-income levels cutting back just a bit. When it comes to entertainment and leisure, though, it's not cut and dried. We'll tell you where consumers still think, oh, boy, I'm going to spend some big bucks and where they're cutting back. Quick programming note here, Democratic presidential candidate Robert F. Kennedy Jr.

We'll join Brian Sullivan on last call tonight. That's at 7 p.m. Eastern. You don't want to miss that. Power lunch. We'll be right back. Welcome back. Inflation is affecting prices of pretty much everything these days, and that includes entertainment. Julia Borson has been crunching the numbers on where consumers are still willing to shout out some big bucks. And I don't know, Julia, where are they cutting back as well? Well, there is definitely entertainflation or funflation, and it's definitely higher than the 3.2% CPI that was reported in July. Now, concert ticket resale prices have seen the biggest leap. The average ticket. And resale prices jumped 27% from 2022 and 95% from pre-pandemic levels, according to seat geek.

But thanks to the draw of Taylor Swift and Beyonce, people are paying up and turning out in droves. Live Nation reporting that ticket sales are on track to surge 20% this year to 90 million tickets sold. That would be a record. And while Disney fans may be feeling pinched by a $30 price increase in Walt Disney World's single-day park tickets since 2019, Disney notes that that's actually just a four and a half percent compound increase that's in line with inflation. And they also note that the lowest ticket price for the least crowded days has stayed the same. Now, shifting over to movies, their ticket prices have increased 4% from last year and 18% from pre-pandemic levels. While streaming is getting a lot more expensive.

In the past year, all of the major streaming services have raised their prices by between $1.30. dollars a month. Ad Free Disney Plus is going to be increasing its prices by 27% when those price increases go through in October. A variety survey found that a quarter of adults say that they have already made changes to their entertainment subscriptions as a result of rising inflation. And subscribers could drop even more if the strikes, the ongoing strikes, mean less new content hitting these services this fall. And guys, there's just one more thing. Just today, PlayStation announcing is raising prices of its subscription gaming service called PlayStation Plus, its highest tier option is going up by $40 to $160 a year.

Back over to you. It makes me think that parents have a lot more clout just to go, like, no, go outside and play in your tree house because everything else costs so much more. I'm just curious, do you have a sense when you're looking at, for instance, concert prices, Julia? how, you know, what the, what the median rise has been, or how much Taylor Swift and Beyonce have sort of like drawn all ticket prices higher. Well, look, there's a ton of data on concert ticket pricing, and we could do a whole hour just to hunt that contestant. But I think what's interesting is that at the lowest level, going to a festival, you could still get a very inexpensive ticket to some concerts or to a music festival. But when it comes to these really big acts and the fact that there is such an active resale market for tickets for something like a Beyonce show, you have to remember that people are willing to pay up because they feel like this is a once-in-a-lifetime concert or something that's part of a cultural moment.

I mean, those two concerts are certainly a good example of that. So these artists, such as Taylor Swift or Beyonce are saying, we're going to be going on tour, this is your chance to come out and have a moment. And this is something that people have been paying up for. There's a great article in the Wall Street Journal about how people are actually taking second jobs because they're so determined, maybe not just to go to one Taylor-Sift concert, but to go to multiple ones. So some of this may be pen-up demands still from the pandemic. Some of it may be unique to these particular artists, but it does seem like people are really willing to pay up when they know that the experience is going to be very special, very differentiated, and also something that they can maybe share on social media and share with their friends. person. And we didn't even get to the price of tickets for Leonel Messi's soccer game. Oh, yeah. Way up. Yeah. So let me ask you this. If you can, are you almost always better off

buying the tickets straight from the box office rather than online? Yeah, I mean, look, if you can avoid the secondary market, you can get access to tickets, of course. And that's been part of this whole process. A lot of artists such as Taylor Swift have said they want to make sure that there are some lower price tickets for their core fans. So everything doesn't just go into the secondary market. All right, Julia, thank you very much. We appreciate it. And ahead on Power Lunch, we will care. You know, this is the biggest bargain in entertainment right here. Right. Right here, Power Lunch. We'll continue to attract the latest on Idalia, including how one of America's biggest insurance firms is gearing up to deal with the aftermath of the storm, that and more on the biggest bargain in entertainment, Power Lunch. I like a value. Value. Best value in entertainment.

Welcome back, everybody, to Power Lunch. Let's go over to Simomodi now for us. CNBC News Update. Hi, CMO. Tyler, good afternoon. President Biden pledging $95 million today to strengthen Hawaii's electrical grid. The funds will be used to improve grid service, limit future damage, and help prevent failures. The White House said the investment will help reduce outages and the risk of further wildfires. Senate Majority Leader Mitch McConnell appeared to freeze again after he was asked if he would run for re-election during a gaggle with reporters in Kentucky. Last month, the Kentucky Republican froze for about 20 seconds during a news conference on Capitol Hill. A spokesman says that McConnell was feeling lightheaded and would see a doctor before his next event today.

America's late-night hosts are joining forces to help striking writers. Jimmy Fallon, Seth Myers, Stephen Colbert, Jimmy Kimmel, and John Oliver, starting a Spotify podcast called Strike Force Five. All the proceeds will go to staff and crew affected by the ongoing strike, which has stretched on now for more than 120 days. A creative approach. Contessa. Thank you, Seema.

Appreciate that. Let's take you now to South Carolina. We want to show you some live pictures where Hurricane Idalia is hitting after making landfall on Florida's Gulf Coast as a category three storm with a kind of catastrophic wind that hasn't been felt in the state's big bend area

in 125 years. Now this afternoon, nearly 270,000 Florida homes and businesses are with outpower. 49 of Florida's 67 counties are under a state of emergency, and the storm hit nearly a year after Hurricane Ian devastated not only the state, but of course up and down the eastern seaboard, but it was Florida's most expensive storm ever with $65 billion in insured losses, $17 billion in uninsured losses. For more, let's bring in USAA president and CEO Wayne Peacock. Wayne, you're coming to us from USAA's command. center right now. And I know that you have a high-tech look at some of the damage. Can you give me a sense of what you're seeing in Florida as we're watching the storm still moving its way up through

the southeast? Well, Contessa, one, it's great to see you today. Great to be back with you. It's early days as we take a look at the storm. We're really clear about, you know, the rising water and challenges along Florida's Gulf Coast, certainly at the point of impact. And now we're standing by to really understand the wind impact as Idalia has worked its way through the Florida panhandle and now into South Carolina. So within about 24 hours or so, I think we'll have really good eyes on target from the air, be able to assess that damage with more clarity. When you look at your overall portfolio of states and customers, how big does, how much of your portfolio does Florida represent? So Florida is really important to us. It is a great state.

for veterans and for currently serving military personnel. It's the number three state for us. We have about a million of our members in Florida. And today, maybe about 150,000 or so in the path of the storm through Florida and into South Carolina. We have talked in the past about how difficult it is in terms of a business environment to operate in Florida because of, one, the fact that there is all of this exposure to hurricanes. to the regulatory environment, litigation and fraud especially. Now you pile on that, the inflation cost of replacing and repairing homes and cars, the inflation factor with labor and reinsurance costs, that is insurance for insurers.

What's it like for you to be operating in Florida right now? Where is there still room for improvement? Well, Florida is a very challenging market, probably one of the most challenging markets we operate in for all the reasons that you described. As a mission-based organization, taking care of military families, we're working hard to stay in the state and to continue to write and serve.

So we've been really careful about how much exposure we write in coastal areas and then being really, really careful in terms of the underwriting we're doing kind of neighborhood by neighborhood and house by house in order to write good risk, but also in order to take care of as many of our members as possible.

The other thing I would say is financial strength as we've been building for 100 years gives us the ability to absorb things like Ian last year or Idalia today and continue to be able to serve members well into the future. So from what you just said there, it sounds like you said you're trying to write policies that are good risks. That would suggest that there are policies that you will not write. do you ever consider pulling out of counties or of states altogether as some of your competitors have in Florida, in California, and elsewhere? Well, again, I'll come back to our whole goal in life is to take care of our members. So we're working hard not to pull out of any states. And today we have not.

What we're doing in Florida is being, again, thoughtful about the risks that we write, continuing to have a really strong balance sheet. And we're still growing in Florida, both with our auto insurance and with our homeowners insurance book. We're just trying to do it in a very careful, thoughtful, and measured basis. But for us, this is really about member service and serving our important constituents versus looking solely at the bottom line where someone might make a decision, and let's move out of this state because of kind of the tough financial condition.

Yeah, but of course, if you don't look at the bottom line, the business folds. seen that happen with other insurers that have folded or just found it to be impossible to operate in the state. Now we're starting to see a similar trajectory in California as well. Wayne, it's good of you to come on and join us on such a, I know it's a really busy day for you guys at USAA. So thanks for giving us some of your time. Well, thanks, Contessa, and I just want to shout out to all of our teammates in Tampa. We've got about 5,000 there that are impacted personally as they continue to serve our members. And it's always good to be on with you guys. Thanks for bringing the story to life today.

Sure, sure. Yes, thank you very much, Wayne. All right, coming up, speed bumps for the self-driving push. Cruise's San Francisco debut hits a snag. While regulators now have questions about Tesla's autopilot systems, we'll bring you all the details when Power Lunch returns. The road to an autonomous futures hitting some speed bumps. Cruise rolled out autonomous cars for ride-sharing in San Francisco,

but then had to pull back after one hit a fire truck or a fire truck hit it. Phil Lebo talked to the company's CEO. about the issues. In whatever case it was, there was a collision between a fire truck and one of these robo taxis, Phil. And Contessa, it's been a weird August for crews. First, they have the expansion that they are granted by regulators in California for 24-7 service in San Francisco. They can start offering people to pay for the autonomous ride hailing. And then it isn't long after that. You've got a couple of incidents, one where a number of cruise vehicles were disabled because they ran into connectivity issues and they were disabled in intersection. And then you see this video here

where a cruise ran into a San Francisco fire truck. And the DMV in California then said, you know what, we're going to investigate these. And while we do, Cruz has dialed back to 50% of its fleet capacity relative to where they were expecting to be. This morning on Squackbox, we talked with Cruz CEO, Kyle Vote, about his bull. belief that ultimately Cruz will be able to expand. Here's what he had to say. It's really easy for us to get caught up in the excitement and novelty of AVs anytime they do something different than a human driver would. But if we create a double standard or start ignoring the fact that humans on average are actually not very good drivers and causing havoc

on our roads, I think we run the risk of getting people hurt. Remember, Cruz is a subsidiary of General Motors and GM CEO, Mary Barra is very bullish on the future for Cruz. She believes that the cruise service could generate $1 billion in revenue by 2025 and $50 billion annually by 2030. The service continues to expand. They're moving into new cities, testing out the service, and they believe that they will continue to grow. And we'll see what happens with this investigation in San Francisco.

At some point, we'll get some kind of a determination by the DMV, whether or not, sure, go back to full service or if they need to stay restricted. All right, Phil, stick around. We're going to stay with the self-driving theme. CNBC.com's Laura Kalladne writing about a so-called Elon mode configuration for Tesla's autopilot, which federal regulators are now asking for more information about. Laura joins us now from San Francisco. Laura, it sounds like this so-called Elon mode is a kind of cheat code that will disable a warning system that pops up on your Tesla

if when you're in autopilot, you take your hands off the wheel for an extended period. That's right, Tyler. So we've written about Elon Mode before. That's a nickname for it. It's not what it's called in the code base. This is a server-side configuration, so Tesla would have to, you know, set it and allow select drivers to access this, but it effectively bypasses the what's called the autopilot nag.

It's this, you know, first you'll see... display on the screen that tells you to, you know, put your hands on the wheel, pay attention to the road. And if you kind of keep your hands off the wheel for too long, it'll escalate to a beep, and eventually it can lock you out of the more advanced features that are part of autopilot and FSD. How do drivers who want this cheat code get it? Well, that's part of what NITS is looking for. They want answers about how many drivers have been given access to this. You know, was it really just for, like, one executive or how widespread was its use?

And, you know, Tesla sort of wants to have its cake and eat it to you when it comes to self-driving. The brand names they give for these things make it sound like their cars are autonomous. And then they tell regulators and in the fine print, they say, this is a level two system. You have to keep your hands on the wheel at all times. Phil, what have you heard about this so-called Elon mode? And whether Tesla could be sanctioned somehow for allowing something that on its face sounds like it might be outside of the boundaries of what the federal regulators would allow? Sure, they could be sanctioned.

It's reasonable to assume that the regulators, if they determine that Tesla has set this and they've allowed X number of people to use the quote-unquote Elon mode, feasible to assume that the regulators will say, shut it down. You know, this is not allowed. Cheat codes are frowned upon by all regulators, and certainly I'm sure Nitzu would not look kindly on this. So it remains to be seen exactly what Nitzha ultimately does as they do this investigation here.

And part of that depends on how widespread it is in terms of people understanding how to access this code. Do we do? Yeah, Laura, asking for a friend, how widely used do we think these cheat codes are? Is that a few hundred people, a few thousand? What? We don't have the numbers. And, again, Tesla actually sought confidential treatment for their response to Nitzvoutbeth, which is interesting to me. I mean, but it's the special order that the regulator sent to Tesla was written in a broad way. They didn't specify Elon mode only, but anything that allows, you know, drivers in the configurations to bypass those autopilot nags, they wanted to know about it. All right.

I suspect we'll find out numbers later. You have to leave it there. Laura Kalladne, thank you very much. Phil LeBow. As always, great to see you. Coming up, struggles in the Lone Star State, Bernstein, downgrading shares of Texas instruments to underperform on concerns over revenues and gross margins. We'll trade TXN and other movers of the day in three-stock lunch. That's next. Time now for today's three-stock lunch. Up first, analog chip maker, Texas instruments slipping today on a downgrade from Bernstein.

Bernstein says it sees problems with the company's long-term strategy that includes greater in-house chip production. And there you see that it's off by quite a, what is that, a full percent now here with our trades. Eva Ados, ER shares chief investment strategist. Nice to see you today. What do you think of Texas Instruments? It is a sell. That's a legacy company has done very well over the years. However, it's now showing signs of decay.

The revenue growth is down. It's actually now negative 4% compared to 6% for its peers. And what's more concerning is that SJBOR, you know, costs have been increasing, gross margin has been dropping. As a result, we're seeing that EBIT has gone from 55% to 51%. I think weak out going forward, it's a sell. All right, let's move on to Sun Run, Eva. The stock up more than 4% on an upgrade from City saying headwinds, headwinds are priced in. A city also says it's not getting enough credit for gaining market share and strong battery storage businesses. Eva, what do you say?

It is gaining market share, but it's still among the weakest in its sector, weakest margins in its sector by far, negative 30% compared to positive 6% for its peers, revenue growth, it's half its fears, relative valuations above double its fears. And so I don't think fundamentals look that good. It's a sell. I think they're much better opportunities such as solar edge or end phase in the sector. All right. Our last name today is PCMaker HP. That stock is down about 7%. It's the biggest. loser in the S&P today. The company posted underwhelming results yesterday, lowered earnings guidance for the full year. Clearly, the street doesn't like it. Eva, do you? I would have it as a hold, and I'll explain why. I do not like the fact that they have weak guidance going forward. I also don't like the fact that revenue growth was down 15.6% in the last year. However,

after the significant drop today, the relative valuation looks better than it's fierce. Actually, it looks attractive. So if you do own it, we think that it's going to continue to perform with the market. If you don't own it, there's no major catalyst to buy into it. Eva, it's great to see you today. Thank you for joining us. Eva, Ados, Tyler. All righty, be sure to join us for CNBC's Delivering Alpha Investor Summit on the 28th of September in New York City. Investors and business leaders will provide insights and analysis to help you balance risk with maximized returns. You can scan the QR code on your screen right there or visit at CNBCEvents.com slash delivering alpha.

There's more power lunch after this quick break. Well, we only have three and a half minutes left in the program and a bunch of more stories we want to tell you about. Here's one. The average fee for using an out-of-network ATM has now jumped to a record. You want to guess what it is? You want to guess what it is? $3.

$4.73. That is, according to new data from bank rate, and comes despite President Biden's crackdown on so-called junk. fees passed on to consumers. This is yet another example of why I think cash is going to become obsolete. If you have to pay $4.75, think of the profit margin on that transaction. It must cost pennies. At the casino, you know what the ATM fee can be? Ten bucks. Easy. Forget it. Forget it. Forget it. Well, despite the fatigue over fees and tipping, consumers are still donating to charity at the checkout counter. They don't really want to,

though. The data shows us that companies raise more than $749 million from consumers last year. That's up 24% from 2020. However, 73% of shoppers say they feel positive or neutral about being asked for the donation. That's down from 85% in 2021. You know, like, do you want to add to add to add to it? I'm like, I already choose my charities. Yeah. Okay. I'm grouchy when I go to check out. And American drinkers could be losing their taste for brown liquors. Jack Daniels maker, Brown Foreman, says U.S. net sales dropped 8% year over year, citing supply issues, and believe it or not, lagging whiskey sales. I thought whiskeys had been on the upswing over the past few years.

Like it was the cool thing to do to talk about which whiskey you have in your cabinet, which rye, bourbon. Bespoke bourbons, bespoke burbushed scotches as opposed to. I mean, there was that period where it was. all the vodkas that were so popular. But, you know, like when you're talking about the move into the health field, lighter alcohol content, clear beverages, you know, it starts to take over. And we've seen such a boom in, say, hard-seltzer. Hard celtzers, tequila, et cetera. If people are not buying whiskey, they might be spending that extra money on.

No, no, no, no, this is not the right transition. Lego. We go from whiskey to Lego. The six-year-old. Yeah, right. Going from Jack to Lego. This is not how it works. Much of the toy industry, though, is struggling, but the Lego Empire is growing.

Here we go, brick by brick. The Danish company reported first half sales of about $4 billion. One percent growth from last year. Compare that to double-digit sales drops from Mattel and Hasbro. But they're branching out. They're starting to get new kinds of Lego. And, of course, Lego lasts longer than five, seven, nine. You know, even adults enjoy Lego.

And the adults can have a little whiskey all along. the side while you're making that 4,000 piece item. And we end with birthday wishes to Mr. Warren Buffett. He turns 93 today, and I wonder what he would say about yesterday's story, that you reach your financial peak in your early 50s. Decisionally, he seems really almost as sharp as ever. Warren Buffett, we wish you a very happy birthday, and we thank you for all the educating you've done over the years and the capital you've made for your sharehold. Yeah, absolutely amazing. millions of dollars in a single week.

Yeah. Thank you for watching Power Lunch.