Power Lunch - More Musk Controversy & That Sinking Feeling 3/11/24

Episode Date: March 11, 2024

Elon Musk just donated billions of dollars in Tesla stock to his own charity – giving the organization money, and giving himself a tax break. But a new report claims the foundation has been mostly sitting on the cash, which could pose a problem for the billionaire. We'll explain. Plus, we've heard a lot about rising sea levels, but new data shows the ground is sinking. We'll dig into potential causes and impacts, next.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon and welcome everybody to Power Lunch alongside Contessa Brewer. I'm Tyler Matheson. Good to have you with us. Coming up, Elon Musk, donating billions of dollars of Tesla stock to his own charity, gave the organization money, gave him a big tax break. But a new report says the Musk Foundation has been mostly sitting on the money, not spending it, and that could be a problem for the entrepreneur. We'll explain. Plus, the science shows that sea levels are rising, but new data shows the ground is also sinking. Why is it happening? How fast? potential impact. That's all coming up. First, let's get a check now on the markets. You can see the Dow industrials barely hanging on to the green up. 0.06 percent. The S&P 500, those in the red, down fractionally, the NASDAQ composite off by a third of a percent. All right, chips have been the hottest area of the market lately, but also pulling back a bit today. Invidia, get this,

down almost 2 percent there, 1.6 percent at $860. AMD down about 4 percent, 4 and a half. For more now on where the market stand right now after a strong recent run. Let's bring in Mike Santoli from the New York Stock Exchange. Can the market keep it up, Mike? Well, Tyler, I think you might expect with Nvidia down actually about 12% from Friday mornings high that maybe you'd have thought the market would have a harder time handling that. And in fact, the market that was pretty overheated up 25% in the S&P 500 over four months. You know, last week was only the third down week in the last 18 or 19. And that cooling off is happening, though, in a very orderly and relatively painless way. Why? It's because it's happening through more rotation and a broadening

out of the market, something everybody has been asking for. You know, if you look at the S&P 500 equal-weighted version, it's beating the NASDAQ 100 on a one-month basis. So I would categorize it as another test tentatively passed at this point. One test was, does the market need the Fed to be cutting rates starting in March and doing, let's say, six-rate That's what we thought that might happen just a couple of months ago. Those expectations have gone away. The market has gone higher. The second piece was, are we overly dependent on just that small number of huge, you know,

mega-cap, AI-related momentum stocks? And at least right now, you can sort of haltingly say we might not have been quite as dependent on it. So, yep, we should probably cool off a little bit more, just given how far we've come. But right now, markets managing to make use of a really healthy macro environment to sort of take risk from one area the market, put it elsewhere, and not have a broad retreat. One of the amazing things that I see in my notes is that from the lows back in March 2009, which is now 15 years ago, it doesn't seem that way, time flies, when you're having 16% annualized returns since then. That kind of outperformance is an outlier, right?

It 100% is, Tyler, of course. It's very sensitive to that starting point, which was, you know, March 2009, the S&P 500 was below where it traded, you know, 11, 12 years earlier. Yes, 16.7% total return annualized over that period of time. Now, I did look back. There have been stretches of 15 years that have been a little bit better than that, but not too many. So it should inform how you, I guess, form your expectations for what returns can be over the next decade. Probably not nearly as good. Doesn't mean we go right down, though.

All right. Mike Santoli, thanks very much. Maybe we should be grateful for the growth we've seen. Our next guest sees the market turbulence ahead, but despite the mixed signals, He says, look, this is an economic sweet spot. Here with us is Ken Stern, president of Lido Advisors. It's great to see you. So if this is the economic sweet spot, how do we position portfolios to take advantage of that? Just smooth sailing.

Yeah, I do think that there are some headwinds, and I do think we're going to see some bumps. You can't go from 6, 7, 8 percent, and have a linear return. Think about the return. It would be just way too high. Mike talked about a 16 percent return since the lows. the average is what for the last 100 years, 10%. So I think what now this rotation that we're seeing is very healthy.

This is a good rotation. It's broadening out. It makes sense. And we don't know when the feds are going to move. We don't know, but we don't think that they're going to raise rates. And if they're not going to raise rates, and we have pretty good employment right now, very good employment, I like this.

I think we should hedge, though. I don't think we should be fully, fully aggressive with our portfolio. I like a little bit of a hedge here. Hedge for what and how? Yeah, so some of the simplest ways to hedge and talk to your advisors, you can use options very, very effectively now to say, I want to have a little bit of downside protection.

You usually give up a little bit of upside, but again, you make money by not losing money first. Have a little bit of hedge. I also like hedges by finding where the opportunities are. There's an opportunity. We were just listening to a real estate expert. You know, there's a lot of credit. There's a lot of debt coming due.

And not all of these speculators are going to be able to keep their portfolios and keep their real estate. They're coming due at much higher interest rates. And I think some of the opportunities in real estate makes a lot of sense right now. But if certain sectors of real estate are going to face a debt cliff, so to speak, how do you differentiate between the ones that are going to be able to get through where you might want to put your money and the ones that are vulnerable to those higher rates at which they'll have to refinaner. Yeah, I think it's an opportunity to keep your powder dry and watch as this millions and billions, potentially trillions of dollars of debt refinances, and be able to be very, very selective with it. I like multifamily very much right now.

There's not a lot of new building. You're not seeing a lot of construction. It's hard to get the banks to lend. All of that is lending to a long-term, another macro trend that makes sense. So keep your powder dry, look at apartment builders and reits that do that. Is that what you're talking about? Yes. That's what you're talking about.

Yes. Either you can go directly into the private equity real estate or you look at the reed sector, which is, by the way, underperformed the broader, for many of the reasons that we know, rates have been going up. What about, and we heard Mike talk about this briefly, but those mega cap names that we've seen so much growth coming from and where that's heading in the future. Yeah. Again, it's a positive.

in the fact that you have, what, 20 times earnings on the S&P. A lot of that is tied to that Mag 7, and it deserves growth that is associated with that. The other 493 stocks, though, don't trade at 20 times earnings. And the broadening out, I mean, we haven't talked about utilities in how long, how nice is it to get paid and have an actual, I think, approachable multiple on that index. And it tells you where we are. are as a society, right? When we talk about health care now, we're not really talking about,

like, what could cure cancer? It's all about weight loss drugs and OZemPEC. Is that going to fuel opportunities in health care? 100%. Because the fact of the matter is, is that we are in life sciences now. And we are living longer and we're living more active. That's what I call a macro trend. And when you have an opportunity to buy into that macro trend at the right multiples, again, let the market come to you, don't chase it. But I like these entry points coming up. All right, Ken, thank you very much. Have you back soon. Appreciate it. Ken Stern. All right, while stocks are pulling back today, just by a little bit, Bitcoin's run is showing no signs of stopping. Seventy-thousand, the latest milestone cross. And let's bring in

Kate Rooney now for more. Hi, Kate. Hey, Tyler. Hey, Tyler. Yeah, so this is the most euphoric pocket right now. When it comes to the markets, the big driver has been demand and flows into this group of new crypto, ETFs. J.P. Morgan points out there's now been a total of $20 billion of inflows into these ETFs that's excluding Grayscale, which has actually seen outflows due in part to higher fees. City, meanwhile, says the flows are, quote, significantly outpacing the flows that you saw into GLD. That was the first gold ETF that launched back in 2004, even on an inflation-adjusted basis. Since they launched only two out of 28 trading days, have seen outflows when it comes to

all these ETFs. City also points out a very small correlation with Bitcoin returns and those we've seen for U.S. equities, gold and real rates, which is a big change there. Others, meanwhile, pointing out this increase we've seen in institutional demand, at least signs of it, that you've seen these average spikes. In larger transaction size, that tends to indicate some wealthier buyers getting in. This has been a pretty volatile path to 72,000 guys, for Bitcoin. That is in large part due to this increase we have seen in leverage. Investors are paying huge. premiums at this point to keep those long positions, which is really exacerbating some of the price moves in both directions that we've seen. As Glassstone analysts put it, this speculation is

showing up in both directions highlighting heightened risk appetite. Other factors, you've got this event in April that is essentially meant to keep a cap on supply. It's called the halving coming up in about five weeks or so. Then some news out of the UK as regulators open the door to exchange traded funds when it comes to Bitcoin overseas, guys. Back over to you. Really fascinating stuff, Kate. Thank you for that. President Biden released his budget today, and now we're learning more about how he plans to pay for his priorities. Megan Kasella has brand new details on that. Hi, Megan. Hi, Contessa. That's right. President Biden needs to find a way to pay for that $7.3 trillion

budget he released earlier today. And it turns out he's going to be looking to corporations and the wealthy to help cover the bill. So some of these revenue raisers will sound familiar. The Biden administration says it'll be focused on implementing a 21% global minimum tax on corporations, on lifting the corporate minimum tax to that same 21% level in the United States, on quadrupling the stock buyback tax from 1% to 4, and imposing a 25% minimum tax on individuals with a net worth of $100 million or higher. On the enforcement side, the president is pledging to close a handful of tax loopholes on carried interest, on estate and gift taxes, and on life insurance policies. And Treasury officials say he's allocating an additional $104 billion to the

IRS to strengthen enforcement of the tax code. Overall, White House officials say their plan would raise almost $5.5 trillion in fiscal 2025, with roughly half the extra tax revenue coming from corporations and half from high net worth individuals. Now, guys, usual caveats apply. These are just proposals, but they do show us where the White House's priorities are, especially as we get closer to 2025 when former President Trump's tax cuts are set to expire. Guys?

So let me ask you this, Megan. And this would apply to the 2025 budget year, which begins in September of this year. So that is six months away from now. Do you think there is any way that much or even any of what these revenue raisers that are proposed would get passed into law? Certainly not right now, right? I mean, we're still talking about the last budget in Congress. So we're not anywhere close to this happening right now. But I do think this sets a really important marker.

we get closer to the 2024 election. If we're talking about what's on the line, this is what's on the line. If Democrats really do well in Congress, if President Biden is able to keep control of the White House, then we know exactly where they're going to be looking. They have a lot more places they want to spend money. So they're going to be looking to raise those taxes on corporations and on wealthy individuals in order to pay for it. Megan, thank you very much for the update. Appreciate that. All right. Coming up, no charitable trust in Elon Musk. The Tesla CEO runs one of the largest charities in the country yet gives away less than the bare and required minimum to receive a tax break. The reporter who uncovered that story joins us next. Plus, parts of the East Coast sinking

at an alarming rate. The details when Power Lunch returned. Welcome back to Power Lunch. Despite making billions in tax-deductible donations to his own philanthropy, the charity apparently gave away less than the minimum required amount in recent years, and Mr. Musk may have to pay the price because of it. The new investigative piece in the New York Times over the weekend takes a deep look into Musk's charitable foundation and crunches the numbers on how Musk's donations often support the billionaire's own interests. Joining us now is one of the authors of that piece, David Ferretold.

He's an investigative reporter for the New York Times who covers nonprofits. Mr. Ferretthold, welcome. Good to see you. Let me make sure I unpack your story correctly. I found it to be a fascinating story, by the way. One is that Mr. Musk has given a large slug, I guess, of stock and other capital to a foundation that he is one of the key board members of, that he controls. There's nothing wrong with that. Isn't that what Bill Gates does with the Gates Foundation? That's right.

There's nothing wrong with giving a lot of money, or in this case, appreciated a Tesla stock to a foundation that's got your name on it or a foundation that you run or in this case both. But the problem arises because there is a requirement that that foundation expend a certain percentage of its capital every year. How much did Mr. Musk put into the foundation and how much has it spent? He put in about $7 billion worth of Tesla stock. And you're right. When you put money into a foundation that you run, you're basically giving yourself a job. You're giving yourself a responsibility. Tax law requires that every foundation give away.

about 5% of its assets every year. That's to keep you from just stockpiling money in your foundation and not helping the world. And so in this case, the Musk Foundation was required to give $350 million in 2022, which is the last year for which we have numbers. And they only gave away about 160. In fact, right now, or at least as the end of 2022,

they were $234 million behind of where they should have been, in terms of the money that they should have given out, which was the fourth largest of any foundation in the country. In the nonprofit world, how common is that, David? It's not very common. I mean, there's no immediate penalty for it. You get a year-long grace period to give that money away. But as I said, it's very, very uncommon for foundations to have that much money short,

to have that kind of shortfall. This would be kind of like a pension plan that is not putting in enough to cover its benefits. So to cover its benefits. So it would have a shortfall there. And do they have time? You just said that they have time to make it up. In other words, if you have a deficit in 2022, you might get another year to make good on that 5% that you owe? That's right. In 2023, they had that year to give away the $234 million that they had left over. They owed from 2022 plus the 5% for 2023.

And if at the end of 2023, they hadn't given away their shortfall from the year before, they'd owe a 30% penalty tax to the IRS. Well, of the money that the charity is giving away, what's it going to? About half, as far as we could tell, about half of it has gone to things that are associated with Mr. Musk himself. For instance, after one of his rockets blew up in South Texas near the SpaceX launch site, an hour later he started announcing donations from the Musk Foundation to schools and downtown beautification in that area. In another instance, he had a customer who paid him to rent a SpaceX rocket and be flown into orbit. As part of that space flight, the customer said, I'm going to raise $200 million for St. Jude's. The rocket lands, and they haven't gotten the $200 million.

They're short. Musk kicks in $55 million from the Musk Foundation to get his customer over that charitable pledge. A few months later, the same customer orders three more flights from SpaceX. He also used the money to start schools or build schools that are located right next to his business operations in rural areas, basically to provide schooling for his employee's children. And some of those children who benefited from that school were, in fact, his own children, correct? That's right. The first year that he started, this school called the Ad Astra School, it was when SpaceX was still located in California, and he was still located in California.

Of the school's first 14 students, five of them were his own children. How closely is the board involved in the decisions about where to donate money on whether to donate money? Well, it's important to know who the board is. So the Musk Foundation, despite its very large size, has no paid staff. It only has three board members who are all volunteers. There's Mr. Musk himself. There's his money manager, Jared Burchall, and there's a woman who works for the money manager.

So it's him and two of his very closest employees. Collectively, they work two hours and six minutes per week on the foundation. So we asked all three board members, including Mr. Musk, how does that work? Does the board meet? Do they ever challenge you? Or do they ever challenge Mr. Musk and ask him, you know, do you really want to give money to that? And they didn't respond.

But as you can tell, he seems to have a very outsized influence on where the money goes. Has he responded? No, we sent him a lot of questions last week and he has not responded yet. So let me ask one more final question here. If he is in deficit, or the charity is in deficit, not he, if he is in deficit of spending the amount that is required, what kind of penalty would he face? In other words, if he's in arrears on what he should be spending, presumably he's claimed a tax deduction against income for the amount of the donation. So what would he owe?

Yes. So he has a year to give away the 2022 shortfall. If he didn't do that by the end of 2023, he would face first a 30% penalty tax from the IRS on whatever the remaining shortfall was, whatever was left over from 22 and not given over in 23. And then if he still didn't give it away, even after paying that 30% shortfall, he would owe 100% penalty tax. And so the IRS would basically confiscate all the money that he had failed to give away. Eye opening, David Ferrenhold.

Thank you for joining us and explaining the reporting. Further ahead, former President Donald Trump weighs in on TikTok, making a bit of a U-turn on his previous stance. We have details in today's tech check, and we will be right back. Welcome back to Power Lunch. The bond market, looking ahead to tomorrow's CPI report. Let's bring in Rick Santelli for more on today's action, and how was the auction received, Rick?

Yes, Contessa. Well, on the first bout of that, we are looking at rates creeping up going into tomorrow's CPI and the three-year note auction, 56 billion of them went quite well. Look at an intraday of three-year notes and you can see right around one Eastern was one of the few buying sprees that pushed yields lower and it was very short-lived as you can see. We're revisiting the high yields pretty much on every maturity in front of tomorrow's CPI. Now if you go to a one-month chart, you can see that three-year notes,

on Friday closed at a one month low yield. But boy, they came back very much like all maturities have. And what's fascinating, if you look at a year-to-date chart of three-year, we've had 49 trading sessions. Only three have closed below 401, 4.01%, which is where they ended last year. Now let's switch gears to foreign exchange. The Bank of Japan meets on the 18th and 19th. They may raise rates at n-0.

interest rate policy. So we are now on pace for the fifth lower close of the dollar index against the yen. And as you look at the chart, you can see they closed at the lowest level. That is the dollar in favor of the Japanese yen since February 1st on Friday. Tyler, back to you. All right, Mr. Santelli. Thank you very much. Let's get to Julia Borson now for a CNBC News update. Tyler, House Republicans are releasing a report today trying to undermine the special committee on the January 6th riot at the Capitol and a star witness. They claim their report will prove Cassidy Hutchinson's account of the former president's actions that day were not corroborated by four other White House employees. The former White House staffer testified she heard Trump got into a physical altercation with his lead secret service agent after the president was told he could not join his supporters at the Capitol. Back to the president's budget proposal, the Biden administration is seeking $43 million in funding from Congress to help solve the country's air traffic controller shortage.

It comes as the agency warns fatigue and mandatory overtime are likely contributing to more close calls at American airports. And Airbnb responding to privacy concerns with a new policy on security cameras. The short-term rental site is banning hosts across the globe from using cameras indoors. Previously, Airbnb allowed them in common areas. Outdoor security cameras are still permitted. Back over to you. All right, Julia, thank you very much. Well, a new study reveals it not only is the East Coast sinking,

but it's sinking at a faster rate than water levels arising. So what's the cause? We'll take a look at the rising risks next. A groundbreaking news study shows we may be more at risk from sea level rise than we think, and that could have profound impacts on real estate. infrastructure and the U.S. economy. Senior climate correspondent Diana Oleg explains in her continuing series on rising risks from climate change. Hi, Diana. Hey, Contessa. Yeah, we know that as the earth warms and glaciers melt, sea level rise will increase, but we're now learning of another

harmful effect of climate change that could make it even worse. This is what Baltimore, Maryland looked like in early January after a heavy rainstorm. But it doesn't always take a storm for the city to flood. So-called nuisance flooding is increasing, not just because the sea is rising, but because the land is sinking, more than doubling the potential damage. So in this area, you do see nuisance flooding. Yes, yeah, particularly right here, you know, in the promenade. Grace Hanson is coastal planner for the city of Baltimore. You know, when you have nuisance flooding, it's basically saying it's an inconvenience. But when you think of the promenade here as flooded, you know, some people can't get to businesses or they can't get to work. Coastal Baltimore is sinking.

by more than two millimeters per year. And to me and you, that doesn't seem like a lot by any means. But what becomes an issue is when it's not uniform, and you can have building foundation sinking faster than the other side of the building, and that's where you'll see the foundation is not stable. And coastal land is sinking around the world, especially on the east coast of the U.S. from New York to Norfolk,

according to a new study from Virginia Tech and the U.S. Geological Survey. In some areas, it's sinking as much as much as, as much as 5 millimeters a year. Sea level rise is about 3 millimeters a year. We expect to have a doubling of the frequency of flooding. Cherzai and his team used space-based radar satellites to build digital maps of land over many years in order to see where it's sinking most. They then built the first high-resolution maps of this showing East Coast land sinking anywhere from 2 to 5 millimeters a year,

affecting more than 2 million people and 800,000 properties. The study says that when you add the sinking of the land to sea level rise, it actually doubles the frequency of flooding and cuts in half the amount of time that both cities and coastal residents have to prepare. And that has profound consequences on the flood adaptation strategies that have already been developed. Areas including New York's JFK and LaGuardia airports are seeing land sink at more than two millimeters a year. And why is land sinking? Climate change is causing drought, forcing us to pump more. groundwater and to build more dams to store water. In terms of groundwater extraction, that, you know, is primarily one of the reasons why Baltimore is sinking.

Baltimore is surrounded by more than half a dozen dams, which reduce the supply of sediment going to the coast, thereby causing the land to sink. Even as water becomes more scarce, Scherzai says we need to mitigate the sinking of the land in the next decade, or it will severely impact the integrity of buildings and infrastructure. It would affect bridges, pipelines, railways, runways of airport. And that would translate into trillions of dollars loss and cost of the repair. All right. So what do we do? Well, there are several options. One, you could recycle water by treating wastewater and sewage or put wider restrictions on water usage, especially in landscaping,

then capturing rain and banking it better. In fact, one project in Virginia is pumping, groundwater back into aquifers and treating it in wastewater plants. Whatever the option, though, the sinking needs to stop. Back to you guys. All right, Diana, thank you very much. Diana Oleg reporting. Let's go a little bit deeper now on the sinking East Coast and the groundwater depletion that is helping to cause it.

Joining us now as one of the authors of that paper, Patrick Barnard, a climate and coastal research director at the U.S. Geological Survey, and Cheryl Norton, chief operating officer of East Coast water provider, American water. Patrick, welcome, and Cheryl, thank you for joining us as well. Patrick, let me start with you. I believe Diana said in her report that one of the reasons why the land seems to be sinking is that we are pumping more groundwater out of the land. Am I understanding that correctly?

And why are we having to pump more groundwater out? That's correct, yeah. I mean, we need water resources for drinking, for irrigation, for industrial uses. And so one of the main sources is pumping water out of the ground. And when we do that, we're essentially compressing the poor spaces in the sediment and that land settles through time. And that's one of the driving factors. Similarly, you know, when we pump oil and gas out the ground, it has the same issue. We're basically taking fluids out of the ground and that ground compresses over time and the ground lowers.

And we see a lot of that, especially the groundwater side along the East Coast. Why did we not need to pump out as much groundwater in the past than we do today? Is it because of drought or what? It's a confluence of factors. You know, obviously our cities are getting larger. We have more of a demand for natural resources and water being sort of order one for what we need. And, you know, we get water out of rivers.

And we get water out of the ground. And these are resources that we need to support these urban centers. Cheryl, we heard some solutions from Diana there, including recycling wastewater. How feasible is that to start those changes and do it soon. Yeah, Contessa, it really is very feasible. In fact, we've done that in a number of locations. We've done both the aquifer recharge as well as reuse of water. So basically, people use water. It goes to the wastewater treatment facility. They clean it up very good. And then you can reuse

that for things such as irrigation and just not necessarily for drinking in a lot of cases. You can't get there quickly for drinking water, but you certainly can get there quickly to use it for irrigation and other purposes, which can take a lot of water. Although certainly there are places where that's already happening. Orange County, California, for instance, has the technology in place to recycle wastewater into drinking water, and they've already started it. What about the other parts that Diana's story mentions, the fact that the dams, for instance, are keeping sediment from being deposited in the deltas? Yes, the dams will hold. the sediment back. And so you have to manage that well so that you can either release the sediment

very slowly or you have to do dredging to clean out the sediment behind those dams. In some cases, the dams will fill all the way up and you have to either take the dams down or do an extensive project to remove that sediment. I don't know which of you would rather take this question, so I'll let you have a jump ball and fight over it. We clearly waste a tremendous amount of water leaving the faucet running while we're rinsing dishes or brushing our teeth or whatever. But there is also the loss or leakage of water because of deficient infrastructure. We must lose millions and millions of gallons every minute to that. Can one of you comment on that? Yeah, I can jump in there. To be honest, we lose across the U.S. about 6 billion gallons of water per day from infrastructure

that's not up to where it should be. And there's a huge gap in infrastructure needs across the U.S. In fact, the American Society of Civil Engineers would rate the drinking water infrastructure as a C-plus. And so that's really not where we want it to be. And there's over a trillion dollars of investment that's needed all across the U.S. It's a very, the water industry is very fragmented in the U.S.

And so it requires each individual system. There are about 52,000 water systems across the U.S., and it requires each of those systems. So consolidation could be a real help there to try to utilize similar resources to provide water to multiple communities instead of each community trying to provide it themselves. That makes the infrastructure investment very challenging. The most affected cities I see here, Boston, Atlantic City, New Jersey, Wilmington, Charleston, Savannah, particular risks in the Chesapeake Bay Area, Savannah, and New York City.

we saw in New York City firsthand when Superstorm Sandy came in and those low-lying areas were inundated and really and left out of function for more than a year. Patrick, where does the tipping point come? Yeah, we built up these societies, you know, these urban centers so close to the coastal margins. So we're really on this razor-thin edge between the land and the ocean. And, you know, with sea level rising, you know, at a rate of about a foot a year right now, we expect to get about three, sorry, about a foot of century. We expect to get about three feet of sea level rise by the end of the century in total. But then if the land is also going down at a comparable rate, we can see double the amount of sea level rise effectively in places like New York City. And when we look at the flood probability, you know, about every two to four inches of relative sea level rise doubles the flood risk. And so, you know, we're really right near that tipping point right now.

We've seen this. We have especially amplified during storms, what can happen when you have sea level. level rise, land sinking, and then a storm on top of that. Patrick, will this sinkage and the rising of the sea of waters mean ultimately that buildings that have been built, right, as you say, on the margin, whether it's Alexandria of Virginia, or whether it's Long Island City, New York, or it's Boston Harbor, are those buildings going to be unusable? Are they going to have to be torn down? What's going to be a challenge?

We have to think about how we're going to build resilient coastal communities and incorporate the risk that is here now and that is coming. We're going to have sea level rise. We're going to have storms. We're going to have more subsidence. And all those factors have to be taken into account so we can engineer and protect these cities to be more effective as we move forward. Thank you so much. Patrick Barnard and Cheryl Norton. You know, it's interesting, Tyler, because we didn't even touch on there what the insurance implications are.

if you have buildings going on. We already know that coastal. Coastal United States is already problematic when it comes to property insurance. And that is a red flag warning, I would say. Still ahead. Tick-Tox pain, Facebook's gain. Former President Trump says a ban on Gen Z's favorite social media platform could put too much power in META's court.

That hasn't always been his stance, though. We'll have more details in today's tech check. That's next. A new bipartisan effort to crack down on TikTok, now gaining traction in Congress, which is set to vote on a bill as early as this week. Former President Trump, who led the original push for the ban, seemed to change his stance when he weighed in on squawk box earlier today. I was at the point where I could have gotten it done. If I wanted to, I sort of said, you guys decide you make that decision because it's a tough decision to make. Frankly, there are a lot of people on TikTok that love it.

There are a lot of young kids on TikTok who will go crazy without it. There are a lot of users. There's a lot of good, and there's a lot of bad with TikTok. But the thing I don't like is that without TikTok, you can make Facebook bigger. And I consider Facebook to be an enemy of the people, along with a lot of the media. Deirdreboza joins us now for today's tech check. Pick up on that thought, Dee. Hey, Tyler.

Yeah, I mean, it is just such a massive about face. I remember in 2020 when President Trump spearheaded the TikTok threat and started banning, started talking about banning it, which he also identifies in that clip that you just played. The question is, why is he changing this stance right now and why is he juxtaposing it with Facebook? It's interesting, some have speculated that President Trump himself and some MAGA content has actually been, sort of suppressed on Facebook and it gets a lot of play on TikTok even if his campaign isn't posting directly itself. A lot of his speeches, a lot of his content gets clipped and posted there. And as he said, people go crazy for TikTok. It is a younger demographic, some 150 million

users here in the United States. It's where a lot of that demographic gets their news. So it is in his interest, especially leading up to the election for his content to be on there and also to take a stance against Facebook. But I think that's a lot of the election. But I think the speed at which this ban is once again in the news and coming up to another vote in the Senate has sort of caught everyone a little bit off guard, right? There's always been this undertone. It's always been a bipartisan issue. But the timeline from here, it's all happening, I think, quicker than many had expected the bill will go to the House and then to the Senate and then to President Biden's desk for signing. If you wonder where TikTok could fight back, it could

challenge the legality around the First Amendment saying that it's a violation of free speech. So there's still some ways to get there. And we've been here before. How difficult would it actually be? Could it sell to American, like Bobby Kotech, if he can raise the funding? Those are all questions that we're going to encounter in the coming weeks. Very interesting. Are there other foreign owners of major internet social media sites?

So TikTok was kind of this phenomenon because until TikTok, there wasn't a big Chinese company that had made major inroads into the American market. Now, not social media, but Timu and Sheehan, right? These are huge e-commerce players that have successfully captured American consumers. So you have to wonder, back in 2020, President Trump talked about banning TikTok and WeChat. But the more relevant conversation today may be what happens to Timu and Sheen, which has, you know, collected a lot of American user engagement. But it's the whole question around, do you ban Chinese apps? That's what they do to our companies over there, or do American consumers who love to use them? Do they use the great firewall, the great VPN to get beyond and use these apps that they enjoy?

You know, it's interesting, too, because you mentioned those Timo and Cheon, the young users there, those who are being accustomed to using platforms that originate in China, that's where they really proliferate. Deirdre, thank you. Appreciate it. Still ahead. Shares of EQT off nearly 10% after the company struck in near $6 billion. deal to buy back Equatrans midstream. Our three-stock lunch trader tells us how he's playing that name and more next. And as we celebrate Women's Heritage Month, we're sharing stories of some of our newly

named CNBC change makers, an annual list of 50 women who are innovating and transforming business. Here's Upward CEO and co-founder, Jessica Chang. I think moms, well, especially moms, we are able to balance so much in life. and that ability to balance actually makes us really good leaders. I could be on a conference call. My kids could be farthing on the side. And I have to stay still and say,

let's look at the projections and financials. And quite frankly, we just need more women. Time for today's three-stock lunch, taking a look at some of the movers here with our trades as CNBC contributor Michael Farr, chief market strategist with High Tower Advisors and president and CEO of Farr-Miller-And Washington, Great to see you today, Michael.

We have Meta up first. Morgan Stanley reiterates the stock is overweight, citing AI as the top line driver. But today on Squawk Box, former President Donald Trump called Facebook an Enemy of the People. Shares went down nearly 4 percent today. What's your trade? Enemy of the people. That sounds kind of strong to me. Look, Meta has been a fabulous company.

They've executed really well. but they've also caught the real surge of this AI tidal wave, not the generative AI, the other AI. All-time highs, even got above $500 a share, up 37% for the year. I mean, here we are. It's not even March 15th, and they're up 37%. So I think, look, the company's not going anywhere. It's a very powerful tech company. A lot of people have profits.

I would be trimming those profits. I would not be investing new money today in meta. Wait for a pullback. The rule is to sell high and buy low. This is all-time high. Still in that range. All righty. Let's move to EQT, Michael.

Shares down 9% today. Natural gas producers agreed to buy back its former pipeline business, Equatrans, midstream, for $5.5.5 billion in stock, latest in a wave of mega deals in oil and gas. You like it or not? I don't like it. There are a couple of different reasons. I think in time this could work out. I really do. But is a price and a trade or an investment?

I don't want to catch a falling knife here, Tyler, I want to wait until it bounces and hits the ground. Price of natural gas has fallen in half here, trading about half of where it was around $1.76 now. That's not helping. Now, they know this pipeline they're rebuying. They know what they can do with it, but Wall Street didn't like the price. It's not going to work well on the balance sheet. So I'm going to wait. I would not buy it here, and I don't own it, so I don't have to worry about selling it.

But I think you certainly get this one cheaper. Michael, here's a stock you picked, Valmont Industries, shares roughly flat today, down 30% or so in a year. Why are you bullish on this stock? Contessa, I've liked this stock for a long time. And I guess as much as anything, you know, from where I started to buy it, I've just made a lot of money in it. And I'm a buy-to-hold guy. I don't trade stuff a lot. So I still have great profits in this company.

And the companies continue to execute. infrastructure spending and agriculture. You take that with a Fed that at some point here is going to be lowering rates. Money's a little more accommodative. We've got more spending still coming on infrastructure, money that's already been allocated that's going to get spent, and more on agriculture. I think this company's a well-managed company.

They've been through a CEO change. I like management. I like what they're doing. Yeah, maybe they got ahead of themselves, but longer term, I think they execute, they grow, and this company, I think, certainly from these levels, you make money. You like it, you own it. It's down 7% so far this year, 28% over the past 12 months.

Does that make you wobble a little bit about your ownership of it? Every time something goes down, Tyler, I wobble. I mean, I'm human too. But when I wobble on this one, I would wobble towards buying more of it, to increasing my position where I didn't have a full position. For new clients at the firm, I'll take new positions in the... Valmont. Now, also, I tend to buy a two to three percent new position in any stock. So when a stock pulls back, it's not going to kill my overall portfolio. I limit my risk and I manage through,

it's still considered a concentrated portfolio with, you know, 30 names in a portfolio or so. But I like this name. I'm going to hold on to it. I would tend to buy. All right. Supporter. Thank you, Michael. Still ahead, North Carolina sports betting just went live. We're going to give you the details on books that are open for business, or Power Lunch returns. Welcome back to Power Lunch, just in time for March Madness. Mobile sports betting launches today in North Carolina, competitions, but notably Penn Entertainment's newly rebranded sportsbook ESPN bet

out of the starting gates alongside its bigger competitors, Panduel, Draftings, Bet MGM and Seas and others left to wait and see who grabs the market. There will be a lot of March Madness action down on tobacco. I promise you that. Thanks for watching, PowerLine. Thank you.