Power Lunch - Market Parlay, A Fine Line 1/19/24

Episode Date: January 19, 2024

Markets are higher again today, with all 3 major averages now higher for the year after a rough start to 2024. But is the rally based on “bet” that may not even come to fruition? We’ll explain.Plus, speaking of bets -- we’re seeing growing complaints from sportsbook customers claiming bad lines are impacting their payouts. We’ll dig into the details. 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. Alongside Contessa Brewer, I'm Tyler Matheson. Markets are higher once again today, up for the week, and all three major averages now higher year-to-date after a bumpy start to 2024. The S&P has just hit an all-time high. Very likely will set a new closing record two hours from now. Our eyes are on it. We are watching for the countdown. And the NASDAQ 100 also breaking or hitting an all-time high today. and there you've got the NASDAQ up 1.6%. Chip stocks, the biggest driver of tech's outperformance, both the SMH and the SOX ETF, are up more than 5% this week. But is this rally based on, I mean, I guess I would call it a parlay, is it a bet that might not actually come in?

Let me think about this. The first leg, the Fed will have to cut rates early and often, far from guaranteed, given some strong economic data that we've seen recently. Leg two, second part of the parlay. We've heard a lot about the $8.8 trillion sitting on the sidelines, but even if rates on short-term bonds and money market funds fall, investors may still prefer their relative safety. And leg three, tech has to continue to carry the markets, again, far from certain given the layoff announcements so that we have recently heard. And I would just add in here, let's look at the global uncertainty over macroeconomics.

us now to weigh on the odds on all of this. Brian Jacobson, Chief Economist with Annex Wealth Management and our friend Ron Insana, CNBC, senior analysts and commentator. He's also chief market strategist with Dynasty Financial Partners. What odds would you give or how much would you be willing to bet on this parlay of three things all lining up to really pay off? I put all my chips in the center of the table on this one. I think it's going to be a decent year. It may not be 2023, but, you know, the fourth year of presidential cycle. the fact that I believe the Fed will be cutting interest rates by April May. I think money will come off the sidelines.

8.8 trillion is a lot of cash. And if rates come down just a little bit and you get a portion of that coming into the equity markets, you're fine. And for the rest of the world, the U.S., even by default, looks better. So that's where you'd put your money. If rates come down a little bit, do you think that that's enough movement then to persuade people who are enjoying whatever you're getting in your CD or your money market fund, the safety zone, is it enough?

to get them to move their money into slightly riskier investments. Yeah, I mean, what was a total, total return on the S&P 500? Last year was 26%. So that's a 21 percentage point differential. I think, yeah, I think ultimately, you know, look, it doesn't happen all in one push, and it'll take some time. And we hear this a lot. Yeah.

I mean, this is the constant clarion call of the Bulls, that there's money on the sidelines that's going to flood the market. It's going to take things up. And I'm not sure I buy that narrative. Well, I'm not sure looking for the flood either. I mean, you know, if you just get an 8 to 10%. Yeah, you did say, you know, a little bit, marginal. So, Brian, what about you?

Do you think that this money on the sidelines is just burning a hole in people's pockets and they're ready to go buy stocks? No, I don't think so. I think actually what we're seeing is that a lot of the quote-unquote money on the sidelines, it never really comes off the sidelines. As people try to reallocate their portfolios for every buyer, there's a seller, so it goes off the sideline but then goes back onto it. And will sentiment improve?

I think that's really the key thing because the money is still. going to sit there in some form or another. And when you look at the dynamics behind what has gone into money market funds, it's really come out of savings. And so I think for a lot of people, this just represents a reallocation of what economists would call their precautionary savings. So it's not necessarily something that they have earmarked for more speculative or long-term purposes. It's more about for your rainy day fund. And really, when you look at the total amount in checking accounts, savings accounts, and money market accounts, it's at about about 10.4% of household assets. That is the historical median. So I don't think people are

over allocated to cash by any stretch of the imagination here. Or react, Ron? Well, I mean, they're overallocated if they want to get better returns than they're getting in their money for cash. Yeah. And it doesn't take all $8.8 trillion to move, right? I mean, it doesn't have to be that much. And again, they're not the only buyers in the game. They're professionals. There are, you know, wealth advisors, a whole host of individuals who make allocations towards equities. And again, when I think you look at the U.S., you look at the fact that I'm 100% certain the Fed's going to start cutting rates, even just to get monetary policy closer to neutral. We don't need a recession. We don't need, you know, some sort of calamity to get the Fed

to move. And I think under those circumstances, you know, the market has a tailwind rather than the headwind that we saw, at least coming into 2023. It's interesting, though, Brian, you think that that's a real wrestling match between the markets and the Fed. Yeah, I think that there's still that wrestling match between what the Fed is projecting and what they're likely to do. versus what the market is expecting. And a lot of the volatility that we have seen year-to-date, I think, reflects that wrestling that's going on. Instead of the Fed cutting early and often, it's likely going to be a little bit later, let's say maybe closer to summer. I don't think that, you know, May is off the table, but maybe it's more like June. And in fact, they probably

want to take more of a two-step approach to this, teeing up a tapering of quantitative tightening, get that done and get that underway and then do the rate cut. So I think that there are a couple almost like sort of landmarks that you can look for as far as when the Fed is likely to start cutting. They probably need to move from just talking behind the scenes and sometimes in public speeches about tapering quantitative tightening to actually having a coherent plan. And then they will really tee up the rate cuts,

but it's likely to be very slow and methodical. It's interesting that long term you're supporting small, emerging markets, foreign investments. I'm wondering, I mean, I spent a lot of time looking at insurers and their global businesses. And this geopolitical uncertainty keeps coming up. It comes up in earnings calls. It comes up in my private conversations with them that insurers, who are looking at risk and how much money it would cost them, factor that in. Do you think that that should play a role whether people are considering foreign investments? Emerging markets?

Yeah, especially with emerging markets. I mean, historically, that's one of the reasons emerging markets have traded at a discount to develop markets is because of that additional political risk. I don't think that's going to go away. You know, sometimes it does during periods of time like 2004 to 2006, I think 2015 to 16. You had some brief periods where emerging markets really outperformed kind of closing that valuation gap, the discount that they historically trade at. But then the reality of the political uncertainty slaps investors in the face once again.

And so when we look here at Annex on our investment committee at the valuation opportunities, we always have to keep in mind. Valuations are a horrible timing tool. It might tell you where you want to spend time in the market for the long term. But as far as getting those different turns and when valuation gaps can begin to close, it's really difficult. That's more driven by shifts in sentiment and liquidity. So, Ron, last year was the year of the magnificent seven, all of those big tech stocks.

They'd be hard pressed to do as well this year as they did last year. So far this year, Invidia is doing just fine. They're doing just fine, you know. But where, if you had fresh money of that $8.8 trillion, which I know you have a big hunk of. Yeah, because that's why I'm sitting here. That's why you're sitting here. Where would you put fresh money today? What kinds of equities?

I mean, it's possible that the big, Magnificent Seven will be a source of funds at some point. Small caps may have a little bit of room to run, given the historic underperformance that we've seen there. Having said that, I mean, I'm still comfortable with the S&P or, you know, if you want to do the equal-weighted S&P, that it takes a little more of the big seven out of there, magnificent seven out of there. You know, just getting back to the Fed for a minute because I do think this is going to ultimately be the catalyst. Nick Timrose from the Wall Street Journal published something really interesting on Twitter today. The consensus on core inflation now, which we're going to get the December numbers coming up in few weeks is below 2% both for the three-month and six-month annualized number. You get there,

and the Federal Reserve doesn't need an excuse to cut rates. No, they've made the goal. They will have made the goal. And so in that regard, you know, I think it rising tide lifts all ships. And again, the U.S. to me, I've had a homeward bias for quite some time. I would still follow that. And I think, you know, whether you're buying the S&P or the NASDAQ or the component of the Russell 2000, I think a mixture of those three is a hedged bet on both. you know, small cap and large cap, and then the other mixtures that you get when you buy those indexes together. Brian, same question to you. Where would you put fresh money right now quickly? Yeah, the way we're looking at it is favoring some of the larger cap in this type of environment.

They're also incredible as far as their shareholder yield and cash flow generation, a little bit more of a bias towards, let's say, dividend paying and the more highly profitable stocks. So if you kind of think about S&P 500, but a slight bias more towards equity income. Brian, thank you very much. Appreciate that. And how cold is it going to be in Buffalo this weekend? Well, apparently they've asked the Buflonians to come out and start digging out the stadium again. Again? Oh, is that right? More snow.

Oh, is that right? More snow coming this weekend. Yeah, listen, you know where I'm from. I know where you're from. That's why I'm asking. So we can only hope that we pull that off. And the interesting thing here is if Houston were to upset Baltimore and the other divisional round. You'd have another game there.

Houston would have to play in Buffalo. Houston would have to play. And they're a dome team. Oh, and there's nothing like bringing in a warm weather team to a cold, frigid seen with Miami and others, yes. At Green Bay. But then there was the opposite way. As the late great Tim Rose used to say, go bills.

We'll see what happens. All right. Thanks, Ron. Thanks, Brian. Appreciate it. All right, let's dive deeper into the tech leg of this market parlay. We talked about, as we mentioned, optimism is high. NASAC 100 at an all-time high. And chip stocks are leading the way.

Deirdreboza joins us now for today's Tech Check. D. Hey, Tyler. So, common knowledge tech obviously led the way last year. And after a rough start at the beginning of this year, it continues to keep that leadership. But let's dive into the different sectors. And you see that chipmakers by far in a way is the best performing sector within tech itself this year, but also over the last five years. Take a look at it versus the software ETF, an internet ETF, a tech ETF. And the NASDAQ itself,

it has just been such an outperformer up nearly 300% over the last five years. And when you look at where the gains have come from this year as well, it's for. To me to mention all the chipmakers, the only one of the magnificent seven that sort of in the top percentile, the top performers of the S&P 500 is Invidia. But you've got other ones like Juniper, AMD, Palo Alto, Arista, Broadcom, etc, etc. Chipmakers have just been a fantastic investment over the last five years. And it looks like this year they could lead the way again. Of course, at some point, valuations get stretched or there's opportunity elsewhere. But the idea that this generative AI shift, platform shift, is so big and the need for, you.

chips and especially high-end ones like GPUs, the ones that Nvidia and that AMD is going to be making, is going to continue to fuel this rally. And some evidence of that was Zuckerberg's message yesterday when he basically said that he is just loading up on these GPUs and CPUs in order to develop their own large language models. It kind of gives investors an idea that this could continue to move. Let's talk about the, on the one side, these companies investing heavily in AI. On the other side, they seem to be cutting jobs. Yes. So those two ideas are not actually at odds with each other

because you have to think that more chips and smaller workforces, they actually go hand in hand. Because if you are shifting your business towards this, and we've talked about this, Tyler, this generative AI model, you're going to use those GPUs or other advanced chips to make your workforce more efficient. You may not need those junior engineers

that can be replaced with generative. A.I. So you can be spending a lot more on the back end, on the chips, on the infrastructure, while actually cutting down your workforce. And I think that's what we've been seeing at Google. We've talked about their rounds of layoffs this year. And even Zuckerberg yesterday, he said that they're consolidating their AI teams. That could lead to layoffs as well. Yeah, all right. Well, Deirdre, we'll keep an eye on it, right? Yep. Thank you. Appreciate that. Coming up, investors begging for several rate cuts. Most big bank CEOs just don't see us getting that close to that many. After the break,

we'll hear from the CEO of Huntington Bank about this and the sector at large. Welcome back to Power Lunch, the Fed, a hot topic among the big bank CEOs at the Worldwide Economic Forum in Davos this week. Let's take a listen to what was said on Squawk Box about the likelihood of rate cuts this year, starting with Goldman Sachs's CEO, David Solomon. It's hard for me to see the market's view of seven cuts, you know, this year. You know, I do think there's a reasonable possibility of some interest. interest rate cuts and some easing. But it's really going to be dependent on what the data says and how the economy transmits through the year. I do think we are probably past peak inflation.

What's interesting though, Becky, is like it is not inconceivable that we have to go faster, i.e. 50 basis points, if you sort of price that out, it's kind of 5 or 10%. We have four rate cuts, not the six or seven in the market. For this year, for this year 24, four and 25, which leaves you to 3% plus Fed funds rate, probably have a four-word handle on a 10-year rate. That'd be a normal rate curve for those of us have been around a long time. Moynihan going without the top coat. Ooh, baby. All right, let's get some reaction from Steve Steinerauer, chairman, president, CEO, and lots of other things that hunting and bank shares. He also previously served on the board of the Federal Reserve Bank of Cleveland.

Steve will get to your bank's earnings, which came out today in just a minute. Let's start, however, with the Fed and see where you are on the state. speed, pace, and frequency of interest rate cuts this year? Where are you standing? We model both the forward rate curve and then we've an adjusted curve, and it's more in line with what you heard from those three CEOs. Three, four cuts, generally later in the year, obviously data-dependent. What does that do to your business if rates come down at that level? Helpful? Well, if it's three or four cuts, it's helpful. If it's six or seven, that might imply a of soft economy, and that would not be helpful to us and anyone else. But we model it both ways,

and in either direction, we've got a very tight net interest margin, part of that through hedging. You're a major, major presence in the markets you serve, many of them in the Middle West, Ohio, West Virginia, those places. How's business? How's the economy there? Business is generally good, and the consumers still reasonably strong. wrong. Delinquencies, which might be an indicator, came in, we're still well below 2019 in terms of some of our core products. So housing prices are stable. Housing for sale is a very limited supply. So on many indicator fronts, things look good. And businesses are generally having a good year, not necessarily a great one, but a good year. This rate pivot by the Fed

will be helpful. I'm looking now at earnings today, Steve, that you had an earnings beat, but a revenue miss. And then when I'm diving into the details here, that your average total loans and leases increased $445 million from the prior quarter to $121.2 billion, and then increased 2% from the year ago quarter. What does that tell you about your consumer and their economic health? Well, the industry generally has pivoted a bit. off of what happened at Silicon Valley because of uncertainty. So you've heard expressions of things like RWA diets and others. We didn't do that.

We chose to continue to support our customers and grow our loan portfolio, but it's off. 23, it was 2% for the year. 22 was 10%. We purposefully slowed it down with all the uncertainty about where rates were going and what the underlying economy would perform at. Now, the certainty or the confidence post the pivot gives us a lot more confidence in growing the portfolio, loan portfolio, and that was what we shared

on the earnings outlook today. How does an executive like you and at other banks prepare for what I think caught some maybe more casual observers of the banking industry a little bit by surprise, and that is the charges that the FDIC imposed on banks? How do you plan for that? How do you know how much is coming and how do you prepare for the right-offs or the markdowns that you have to take as a result of that? Well, you can't plan per se because it's large bank failures

and then it's losses as a consequence of those. And we haven't seen large bank failures now for a decade and a half. You have to go back to 2009 or 10. So there's not a budgeting capacity for this. And ultimately, the bank's management and boards are responsible, but the better the regulators do in terms of oversight, the smaller those losses should be that would hit the fund. And the banks support FDIC insurance, not the taxpayer, the banks do.

So in this particular case, an extraordinary level of losses out of two of the banks. And we and others have to replace $16 million dollars. What did it cost you? For us, it was a little over $200 million. $200 million that just comes right out of the hide of the bank. That's right. That's right. Well, Steve, thank you very much.

time expense that we and others have. You can't budget it. You just absorb it. We have net earnings beyond that. We grow capital, grow liquidity, and continue to perform and meet our customers' needs. And there you see a lot of regional banks moving very nicely today, including yours, up three and a half percent. Steve Steinauer. Thanks very much for being with us. Pleasure. Thank you. You got it. Further ahead, insurance costs keep on climbing. Travelers got a big rise in premium. So that was great news for travelers. Boy, they just really wowed the crowd with their earnings. It is not so great if you have to pay the premiums. More on that when we come back. Welcome back to Power Lunch, everybody. As we've discussed, we've got records in lots of places today. Stocks rising. The Dow is up

all-time high for the Dow. The S&P 500, all-time intraday high. The NASDAQ composite not an all-time high, but the NASDAQ 100 is at an all-time high. It comes as economic data, continue to show a strong economy. Today's latest evidence, the highest reading on consumer sentiment in two and a half years. Rick Santelli joins us now with the Bond Report from Chicago. You know, Tyler, it really is quite amazing when you think about how strong consumer confidence was today and how it wasn't that long ago that this metric was at 50. It's at 78.8. And the split decision here, We have really nice, strong confidence, which most likely is reflecting a strong stock market, which is reflecting an economy that definitely is the best dirty shirt in the laundry basket

with respect to global activity. And while all that's going on, we saw the one in five to ten year inflation rates moderate. So one would think it really, from a stock market perspective, could be a bit of a Goldilocks. But look what's happening with interest rates. A two-year note yield, and you see it there, is up nearly 30 basis points this week. And most treasuries, tens, 20s, 30s are not only at the highest yields of the year, they're at the highest yields going back to the second week in December in terms of tens and 30s, as you see on that chart.

And what's very interesting here is that we're going to keep comping to the 12th of December until we close above 420, but to think that interest rates are so firm and the equity's so solid, all green, all day, that it's going to make a real tough decision for the Fed. Finally, five-year break-even. You can look at the two, five, ten, third of your break-even. They all are moving up. The five-year break-even has up for the six consecutive session

at a two-and-a-half-month high. Now, granted, it's hovering around 2.30. But the implications here are important because the trend is your friend when you trade, it's not necessarily the friend of the Fed, when the trend of inflation seems to be higher in certain metrics and conflicting, like University of Michigan, in others. Contessa, back to you.

Rick, I have a question for you if you wouldn't mind. Am I wrong, but is the yield curve still inverted? And if it is, why aren't people wringing their hands over it? Yes, it is inverted, but it's much less inverted than it was. And today it's hovering around minus 20, basis points and that is because two-year note yields really have surge inverting it a bit more. But we spent a lot of time this week, Tyler, under 20 basis points. And I think that really is the story that most of the big kinetic activity in the 2s 10 spread

has been de-inverting. And I think that's why there isn't more hand-wringing. As a matter of fact, I would still go on record saying that steepening yield curve, I'm watching it move more into positive territory, seems to be the trade most of my sources think is the best trade of 2024. Very interesting. Glad I asked, Rick. I knew you'd have the answer. Thank you, sir. Rick Centelli. Thank you. Of next, a fine line growing complaints from sportsbook customers about bad lines affecting their payouts, mistakes, and not getting paid for them. We'll explain more when Power Lynch returns.

Welcome back to Power Lunch. Check out the Round Hill sports betting ETF up 4% this week. It follows strong results from Fandual Parent Flutter, those shares just soared yesterday after earnings. And that helped boost its rival draft kings. Again, you know, week to date, we're looking really good here. Flutter up 22%. It was a good week on Wall Street and Main Street. But more and more gamblers are beginning to share stories of how bets got voiced. by their sports books and maybe overusing the obvious errors clause. For instance, if a site listed the Kansas City Chiefs as plus 30 points against the bills, instead of plus three, well, it's an obvious error.

And any bets made on that line would be voided. But there are others voided, they say, like this bet from Danny Moses, an investor who was profiled in the Big Short. Moses says he bet on the Baltimore Ravens to beat the Detroit Lions in the Super Bowl. The bet was 500 to 1 odds. Three days later, Hard Rock in Florida voided his bet, the bet, which is now listed at 13 to 1. He says when the void happened, he wasn't given an explanation. By the way, we did reach out to Hard Rock, and they told us that 500 to 1 is an obvious error,

that the odds were 10 times what they should have been due to a pricing mistake by a third party. And in fact, they named the third party. They say it's Sport Radar, which is a data provider and involved with a lot of these sports books. Danny Moses joins us now. Did you know it was an error when you made the bet? Was it obvious that this was an anomaly? It was a great line. I'll tell you that.

And so when I made the bet, it was a friend of mine, Brian from Jacksonville. I went to high school with who was on a plane who couldn't access his account but saw it online, had me go look at it. And he says, this doesn't seem right. And if it is, maybe we can bet it together. I said, okay, the max bet they'll take it a 5001 odds bet is $50. So therefore, it would have been a $25,000 a payout. to put it in context, Detroit beating Baltimore, which should be higher odds, it was sitting at 60 to 1.

See, it was clear that it was clear that it wasn't some type of anomaly. And the interesting thing contested is that I went on Twitter, my friends at WagerWire, and we put this out there, and I got an immediate tweet back from Hard Rock bet, which said, whoa, good luck. What I thought was affirming that this bet existed. We also alerted some of our friends in New Jersey, where Hard Rock is online as well. They put their bets in there, and those bets are actually still. alive as we speak right now. Okay, so I went to Hard Rock, and I wanted to get some answers from

Hod Rock bet. First of all, on the reply that you got from Hard Rock, they say a social media staffer replied wishing you luck before realizing the full content of the clear and obvious error with the wager, and then deleted the tweet. Secondly, they say you could have known that that was an error because you could have looked across other sports books and seen that it was in the neighborhood of 50 to one odds. And in fact, they said it wasn't just the matchup that you found that there were errors that extended to multiple NFL futures matchups and that 117 players made 225 bets across these obvious error markets. Were you interested to learn that your friends in New Jersey, they still have active bets that have not been voided? Yeah, let me just say,

the only way to gamble in Florida online is hard rock. So I don't have access to those lines, at least not to place them in Florida. Not legally. Exactly. In New Jersey, there's a lot of competition, as you know. And so they probably one of two reasons from a marketing perspective, they didn't want that bet to be voided, canceled. And two, I think the regulators in New Jersey are a little bit tougher when it comes to consumer protection laws. And I've since obviously filed a complaint here down in Florida with the Gaming Commission here as well. So obviously it was an outlandish line, but the same.

time, how could they not know that I've been hedging all the way through and maybe trying to hedge that bet through the end of the Super Bowl? So to me, I think it falls between a line that was obviously high, but also lack of customer service. There is no one on the hard rock bet help. I've tweeted at them. I've tried to reach them. You can't get anyone on the phone. It would have been nice to get an explanation of some kind. They said that they don't have a record of you contacting customer support team via email or chat and Salesforce records. I want to say that I've reached out to other sports book operators to ask, how do you handle it? They all have this on this book. Basically, if there's a fat finger error, if it's an obvious technical

mistake that you should know that it shouldn't exist. But in New Jersey, they're not allowed to just void it. They actually have to apply to the regulators in order to avoid it. So you're right, the regulation, and this is what Hard Rock told me, the difference is the regulators in Florida look at those mistakes differently than the regulators in New Jersey. When you and I talked on the phone previously about this, I was interested because all the sports books have this. I asked whether Fat Finger mistakes apply to the customers too, and in fact, Hard Rock said, yeah, we get lots of customers calling back and saying,

that's not the bet I meant to make. And they look at the history, and if it looks like it's not an abusive situation, they will allow, you know, out of goodwill the customer to void that bet. but you think the rules should be different across gambling. Well, yeah, I think if you want to be a regulated market like Wall Street is, when there's a fat finger on Wall Street, depending on who the parties are, they stay on the tape. If you meant to buy 100,000 shares and you bought a million,

they're not taking that stuff off the tape. And so, again, my issue is twofold. One, customer service lack there of. And two, there's a lot of times where these bets, probably if the team had lost, there was no need to avoid because they lost and went into the customer service. accounts. Am I to believe that if they had not voided the bet and the bet had not materialized and the lions may have lost in the first round of the playoffs if the bet was still alive or with the people that have this bet alive right now in Jersey, would they get their money back? I don't know.

And so the whole part just bothers me that they launched quickly in Florida and they're kind of figuring it out later here and they're the only game in town. And that's the frustrating part for me. And that might be a lesson for other states that are considering who to allow in and whether a monopoly gets them more. There is some indication and some research that is a more competitive marketplace actually lands the states more in licensing fees and more in tax revenue when it's a more competitive playing field. The American Gaming Association says that basically the illegal offshore businesses are more

risky for customers. And they say 5,000 regulators nationwide work with elected leaders to establish these markets and to enforce the rules. and that they definitely want to ensure the integrity of the market, and they want to protect consumers and deal with consumers and potential complaints. I just want to be clear here, because you are a well-known investor. You mentioned WagerWire, which I understand that you're an investor in that business. Is any of this about giving draft kings?

Do you own draft king stock? Not at the moment. Patty Power. Flutter I do at the moment. I am that. Is any of this about? giving a boost to your other investments? Not at all. I've been involved in the sector for years. I'm standing up for what's right in this. I did that obviously on my years on Wall Street,

trying to warn people or help people through the investment process. This is just more of the same here. And so I think educating the consumer and making them aware of this, obviously can help everybody. And I think this is a nascent industry. I love the industry from the macro perspective. It's a huge sector of growth area. And so there's going to be mistakes that are made along the way. not a question about it. And I just don't feel like this was, that I was made whole on this. And one of the things you could have done is just create a free vet on the site, maybe, would have been filled out the appropriate payout potentially of $25,000, maybe what the right odds should have been, whether that was 30 or 40 to one.

That's, again, that's the part that bothers me the most about. You know, the Romans said, caveat mTOR. I mean, if it sounds too good to be true, it probably is, and buyers should beware. At least you got your 50 bucks back. Hey, Danny, great to have you on with us today. Thank you. Thank you for having me on. All right, let's get to Bertha Coombs now for a CNBC News update. Tyler, a grand jury has indicted actor Alec Baldwin today in connection with a deadly shooting on the movie set of rust. It comes after prosecutors had dismissed earlier involuntary manslaughter charges against Baldwin back in April. They convened the grand jury in the fall to look into whether to refile those charges.

Baldwin's attorneys say they look forward to their day in court. He could face up to 18 months in prison if convicted. Thousands of opponents of abortion braved the cold weather and snow to demonstrate today in the nation's capital. Today's March for Life is the second rally since the June 22 Supreme Court overturning of Roe v. Wade, which ended federal protection for abortion rights. Much of the country has been under a cold snap this week. But ice has been the biggest issue in the northwest. One Oregon County reported nearly 200 visits to the ER for falls yesterday.

That's the highest number in nearly eight years. And the continued ice and wind has knocked out power to more than 110,000 customers in Oregon today, according to the state's utility, Tyler. Seems like a good weekend to just stay in and stream some movies. All right, or movies, whatever you like. Whatever your taste is. Bertha, thank you. Still ahead. Insurance endurance shares of Travelers on the rise, thanks to higher investment returns lower claim losses.

We'll bring you the full story when Power Lunch returns. Traveler shares up 6% on a massive earnings beat. The global insurer set record quarterly highs in core income earnings per share and return on equity at 24%. They're now writing more new policies and then charging more for premiums. Plus, they're keeping the customers they have even when those premiums go high. higher. Net investment income up 24% over the same quarter last year, driven, of course, by higher rates and fixed income. And catastrophe losses were lower last quarter. It was a reversal from a much higher catastrophe cost in the previous quarter. And Tyler, Gallagher Ree was just

out yesterday with a report on the catastrophe damage around the world in 2023. And what they found was it's the fourth year in a row that global insured losses were more than $100 billion. More than half of those came from convective storms, aka... Thunderstorms, tornadoes, things like that. Thunderstorms. Thunderstorms. Thunderstorms. In the United States.

Well, the thing is, an insurer like travelers would look at that, and none of those individual thunderstorms would create so much damage that they could go to their own insurer, a reinsurer, and say you've got to kick in part of the damage here. So travelers just had to shoulder that. It makes it all the more impressive when in one quarter they can set all these records because catastrophe costs are lower. Climate risk is a real headwind for insurance premiums. And people who are paying their homeowners premiums are noticing it and their car insurance,

but that's a big part of it. Definitely. Definitely is going up a lot. All right, folks, still ahead. A good connection. upgrading shares of AT&T to buy, seeing 25% upside from here, saying its challenges are finally, quote, in the rear view mirror after its years-long, years-long transition back to a pure telecom play. We'll trade it and other movers in the last three-stock lunch of the week. That's next. Crypto Watch is sponsored by Grayscale.

Crypto investing begins with Grayscale. Time for today's three-stock launch where we look at three-big- Movers of the Day. Here with our trades, Gina Sanchez, Lido, Advisors, Chief Market Strategist, also a CNBC contributor, a member of our stock draft. We'll get to that in a minute. Up first, though, is IBM. That one getting an upgrade from Evercore ISI to outperform from inline. Also raising the price target there to $200. The stock is up about 2% today, nearing its highest level since 2014. That's 10 years. Gina, your trade on IBM. So we've been holding this stock, and it's been a great holding for us. However, you know, it is now above its PE average and that's a challenge, but it's growing and it is

you know continuing to put one foot in front of the other. We're seeing some slow down in terms of tech spending, but IBM's consulting division has not really had to feel it as much as the rest of the industry. Okay, up next we have AT&T. It's a stock that got an upgrade from Oppenheimer. The stock has been a laggard, but analysts think it stands to benefit from several tailwind, shares of AT&T up about 2% today. Gina, how do you trade this one?

So this is a challenge. This is a stock we like. We don't currently own it except in our passive strategies. But, you know, yes, it has definitely been a real, it has had a rough ride making those investments into capacity in their wireless and wireline businesses. And they should start to get some, you know, expected earnings out of that.

But if you look forward, the expected earnings for this are still somewhat low, somewhat under the four to five percent, you know, earnings range. So it's coming out in a slowing environment. So that's the challenge for it, but it's trading really cheap. So that's its advantage. All right, let's move on to SLB, which is nowhere near as fun as saying Schlumberger. The Oilfield Services Company lifts its dividend as strong international drilling boosts earning shares up about 2 percent, your trade on SLB. So this is also an interesting one, one that's been a dog for years, this is very highly tied to oil. So as oil prices have been lagging, so has drilling, but drilling has picked up. And if you look into their earnings report, it was international

drilling that really supported this. And, you know, the continued tail risk of unrest in the Middle East continues to be something that could, you know, that could cause an immediate need for oil drilling. But even the longer term need is that as interest rates start to at least stabilize, and eventually we start to get some cuts maybe in the second half of the year in 2024, you know, we should get past the slowdown and we should see demand pick up. That's good for oil.

That will be good for Slumberger. All right. Thank you very much, Gino. But before we let you go, just three weeks away now from the Super Bowl, and that means the end of our 2023 stock draft competition. The leaders, as we come down to the wire, Charlotte Flair, with a commanding lead of 86 percentage points, thanks to her top pick,

NVIDIA, followed by Tori Dunlap and Ryan Reynolds, that guy again. Gina, you and Diamond DeShields are in fifth place, up 11 percent sits the draft with your picks of PayPal and Google. If you only had Google, you'd be in even better shape. PayPal has been the drag here. Absolutely. I feel like we've been the fulcrum around which everybody has gone. You know, Google, great performer. Our thesis there was that even if we saw slowing, that ad spending, all ad spend would go to the strongest, you know, advertising platforms. And Google is that. They also have a cloud play that's definitely a big, you know, a big part of their story. And we think that that sort of continues, even though it is slowing.

And they are a leader in AI, and they probably will continue to be. So that was the story there. It was a higher price stock in rising interest rates. That was a challenge. But it performed really well. PayPal, on the other hand, we were sort of banking on the fact that it is still one of the cheapest ways to access payments. Its expected earnings growth is still very strong, and quite frankly, over the last three months, it's been a stellar performer, but it just has not gotten over the losses that we sort of, you know, endured at the beginning of the stock draft. So it's strengthening up, but it may not get there by the time we get to the end of this.

Like scoring a touchdown while you're down 40. to nothing like the Cowboys did last week, or whatever it was. Oh, yeah. There you go, Cowboy fans. Go pack. Go pack. All right.

Gina Sanchez, thanks. Thank you, Tina. Thank you. Still ahead. What's that got to do with the price of eggs? We'll reveal the reason why omelets and eggs are rising again. Power lunch. Back in two.

We've got a little less than three minutes left in the program, and we've got several more stories we want to tell you about, so we'll get right to it. More corporate layoffs coming, this time at two of the nation's biggest retailers wayfair, you've heard of them, cutting more than 1,600 workers. Macy's plans to cut more than 2,300 jobs across its various platforms, and to also close five stores as part of an incoming CEO, Tony Springs, strategy, to move the company forward. Obviously, retail not all retail the same, and here are two that are trying to cut head count

in Macy's case, really in a kind of to stay ahead of the grim reaper. Well, I mean, the cost efficiencies matter if you're going to try to make a business that is changing and transitioning continue to make sense. Yep. Egg prices on the rise again, thanks in part to a resurgence of bird flu. The average price jumped 8.9% from November to December, according to the latest CPI report. And we should note a dozen large grade A eggs costs on average $2.51 last month. That was more than $2. Wait, wait, more than $2 less than the peak of $482 back in January, 2023.

Do you got that? I got that. I followed you. More than $2 less. They're still cheaper compared to what we were paying. They're cheaper to compare. They were. They're higher than they were.

But eggs are more or less. Yeah. More or less. They cost a lot more than they did five years ago. There you go. Eggs. Okay. Hot housing, cooling off, sales of existing homes dropped to their lowest level in nearly 30 years.

We covered it earlier this hour, or maybe it was the last. I can't remember. I lose track of my hours. It happens, you know. Prices remain stubbornly high, inventory remaining low, interest rates not helping. The National Association of Realtors say existing home sales dropped at 19 percent year over year in 2023. Just over 4 million. That is the lowest figure since 1995. Maybe some interest rate cuts will help, but who knows? Yeah, well, and also having more homes to buy us. especially those entry-level homes. Diana Olik has sort of been preaching this to us for a year or more,

that if there's no availability of entry-level homes, then how do you get your first home? Yeah. You know, it's just not there. One more layoff announcement to tell you about. Sports Illustrated laying off nearly all its staff and the future of the magazine is in doubt. I used to work for the company that owned it, Time Incorporated, long since selling that property.

The company that licensed that magazine for publication missed a payment. missed a payment, and therefore the company that owns the brand revoked the licensing agreement. There it went. In my house since I was a young boy. Thanks for watching, Power Lunch. Closing bell begins right now.