Power Lunch - Money & Politics, and Back to the Office or Bust! 4/13/23

Episode Date: April 13, 2023

New White House regulations are under fire, as auto companies are unhappy with new emissions rules. And a new business lobbying group is forming to push back on what it calls “future-killing” tax policies. We’ll break it all down. Plus, we’re seeing big changes to the employment picture. The “Great Resignation” is all but over, and working from home could soon be a relic, too. We’ll explain why. 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 Kelly Evans, I'm Tyler Matheson. Glad you could join us on this warm and spring like Thursday. At least it is here. Coming up, money and politics, Biden administration regulations are under fire. Auto companies unhappy with the new emissions rules and they're not the only ones and a new business lobbying group forming a Chamber of Commerce alternative set to push back on what it calls future killing tax policies. We'll break all of that one down for you. Plus big changes in the employment picture. Remember when old, older workers were retiring in droves. Now, some of them are coming back to the office and employers can't wait to hire them. Also, working from home could be another relic. JPMorgan demanding some workers come back to the office five days a week. We'll get to all of that,

but first let's check markets with stocks at session highs pretty much. Dow up 311. NASDAQ leading the way up 1.9%. All right, let's go to Dom Chu now for some details on where the market is going and why. Dom, welcome back. All right. So Tyler, thank you very much. We're going to start off in the skies, friendly or otherwise. Now, for Delta Airlines, they're down about 1% right now. And it's been a bit of both, though, today. Lower on the day so far, off the session lows, but it was positive at one point earlier on. This is America's biggest airline by market value. It posted quarterly profits and revenues that missed analyst estimates, but its current quarter forecast was more bullish. And Delta said it expects record advanced bookings for the summer.

So a little bit of push and pull for Delta down about 1%. Sticking with consumers, and leisure. One of the best performing stocks in the SMP today is win resorts up about four and a half percent. The casino operator is up thanks in part to more optimistic analyst commentary out of Wells Fargo, where it's being named a top pick with an overweight rating and a boost to the target price to $134. It was $128. They like, amongst other things, positive momentum for both the Macau and Las Vegas gaming markets. And then we'll end with a check on gold prices, which have hit a fresh high for the year in today's session. still over $2,000, $258 per ounce. It's up 12% again so far in 2023. That's helping to propel upside moves and many stocks tied to gold production. Look at Newmont. Look at Freeport MacMran,

two of the better performing stocks in the S&P. Also the gold mining ETFs, Tyler Kelly, the Vanek gold miners' ETF ticker GDX is up about 3.5%. So watch gold prices on the bid. I'll send things back over to you. All right, Dom, thank you very much. More on today's market moves than Azdak leading the way today and this year. so far. But as we have discussed before, when big tech rallies, it's often a small handful of stocks that pull the index higher. Microsoft, Apple, NVIDIA, accounted for half of all the returns in the S&P from January through March. And that is concerning to our next guest. Malcolm Etheridge is a CNBC contributor, an executive vice president at CIC Wealth and Ron Insana joins us as well. He is, of course,

is CNBC's senior analyst and commentator and co-CEO of contract capital partners and so much more or less or less whatever. Malcolm, let me start with you. Why is it concerning or why should we be concerned that the leadership in the market seems so narrow? Yeah, Tyler, it's concerning because when fewer stocks across each sector are participating in that rally, it means the rally is more likely to fizzle out and the market's more vulnerable to a pullback, right? And this is coming from someone whose own personal portfolio over indexes toward tech. So I'm very happy to see the S&P up being carried by these names. But I'm also very concerned when we only see three stocks doing all of the heavy lifting

because there's no way to get out of the way when the trade goes the other direction. You share that view, Ron? To a point, although we've seen, you know, the market breadth expand a little bit. And so there's been what some technicians like to call a bit of a breath thrust. So you've had, yes, that's what they call it. That's a technical term. But yeah, I mean, I think my bigger concerns are really around not so much the narrowness of the advance, but what the headwinds are still facing the market, whether it's earnings, whether it's the Fed,

whether it's a misread on inflation, which I think is still taking place. I think those are even more profound issues for the markets going forward. Malcolm, let me turn back to you on earnings. We're going to start getting some of those bank numbers, I believe it's tomorrow, actually. One of the areas that sort of stands out to me is what the banks will say about loan originations. and the tightening of credit standards and what that could mean not only for the stocks and the market, but for the economy. Yeah, I can imagine that the bank CEOs are going to want to tell us everything about how well capitalized they are, how well diversified their customer mix is, just trying to separate themselves from the contagion of an SVB and signature and everybody else that we're so concerned about and have been so concerned about for weeks. they're finally getting their moment to come out and talk about why they're different.

This is the G-Sibs that I'm talking about. But I think to your point, what's more important is just how little they're lending now because they're having to tighten lending standards. At the same time, deposits have been fleeing from at least mid-sized than community banks, where, you know, on one hand, we have to worry about our long-dated bonds coming back to bite us. And also now we can't lend because lending standards have to be tighter. rates are significantly higher. So the big six banks, I know are going to be in good shape.

They probably weren't lending all that much to begin with in this space because they traditionally lend less in small and mid-sized business arena than the local banks. And that's for good reason because so much business is hyper-local. But I think that they're going to want to focus the majority of the conversation on the details that don't really matter too much to us as investors, but they'll want to reassure investors one more time. that their banks aren't exposed in the same ways. Malcolm is a quick follow-up to that.

I see that you are, to some extent, expecting more weakness at Charles Schwab, but also using that as a buying opportunity and think others should as well. Why? Yeah, so I actually bought into Schwab on weakness because I think 31% down is where we first got, we broke through its 52-week low

and established a new one. We're now, what, 40% or so off of its highs? to me, Schwab is a brokerage masquerading as a bank, right? It's a brokerage first and a bank second. And I think that's gotten misunderstood by investors a little bit who are looking at the $333 billion or so of long-dated bonds that are on their balance sheet that during their earnings next week, they're probably going to tell us are worth something with a two-handle on it. But I think that's a mistake to focus solely there simply because they have liquidity

in other places that they can tap into and allow their long-dated bonds time to mature. In these types of circumstances where we have a Schwab, who's a brokerage with a bank, higher interest rate periods like this one are actually a big wind at their backs, right? They are able to lend against and make money on the cash that sits on deposit between trades from all of their retail brokerage clients. Ron, should the Fed hold in May and go away? They should have held in March or January or December. Yeah, look, I mean...

What's the old cliche? Selling May and go away. Selling man go away. They hold them in May. That's what I was doing. Yeah, you sell Roshakshani by Yom Kippur. I don't know. We can do this all day.

I mean, but look, I think, you know, we just got the ninth straight month in which wholesale inflation came down. We were peaked at 11 percent. Today's 2.7 percent year over year. You know, I am a broken record on this, as you both well know. And all the data, you know, with the exception of oil, which is extraordinarily about. People don't know what records are, Ron.

I'm sorry. I'm a broken Spotify. You're a broken wheel. Broken stream. Yeah, yeah, the wheel of death. I'm an unending stream. How's that? Oh, that's good. But, yeah, look, I mean, I don't know what the argument is.

And, again, the same people come up with the same argument. There's still too much core inflation. There's still too much super core inflation. There's still too much underlying price pressures. And yet, when you look across every category, they've all come down markedly. And I don't understand, again, why they're so fixated on this in the way they are. I went back yesterday and looked at inflation data in post-World War II, post-World War I environments, which again, I tend to think is more analogous than the 1970s.

It took four years for inflation to go away. But those were two very, very big events that shocked the world. This was the pandemic was as well and the war in Ukraine. I think it's going to take less time. And we're certainly already seeing that. Yeah, already through those innings. Yeah. All right, Malcolm.

Thank you very much. Ron Insana. I think we're done. All right. I think we're done. I'll go home. I only think we're done. What was that?

Threat thrust. Breath thrust, yeah. It's a technical indicator that's talking about when advanced decline line starts to look a little bit better on a sustained basis. Learn something every time. Every time. Thank you, Ron. Thank you. Thank you, Malcolm. Appreciate it.

Bank earnings are the next big obstacle for the markets. J.P. Morgan, Wells City, all reporting tomorrow. Christina Parts and Nevelis is here with what we need to know, Christina. Well, Kelly, it's time to bank on because financial earnings are more important this season. No, they do not have the largest market cap. But according to refinitive, financial earnings have the largest impact on the money. the S&P 500 during earnings season, given their 20% weight. So even when compared to health care and big tech financials comes out number one, analysts are expecting a Q1 earnings growth of roughly

4% year-over-year. That means growth for the first time in five quarters, but still far less than the 7% growth projected at the start of this year. Another surprising factor in our research is how few earnings estimates for the big banks like JPMorgan City actually came down post-Silican Valley bank as well as regional bank fallouts. Bank of America is the outlier with estimates dropping roughly 2% after March 10th. There are concerns, though. We've been talking about deposits. Yes, we did see movement from regionals to the big players, but facts at estimates show a potential $49 billion net outflow in Q1, which does sound bad, but the deposits levels are still expected to be higher than pre-pendemic levels. So the big question now is, where is that money going? You've

money market funds, safe bets, consider them like safe bets similar to mutual funds that offer higher rates, and then direct treasury bills. In other words, depositors are having what I'm calling a spring awakening moment, what Barclays is calling sleepy depositors that are now awakening, and realizing they can make more yield beyond just a savings account in these big banks. So if you're wondering right now on the name to watch, it would be the largest of the banks by market cap, J.P. Morgan,

because it's also the bank that has the biggest impact on the S&P 500 post earnings, only second to Amazon when Amazon comes out with the earnings. Wow, it's definitely a bellwether. Christina, thank you so much, Christina, parts and avalus. Still ahead, new emission standards for automakers, just the latest regulations that have companies feeling a little fed up. Now a new lobbying group is forming and trying to fight back. Plus, a must watch segment.

If you thought the Apple Watch would kill the high-end watch market, you were wrong, it's flourishing, and that's in part, thanks. to TikTok. Power Lodge will be right back. Welcome back. A chamber of conflict is brewing. Former Trump Attorney General Bill Barr joining a new business group taking aim at Biden administration regulations. The group is meant to serve as an alternative to the U.S. Chamber of Commerce. Our Brian Schwartz is here now to discuss. Why now, Brian? Well, you know, it's really interesting. It's post his time in the Trump administration.

This particular new business lobbying group, the American Free Enterprise Chamber of Commerce, has really been looking for big players. particularly the Republican Party, to jump on board. And they have turned to Bill Barr as basically an advisor to them when it comes to potentially challenging in court some of Joe Biden's business regulations. What is their distinguishing characteristic that's going to set them apart from the positions of the Chamber of Commerce, which represents big businesses and Main Street businesses or mid-sized businesses?

But they would argue that they are actually really trying to push more and more of the small business side of lobbying. we can debate the merits of what they're actually saying publicly and who their members eventually when it comes out who they are. But that's what they're saying. They claim that they're really this alternative to many lobbying groups as the small business alternative to the larger Chamber of Commerce. Is the impetus here that there is a perception among some on the right that the Chamber of Commerce isn't read enough? Well, there's been a huge problem between the Chamber of Commerce and certain members on Capitol Hill, including House Speaker Kevin McCarthy and Steve Scalise, the House Majority Leader. They have told us, we didn't do this story, I think, a month ago, about how the Chamber of Commerce is persona non grata in their offices. So that is pretty much where things stand between leaders, many leaders of the House GOP and the Chamber of Commerce.

So, of course, there are some in Washington who are looking for an alternative, an alternative ally in the business world, and that is this potential. What are the sticking points that have caused such a rift? Well, the big thing that has stood out to them, the people who are, you know, some of the leaders in Washington and Republican leaders, is that the Chamber of Commerce, did endorse Democrats in key elections over the past one or two election cycles. That has enraged some as high up, as I said, Kevin McCarthy, and has gotten to a point now where they're saying, we're not going to deal with the Chamber of Commerce anymore. We're going to turn to somebody else, and it could be this group.

Is there any sign of the Chamber itself sort of tacking back and saying, okay, well, if we're now being attacked in this way, that we're going to change going forward, or are they doubling down? I think doubling down. I don't think there's any indication that there's actually going to be any sort of change in the way they operate. they're full steam ahead because they are still the biggest business lobbying group in the country, maybe in the world. They aren't really going to be changing much of what they do.

They're almost saying, you know, the way that they come off to me when I hear from them is we're okay, not really getting access to Kevin McCarthy's office and Cs-Colice's office, because there are still allies of ours on Capitol Hill who will engage with us. They only speak for their offices, and we already have allies on the Hill. Let's switch gears and talk about a topic that is going to be front and center in the lobbying world here over the next couple of years. And that is emissions, the new emissions standard, the battle brewing, as the White House yesterday announced the strictest auto emissions outlines to date. The goal is to drive EV adoption, but are the standards and deadlines achievable for the businesses impacted here to discuss and join the conversation, Jim Pethakukas, economic policy analysts at the American Enterprise Institute? Already, Jim, several attorneys general in a variety of states, led, I believe, most notably by the West Virginia Attorney General, have come out and say that they are going to challenge these rulings from the EPA, which go even farther than the ambitions of President Biden in this area.

Yeah. This is, this, this, remember the, the fight about the gas stoves? This is going to be a far more contentious issue that will, I think will ultimately be probably one of the core issues in the next president election. And that, that is a problem with doing this kind of thing via regulation as opposed to Congress acting. If Congress passes something, it's hard to undo it. If the EPA issues a regulation, somebody else's EPA. can undo the regulation. Which creates a lot of uncertainty for business. If a GOP president comes in in the next election cycle, I would think that one of the first things they would do would be to overturn this. And we have just seen, with respect to MIFA Prestone, the abortion pill, the power of a federal judge at the stroke of a pen to abrogate, get rid of any kind of regulation of a regulatory agency.

In that case, the FDA. In this case, it could be the EPA. 100% right. And that may actually come up in this 2024 presidential election. I'm sure if you're the Republican nominee going up likely against Joe Biden. You bet your Tesla. Yeah, they're going to be, banging the drum on the fact that Joe Biden's administration has put forward, or least proposed, right, proposed some of these regulations that in theory could hurt business at the end of the day. This is kind of, Jimmy, the rules as written govern, they don't say you've got to build more EVs, but effectively they do because they require that the fleet standard of any manufacturer

meet certain emissions targets, right? Or else, and if they don't hit those targets, they can be subject to find. So they say, here are these targets. It's up to you, how you meet them, and obviously how they're going to meet them is by changing the mix of cars they sell. Now, of course, as automakers will tell you, they don't have complete control over that. People have to want to buy these cars. So I'm not sure if this is going to mean, you know, bigger tax breaks down the line.

Also, there's a whole infrastructure around this. Are we going to have the grid capacity to deal with this new future? Are we going to generate the energy to deal with this new future? Remember, wasn't that long ago? California was telling people stop charging your cars because we don't have enough energy. Yeah, the market play, as you say, the market may say no. The ability of the country to build the infrastructure may not be there. We were talking about this yesterday.

and so there are lots of bumps along this road from point A to point B. What's interesting, too, is where we're going to see the auto industry land on this, right? Frankly, there are many automoblies. They know it's coming. It's just the timeline. But they've been really pushing out, at least this is from their PR side, how much they want to do more and more in EV. Look what GM's doing. Look at Tesla.

Mary Barras, CEO, GM. Is she really going to be interested in something like this? She's very close to President Joe Biden. Is that how this is going to go? Maybe she's going to be thrilled about it. I'm not going to know. But the oil and gas industry is something definitely to keep an eye as we go forward with this.

Jimmy, a final comment on that end. How much power do you think they're going to have to push back here? Listen, this isn't going to be an amazingly contentious issue. I was sort of joking about the gas stoves. It's going to be, listen, you have these, you know, we talked about the attorney generals. You're going to have Republicans. going to view this, not just as sort of a business regulation, bad for growth issue. They're going

to view this as a, I guarantee, this is also going to be a culture war issue. So if you're looking for the kind of issue that's going to get people riled up for economic reasons, cultural reasons, this is it. EPA can say what it's want. The president can say what he wants. There's a lot of other factors that will go into this, including, as we mentioned earlier, maybe eventually the Supreme Court. That's a very interesting point, that this could be a part of a, of the broader culture wars that go on here, that people don't want to be told that you must effectively buy this kind of car as opposed to that kind of car. You know, the people on the coast don't understand when you have to drive 50 miles to work,

which is not uncommon in big states. That in EV is a little bit less practical. And to be, at least to feel like those concerns are being validated and not just brushed off by those who have no experience with that way of life. Well, the SEC on the other side of things, has been proposing a climate rule. Again, it has not gone into effect. And there has been, at least a report I read today, pullback on the SEC moving ahead with that

because of the threat of a legal action against the SEC. So the other question is, will there be legal pushback against this and will that stall this ever being enacted by the time the election comes around? And to go back to your earlier reporting, that's why the fact that this new entity is forming with legal in its name tells you

this is going to be fought in those courtrooms and a multitude of fronts. Ideally, you want the market to lead us to where we need to go. And it is. And I believe it is. Yeah, totally. I mean, that's my sort of free enterprise rant for the day. Brian, thank you.

Thank you. Jim, always good to see you, sir. Thank you. And still to come. Let the good times roll. Many might have claimed the luxury watch market dead with the launch of the Apple Watch and others, but TikTok, yes, TikTok, aptly, is helping to bring it back to life. Power Lunch will be right back.

We'll explain. Welcome back to Power Lunch, everybody. Stocks are near session highs. The NASDAQ up about 2%. My goodness, big moves here. Bob Pisani is at the New York Stock Exchange covering it all for us. Bob. And Ron Insano was talking about a breadth thrust.

What he means is more advancing than declining stocks. That's exactly what we've been getting all week. Today, three to one advancing to declining stocks. A lot of this is in the consumer area today. Earlier, it was in cyclical areas. We've got a breakout in the S&P 500, folks. There's a year to date. We're at the levels we saw in mid-early February, 41, 47, 48, 49,

in early February. We're breaking out of the range we've been in the last couple of weeks. That is a very, very good sign. Some of this I mentioned earlier the week, cyclicals like industrials, but last couple of days, consumer names have been strong as well. It's what I mean, a very broad rally. So we had McDonald's had a new high this week. Nike's been strong. Starbucks has been good. Even today, some of the travel names, some of the hotels like Hilton also have been strong. I would say tech is doing well today, but not a lot of breakouts. The breakout stock in tech is meta. We are 1%, 2% from the new high on meta. Believe it or not, after a terrible year last year, it's had some real nice momentum. But Microsoft, Apple, Amazon also have been positive.

If you want something that really has got quiet momentum behind, it's just been consistently strong, I'd pick health care. I know not a lot of people get excited over universal health. They do acute care hospitals, for example, but it's been a terrific performer. And Molina, Centine, Humana, all have been strong this week. Other providers like Boston Scientific have been strong as well. That's the group to watch right now. Back to you. All right, Robert, thank you very much.

Let's turn to the bond market now. And Rick Santelli, who, as usual, tracks the action from Chicago for us. Yes, Tyler. You know, we had initial and continuing claims this morning, and I still harken back to last week when we had all the revisions. It was a question at one point whether continuing claims had enough horsepower to get above 1.7 million. Look at this chart. We have now had fourth consecutive week after those revisions above 1.8 million.

We're hovering at the highest levels since Dece of 21. And if you look at a two-year note yield for today, we're making new high yields, low prices as I speak. And you can see it there on the chart. We've finally gone into the territory of a higher yield. It was the last maturity to do so. And why is that so fascinating? Because if you benchmark it against yesterday on a two-day chart, a much more aggressive response after CPI was soft than PPI.

What's that telling us that short maturities aren't leading away higher after inflation data? That is significant. And if we look at the difference between U.S. 10-year and European tenure, that distance is shrinking. It is now hovering at the tightest it's been in nine years. And finally, the dollar index, no surprise with interest rates most likely peaking in the fall, at least on the mid to long maturities, we see the dollar index about to close at a one year low. Kelly, back to you. Thank you, Rick Santelli. Let's turn to oil. Now Pippa Stevens has the numbers for us. Five week, what, four or five week winning streak, Pippa? Yes, it is,

but oil is pulling back today after that strong session yesterday, which saw WTI close at the highest level of the year. It also got within striking distance of the 200-day moving average, which it hasn't crossed above since August before we're treating a bit now down 1.3% at 8217. Now, turning to NAC gas, it is under pressure today and back below the $2 level. Today's storage report showed another build with inventory now 33% above last year. Now, some specific stocks to watch, BP, today starting production at its $9 billion offshore platform, Argos, in the Gulf of Mexico. And it is the company's first new operation in that region since the Deepwater Horizon

an explosion back in 2010. Meantime, solar stocks are also on the move today, with tan up 3.5%. Solar Edge and N-phase among the best performers, each up more than 7%. After HSBC initiated coverage on each stock with a buy rating, Deutsche Bank also opening a catalyst buy call on N-phase ahead of the company's earnings report. Tyler, later this month. All right, Pippa, thank you very much. And we want to turn now to a developing story.

Police have made an arrest in the murder of cash app founder Bob Lee. McKenzie Seagalos has been following the story and joins us now with the latest. McKenzie. Hey, Tyler, so I've been in touch with officials in San Francisco. A city supervisor there confirming the arrest was made early this morning. Local San Francisco news outlets are reporting that police went to Emoryville, California. It's a suburb 15 minutes outside of San Francisco to arrest a man named Nimma Momeni and the fatal stabbing of Bobli. Jail records show that the 38-year-old Momeni was booked on suspicion of murder at 919 a.m.

today. Media reports and a LinkedIn profile indicate that the suspect is a tech entrepreneur in the Bay Area. Now, up until this morning, the narrative was that Lee's death was a product of San Francisco's spiraling crime problem. But media reports say that Lee apparently knew the suspect, and police believe the murder was not a random act, though they haven't offered further details as of yet. Police are holding a press conference in about an hour, and I will be monitoring that one. Do we have any knowledge or any hint of how these two may have? have been connected? Well, they both were tech entrepreneurs in San Francisco. And part of what people found so devastating about Lee's death was the fact that he had just moved to Florida. He was back

in town in San Francisco for a couple days just on business. And it really created this narrative in the last week that San Francisco was a lawless city. And now we're seeing a departure from that idea now that it seems that they knew each other. He moved to Florida because he was concerned about safety or quality of life issues in San Francisco? Or do we know? Well, actually, his ex-wife spoke to another news platform and said that that was the exact opposite narrative. And she thought it was unfortunate that a lot of people were creating, you know, this conversation around San Francisco's spiraling crime problem. And actually, if you look at the homicide rate, a chart against historic trends, it's well down from that, even though it's kind of come up in the last few years since the pandemic. Interesting.

McKenzie, thanks for following the story and follow the press conference as well. Appreciate it. Thanks, Tyler. Let's get to Sima Modi now for the CNBC News Update. Hi, Cima. Kelly, good afternoon. Here's their news update at this hour. The Justice Department appealing to the Supreme Court to help protect reproductive care.

U.S. Attorney General Mayor Garland seeking emergency relief from the court after a federal appeals judge set restrictions on a widely used abortion pill. The Women's Tennis Association is set to return to China this year, ending a 16-month boycott. This despite an unresolved investigation into assault allegations on Chinese player Peng Shua. In a statement, the WTA says the organization has received assurances that players and staff operating in China will be safe and protected while in the country. And a group led by Apollo Global co-founder Josh Harris reportedly reaching a record $6 billion deal to buy Washington Commander's football team. This, as the NFL, continues investigations into sexual harassment allegations made against the team's executives. We'll have more on that story and how it stacks up against other sports deals coming up. Kelly, back to you.

It is a biggie. Seema, thank you. Also ahead on Power Lunch and join your Twilight Peers. Companies are giving older employees a second look after years of overlooking them. The reason why? Perhaps they're the only ones willing to return to the office. We'll get into the reasons after this. Welcome back to Power Lunch. J.P. Morgan announcing that senior level managers will soon be required to return to the office five days a week. And they warned other employees not to fall short in their in office expectations. That bank, just the latest name to scale back on work from home, marking another shift away from the pandemic-era mainstay. But as more workers start to wonder if their jobs are worth the sacrifice, is at time businesses start serving?

searching for talent elsewhere. With us now is Julie Boutke. She's president and chief career strategist at the Boutke Group. Julie, it's great to have you here in the Wall Street Journal really recently highlighted this trend where they said, hey,

companies are finding older workers might take a little more time to train, but they're vastly more productive. Yes, and more predictable. So during the pandemic, five million, five and a quarter million people left the workforce, just left. And three million of those were boomers.

They left for a variety of reason, but it was always suspected that some of them would find their way back into the workforce, just not in the role, profession, or maybe even industry they left. And so the pendulum is starting to swing back the other way, and we're seeing not only an interest on the part of employers in this better understood demographic, but also boomers are saying, yeah, do some work, maybe two to three days a week, but their requirements and what they're looking for are different than when they left. So one of the things that

strikes me about this is that you would think for a lot of boomers returning to the workforce, they would want the kind of flexibility that companies are now pulling back on. So is there, you know, do they offer something different from younger generations and are they more willing to go to the office? Or do they want the same things as younger generations? It's just that employers might say, hey, they're probably going to be a little bit stickier if we do offer them the job. Yes, stickier is a great word.

So when you have people in the baby boomer generation who are looking to come back to work, they're probably not going to come for a year and then leave. They're going to, if they can find a role that meets their life needs, they're likely to stay. Whereas employers are experiencing Gen Z being very willing to, if they don't like what they're seeing or not getting what they want when they want it, they're the first ones to bounce and say, I'm going to try something else. And so boomers, baby boomers are more understandable. They are also looking for flexibility. Now, we have all kinds of evidence in the market that a lot of companies are pulling back on hybrid. or remote work, but I think that the pendulum is going to settle somewhere in between,

and there will be plenty of hybrid-type work or work from home, work from any where types of roles available. And I think those are going to be the ones that boomers gravitate toward the most. Which leads us to a conversation about J.P. Morgan calling its managing directors to the office five days a week and to monitor those who are still allowed to be on a hybrid work plan to monitor their attendance more closely so that they're not taking advantage of, you know, you're supposed to be in three days and maybe out two or in two and out three. Do you suspect that many more companies are going to follow the J.P. Morgan example and require more workers to be in the office more of the time? Yeah, well, it's very interesting to watch

the last couple years because as the pandemic kind of edged and flowed and waned and people were trying to figure it out, there were a lot of attempts to get people back into the office. We're going to try it, and then we're pulling back. But Jamie Diamond has always been the one who's been out there saying, this is not okay in any or rare circumstances. And so I'm not surprised that he's the first one to come out and put his foot down and say everybody back. Now, he's starting with that senior level of very senior level of managers and saying the

expectation is five days a week. And then, you know, so he's kind of putting his. toe in the water there, and I know that other companies are going to watch. How does this affect J.P. Morgan's culture? Do they lose people? Are they able to attract and retain the people there want? So there's a lot of kind of temperature checking of what people are willing to do. And so we're in this watching sausage getting made behind the scenes era of going back to work. And so, you know, certain jobs, I think, will fall out and land where they are always going to be remote or work from anywhere. Tech, sales, things that are done that do not require collaboration will probably stay there

for the most part. But there are certainly other roles where you really do need to be in the office. And so employers are still trying to figure that out. My sense would be that if you're a managing director at J.P. Morgan Chase, you're fairly well compensated. And so you probably will go ahead and come back into the office five days a week and not leave. I mean, I don't think their attrition rate would be as high. What are you going to do? Are you going to go to another similar bank who's going to have the same policy? You're probably going to be expected to be in five days a week as well. Very interesting. Exactly. Exactly. Julie, thank you for being with us. And I'm glad there's hope for baby boomers like me. That's fantastic. And all of us someday. Come on. All of us. Right. Thanks.

Coming up, the watch talk of the town. Oh, that's good. TikTok is filled with content from every corner of light. One trend growing in popularity, watching live deals for luxury watches. And it's driving Gen Z and millennials into the watch resale market. We'll have that story in a moment. Welcome back everybody. TikTok helping create a whole new generation of luxury collectors, Gen Z and millennials suddenly pouring into the watch market.

Robert Frank has the details. Hi, Robert. Tyler, I've never seen a supply demand imbalance in luxury like we're seeing right now in watches. So if you go to the big three, Rolex Automar Pigay or Patek Philippe, and say, here's $40,000 I want to buy a watch. They'll tell you we don't have any, or if you're very lucky, it's going to take at least two years, so we join the waiting list. As a result, those watches are trading online to pre-owned versions for two to three times the brand new retail price. What? In this market?

In this market, with everything going on, customers are furious. So I sat down with the CEO of Otomar Pigge and asked him, look, are you deliberately restricting production to manipulate prices, to jack up prices? And here's what he told us. I want this to be very clear for everyone. We're not playing the market. We're not doing anything in that respect to make the price go one way or the other. We make a certain amount of watches that we think I could be accepted by the world and say, this is the right number. Then the market is free.

and we'll do whatever they won't. They only make 50,000 watches a year. That's always been the case. And the problem is this huge demand that we're seeing. Where's the demand coming from? It's coming from the most surprising place. So when the Apple Watch, which Kelly's wearing... People who don't need watches.

When that came out in 2014, everyone said the mechanical watch market is dead. It turns out it wasn't dead. And it's the young people, Gen Z, millennials, who just became during the pandemic obsessed with mechanical watches. Like records. They're bringing back the records. They're bringing back the records. the watches. Manual transmission

cars. So as we talked about TikTok, social media stars created this wave of people that just went crazy for these watches. Prices went up, all these online sites so you can now buy and sell them and also get educated about watches. So this brand new generation

just literally revived the entire watch market and there's just way too many buyers for supply right now. How do you buy a watch in this market? Is it an all an online transaction, and how do you know the provenance of the watch and that it's not some knockoff?

That's the problem. Most of the transactions are occurring online. I mean, there's a frenzy online for certain models. The Patek Philippe Nautilis, the Automar Pigier Royal Oak, the Rolex, Daytona, those are sort of the big three that people love to buy. They're kind of the momentum trades. I'm going to look all of these up now. And watches, they're the momentary trade.

And there's a lot of untrustworthy occurrences online and not a lot. of, you know, credible information. So it's a little bit of a Wild West, and that's where the watch companies like Otomar Pigay are trying to bring in some of that themselves, maybe do some pre-owned marketing and sales themselves to give it more trust. All right. Robert, thank you very much. Robert Frank.

Fascinating story. That's jakes. Breaking news on the story we brought you in the last hour on the exchange. Let's get to Kayla Taushie with more details. Kayla? Kelly, a 21-year-old Air National Guardsman suspected of leaking troves of classified documents in recent years on some private social media channels has been taken into custody by law enforcement officials, according to officials who spoke to NBC News. That arrest happening in just the last hour,

and we were expecting to hear from Attorney General Merrick Garland on the latest in this investigation and next steps for this case. The Department of Justice has had a criminal investigation ongoing into this leak, and the Pentagon is also reviewing the protocol around the dissemination of class. documents as well as the national security implications of the documents that were released and in some cases altered. We'll bring you more as you have it, Kelly, but that is the latest for now. Back to you. Kayla, I'm sure we'll find out more about this in due time, but I think there's a lot of questions about how someone in his position reportedly would get access to documents of such sensitivity. Yes, he was reportedly serving in an intelligence wing of the Air National Guard in Massachusetts.

He was reportedly arrested in Massachusetts at his home earlier this afternoon, Kelly. And certainly someone in that intelligence unit would have had access to some of this information. But one of the major questions that is arising now is for how long did he have this access? In some cases, it was reported that he had been disseminating some of this information for up to two years, meaning that he had been in possession of classified information at the age of 19. So certainly we need to learn more about exactly what his division did, what his role was, and how he came into possession of some of these incredibly sensitive documents. Yeah, absolutely. Kayla, thank you very much.

Kayla Taushy. Now to drama in the drug space. We'll get a check on some biotech movers when Power Lunch returns. There's the IBB popping 2% today. We're back at a moment. Welcome back to Power Lunch, everybody. Shares of Surrepta Therapeutics down today on some drama. surrounding its gene therapy, and here to explain it as only she can, is Meg Terrell.

Guys, there probably isn't a biotech name that has been more dramatic over the past decade than surreptopoeuics. And over the last two months, you can see an example of this roller coaster ride the stock has had, and it is all about their gene therapy for Duchenne muscular dystrophy, which is just a horrible disease, and this gene therapy would present a new way of trying to treat it. So you can see that back in February, the stock rose quite a bit. That's because the company came out and said it did not expect the FDA to convene a panel of outside advisors in order to review this gene therapy application. But then the stock plummeted a month later, as they said, actually, there is going to be an FDA advisory committee. Now, Stad is out with a

report today saying that FDA staff was leaning toward rejecting this gene therapy until a top FDA official, Dr. Peter Marks, intervened. And so now there is a lot of sort of bearishness around this May 12th advisory committee date for Sirepta, expecting that because the FDA reviewers had been potentially negative about this, that at least that's going to look negative. And we'll have to see how this plays out, but it's all going to happen in a few weeks. And that was sort of why we have this fast forward share decline today. Yes. Want to talk about last night the update that we got on the case surrounding Mitha Prestone.

What happened exactly? What are the implications for the broader drug industry? This has been something the industry is watching incredibly closely because of the potential implications on FDA's authority generally to regulate medicine. So this comes after Friday, a federal judge overturned the approval of Mithapristone, one of the drugs used for medication abortion. The drug industry said, if they can do it for this drug, they can do it for any drug. And so now, last night, a panel of judges for the appeals court came out and basically said,

you can't overturn this specific approval because it was made more than 20 years ago. It's too old. So they did not uphold that part, and the drug is going to stay in the market. However, they did agree with the lower court's decision on some. restrictions on the drug. And so the drug industry is not satisfied with this. They still say the same risks exist. Did I read somewhere that the court effectively allowed restrictions to go back to where they were in like 2016 on this medicine? I don't know what those restrictions were, but. No, that's exactly right. So over time, this drug was approved in 2000. And, you know, in 2016 and

subsequent years, the FDA changed things about how it was allowed to be used, essentially loosening up. loosening it. Yeah. And so this court said, well, the 2000's too far back, but 2016 is not too far back. And so those things can stay. So you can go back and reimpose, basically, restriction circa 2016, on that particular drug. Yes, and this is expected to go up to the Supreme Court. This legal process will continue. Sounds like it. Wow. All right, Meg, thank you very much. Thank you, guys. $6 billion for a troubled football franchise. That story is next. The long saga of the sale of the Washington commanders, formerly the Redskins, is reportedly over.

Josh Harris, buying, or reportedly paying $6 billion. Harris and his group already owned the 76ers and the New Jersey Devils. Let's get Dom Chu here for some explanation and context, Dom. So one more step towards putting together that a cell-a-line, if you will, for Amtrak along that kind of I-95 corridor for this particular group. Now, to put that in context, if this deal were to happen, it's being reported by most. multiple news outlets, not yet a done deal, no paperwork as we know has been filed with the NFL or otherwise yet. But if it were to happen, just how much is $6 billion or just shy of $6 billion, as some reports say it could be put in context for the biggest kind of franchise sales?

We put the wall together for you to show you just how much it is. Now, the Denver Broncos is still the standard right now, the highest ever paid for a franchise, just about $4.65, $4.7 billion. Rob Walton and that group put that together. That was the huge deal. The Phoenix Suns for $4 billion. The Mets, Steve Cohen and his group there, $2.4 billion. The Brooklyn Nets at $2.4 billion. And then, of course, David Teper and the Carolina Panthers in the NFL for $2.3 billion.

We're talking about a lot of money here. But what it comes down to, Tyler and Kelly, is if this sale were to happen, it just kind of solidifies, if you will, this idea that this is like fine art. there's a scarcity value towards sports franchises. If you look at the money that was paid for any of these franchises and then what it ends up going to sell for later on down the line, it's always... I forget what Snyder paid for the committee. I want to say it was around $600 million.

Wow. $600 million. So that's a 10x. And it's been a big point of debate even this week. You heard what Mark Lazarie said, obviously, about selling out whether he thinks sports franchise will hold their value over the next five to 10 years. He's now questioning.

Well, what's interesting about this right now, too, is this group that has been put together for this potential bid. It's Harris. It's Mitchell Rails. And Tyler, I know that you're a commander slash Redskins fan. This is huge for the Washington fan base because Mitchell and Stephen Rails are of the Danahur group, right? They founded Danahir, which is a local Washington, D.C. company. Two local guys.

It might kind of have a big community impact for that. Interesting, too, that in those five franchises that you showed, three of them were bought by, let's call them, private equity. H, H, H. H. H. H. H. Front guys. Wall Street guys. Yeah. Thanks for watching, Power Lunch, Dom.