Power Lunch - Mixed Messages, Tesla Tumbles 01/25/24

Episode Date: January 25, 2024

Fourth quarter GDP came in much stronger than expected. But earnings continue to roll in, and we’re hearing lots of profit warnings. So what kind of economy do we have? And what’s the Fed going to do about it? We’ll discuss.Plus, Elon Musk and Tesla gave zero guidance on their conference call. And that worries Wall Street about future growth. The stock is down 10% today and 25% to start the year. We’ll explore where the firm goes from here. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Contessa Brewer. I'm Tyler Matheson. Coming up, fourth quarter GDP coming in much stronger than expected, but earnings continue to roll in, and we're hearing lots of profit warnings about the first half of the year. So what kind of economy do we really have, and what is the Fed going to do about? Well, we have Elon Musk and Tesla giving no guidance on the conference call. That, of course, worries Wall Street about future growth, the stock down about 10% today, 25% so far this year. Let's check on the markets as the stock. are higher. And once again, you've got the NASDAQ leading the way. Nope, not now. It's off by two-tenths of a percent. We've got the Dow industrials up about the same S&P 500 up, you know, like pretty much we're flat. Tug of war taking place on the Dow. IBM leading the way after strong results. United Health pulling in the opposite direction. UNH getting hurt by results from Humana. The company's 2024 guidance fell below the street's expectations, which already had been lowered after a warning. so far this year. All right, let's get more on this morning's hotter than expected GDP number,

a growth rate of 3.3% in the fourth quarter compared to an expectation of 2% growth. But that's looking back. Looking forward, many big companies have been offering weak guidance along with their earnings. So here you can see more than 20 big names, including Procter & Gamble, 3M, Netflix, Nike, all with sort of cautious comments. So what kind of economy do we really have? and what economy do the markets want? Let's bring in Jeremy Bryan, portfolio manager at Gradient Investments and our own Mike Santoli,

CNBC Senior Markets commentator. Mike, let me ask you first. I mean, the market must like the fact that the economy seems strong and the recession scenario increasingly seems to be getting off the table. But it can't love the fact that so many companies are issuing warnings. No, for sure, Tyler.

I think CEOs, first of all, are seeing a little bit of a mixed bag, depending on the sector they're in. It's a very noisy earnings season as it typically is. And also, really no benefit from their perspective to overpromise this year, not really knowing if we're going to get the economic slowdown that everybody still plugs into their models, whether we've seen evidence of it so far or not. We are still beating at an 80% rate, the earnings forecast. So that's pretty typical at this time of the year. The absolute growth rate, not wonderful, but probably still tracking for low single digits a year over year. growth has been harder to come by. So I think that explains part of the hesitation among companies

to really extrapolate better numbers for the next few quarters. So, Jeremy, do we have the, the economy we have is the economy we've got, but do we have the economy that the market wants, and particularly in light of the fact that quite a few companies have either dialed back their forecasts or warned? Yeah, I still think we do. I think this is not abnormal, right? Is that you come into earnings season in January, you have lofty expectations of earnings. It was over 11% was the consensus for 2024. And companies come out and say, well, we're going to lower that bar a little bit for the hopes that we exceed it in future quarters. It happens every year. It's something that we actually become relatively accustomed to. It's a silly game sometimes that

we play. But at the end of the day, we still believe that GDP numbers are there. Jobs are still there. Growth is still happening. So there's still a lot of positive things with regard to the economy. I think just expectations coming into the year, we're just a little overinflated, and we're starting to normalize that now. A mid to high single digit earnings is probably more accurate than double digit earnings anyway. And in that case, if we still get there, we still have a good backdrop for the stocks to work in 2024. Mike, do you think that the analysts had maybe shrugged off the labor costs that we've seen, and we've seen some big union contracts coming in at historic rates. And also things like, you know, we heard J.B. Hunt, I mentioned it yesterday, talking about how much of a hit they're taking because of insurance costs.

I know companies are going to be seeing those costs increase in their directors and officers insurance and their property and casualty lines. I mean, is it that the analysts, when they're putting their expectations out, have been sort of missing the mark on what these big cost inputs are? I'm sure it's more about not having enough granular detail about whether the disinflationary trend in the overall economy on the headline and core numbers are applicable company by company, sector by sector, and you have to have a reality check on margins as you report. I think one other thing we might be seeing is, you know, the first couple of weeks of earnings season, you have a certain sampling of industries, financials, and then you get a little more consumer. You know, we have a very top-heavy stock market right now. the performance has been concentrated among the massive companies. That's also where most of the earnings growth is concentrated. And we have not really gotten the reports from there yet. So I think it's an uneven corporate profit picture. We definitely seem to have troughed in terms of the overall

earnings rate. But it's not clear sailing to get back to peak margins for most companies. We're going to still rely on some of the huge mega-cap growth names to make the full S&P 500 targets. Two of the companies, Jeremy, that you like Procter & Gamble and Raytheon, you also like Constellation Brands, by the way, all of which you think can continue to grow. They, however, were on that list of companies that had issued warnings about profitability. So I have to assume then that Procter & Gamble and Raytheon you think are going to be able to step past whatever short-term issues they face. Absolutely. So from Procter & Gamble's perspective, let's start there, is that organic growth was actually higher than expected in the quarter, and their guidance was relatively strong in that regard. And I think that's why it had a positive reaction to even what was considered maybe slightly weak guidance.

And again, this is coming on, you know, we're bringing numbers down a bit, but overall, we're not moving this thing much, and they're still talking about a relatively robust and resilient consumer. So there is still plenty of activity there, and they're weathering that storm of inflation that every single. was worried about that pricing was going to come down substantially or that people were going to pivot away from their products. I think that that, at least this quarter, was somewhat put to rest. Then on the Raytheon side, it's much more an argument around real self-inflicted wounds that happened last year with regard to repairing some of the airplanes and the issues that they had there coming closer to an end and the core business being still relatively strong.

So even if their guidance wasn't robust and didn't see. significantly, you know, surprised to the upside. There's still a lot of health within the companies that are giving people confidence that things aren't falling off a clip. All right, Jeremy, we should point out that Jeremy personally owns Constellation and Raytheon. Jeremy, Ryan, thank you very much. Mike Santoli, thanks to you as well. Let's turn now to how that hotter than expected GDP report is playing out in the bond market. Rick Santelli joins us from Chicago with that. Are traders, Rick, focused here on growth, or are they focused on inflation?

They focused on both. It all matters at what time you looked at you're watching, what time you looked at the chart. So to the first question, let's look at an intraday of two-year note yields, Contessa, because at 830 Eastern, look at that spike. It went up, up to 440 plus. And then within seconds, it disappeared.

Why did it disappear? Because it was the old one-two punch. Stronger growth, but easing, pricing, pressures. And then it was round two. Fast forward to 1 o'clock Eastern, where we had 41 billion and seven-year notes. And if you look at that chart, you could clearly see we had two big moves. We had the move at 830. You can even see on that chart. And then at 1 o'clock Eastern we saw rates drop. And it wasn't that it was a spectacular seven-year. It was average. But it's the last auction, and it was the only one between the twos and the fives and the sevens that was

smaller size than the biggest size they've ever done in that maturity. So we had 41 billion. In 2021, we had 62 billion for about nine months in a row in that COVID-related period. And finally, look at a year-to-date chart of tens. We're up nearly 25 basis points exactly on the year. It's been an up year. And real quickly, we are now under 20 again in Tuesday's to 10 spread. I want to draw your attention to that minus 15 and a half from October. If we start to trade on the sunny side of that, meaning minus 14, minus 13, you're going to get a lot of quick follow-through. There's a lot of eyes focused on that spot in October on that Tuesdays 10 spread. Tyler, back to you.

All right, sir, Rick Santelli. Thank you. Coming up, will the Elon Musk dust settle? Say that five times fast. Tesla shares deep in the red, warning of a major slowdown in 2024. This after Musk demanded a larger statement. from the company's board. But these results now have even bulls crying foul at management. Plus, CEOs weighing in on earnings and a slew of other factors this morning on CNBC. We'll recap all of that

and more on three stock. All right. Let's take a look at shares of Tesla now following its report after the bell last night. Look at that down. Almost 13 percent today, 27 percent this year. For more on what Musk said, what the company did or didn't do and say, what's dragging on the stock? Let's bring in Phil LeBoe. What is it, Phil? Contessa, it's a lack of detail in general. Look, if you were an investor and you listened to that call and you read the report about the Q4 results, there's very little in there that gives you optimism heading into 2024. Doesn't mean that there are things are going to fall apart at Tesla, But look, the headwinds are there in terms of what this company is facing right now.

And if you look at it, you've got the global EV market. The growth of EVs worldwide, it's slowing. Doesn't mean they're not growing. They're just not growing as quickly as they were, let's say, a year or two ago. Pricing pressure, we've talked about this. Will they have to cut prices even more, especially in China? And speaking of China, Elon Musk talked about the expansion of Chinese automakers. Remember, their biggest factory is over in.

Shanghai. And that factory is a big part of the success they've had ramping up deliveries over the last couple of years. And for 2024, many were expecting them to give guidance saying, hey, we are going to deliver at least, I don't know, 2.1, 2.5 or 2.2 million vehicles. They did not give any guidance at all except to say growth next year or this year, I should say, will be notably lower than the growth in 2023. By the way, the consensus is for 2.1 million vehicles. to be delivered in 2024. Let's see if that consensus starts to come down as analysts crunch the numbers

and get a better sense over the next several weeks about what to expect, at least in Q1. Meanwhile, Elon Musk on the call, once again, as he did a week or two ago in his post on X, laid out his reasons for why he believes he should have 25% voting share or 25% stake in Tesla. Here's what he said on the call last night. I don't want to control it.

But if I have so little influence over the company at that stage, that I could sort of be voted out by some sort of random shareholder advisory firm. You know, we've had a lot of challenges with institutional shareholder services. I call them ISIS. We could do a dual class stock. That would be ideal. I'm not looking for additional economics. I just want to be an effective steward of very powerful technology.

Elon Musk on the call last night outlining why he believes he should have 25% stake of the company. As you take a look at Tesla shares and we're showing you a 10-year chart, we should point out that this stock under pressure today on track, guys, for its worst day since 2020. We'll see what happens as we go into the last hour or two of trading. His desire for more equity, a bigger stake in the company, I guess it strikes me. It would be very easy. Let me put it this way. It would be very easy for a shareholder of the company to say, is that what you really want,

in other words, to be a better steward of this company, or is what you really want is for the shareholders of Tesla to bail out your purchase of X? That's one way to look at it. Now, his argument would be, if you give me control, I can make sure that I will always be here. You heard him say that he might get voted out. I think it's unlikely that anybody's going to try to vote out Elon Musk. His value to the company is very clear. But what the question is for the Tesla Board of Directors, and remember there's a suit pending in terms of his compensation.

A lot of what happens probably will be coming off of what happens with that case, with that lawsuit. But I think what Elon Musk and the board have to determine is, how do you give him the equity that he thinks he should have, regardless of what happened with X, and yet at the same time, not have investors come back and say, oh, that's it. You're giving them 25%. It's a tough call for the Board of Directors in some regards, Tyler. What's his stake now? You've told me this, and I know, and I just can't remember it. I think it's down to 13%. 13%. After he sold what he had to sell in order to fund the X purchase or the Twitter purchase,

I think it's down to 13% right now. So it's not insubstantial or unsubstantial. It's, it's, a substantial holding that he has in Tesla, but it's clearly not as much as it once was. No, and its value has gone down, a good bit. 13% today. Phil LeBow, thank you. Ahead on Power Lunch, shares of Las Vegas Sands higher after reporting better than expected results will speak to the CEO. And remember that bankrupt $150 million Hampton's mansion we discussed yesterday, Robert Frank was here.

It sold. La Dune sold la money to follow. Details when Power Lunch returns. I like your French. The Federal Trade Commission is launching an inquiry into AI deals made by tech giants, calling out specifically Microsoft, Amazon, and Google for their billion-dollar investments into the startups, Open AI and Anthropic. It's the focus of today's tech check with Deirdre Bosa.

Hi, Deirdre. Hey, Contessa. So I had a conversation about those deals just this morning with VC and founder Jack Abraham of Atomic. And I'm just going to play it for you. Have a listen. I saw a stat. I think it was about $19 billion of that venture capital that went into the AI sector came from the big companies.

And the amazing thing that you're seeing, and these companies have figured this out, and they're very, very smart. They have all this cash on their balance sheet. It's not accreting to their market cap. What do they do with it? If they can give it out to a company and it bounces back to them in revenue and profit in their most important segments, which are the cloud, and make those grow faster, that is the way to get your market cap up.

And now Microsoft was the first to discover that, and all the other companies are copying it and it's very, very smart. They're basically bankrolling their cloud businesses. Is there something wrong with that though? Should regulators be concerned about that? I don't know that they should. I mean, clearly it's powering a lot of innovation in the economy. We're partially getting this. AI is very expensive to train. I mean, some of these new models are going to take a billion dollars or more to be able to train. That's not capital that venture capitalists can fork over. So to get into this AI age, you actually might need some of these bigger companies pushing this along.

Contestant, Tyler, that is a very key point to develop these large language models like Open AI and Anthropic are doing. It requires so much capital and so much compute power, which the mega caps have. They're using it to their advantage, but it's also something I hear from a lot of startup founders here is that they just want to be able to use these models. They don't care how they're developed and they certainly don't have the money to do it. So they're happy if the mega caps can. And guys, we did a whole deep dive on this during our tech check weekly. You can find that at cnbc.com slash tc weekly mega caps, mega deals, how they're essentially bankrolling their own businesses.

That can either raise eyebrows at the regulators, but it can also benefit startups. Are you getting a sense of why it's a concern for the FTC that there were these investments made? Because they basically go out the door from the mega caps. They go to an anthropic or an open eye. And at the same time, these big deals, multi-billion dollar deals, are signed that that money will come back in. So an Open AI needs compute power to then go away and build these large language models. That goes back to Microsoft. Microsoft gets billions of dollars back in the door. So they're saying there really could be antitrust issues here. If you are creating a system that there is no

competition for that cloud business. Exactly. And you're creating the winners and losers here, right? A $13 billion investment from Microsoft gives Open AI a very good chance to compete in addition to, you know, Microsoft's enterprise customers. So what the FTC may be concerned about, and by the way, European regulators are looking into this as well. Are they sort of changing the competitive landscape by picking and choosing the winners themselves? Let me make sure I'm understanding this. The, quote, investment that Microsoft is making in company X comes back to it in the form of

credit for services? Exactly. Into their cloud computing units, which we know is so important. Like, as we head into big tech earnings, right? investors, they want to know has Amazon's AWS bottomed. It helps when Anthropic is, you know, then spending money and, you know, juicing revenue in that way. Of course, it's small enough to not make a huge difference. It's not going to change the trajectory yet of Amazon's AWS business. But again, it is this idea. And then they also get the upside if valuations continue to rise.

There's a fair amount of mutual backscratching going on, it would seem, right? Yeah. Okay. Deirdre, thank you. Turning now to oil prices, which are rising today to an 8, week high. Pippa Stevens joins us now. Hi, Pippa. Hello, an eight week high, we might finally be breaking out of the range that oil's been stuck in for the past few months. Rebecca Babin, over at CIBC Private Wealth, said 7625 was the key level to watch. We did top that, and that's because that's the model. Her model said the CTAs were pricing in for when they would start covering their short positions. And these CTAs... What are the CTAs? They're kind of their funds that are tracking it based on the macro,

based on the technical factors, very fast, often algorithmic. traders, so not so much on the fundamental side. And so their models were pegged at the 76, 25, Rebecca Babin told me, and so they start covering their short positions. And they are a larger, an ever larger share of the oil market. And so their moves tend to have more of an outsized influence. Also, we still got that stimulus out of China, which would support oil, given that oil, that China is the world's largest crude importer. And then finally, we saw a big drop in U.S. crude inventories about 9 million barrels yesterday. That was thanks to a lot of lost production in North the Dakota with those freezing temperatures. Also, refinery utilization dropped to about 85% as well.

And there you're seeing it. Oil at 7725 right now. Pippa, thank you for that. Let's get to Bertha Coombs for a CNBC news update. Hi, Bertha. Hi, Contessa. Opening arguments took place today against Jennifer Crumbly. She is the mother of a teen who pled guilty to a shooting at a Michigan high school back in 2021, killing four people. Crumbly faces involuntary manslaughter charges in the case, a first for parents of a school shooter. Prosecutors argued today that she willfully failed to act before her son's rampage, while the defense said she simply did not know what he was capable of. Donald Trump's attorney confirmed moments ago she would call the former president to testify in his defamation damages trial in New York. Comes after the defense began its case earlier this

afternoon. Trump is fighting a lawsuit, sinking over $10 million for comments he made about writer Eugen Carroll after she accused him of sexual assault. And the PGA tour announced today that 20-year-old Nick Dunlap joined the tour as a member. On Sunday, the University of Alabama student became the first amateur to win a PGA event since Phil Mickelson did back in Tucson in 1991. He is one to watch, guys, back over to you. 20, I think, Alabama, maybe a soft-I-can't, I'm not sure. Anyhow, he's got a good future ahead of him, one would think.

Right, American Airlines up 10% today after beating estimates and narrowly turning a profit. We will hear from the CEO about the state of the airline industry in three-stock lunch. Time for today's three-stock lunch. We're looking at three companies whose CEOs all joined CNBC today. And here with our trades is Ava Ados, the C-O and chief investment strategist at ER shares. Great to see you today, Ava. Up first we have American Airlines. shares soaring after the company reported fourth quarter results that topped estimates. Here's CEO Robert Isam discussing the state of travel right now. As we go into the first quarter, we see demand strong. I think that we're going to have a really busy first and second quarter. And look, I think the time to buy is right now for travel. It's going to be a busy year. Eva, what's your trade on American Airlines?

I have it as a hold. They're having a great day to day up about 10%. I wouldn't buy on this news. I would fold. Many consumers don't realize this is no longer the biggest domestic airline company. They used to be back in 2015 with $40 billion in market cap. Now they're down to $9 billion. That makes them the fifth largest domestic airline company.

And back then, they had three times, they have profits that were three times higher. and that came with revenues at one-third below current levels. However, they are making a progress with their debt. It has come down by $11 billion in recent years. They have also improving their profits and their revenues. And last year, they also decreased their energy cost. But I'm not sure if this is going to be the case this year, as we have the red sea tensions.

We don't know if this is going to affect their operation costs going forward. So a little tentative on American Airlines. Let's go to CSX now. Fourth quarter profits slipping there, but the company's CEO still expects a profitable year for the railroad. Here's Joe Hinrich talking about why he sees strong demand on squawk on the street earlier. We're feeling optimistic, actually. What we saw in December was interesting. Chemicals, forest products, international, immodal all year long. We're down until December. We started seeing an inflection positive. Autos, coal, metals and minerals have been positive all year, and we see that continuing. So we're actually feeling pretty good about what we're seeing on the demand side right now. Feeling good on demand.

How are you feeling about CSX, Ava? It's a hold. Again, this is a slow growth area, but they're doing a great job generating profits, which is important. And their margins are one and a half times their peers, so that's really good. But they have, which is actually, it's 38% compared to 23% for their peers. But they have a debt-to-capital ratio, which is double their peers, which is not, not. good. So they're highly leveraged. I need to mention that in the last 20 years, they have doubled their margins, which is also good because in this area, in this slow growth area, it's not

very common, but their margins have been coming down in recent years. So I'm not sure how this is going to continue. If investors want to have exposure in this space, then this is a fairly priced, solid company. I wouldn't invest in this space. All right. Lastly, we have Papa Johns unveiling a new marketing strategy for the year. Here's CEO Robert Lynch talking about the strength the company's seeing. He was on the exchange last hour. We feel great as we look towards 2024. We've seen a stabilization of our business relative to the last three and a half years

where we've gone through obviously a global pandemic, some conflict across the world, and then hyperinflation. So we feel like we are in a great position right now to take advantage of a stabilized environment. Eva, everybody was talking about whether they eat Papa Johns, but should they trade Papa John's? I have it as a sell. We used to own the company years ago, but then we eliminated our position when the founder was removed over some controversy. Their margins are half their peers, and their revenue growth is actually negative. But most important, their international sales came down in the last year reported. The reason why we want to mention this is that international used to account for 10% of the,

total sales, but that contributed 20% of their profits. So it had doubled the contribution. And with the international tensions that we see in Europe and Asia, that can significantly affect their profits going forward. All right, Ava, thank you very much. Ava Atoe, a sell on Papa Johns. Coming up, a beachfront bargain. That exclusive Hampton's estate, we told you about yesterday, selling at auction for $60

million less than the original asking price. Robert Frank joins us for an update. We'll be right back. Welcome back to Power Lunch and welcome back Robert Frank. When last we spoke, we were waiting for the results of an auction on the pricest property in the Hamptons. And now, Robert, we have the result. Yeah, Tyler, only in my world is $80 million a bargain. But that's what it was. Or disappointing.

Or disappointing. So this is a property called Ladoon out in the Hamptons, four acres, 23 bedrooms. Not quite a knife, not enough for Tyler, but still a pretty good size house. It's got two pools. This had been offered as the most expensive home in the Hamptons listed at $150 million. So it hammered at $79 million. You add the buyer's premium, which is about another $10 million, and you get to $88.5 million. That's the final sale price. Question is, did the owner, Louise Bluin, get enough from this sale to pay her debts?

This has to be approved by a bankruptcy court because it was foreclosed and it went into bankruptcy. But look, $88 million is still a very expensive sale. It's a marquee property. There were seven bidders, including one of the founders of Rent the Runway. So, you know, there were seven wealthy people in New York and beyond who wanted this property. It's pretty decent. And that's probably what it's worth. Well?

Do we know who the winner was? We don't know. Anonymous. We don't know. Anonymous. We'll find out soon enough. I will do my best. You will do the due diligence to figure it out. We want to ask you about LVMH earnings because you're looking here at the luxury sector.

And I was surprised at some of the results that came out here. Yeah. So when we look at the high-end consumer around the world, lots of eyes on that. LVMH is the bellwether. They're four times larger than any other competitor. And so the two numbers that really struck me from this that were actually very positive signs for the global economy. One was China. Sales in China were up 21 percent in their fourth quarter.

And we look at the economic news from China, and I've just been expecting the Chinese high-in consumer to just crater. And they haven't. In fact, they've been growing strong. So that was one positive surprise. The other positive surprise was, you know, and that was in their core leather goods. The other positive surprise was just the specialty retailing, which is Sephora. Many people don't realize LVMH owns Sephora. It's not really a true luxury brand by some people.

But the wellness and beauty category has held up really well. Those sales were up 30%. Sorry, it was China up 30%. These sales were up 21% for the specialty beauty. So, Sephora, really driving growth at LVMH. It's interesting, though, because we saw Estee Lauder's performance significantly impacted by tepid China sales. You look at Canada Goose, high exposure to the China market.

It is hurting the retailer. And yet, and we have the CEO of Las Vegas Sands coming on, their reporting in Macau, their retail segment, is outperforming pre-pandemic levels. So is there something about certain brands or certain areas in China where LVMH is doing better? Well, Rishman had a great quarter in China as well. They were up something like over 20 percent, LVMH, up 30 percent in China. So I think what I'm being told is it's the must-have brands in China, Cartier for Rishmont, Vitone and Dior in China. and I think anything below that is really struggling.

Interesting. All right, Robert. We'll find out who bought that house too. Yes, we will. Good stuff. Well, as I mentioned, cards on the table, shares of Las Vegas stands going slightly higher today after posting a revenue beat for the fourth quarter. We'll hear from the CEO about how the recovery is going in Asia when Power Lent returns.

Welcome back to Power Lunds shares of Las Vegas Sands up about 1% following an earnings report that demonstrates how much luck. plays a central narrative in the tale of two cities. Las Vegas and CEO Rob Goldstein joins us now for an exclusive interview here on CNBC. Rob, it's great to see you. Hi, Contessa. There was bad luck in Macau. You missed earnings expectations there.

Good luck in Singapore and you beat expectations. I'm more interested in the recovery from the pandemic because, look, it's been barely more than a year since Macau reopen. Certainly has been a more modest rebound than what we saw in Las Vegas. But are you happy with the trajectory? Very much so. I mean, Macau is a scale market. We are the largest player, Macau, in every category, be it lodging, gaming, retail.

So the market in the fourth quarter showed great strength. We reported about $654 million of EBITDA. We left about $70 million behind due to for luck in the Bachar tables. But it's a recovery that's underway. It's strong. It is the most important market for land-based gaming in the world, and we're thrilled to be there. Yes, are we happy? We're very happy.

There's just great days ahead. We're past the pandemic. We're past licensing issues. So the future looks very good for us for years to come. And then I was just asking our colleague about LVMH, when you reported retail numbers, it was clear you have surpassed the levels at 2019 before the pandemic hit. Yeah. Are you immune from the kind of macro pressures? in China that other companies are reporting?

I wouldn't say we're immune to anything. We're always part of the economy we live in. However, we have about 2.5 million square feet of retail in Asia, both in Singapore and Macau. We did about $700 million of contribution from those stores. So our pre-pandemic, we're far beyond pre-pandemic numbers. I think we have a few advantages most people don't have. We have places that are expensive, our hotels are expensive and privileged people,

commonly or fluent people, which means we pre-select our customer base. Two, is we get the best stores and the best type of that store. So the environment we shall sell these luxury products in is a very, very nice environment, different when they get at home. And thirdly, in a resort environment, you tend to spend more money. You're more carefree. You're more inclined to spend money. So I think we're the lucky recipients of those three things. Our retail sales are far beyond in 2019, and the quarter was astounding. They were doing $9,000 a foot in our four seasons

luxury department. We did $3,000 a foot at MBS out of 600,000. So can we talk about Singapore? Because your commentary yesterday on the conference call was so bullish. Here you have construction, taking out a couple thousand rooms last quarter.

China visitation isn't fully back. And yet the casino is just raking it in, making $339 million more than the previous year, that's 84% more, 84% than the same quarter in 2022, when your occupancy was higher. Why? And is that sustainable? First of all, it's a record quarter. In the history of our Singapore operation, it is the number one quarter of $544 million of EBITDA. It's a lot of factors contributing. Yes,

it can seem to it very well. The hotel is under renovation, as you referenced, which is a big negative, which means the future is even brighter from a lot of. our perspective. The retail was extraordinary this quarter. The gaining was extraordinary. Singapore is a very, very desirable place to visit, and we have the best hotel in the neighborhood. And although the construction clearly is an impediment, it looks to me as though Singapore is on a terrific run and will continue for years to come. We see the $2 billion annualized EBITDA asset and beyond the next four or five years growing, hopefully another 10 or 15 percent. And we are speaking with the government, hopefully when they approve it to build another tower in Singapore

in the future, which would be very additive to our earnings there. So we're raging bulls on Singapore, and we should be. I want to ask a couple of questions, Rob, if I might. I mean, you mentioned the word luck in explaining something a few moments ago. I guess you work in one of the few industries where CEO can say, well, it was just luck. It boiled down to luck and be believed. So good for you. Revenues are hot in the, in the, in the, in the, in the, in the, in the casino business for you. I mean, just a breathtaking growth in revenues. How do you explain that? How do you explain that? And number two, your stock is down about 10% over the past year. How do you explain that? And what are they not crediting you for? Well, the market that is.

Let me just address the luck issue. Luck perhaps is a misnomer because it really is a, it's not a luck business. It's a mathematics driven business. And the end, the law evens out. There's no real luck. You're lucky one day, one place, and not so much than the other. But in the end, the mathematics always prevail. So the luck factor goes away. We don't build these places on luck. As far as the stock price, we just keep our heads down and keep performing. We bought back a lot of shares last quarter.

We do our job, which is create lots of EBITDA and then buy back shares and run these businesses to the best of our ability. Our teams perform. And in the end, someday, the stock price will reflect the nature of our business. I can't spend every day worrying about the prices up, the prices down. We had great results yesterday. We're very bullish on 2024, and someday the market will recognize what we have here. I can't explain to you why we're pricing like COVID numbers as opposed to pre-COVID.

Investors are just not giving you any credit for Macau reopening or the rebound in Singapore. It's clear, although your president and COO said yesterday, But the share price means there's a great buying opportunity, and so we did. Here's half a billion dollars. Yeah. Yeah, Patrick Refin, $755 million. It's a lot of money, and we'll keep buying back shares because we believe in our company. Very much.

You talked a bit yesterday about the New York opportunity and the Texas opportunity. Las Vegas Sands now doesn't have domestic operations in the United States. And I know you've put tens of millions of dollars into both of these states and lobbying for a license and whatever. Can you give me a sense about how you think about the development and the way that might ensure that eventually there is a casino license? Are you talking to New York? In New York and Texas. I mean, Patrick said, Patrick said we're looking forward to building a development there. Well, we like to be in both places.

But for today, New York is in process. The governor herself alluded to it this week as perhaps a decision in 24. As you know, we've required the lease sold in Nassau at the Coliseum. It affords us the ability to build a true destination resort of scale and importance and provide tens of thousands of jobs, both construction and operating jobs. So we want to build a five-star hotel, a Canyon Ranch, lots of convention space, and build something very much a very desirable resort in New York. But at least New York has a process in place, and they will make a decision.

Texas at this point does not have that. We are working towards encouraging people to think about it. but Texas does not have a process in place today. We'll be patient and will be advocates and wait to see how that goes. But New York, we're hoping for a decision because we think we could build something in the $6 billion neighborhood that would be astounding and very, very helpful to tourism in that state and very much a big taxpayer as well. So New York is on the table now, Texas is on the table down the road. There is sharp elbows when it comes to those casino licenses up for grabs in New York.

Rob, it's great to see you. Thank you for your time. Appreciate that. Contessa, thank you for having me. I appreciate it. Thank you very much. Good day. You bet. Same to you. And still ahead. A new appraisal. Americans don't consider home ownership. The financial achievement it once was. We will discuss that and much more when Power Lunch continues. Here we go. Three minutes left. Several more stories you need to know. Let's get to it right now. Bank of America says it's time to get back to the office and they mean it.

The firm has been sending quote unquote letters of education. It sounds a little little like, Orwellian, a little Orwellian, a little mouth, Zedong. The employees who have not been showing up in person got these letters that gives them two weeks from the date of notification to comply or face further disciplinary action. Apparently, there are some people who have just ignored the back-to-work orders. Well, do that at your own peril. Re-education there at Bank of America.

All right, let's talk about Costco. We just wrapped up a banner year. A banner year for hot dogs. The wholesale retailer sold 200,000. million hot dog combos last year. 200 million, a record for the $1.50 deal. The same prices it's been for nearly 40 years. Now, there is no inflation in weaners, apparently, at Costco.

There you go. I said it. Nearly two-thirds of Americans say that buying a home is no longer the measure of achievement it once was. This is according to a new nerd wallet survey. 37% of respondents say they plan on renting forever, with over half, saying they don't think they will ever. ever be able to afford home ownership. We'll see.

All right. Lots of excitement about playoffs, of course, in the Super Bowl draft, King Spandle, Seasers, Bet MGM, they get so much attention. But investors might want to watch the tech power behind sports books. Genius Sports is the exclusive NFL data provider. Here it is publicly traded. It makes money off licensing fees and revenue sharing with the sports books. And it makes three times more on in-game bets than pre-game wagers.

So it's packaging the football feeds in this unique way with augmented reality so that viewers can see the odds of a specific play just as it's getting ready to happen. And then they sell that to media companies as well for better audience engagement. And they sell it back to the teams which want the data to improve their own performance. It's really a duopoly here because Genius's bigger competitor is sport radar. It has deals with nearly all the other major pro sports leagues and 90% of the sports books, Michael Jordan. is a big investor. The stock down almost 9% this week, though on the news that the CFO and the

chief strategy officer are both departing, but they have a big international business where they go in, they scoop up the content from a country like... Premier League in soccer. But even lower like Columbia, but then what happens is when the sports books expand

and they need the content, they have to license it then from sport radar. So it's about prop bets or in-game bets is where they... Well, you know, The prop bets are something separate, and the sports books really do that. In other words, Travis Kelsey, it now has two catches in the game or two touchdowns. I'm going to bet that he's going to get a third. Even more, like, will he complete this pass to the touchdown?

And you can see what are the odds or, like, what's the chances of this happening? So, yeah, there's a lot of engagement around that. There we go. Thank you all for watching, Power Lunch.