Power Lunch - Musk-See TV, November To Remember 11/30/23

Episode Date: November 30, 2023

Elon Musk was unplugged and uncensored in a big interview yesterday. We’ll look beyond the expletives, and get to the heart of what he said about Tesla.Plus, it’s been a big month for stocks. The Dow is up 8% in November, and it’s the laggard of the major averages. Can these gains continue into December? We’ll explore. 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. Coming up, Elon Musk, unplugged and uncensored. A big interview yesterday, you've probably heard about it. We're going to look beyond the expletives and discuss what he said about Tesla. And we're just about an hour away from that company's event to mark the first deliveries of its so-called cyber truck. Plus, it's been in November to remember for stocks. The Dow up 8%. And that one's the laggard. Can these gains continue, Kelly, into December? Well, they are continuing this afternoon with the Dow up 306 points right now. That's 8 tenths of a percent. Mirror image for the NASDAG down about that much right now. Well, the S&P is down about seven points. Here are the numbers for the month of November. Salesforce, a big reason the Dow is outperforming today. It's adding more than 100 points.

The index beat on earnings, raised on guidance, at least partially on hopes for AI. And there you saw the 10, no, 10% gain for the NASDAG, about 8% gains for the S&P and for the Dow this month, Ty. All right, let's begin with Tesla as we are awaiting the company's big event to mark the first delivery of the so-called cyber truck. Phil LeBoe joins us now for more on what this launch means for the company. It's been a long time coming, Phil. It has been, Tyler. And I think people originally, when they first introduced the cyber truck a number of years ago, people thought,

while here in the next couple of years, we're going to see this, you had the pandemic come through, you had a number of things, delay the production, and then ultimately. the first deliveries of the Tesla cyber truck. Keep in mind with the stainless steel body, with the design that is incorporated into this vehicle, this is not an easy vehicle to manufacture. This is not your run-of-the-mill vehicle that you can crank out one after the other. They've talked about the challenges of producing the cyber truck. They're just delivering the first 10 this afternoon. One thing we're going to be watching for, what's the pricing?

We have been told that there are going to be three levels of pricing, but exactly where the base prices and then the mid-level and then the upper end level, the highest of the high-end levels. We don't know those exact prices. That's one thing we're going to be watching for. In terms of what this means for the electric pickup truck market, which is just starting to develop here in the United States, keep in mind that this is going to be far different than what we already see from Rivian as well as from Ford with the F-150 Lightning. And then to a certain extent when you take a look at the GMC Hummer pickup, though, that's really a very niche product. Just under a thousand have been delivered through the third quarter. And yes, Rivian through the third

quarter was the number one selling electric pickup truck here in the United States. As you take a look at shares of Tesla, keep in mind that they will gradually ramp production of the cyber truck over the next couple of years. So you're not going to see an impact on the bottom line this quarter, probably not for several quarters. And even after that, almost everybody, who has looked at the economics, if you will, has said, look, when you're getting up to 2.3, 2.5, 2.7 million vehicles being delivered, if you manufacture and deliver, let's say, 150,000 cyber trucks, it's not going to have a huge impact on the bottom line. That doesn't mean it's not important, though, because this is one of those vehicles, guys, that could turn heads and make people

say, you know what, I've seen other Tesla's on the road. This is really so cool, so unique. I've to go into a gallery, I've got to check it out, and then maybe they start to consider buying a Tesla. That is the hope of Tesla executives. Well, it is a head turner, and in some ways to me, a head scratcher, because as I look at these other versions of trucks, the Rivian, the Ford Lightning, the GMC, Hummer, I see where you put stuff. With the Tesla machine, I don't see where you put junk. You can put stuff in the back, Tyler.

You can put stuff in the back. And people who have driven prototypes of the cyber trucks say, look, it's got a lot more room than you would expect in the back of that vehicle. Just for some context, Tyler, the pickup truck market breaks down like this in the United States. About 50% of it, work trucks, fleets, your contractor, your electrician, people who truly use a pickup truck. Another 30% are those who are purpose use people. Let's say you want to haul a horse trailer or a boat to the lake. You don't use it for work, but you do get the use out of it. And then the final 20 percent, those are what you would call lifestyle buyers.

These are the folks who are driving around Southern California in a tricked out pickup truck, not because they use it, not because they load stuff in the back, but because they think it's cool. And that's where the cyber truck will fit in initially. And by the way, Southern California, Tyler, number one pickup market. in the United States. All right. Phil LeBoe, thank you very much. Our next guest describes the cyber truck as a halo truck,

one that is intended to reinvigorate the Tesla brand. Here to explain is Tom Narayan, Global Auto's analyst at RBC Capital Markets, has an outperform on Tesla, $301 price target. Tom, can this halo truck reinvigorate a brand that is doing really very well, but has not had any kind of model refresh, in several years. Yeah, that's exactly right.

I mean, if you read the Walter Isaacson book on Elon Musk, you see the history of Tesla and how started out with the Roadster and people really getting excited, the cool factor, right? You had rappers driving around in Tesla. Since then, there's a little bit of staleness that's come about the Model 3 and the Model Y. Now we have some excitement about a car where there's lines wrapped around, uh, stores in the past couple of days. And you had signs inside the store that says, hey, if you like this, there's a Model 3 for only $29,000. So the Halo effect is in full effect. In order for sell a Tesla to

sell 2.3 million units next year, mostly Model 3s and Model Y is not the cyber truck. People need to get re-energized and convinced to buy a Model 3 and a Model Y again. And, you know, a car is an emotional purchase, it's all about brand. And this is how you reignite the interest and the passion of a brand. Phil was talking about 20% of pickup trucks being this lifestyle type buyer, and this fits right into that sweet spot. We only see them selling about $250,000, maybe max, at least per year. And that's easily achievable. Is that a needle mover? Is that a needle mover for a company of this scale and size? It's not going to be a needle mover either way. No, no. No, it's not going to really matter. Plus, if you guys remember, my valuation is 90% autonomy, Robotax,

and FSD, and only 10% cars and trucks. But we do need people to buy these products in the next year or two in order for the thesis to work. So I do believe it's important to re-energize the brand for people to buy model reason wise that can put FSD on those and get people excited about autonomy. So it's indirectly important, but in of itself, I don't believe it'll be that big of a financial contributor, especially for a company with a $700-plus billion market cap. Yeah. Let's talk a little bit about the specifications of the truck. How does it compare in terms of size with the trucks that we're familiar with, whether it's the Dodge Ram or the F-150, F-250, the Chevy trucks, in terms of its carrying capacity and in terms of range?

Yeah, it'll depend on the trims. I know we've heard of three trims that they have. I think the highest end will probably have higher range than those other models that we've been hearing about. But they'll have one at a lower price, potentially lower price than the RAM, Silverado, and the Lightning, right? So I think we'll get some diversity in terms of battery range and in terms of storage capacity. But to Phil's point earlier, I don't know if this is going to be a work truck. I think it's going to be a lifestyle truck. It's probably going to be more a vanity truck, I would say.

Yeah. But there's a lot of people who live who drive those. I tell you, my brother lived in Texas. Kelly made by one. And there's a ton of pickup trucks. How many car seats can it fit? Because I would hear. Just throw them in the back.

It's a fine. It's bulletproof. What can happen? Yeah. I'm getting a little sick of the Odyssey, Tom. No offense to Honda. So you talked about how much. much of your valuation for Tesla is about autonomy and software and all that going forward.

Do we need to read anything into his comments, his disappointment with what's been going on at OpenAI? No, I don't think so. I mean, it's the other thing I got out of reading the Isaacson book is there's a lot of Elon speak that you just have to kind of not listen to perhaps. Really, ultimately, you know, people should test out FSD beta. And I personally believe it's the best consumer product since the iPhone. It is so amazing.

It's amazing. Amazing isn't good enough. You know, my iPhone, it went through years to get to where it is. Can we really have, you know, trucks on the, I heard people the other day going, yeah, yeah, sometimes I take it eight-minute nap on my way to work. I just keep my hand on the wheel and, you know, it keeps going. I'm like, I don't know about this. I don't know. Most driving, most driving to me sucks.

It's like, I would say 80% of driving is boring and tedious in traffic. And this thing takes that out of your hands. I think a lot of people just don't realize how amazing of a product this really is. And if they can get more of these and more people testing these, I think that could go very far for folks to get excited about Tesla stock. When they realize how amazing this product, especially if they cut the price on it and just get more people testing this product. People will realize how amazing autonomy can be and not just like fun to drive or not drive, really. but saving lives, space in our cities, really transforming society in general. In the future, I'm not saying it's not coming, but I think we're in that murky middle for a still for.

Anyway, we'll debate that another time. For now, Tom, we appreciate you joining us. Tom Narayan joining us today. Speaking of Tesla, CEO Elon Musk, touting his contributions to the environment at the deal book conference last night in his interview with Andrew Ross Sorkum. Take a listen. Tesla currently sells two twice much in terms of electric vehicles as the rest of electric car makers in the United States combined. Tesla has done more to help the environment than all other companies combined. We fair to say that, therefore, as a leader of the company, I've done more for the environment than everyone else, and any single human on Earth.

Let's pose the question. What's he done for the environment? What are the implications? Let's discuss it all with Jonathan Maxwell. He's CEO of Sustainable Development Capital. Jonathan, you want to take the question? Thank you. Yeah, well, I think, first of all, good ask to, you know,

Musk for putting such brilliant branding and marketing behind the electric vehicle. He's right in the sense in the U.S. is the biggest player. Of course, China has been producing more electric vehicles now than the U.S. I think BYD overtook. Tesla, Q3 this year, over 500,000 cars manufactured compared to 300,000 change by Tesla. But I think the movement, the biggest problem with oil, which is really the fuel for transport, is that it's incredibly inefficient. Most of it goes up in smoke, about three quarters of it is wasted as heat.

So actually, and it's hugely carbon intensive. So moving to electric vehicles is great from a decarbonization of oil and petrol perspective, but it's tiny. It's still only 2% of oil has been done. displaced by electric vehicles of any kind. So the problem that we've got is so big and so massive, and it can be addressed by electrifying transport, but even transport sits within a much bigger context, buildings, industry, transport, incredible amounts of energy being used, most of it being wasted. So I would say that Mr. Musk has doing a fantastic job. He's got to keep pace

with China, number one. And number two, we're just skimming the surface. This clean energy revolution is You're saying that in the grand scheme of things, in terms of decarbonizing the environment, transportation is a relatively minor part of it. Transportation is a very big part of it. It's about 70% of energies are used in industry buildings and transport. But I thought you just said it was 2% or something. Only 2% of oil has been displaced using electric vehicles globally. So what we're doing is we're making more and more and more.

There's been 6 trillion invested in renewables in the last 20 years. 3 trillion in the grid. We've got incredible companies like BYD and Tesla that are making electric vehicles. But we've got to put this into context. We're not yet in the earth-saving territory. In fact, this equipment uses incredible amounts of metals and minerals and requires an incredible amount of mining and resources. It certainly reduces the environmental footprint of using energy, but it's going to take a lot of time and resource to make a huge difference. 98% of the oil that makes transport, it hasn't been discharges. displaced, and that's the scale of the challenge that we're facing here. So we're on the road,

but we're only just getting started on the journey. Jonathan, tell us about COP 28. I thought the economist kind of put it well when they said, if you go back to Paris, it's not like there was anything truly binding about that back in what was at 2015, but it really did catalyze the rise of this whole kind of sustainable investing movement, which is great. The flip side is that it's threatening to bankrupt some governments. So as we stand here trying to figure out where the next 10 years ago, the fact that President Biden didn't even go to the summit, what are we to read into that? Yeah.

Well, I mean, first of all, President Biden and the U.S. government have put out one of the largest stimulus packages for clean energy ever produced. You could argue what more can they do and say a year from an election in the United States. Going back to Paris, Paris was a landmark agreement. It committed everybody to decarbonization targets. COP 28 in Dubai, which is what started today. is a stock take. It calls everybody to reckoning and says, how are you doing? The challenge is that actually, that's not going so well. There's been incredible amounts of money put into clean energy,

but going back to my point about oil and transport, there's very little displacement of fossil fuels. So since Paris, fossil fuel demand, oil, gas and coal, which is 82% of the world's energy, has gone up. So although we've seen incredible gains made in the renewable energy industry, they've been overwhelmed by the growth in fossil fuels. So we need a different approach. And the last point I'll make is that's what I'm hopeful for with COP28. There are two things fundamentally that COP28 calls for. Renewable energy, which is great, add more energy into the system.

But there's a new phrase. It's called energy efficiency. And it says stop wasting, implicitly, it says stop wasting three quarters of the energy we're using in the world because that isn't just the largest source of greenhouse gas emissions. It's also, frankly, the largest source of emission reductions. What do you mean by wasting? What do you mean by stop wasting?

So I'll give you a basic summary. So about 10% of the world's energy is lost just by extracting it and converting it into something useful, for example, oil and gas pipelines. Another 50% of it, for example, an electricity generation goes up as smoke because when you put a molecule into a turbine to make electricity, half of it disappears into the atmosphere, bearing in mind only 3%. of the world's energy's wind and solar. Most of it's thermal and it goes. And then once the energy's got out of the power plant, you've already lost 60%. Another 10% gets lost in the transmission.

And I'm trying to jam this all in about 10 seconds, but basically you think energy, would we call that carbon capture? I mean, is that the next big? And where's the money going to come from? Again, quickly, if you can. A decentralized energy, bring generation close to the point of view, solar, heat capture, heat pumps.

The second thing is reduce the amount of energy that's used at the point of use. Better light, heating, ventilation, air conditioning. The International Energy Agency yesterday pointed out that energy efficiency, so on-site generation and efficiency, can contribute 50% of all the decarbonization the world needs by 2030. And I think that revolution that COP is going to be presenting, if the asset class my firm's sustainable development capital invests in,

and it's the topic of my book, The Edge. Well, we appreciate it because from an investment point of view and also just to try to figure out what is going to come out of this summit. We know where to look now. Jonathan, thanks for your time today. Thanks for joining us. Thank you very much for having me. Jonathan Maxwell. All right, coming up, the cyber truck is entering a space with lots of competition, whether it's your everyday names like the Ford F150, luxury players like Ferrari. Further ahead, we're going to take a look at a $400,000 SUV. The first up next, November keeps giving, thanks to investors.

The S&P up 9% and AST, up 11% for the month. Will this strength hold up into year end? As November comes to an end, December around the corner. We'll be right back. Welcome back to Power Launch, everybody, taking a look at the markets over this past month, and it looks like Christmas came early. It has certainly been, as they say, a November to remember.

The Dow and S&P both up about 8% so far. The Dow adding rather sprightly to its. its gains today up 340 points. The NASDAQ up more than 10%. So will the climb continue and are the numbers setting us up for a Santa Claus rally? Let's bring in Brian von Kronkite, portfolio manager with all spring global investments. Brian, did this move in the markets surprise you at all? And do you think it sustains into December and maybe even into next year?

I'm not that surprised by it given the data we're seeing. The economy is slowing, but inflation is coming down nicely. and the Fed is orchestrating what they're trying to get done. They're trying to slow the economy down. But right now, this rally, as it continues in December, which I think it might, is really on the hopes of the Fed orchestrating the landing. But it seems to me that it's based more on a Christmas wish than on a 40-year-plus history of Fed inertia.

They're typically very slow to react. They rarely preemptively do anything. And so I have to think that our base case is the Fed will achieve their goals. They're going to slow the economy. Companies will react accordingly by cutting cap-x, cutting jobs, and we're going to end up having to assume the Fed will be late in responding. So we might get this Christmas rally, but it makes me very fearful for what Q1 might have in store for us.

So you expect a marked economic slowdown, despite the fact that the third quarter numbers were just revised, I believe it was yesterday, to 5.2% gains for the GDP. This quarter, everybody says, is slowing down a good bit. So talk me through the next six months economically. The next six months, I think, are going to see the impact of a long string of Fed tightening policy. So what we're going to see is consumer credit begin to weaken, consumer confidence, slow down, spending, alter their form. We're seeing trade down already with consumer behavior.

From that, you'll start to see demand for loans at the commercial level begin to slow, and companies will begin to pull back on their CAPX that will then reduce the need for jobs, unemployment rises, and all of a sudden we have this cascading effect and do a slowing economy that is already in the cake, so to speak. The idea that the Fed is going to all of a sudden cut that off right here when they still have some work to be done is just I don't believe something we've seen in history before. So my base case, again, is we're going to see that slowdown,

materialize companies will respond as they should, which will then catalyze the beginning of the bottoming process in 2024. Kerwig, Dr. Pepper, CBRE Group, Carlisle companies. You like all these names in the midcap space? I like all these names for a few different reasons. One, they all have defensive characteristics, either around some of their cash flow streams being very stable through this troughing process. But more importantly, each of them are doing things to drive their own destiny.

This is one of the most important things we can do as investors today when the Fed probably won't be supportive to us overall. What are individual companies doing to drive their destiny? And so just pulling one out of that list, for example, Carlisle, ticker CSL, they're in the building product space. People think of them as being somewhat cyclical. The reality is their cash flows are pretty stable as a lot of its recurring revenue from replacement business, but they're in the middle of selling off their very final

non-core asset, which are bringing about $2 to $2.5 billion of cash, moving them to a net cash balance sheet. As they recycle that cash flow into their core business, it will demand a higher multiple. But in the interim, that powerful balance sheet will protect us as investors if the economy does slide into a deeper recession, then we all hope actually happens. Interesting. That is a defensive play there. Bryant, thanks for joining us today. We appreciate your time. Always a pleasure. Bryant Van Kronkite.

Further ahead, Microsoft securing a non-voting board seat at OpenAI. Does the move quell some of the remaining questions about Microsoft's interest in the startup after a turbulent month? We'll discuss that in tech check right after that. Welcome back. Inflation numbers out this morning and key ones for the Fed shows the core PCE rising two-tenths from last month and three and a half percent from a year ago. The headline up about 3 percent now in line with expectations, but that 3.0, Rick, is catching some eyebrows. get a look at how the bond markets reacting to the data and why are yields up today, at least the last time I checked. Well, I'll tell you, let's start at the beginning. I like that PCE

cord deflator month over month. Yes, it was up only two tens. Look at a chart. That's really good news for the Fed. That and continuing claims of two month or two year highs. Now, if you annualize that two tens over three months, it comes out to 2.4%. You annualize it over six months at 2.5. These are close to Fed target. The problem is. is, well, the problem is the next chart. I'm going to mix apples and oranges here a bit, but here's a 100-year chart of the CPI index that we had just, what, last Tuesday. Now, if you notice, it basically goes up every month because what we always discuss and the only thing the Fed cares about is trying to deal with the present and the future. Annualized is the

trick, and annualized one-tenth or two-tenths is an experience that the public doesn't get to enjoy. The public gets to enjoy that CPI chart, which goes up, up, up in compounds. So prices might be annualized from this point forward at a low rate, but if you look at what prices are in the rearview mirror, that's what the public experiences. Why are interest rates up? Well, look at two's and tens. After all the data was out, the Fed should like interest rates reversed higher. I think it's a logistic technical issue today.

Look at twos and tens over two days. You broke through the top of the range. You held a very technically significant, four and a quarter in tens. It's a bit of a breather, and it's the end of the month. Tyler, Kelly, back to you. All right, Rick Santelli, thank you very much. Ahead on Power Launch, our Econ ecosystem series continues. With prices still high throughout the economy, we take a look at one area.

Consumers can still find value. Those would be the dollar stores. Power Lunch will be right back. Welcome back to Power Lunch. I'm Bertha Coombs with your CNBC News Update at this hour. Senator Tommy Tuberville says he may drop some of the holds on military nominees next week. The Alabama Republican has been holding up military promotions for months in protest of a Pentagon policy that allows time off and reimbursement for service members and family seeking abortions out of state.

He has faced backlash from Democrats, the White House, and members of his own party who say he's threatening military preparedness. Publishing Giant Penguin Random House filed a friend. federal lawsuit against the state of Iowa for a new law banning books in schools that depict or describe sex and books for young children that discuss gender identity. Penguin Random House argues that the law is so vague it could potentially target a broad range of books. Colorado football head coach Dion Sanders was named Sports Illustrated Sportsperson of the year, despite his new team going just four and eight this season. He's the first collegiate coach to win the title in more than a decade. Magazine wrote that in less than a year, Sanders has transformed the program and breathed fresh life into the campus.

Kelly, this is his, will be his seventh time on the cover of Sports Illustrated. So I guess he has broken whatever jinx there was with regard to that. I would like to bring in Tyler Matheson for comment here. I would just say, I mean, it's, look, he's no doubt attracted all the, this attention to the program and a lot of these wonderful athletes, but it's a little early still, right, to call him sports personally. Yeah, when you finish four and eight, there are a lot of coaches who've been fired for going four and eight. But, you know, listen, he, as you said, Bertha. But Neon-Dion, man, you can't deny him. He has created a level of excitement such that my son

decided to apply to Colorado Boulder, I think simply because Neon-D-D-on was that. He has created. there. We'll see. That's amazing. You know, I'm sitting here trying to think, okay, who should it have been? Who should it have been? I was thinking that too. Maybe Lionel Messi. You know, maybe for what he did to re-energize the MSL and also winning the World Cup. Now, that was last year. But interesting one. Tweet us your hot takes. Thank you, Bertha. Time for another installment now of our Econ ecosystem series.

We've looked at big box stores and mall retailers this week. Now we're turning to the discount retailer space with a dive into the dollar stores in particular. Oppenheimer out with a new note on the heels of Dollar Tree's Q3 miss, saying sentiment remains more positive toward Dollar Tree versus Dollar General. Both stocks higher today, but down this year with Dollar General losing almost half its value since January alone. Joining us to discuss is Rupesh Parikh. He's managing director and senior analyst at Oppenheimer. Rupash, have they turned a corner yet?

And what is it going to take to turn it? Yes, I think from a numbers perspective, I think both Dollar, dollar general and dollar tree, EPS estimates out there are bottom. So I think all of us, you know, for DET specifically, we're waiting for a cop re-acceleration. And then for dollar tree, you know, it's a little more complex story. The dollar banner is doing really great, you know, mid single-digit cop grower, while the family dollar segment is against long. So, you know, that was a miss that we saw with their report earlier this week.

And they talked about family dollar in particular discretionary purchases are slowing. I mean, all of this if I break out my 0708 playbook fits in with the narrative of a slowing, economy, slowing consumer, except everything else doesn't right now. So it's been a very strange year to watch them stumble, even while everyone else is talking about a soft landing. Yeah, so I think it's very tricky here. So you have a couple of things going on. So first, you're still laughing very difficult pandemic comparison to some of these discretionary categories. And secondarily, you know, you look where we are in the economic cycle and governance stimulus is being pulled back. So SNAP benefits have continued to go down year every year.

Two, three, you had greater pressures than what you saw during the first half of the year. tax refunds have been lower. And then you look at food inflation, food prices are up more than 20% over a multi-year period. So the consumer, this lower-income consumer, is facing a number of headwinds out there. Yeah. So the stocks, do you think they reflect, you know,

dollar general in particular, these challenges already? Is it possible? We're going to look back in 2024 as a positive inflection point? Yes, I think, I think DJ has clearly bottomed. We had a note out a few weeks ago, calling a bottom around the $100 level. You have a new CEO that's coming,

that came back, Todd Bassos, we're going to hear for him next week. And I think investors are increasingly optimistic that he can help turn around the business. So yeah, I think there is a chance for a positive inflection next year with the business. And that's what we're very focused on with the report next week. And then what would you say are the broader implications? Are they strategic misses, oversaturation? Is it Timu and Cheyenne's fault? I mean, what is it that has accounted for such difficult stocks? Yeah. So I'll say, again, challenges with the low income consumer, margin pressures that these companies have faced. So when you look at the dollar stores, when you sell lower margin consumables, that has a negative margin implications for the mix.

So these companies have had severe margin headwinds. And then, yeah, you know, waning top line growth has been just a challenge for the sector as you allow some of these difficult pandemic comparisons. And then for dollar general, you know, you've had some execution issues, you know, under under with the, under the old CEO. And now they're kind of rectify them with improving the supply chain. They've made a lot of progress there. They've also invested more on wages. So it's a number of factors out there. I think both chains are addressing them. If I look at both DG and Dollar Tree, we are perform rated on both. DG, you know, we think there's greater turnaround potential in the coming years. They have strong cash generation and we're so optimistic

they can drive an earnings re-acceleration. And are we going to look back and say, oh, the lower income consumer was able to kind of get some mojo back? And if so, how so? Yeah, so snap benefits will start to lap some of the snap headwinds next year. So I think that that could be a positive. So then we're optimistic. You know, you lap the snap headwinds and you hopefully get a better discretion environment. And then, you know, I think that could help the lower income consumer, but it's still very much cheapity. So, you know, I don't think any of us have great visibility in terms of when we'll see that turn in that lower income consumer.

Yeah, absolutely. Rupesh, thanks for joining us today. We appreciate it. Thank you. Rupesh, Parik. All righty, coming up, peek under the hood, Ferrari's new. SUV is its first vehicle with four doors. That's an SUV. They call it an SUV. It's out front. It's on the ground.

Robert's taller than it. $400,000 price tag. We were lucky enough to borrow one for a test drive. I should say Robert was lucky enough. He and we will tell you all about it when Power Lunch returns in a couple of minutes. Some developments overnight around ChatGPT parent company OpenAI, Sam Altman officially back as CEO, and Microsoft now securing non-voting, non-voting board seat there. Deirdre Bosa is at the heart of Silicon Valley for today's tech check, the Wonder Coe Summit in Menlo Park, California, with a special guest, former NSA director, Mike Rogers. Deidre.

Yes, indeed. Tyler, thank you very much. Mike Rogers, Admiral Mike Rogers, great to have to you. You have an interesting perspective on all of this, being in the government for so long, yet here on Sand Hill Road, iconic place in Silicon Valley. at WonderCrow this morning has been all about artificial intelligence, the benefits, and the risks. So I wonder from you, what role does government have to play in the development or the regulation of AI, if at all? So look, government clearly normally concerned about the safety and well-being of its citizens,

also concerned about the regulatory or the competitive business aspects of this. So I look, I think there's a role to be played. The challenge is, what is that role, and how does it develop it or execute it? because part of the challenge is most of this technology is being developed in the private sector. You know, out here in other places, government doesn't have much expertise, much knowledge about it, is not playing a significant role in its development, and yet the government has a significant potential regulatory role to play. So it's going to be about the power partnership. How do we work together, government and the private sector?

And yet it feels like we're waiting for the two to collide. Generative AI and a presidential election next year. You were director of the NSA during the 2016 presidential election. How do you view the upcoming one? Do you think that this is a more perilous position in terms of misinformation and disinformation? So clearly technology is enhancing the ability to mislead, misinformed, and quite frankly attempt to manipulate or sway opinion based on false information, false images. So you have to acknowledge that's a dynamic.

Now there's a lot of work ongoing to try to mitigate that, try to make sure it doesn't have a significant impact. In 2016 for the first time we really watched social media really used at a significant level, as well as cyber attempt to manipulate the outcome. Our view at the time was it didn't work, but we acknowledged, hey, look, this is a level of effort out of the Russians we haven't seen before with a level of technology.

So I think there's a lot of focus for 24. You know, I'm comfortable that we're going to have an election process that we as citizens can all believe in. I'm sure there'll be challenges, but in the end, I think we'll get through it. That sounds pretty optimistic. I am an optimistic person by background. You mentioned the Russian interference in the 2016 election.

There was a report from META today that says that China is an increasing source of covert influence and disinformation campaigns. They said that could get supercharged by advances in generative AI. What do you think voters, the government, et cetera, need to know about that interference. What does that tell you? So clearly we need to try to make sure we understand it. We need to try to work hard to identify what is accurate, what is not accurate. You see this now, particularly with, so when we implement AI, for example, are we going to define products that have been generated by IAI so that a consumer understands, okay, this is artificially

generated, so to speak. There's lots of tools like that we're going to be looking at. In the end, as individuals, we just need to learn to be more discerning. Just because you see something or read something, that doesn't mean it's accurate, true, or correct. Right. So the responsibility for deep fakes, right, maybe on the companies that are helped to produce them, but what about, for example, a TikTok, right, which is a Chinese company and, of course, D.C., um, where you have operated for a long time, has been worried about that. How big is that threat of TikTok in the upcoming election? So for example, we've done enough, too.

We were worried about TikTok from two perspectives, I think. One was manipulation, propaganda, disinformation. The second was extraction of data based on the interface with customers that we have. Both of those issues are very valid concerns. I think there's ways for companies to address them, but part of the challenge here is the Chinese model fundamentally allows the Chinese government. under the national security laws, the latest of which they just amended earlier this year, basically if the Chinese government says there's a national security application, they can access anything that they want associated with the Chinese company.

And so my view is we have to build strategies that acknowledge that and account for that. So not just an all-out ban. You think that there's ways of accomplishing that without ban? My view is, look, we probably are going to need it to be a little bit more nuanced here. So, for example, we might say, well, we're not going to allow this technology to be used by a government individual. It's not going to be allowed this technology to be used in sensitive or classified areas. On the other hand, there's parts about where I would say, look, we should feel comfortable with society using it for some things. I want to ask you more broadly about the U.S.-China relationship.

I know that you were watching APEC, which was not far from here in San Francisco just a few weeks ago. How has that relationship changed? I mean, it felt like they put a floor. That was sort of the talking point under the relationship. Did you see any significant ways in which that has changed? Is that going to be lasting? Do you see the relationship getting better? So first, I think both parties have come to the conclusion.

I don't speak for the government, and I was just in Beijing, coincidentally, about 10 days ago. My takeaway is that both governments, China and the United States, have come to the conclusion that we need to build a strong floor. And what I mean by that is we don't want this relationship to get worse. And we don't want this relationship to be disrupted so significantly that it either has significant economic dimensions that are harmful to one or both parties. Or we don't get into an inadvertently crisis or fight, Taiwan or some other scenario. So you saw them talk about where they feel that we are compatible or united. What you didn't hear them talk about was sort of the issues that are still out there where we fundamentally disagree. I think they both came to the conclusion for right now.

We're going to focus on the positive, not so much on the negative. There's two things that I'd be watching for, though, that I think China will be, in particular, be very interested in. Taiwan election will be held January the 13th, and the leader will then actually assume office in May. And we have our own election in November of 24. And the Chinese will be paying great attention to both events. And you brought it full circle. Thank you for that. Always great to get your insights, Admiral Mike Rogers.

Guys, I'll send it back to you over at headquarters. Deirdre, thank you very much. Really appreciate it. Our Dear Gebosa with Mike Rogers. Coming up, racing higher. Ferrari shares are lower today, but up 67% this year amid a record run. We'll take a look at its first ever four-seat vehicle and get you a little test drive. And as we head to break, check out the next.

S&P 500 on pace to close out its best months since July of 2022, and one of its best months ever of 8.5% were back after a quick break. Welcome back. Ferraris first ever four-door vehicle has officially hit U.S. soil, $400,000 price tag and all. It's 100,000 per door. Our Robert Frank was lucky enough to get one on loan for the day so we could get a peek under the hood. When I pulled up, I saw you with this car. I had no idea it was a SUV. It's very low to the ground. Well, Ferrari doesn't like to call it an SUV. What they say is that it's the first four-door four-seat Ferrari.

So I call it the F-U-V, the Ferrari utility vehicle. And it was... I'm not sure they're going to like that any better. It was a huge risk for Ferrari. Number one, because you know, you're putting the Ferrari badge on a four-door vehicle, and therefore is it truly a Ferrari? So lots of people hated this car even before. before it was launched. The second reason is that a lot of the supercar makers had already come out

with SUVs. You know, Aston Martin, the Porsche, Cyanne and McCann, those are 20 years old now. Wow. Lamborghini's SUV is six years old. So they were kind of late to the game, so they had to really do something special. And boy, did they do it with this car. So Tyler, I know you like the roar. I do. You like the roar. This is a naturally aspirated V-12. We're talking old-school Ferrari V-12. They're not going to make any more of these after this car. A V-12. A V-12. And it just 750 horsepower. My goodness. It jumps. Zero to 60 in under three seconds. And I've never driven anything like this. It's not an SUV. It's not a sports car. It's something in between that initially is almost hard to drive because it turns so quickly. It accelerates so quickly.

breaks so quickly that it kind of feels like a sports car, but it's over two tons. And so you have to get used to that weight and throwing that weight around the road with that much power. It takes them getting used to, but it's very addictive. You mentioned a couple of their competitors, Porsche and Maserati, came out with four-door vehicles. And that was a surprise to me. It took a while to get used. That's a Porsche with the Ford. It's going to have the same effect here. It was a surprise to viewers, to audiences, but also a surprise success. When Lamborghini came out, no one knew whether it was going to sell. Now, it's more than half of Lamborghini's sales come from the SUV.

Now, what Ferrari was also mindful of is not having this takeover the brand, like those other SUVs have done with some of those other. Porsche sales, mostly McCons and Cyan's now, not as many 9-11s. So what Ferrari has said is, look, this car, the Puttersongue, will only account for a certain percentage of sales. They won't tell us what that number is. It's a secret. My guess is it's probably somewhere under 25%

because they don't want to be defined as the sport utility vehicle that you can drive around and put your groceries. And they want to be defined by racing and by high performance. But they're now publicly traded stock. So they have to grow. And this is a new audience. Dealers tell me about a third of the people that are buying this car are brand new to Ferrari.

They've never owned one because they want something they can drive every day. And you think I'd fit in the back seat? You would absolutely fit. I'm 6'1. I fit in the back seat with lots of headroom to go. I was shocked at how much space it is, not just in the backseat, but the cargo area. Very interesting. Okay.

Okay, we'll get one. Put it on your list. All the kids will fit. Here's the key. There's the key. You can drive it out. That's a cool thing. It just knows if you're in the car and it starts or it.

It knows. And it's sold out till 2026. So if you order one now, you're not getting one until 20206. Wow. That's how much demand there is for. Look at that. That's a cool. Pin.

All right. Yeah, wear that. Robert, thank you very much. Thank you, guys. Coming up, Gmail, purge, why you might want to check into your Google account before midnight tonight, power lunch is back in two minutes. Tonight on CNBC, we are continuing to celebrate the life of Berkshire Hathaway Vice Chair Charlie Munger, including this gem about how he and Warren Buffett became so successful. We got a little less crazy than most people, and a little less over than most people. And that really helped us.

In addition, we were given as much longer time to run than most people, because something kept us alive into our 90s. And it gave us a long track from our little fiddling start all the way to the 90s. Those are the two things that really happened. And, of course, we guised up over time. A little less crazy, a little less stupid than most, A little extra time. Charlie Munger, A Life of Wit and Wisdom, will be tonight on CNBC at 8 p.m. Eastern. They were filming it for his 100th birthday, which was, I think was Becky said he was about five weeks shy of hitting that milestone.

So at least they have the very recent footage for this. Yeah, he was kind of yin to Buffett's Yang, I suppose. Buffett, a slightly more avuncular, homespuncund present, Munger, a little more tart-tonged, a little more tart-tonged, a little more. acidic, willing to say what came into his head first. And enjoyed playing that role. I think the two of them worked so well together. And I was saying the hardest thing about losing him now is just you'll never know for sure what his take is going to be on some future thing. We know he hated Bitcoin, but he loved BYD, the Chinese EV maker.

I mean, he got Berkshire to invest in 2008. He was no Luddite. So unfortunately, now we'll never know for the next, you know, big new thing. We can probably guess with some certain market manias, though. All right. Well, we'll be watching that tonight. I believe it's 8 p.m. on the life in times of Charlie Munger. There were some long times there for Mr. Munger. Thanks for watching, Power Munch, everybody.