Power Lunch - Nasdaq pops 1% as Wall Street shakes off geopolitical fears 11/19/24

Episode Date: November 19, 2024

The Nasdaq is rising today, driven higher by Nvidia shares, as investors shrugged off concerns of mounting geopolitical tensions between Ukraine and Russia. We’ll tell you all you need to know today. 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 be with us on this Tuesday. Stocks are off their worst levels of the day, the S&P 500. And the NASDAQ are now higher. The Dow still negative, but by ever so slight a margin, as you see right down. Had been down 450 points earlier in the session. The fears of escalating tensions with Russia sending investors to seek safety. Gold jumped this morning, but is pulling back now. This is all related to the U.S.'s, permission to use long-range, highly powerful missiles that can strike Russian territory and, in fact, did earlier today. And Bitcoin, is it a record high? I'm not sure that's exactly related to that overall theme here, but it's happening nevertheless. Some options on one of the top ETFs are beginning to trade today, so that could be a catalyst, maybe it's something else.

But we saw Bitcoin rising above 93,000, almost touching 94, just a few moments ago. Meanwhile, Walmart is higher in giving a small boost to the Dow after they beat on earnings and raised guidance. They're making more money on e-commerce. They're making inroads with higher-income customers. They're doing everything right, Tyler. Yeah, anytime you've got a beat and raise, whether it's poker or Walmart, you've got a good thing going. Meantime, a lot of the focus on the transition team of President Trump. We're also watching the transition team of the incoming mayor of San Francisco, adding Open AIs, Sam Altman.

Don People's already told us he's looking at real estate in San Francisco in anticipation. of a turnaround. This one's kind of a fun microcosm as well on the local level of what we might be seeing national aim. Let's start with those escalating tensions with Russia. Russia saying Ukraine sent six U.S. missiles, U.S. made missiles into Russian territory. Let's bring in Amon Javers to explain the significance of all of this.

Amen, good afternoon. Hey there, Kelly. President Biden authorized Ukraine just two days ago to use these American-made long-range army tactical missile systems. They're known as attack-ems to strike Russian territory. And now the Ukrainians have done just that, firing the missiles at Russian targets in the Bryansk region of Russia. Now, these are ballistic missiles with a range of about 190 miles. Previous Ukrainian strikes inside Russia had been made with Ukrainian drones, not American-made hardware.

Now, in Moscow, the Kremlin announced that Russian leader Vladimir Putin has approved a new nuclear doctrine, which says Moscow could use a nuclear attack in response to an attack by a non-nuclear country that's backed by a nuclear. state read Ukraine and Russia there. But a report today by Signum Global Advisors argues the policy change doesn't really substantively change the situation because Putin can use nuclear weapons or not, no matter what the documents text actually says. And I've been talking to multiple CIA veterans today who have operational experience in Russia and in Ukraine. They're telling me the latest escalation could be useful for the incoming Trump team because it's a sign that both sides may be preparing for a negotiated settlement after Trump takes office. The Ukrainians trying

to consolidate their gains on Russian territory and the Russians saber-rattling to intimidate the West from supporting further action. Back over to you guys. It sounds here like maybe what is taking shape is some kind of land for peace kind of swap. I mean, that's sort of the implication here. Is it not, Amen? Yeah, what one of the former CIA officers told me is that the interest dynamic here is that the Ukrainians invaded the Kersk area of Russia. The Russians were determined to push them out and threw a lot of troops at that issue. Weren't able to do it. The Ukrainians have been able to hold on to a lot of that territory, not all of it. And that may be something that Zelensky is trying to really lock down those gains with these long-range missile

strikes in order to say to the Russians, hey, if you're coming to the table, we're coming to the table with a big chunk of your territory as a negotiating tool. That may be what we're seeing here in the preamble. We'll see how the incoming Trump team decides to handle this. No indication just yet of what communication back and forth there's been between the outgoing Biden and the incoming Trump teams on all of this. But you have to imagine maybe at least some of that is happening as well. I also gather that Russians, even as the Ukrainians,

escalate by using these American-made high-tech missiles, the Russians too are escalating. overnight, I believe there was a serious attack on Kiv, maybe another one in Crimea. The one on Kiev was aimed at disabling power supplies, but also killed some civilians. Yeah. And you see Zelensky taking the social media today. Some of his comments on social media were fascinating to me because he was talking about what the post-war era is going to look like in Ukraine. So clearly, Vladimir Zelensky also starting to think about what that post-war era will be and willing to communicate some of those thoughts to the West because the tweets were posted in English and also to his domestic audience in Ukraine.

Amen, thanks very much. We appreciate that. All right, jumping back now to the markets, as we mentioned a moment ago, stocks are well off the worst levels of the day. Shaking off at least temporarily those concerns about rising tensions between Ukraine and Russia. So how should investors position themselves given the geopolitical risks? Joining to discuss that and more is Peter Anderson, the founder and CIO at Anderson Capital Management. Chad Morgan Lander, the senior portfolio manager at Washington Crossing Advisors. Peter, how do you factor in to your portfolio management, and you run a very concentrated portfolio?

How do you factor in these geopolitical tensions, if at all? What is a portfolio manager to do these days? And in my opinion, these things are transient. I don't want to trivialize them, but in terms of how one would pick stocks, you know, there's a number of possibilities. One possibility, which is what I pursue, is to almost ignore this as, dare I say, noise, but still focus on the stocks that we think will do well. And remember, we're in Trump 2.0 now. A lot of investors are trying to figure out if this is going to be a replay of Trump.1, and if that's the case, maybe we just redo our stock picking. But I don't

think that's a good guarantee. I'm thinking that Trump 2.0 will be. very, very different from the first regime and that we need to focus more on fundamental stock picking rather than saying what are Trump's favorite policies and how can we play into that. That is far more risky, in my opinion, than doing pure stock selection. So I hear you suggesting that while the Ukraine situation is something you can sort of set aside as, quote, noise, I think that was your word. The Trump 2.0 and the potential changes to taxation and regulation and immigration and all of those shuns could be something that you're going to have to and are indeed now taking into account in your stock evaluation. Well, I'm actually saying almost the opposite that so many of these things...

Well, then you confuse me, Peter. Okay, so many of these things are speculative in terms of where we think Trump is going to go, right? So if we were to pick stocks based on what we think he's going to do, what his policies might be, I think you could end up in several dead ends simply because he's so unpredictable in terms of what his policies will be. Certainly, we're thinking that tariffs will be a repeat. But in terms of other steps he's taking, I'm not certain that we can be at all confidence that when he's moving forward, he will replay the steps. that he did. Thus, when you're looking at stocks, I think you go back to your own playbook

and virtually almost ignore what we think he's going to do in this term. All right. Thanks for the clarification. Chad, build on that, if you would. So so many people right now are looking at these outsized moves we've had since the election. Maybe it's the food space because of HHS. Maybe it's Bitcoin, which is up 35%. Do you fade that? I mean, are there entry points this creates for you? Are you chasing it? What's the strategy? So, you know, I've been doing this since 1993 and my partner and I, we have a discipline. You would not chase it. You'd stick to your knitting. When you have an election cycle and there's

a winner, the worst possible knee-jerk reaction is to then change your discipline. So we would be mindful of being in high-quality names. Yes, this poses risks regarding the HSS. We're in to health care, but we believe that the risks over the long run are immaterial. So we would move up the quality spectrum. We're at a high multiple about 24 times this year, 21 and a half times next year. We're trading at a market cap to GDP of two times. So we just would be more critical about the investments that we're making. And that doesn't mean you shouldn't invest in equities, but you just want to be in a higher

quality companies. Do you have health care in the portfolio, Chad, because it's not just this potential nominee. There are people shaking their heads about the underperformance of this space, and maybe it's GLP-1s, and maybe it's Medicare and Medicare. I mean, it's like everywhere you look, there have been landmines. Oh, there has been. Yes, we do own health care. We do own the HMOs. We've owned them for quite a long time, like United Healthcare, and we just entered the position of Elevance. We think that over the longer run, they have long. long-term tailwinds. We don't believe over the long run that this poses a risk to their business models. And you just want to be mindful about valuations. We have in a fairly concentrated

type of market environment right now. We believe that over the next 18 months, there'll be a broadening out of the markets, and in particular, within some of these steady eddy names. So, Peter, back to you, and among your sort of both Trump and geopolitically agnostic picks are a number of cybersecurity stocks. Yes, it's possible that cybersecurity will endure almost any presidential appointment in the sense that the fundamentals of that industry are so strong, especially when there's, say, even international conflict now. It just puts more focus on the need to protect all our cyber communications, networks, etc.

So as time evolves, we believe that this need is going to increase. And Tyler, the only thing I can see that would disrupt this perhaps is quantum computing, which is a whole other industry that we haven't even really touched upon. It's in its infancy. But once quantum computing is established, then we will have to go to a next level of cyber protection. But as it stands now, and we're probably about, oh, I'd say 10, nobody. prizes away, at least, from developing cyber quantum computing, cybersecurity will really be endurable.

And that's because quantum breaks cybersecurity? It has a, yes, it breaks all our cyber cryptology within a second. And that's the problem is that if this does come into existence, all our cybersecurity will have to be revamped because it will break all those crypto codes within a very, very short time. But you got to dance while the- short, we've got some time. 10 Nobel Prizes. It reminds me of the old line.

You've got to dance while the music's playing. So you're in the cyber stocks until quantum destroys them. But quick last word, Chad, to you. I don't know if you have any exposure to cyber or if there's other. We talked about health care. What are the parts of the market you're most excited about? So technology is a very interesting seam of opportunity. So look no further as Google or Adobe when it comes to,

leveraging their business models with the artificial intelligence and cloud computing. We think that overall, that that capital investment is going to be incredible, but it's also going to support future long-term growth for both of those companies. We think that those are seems of opportunity that you have to put in your portfolio over the next three to five years. They will be volatile overall, but we do believe in those companies. All right. Gentlemen, thank you very much. Peter Anderson, Chad Morgan Lander. We thank you. I think we see Chad again in a few minutes time. Three stock lunch. There's a tease. Also, still to come,

volatility is on the rise. Stocks are making some big swings in the past few days amid uncertainty here and abroad. After the break, we'll get insights from the CEO of one of the top exchanges, the CME. Power Lunch will be right back. Stay with us. Welcome back, whether it's geopolitical tensions, political uncertainty here in the U.S. I've seen a little pickup in volatility. It's good news for the exchanges like the CME, which is trading around its highs of the year. Still, the stock is underperforming the S&P with some analysts saying growing competition could cause him to lose some market share. Here to discuss, Dom Chu joins us with the CME CEO, Terry Duffy. Welcome to you both.

Dom, take it away. Thanks, Kelly. Thanks very much, Tyler. And thank you, Terry, for being with us here. Kelly laid out a great scenario. I'm going to get to that in just one second. but the reason why we are here in Naples, Florida, is because CME Group is the headline sponsor

for the season-ending Tour Championship for the Ladies Professional Golf Association. Your brand has been associated with this tournament for years, and it has now produced the biggest purse in women's golf. Can you take us through why it's such an important part of your branding here with CME Group? You know, Don, there's many things that go into it, but the big part of it is C&M.

CME is a very diverse organization. The old CME group, the way you would have looked at it in the 80s and 90s and 2000s, if you show up today, you wouldn't recognize. It's the most diverse set of people across the board, women, men, equality across the board. And if you look at our user base, you know, it doesn't discriminate against women. Women are very large in our business, as you know. So I wanted to do something more in the sports world. I thought the LPGA made a lot of sense.

So I brought this tournament to fruition back in 2011, built it up, built it up, built it up. And finally I said, I don't like the fact that men are getting paid more than women for certain events and it didn't make sense to me. So we upped it to the winner who's going to get $4 million would be the highest price in the history of women's sports this weekend and then an $11 million total purse. So you've got to earn your way into this event, but it's the biggest prize in the history of women's golf. So we are really excited by that. We think we're doing the right thing. Last year, you told us that you were going to continue your sponsorship of the event. why is it that you think that this is part of the future for CME group as well?

Well, here, look at what's going on just in basketball, right now, women's basketball. Caitlin Clark played in last weekend in Ananaika's event and where women are going. We think it's critically important to make sure that we maintain our brand associated with what we think is acceptable around the world. So when my clients come in to play in a pro-am here, and you've played in it before, you know how delightful these women are and how they help you go forward with you. and in your game. So it's pretty exciting for us now. Now, this is also a time when it's not just about sport, but there are also many variables happening right now, as Kelly points out, geopolitical tensions are on the rise. We just had probably the most contentious election cycle that we've had

in modern U.S. history, if not all of U.S. history. What is it like for you as a CEO, the business outlook for not just CME group, but for the American economy in general, given what we've seen with the election and what the rhetoric has been about what the future could look like. in this administration coming up? I said just to Guy Dami earlier today. I think that the, and I know others have said it, but the way the markets are discounting geopolitical risk, I think, is a tragic mistake.

You're looking at Russia, Ukraine, being on page 50 of the newspaper, not page one. Whatever happened yesterday was yesterday, nobody cares because our attention span is in the moment. What's going on in the Middle East is, you know, it's gotten worse, not better. That's a problem. What's going to happen with China and Taiwan?

That's an issue. And these factors are not being priced into markets, and I understand why people get, you know, the euphoria goes forward. You look at March of 2008, 2009, I should say, the market has not had a downtick that the world didn't like to buy since then. Well, eventually that doesn't work. So now we have all those 20-30-somethings controlling most of the money, and all they do is buy and hold.

And it's worked out really well for them. So I'm not begrudging them with that, but you cannot dismiss what's going on geopolitically. So I think it's critically important that you hedge your risk. We saw what happened with SVB banks, signature bank, and others, where they did not hedge duration risk. When you don't hedge duration risk, and all of a sudden the Fed takes the overnight lending rate

to 5.5.5%. And you just took all the money you had at 2% and invested in long-term securities. Well, what happens? People want their money back, and you don't have it to give it to them. You go out of business. So risking, making sure that you're hedged up properly

is critically important in this world. One of the other things, too, as well. You know, the CME group gets a lot of air time these days because of the Fed watch tool. Yeah. Because of interest rate futures and what they say about the economy going forward in interest rate policy. What's your view on interest rate policy? Are we on the

right path? Are you seeing perhaps more volatility in some of these markets because of some of the uncertainty around interest rate policy going forward? Yeah, my job is not to determine what the interest rate policy is. My job is to make sure I manage the risk for people who take a view on interest rate policy, and that's what we do. But when you look at where the rates are at today, when you look at $36 trillion a debt, you look at a $1.9 trillion annual deficit spend, there is a lot of leverage in the system. There's a lot of debt out there. Everything's got a borrowing component associated with it. So interest rates are so important. So even the smallest movement in rates has a massive impact on someone's mortgage,

someone's credit card, or whatever the case may be. So I think that the interest rate, whether the policy, we're going to see more cuts or not, I'm not so sure. I think it gets harder and harder to cut when you've got more and more leverage in the system, more and more debt in the system because other nations are doing the same exactly. Terry, it's Kelly here. I just wanted to sneak in a quick high and a question. Hi, Kelly. Before we let you go, it's good to see you. I don't know if this is exactly sort of competitive or what you make of it. What do you make of the plan for the New York Stock Exchange to potentially go to much longer trading hours? And how should we be thinking through the knock

on effects of it? I think it's inevitable, Kelly. I think that the world wants to go 24-7, whether we like it or not. I'm not saying I support it or don't support it. I am just saying one thing. I think that that's what the world wants, and I don't think they're going to have an opportunity to change that. Now, they're not going 24-7 in NYC, as you know, they're a traditional nine-to-four operation, but they will extend their hours. I'm certain. We've been 23 and a half hours a day, six days a week for the last 15 years, Kelly. So we think it's going to continue. That's the way the world wants it. And so I don't think there's anybody going to put that GNI back in the bottle. Hey, by the way, Kelly, I just want to let you know that Terry over here is probably one of the most well-networked

CEOs I know and I just want to bring kind of, you know, Terry's got an entourage with them right now. And I think that these guys... No, I don't have an entourage. I have friends. And I have friends that come down here. All I know is they're hovering and I know you'll know who these people are when you see them on camera. They do this. What's going on, Vince?

How are you? My dear friend Vince Vaughn, who is one of the nicest human beings on the planet. And my dear friend Keith Urban. Good to see you, Keith. Who are here with me. We're raising money for St. Jude Children's Research Hospital. I've been blessed to know both these gentlemen for a lot of years. And when I text them and ask them if they could do it,

Keith's putting on a charity concert tonight for St. Jude. Vince spoke today eloquently to my clients. It is just amazing to have friends like this. So I asked him, I said, you want to stop in and say hello to Kelly Evans and the rest of the folks at CNBC? And they said, we wouldn't miss it. Keith's got CNBC Australia on right now.

Yeah. I tell you, I mean, he's got a concert on tonight. I've got to say, I love all four of you. You look a little bit like, Dom, you're in the Butler Cabin. at Augusta. But Keith Urban, I've got to say that my favorite song, my wife's favorite song, is the fighter, which you did with Carrie Underwood. It is great. It is great. I love it. Will you tell him that? Would you tell him that, Dom?

His favorite song is the fighter, and this is wife's favorite song is the fighter with Carrie Underwood. He's got a concert tonight. Tonight he's singing the fighter, and I'm doing the role as Carrie Underwood, just so you know. We're going to get it on camera, by the way. Get it on camera, will you, please? That should have been my moment. That is just the best.

Wouldn't have it any other way. That is the best. Ask them what they think about 24-hour trading, obviously, before we go. All right. I'll ask, you know, Vince and I talked. Want me ask them now, Kel? Ask them right now. Do it.

Vince, where'd you go, bud? Right here, brother. Kelly Evans from CNBC would like to know what you think about 24-hour-a-day trading. You know, Kelly, I don't think we can put the genie back in the bottle. I think that people are doing that right now. If my stats are right, I think it's already been six days a week for about 23 hours a day. So I feel like that's just where the market's going. And as we all know, we have to change with the time.

We've got to evolve. That is raw talent. So, you know what, Vince has never needed to study his lines very long, Kelly, as you can tell. Terry, I think a lot of CEOs are going, geez, he did that pretty well. Right. Maybe he could have a future in the corporate world. Kelly, he's a Chicago guy. He's a Chicago guy.

He grew up with this stuff. He knows it. In his blood. Gentlemen, this has been too enjoyable. We thank you for the extra time and for making the appearance. Stay here and talk with these guys for an hour. That's good to me. We're going to have a lot of fun here.

Believe me. Keith can break into a little hot summer nights if you want. We'll save that for tonight. Love that. It's nice to meet you guys. Thank you. Thanks for having us. Can I say it?

To Vince Vaughn and Keith Urban, thank you so much for joining us along with Terry Duffy and Dominic Chu. Really, really cool. What talent. All right. Still to come. Traders making some bullish bets on Nvidia ahead of the company's highly anticipated earnings. Vince Vaughn may be betting on.

What do you know? Did you jump in or look for a hedge? We'll break it down in Market Navigator next. Keith Urban, he's your fighter. Ah, great song. All right, welcome back, everybody, to Power Lunch. Let's give you a quick check on the markets. As you see there, the Dow Industrials are down about 95 points.

S&P 500 up a little bit, as is the NASDAQ. The day began rocky with news of sort of an escalation over in Ukraine in the war there. In Video, we'll meantime release its quarterly results after the closing bell tomorrow. expectations are high despite reports of overheating issues with its newest chips. Our next guest believes NVIDIA will beat estimates, and there is no alternative as a pure play in this area. But he does have some add-on names that support the space if you're looking for a little bit lower volatility. David Miller is co-founder and chief investment officer at Catalyst Funds. David, welcome.

Good to have you with us. Your views on NVIDIA have changed, I'm told, since the last time you were with us. Explain what you were feeling then and what you're feeling now and why. Yeah, well, my views have changed because the data's changed. So my views changed with it. Essentially, the old data essentially told you that you should try to model off of Moore's Law. But with this most recent earnings report that we saw from Meta, it's become clear that things with AI are not behaving like Moore's Law,

meaning that the Lama 4 models they've indicated will take 10 times as much compute to train and Islama 3 did. And when you look at Mehta's last quarter spend, they're north of 8 billion cap-ex. And most of that was going to this data networking. So you can see from the hyperscalers that we've already essentially baked in a beat for Nvidia's earnings. And that's why I'm more bullish than I was previously. So in short then, because it's going to take so much more computing power. And because invidia is really right now the monopoly power in that space,

there's no place to go but to invidia to get the power you need. Exactly. Invidia is essentially a pure monopoly, and that's continuing with their next generation blackwell chips. Those won't be in this quarter's earnings, but they will start next quarters, and they'll really be baked into

the January quarter. But you can already see from the numbers that that came out with this very elevated CAPEX spending by the hyperscalers, that money is clearly going to Nvidia for their current iteration of chips. And they've indicated, at least in particular, for meta, that that's gonna continue to escalate quite rapidly. But the same trend we're gonna see at Google and Microsoft.

These companies have no choice, but to compete in that arms race. You can't afford to lose an AI. David, thank you so much for being with us. David Miller, Catalyst Funds, co-founder, chief investment officer, David. Thank you. We'll see you again soon. Thank you very much.

Thank you. Tyler, thanks. A golden gate opportunity. San Francisco leaning in to the business community, mayor-elect Daniel Lurie, naming Sam Altman as one of his transition team co-chairs. The city has been struggling in the past few years, but are we about to see a big shift? Power Lounge will be right back. Welcome back to Power Lunch. I'm Julia Borsden with your CNBC News Update.

President-elect Donald Trump formally announced Howard Lutnik as his pick for Commerce Secretary. The Cantra Fitzgerald Chairman and CEO had been in the running for Treasury Secretary. The Commerce Secretary is expected to play a key role in Trump's proposed tariffs on goods imported to the U.S. The California Health Department reported a possible bird flu case in a child today who had no known contact to an infected animal. Officials are testing kids and teachers in the child's daycare and say they're looking into the possibility of exposure to wild birds. The New York Jets fired general manager Joe Douglas today after five years with the franchise. Under his leadership, the team has a 30 and 64 record, including a 3 and 8 start to the season, no winning seasons, and no playoff appearances. It comes just six weeks after the Jets fired head coach, Robert Saleh.

Tyler, back over to you. All right, thank you very much, Julia. A key business figure added to the transition team of San Francisco's incoming mayor. Kate Rooney joins us now with a look at how Sam Altman could be signaling a change is about to take place in the city by the bay. Hey, Kate. Hey, Tyler. So Sam Altman, the CEO of Open AI, is going to be a key advisor for the new San Francisco mayor. It does underline how important this part of the tech industry is to the city's recovery.

Daniel Lurie, he's the Levi Strauss Air and philanthropist, steps into that mayor's office in January. anywhere, Altman is going to be a key spokesperson for AI in the city, which is really an economic cornerstone here lately, at least if you look at commercial real estate. City still has the highest vacancy rates in the country, 36.9% per CBRE. There is some optimism that could improve thanks to booming AI startups like OpenAI. According to Co-Star, 15% of office leases in San Francisco have been AI companies, and OpenAI did sign the largest commercial deal this year. Altman wields tech influence well beyond AI.

He did run Y Combinator. It's a famous startup incubator that backed names like Airbnb and Stripe. Current CEO Y Combinator Gary Tan has been a vocal critic of Lori. The tech community out here has gotten a lot more engaged, especially in local politics in the past couple of years. Lori has advocated for business tax breaks for tech companies really to incentivize them to relocate here. Think back to Twitter. It had this massive tax break about a decade ago to move to mid-market street. That did not keep Twitter around, though.

You look at X. Actually left the city after Elon Musk bought that company. This is hardly Altman's only foray into public policy guys. He's spending a lot more time in D.C. as well, trying to shape AI regulation. Back to you. Very interesting. Kate, thank you. Kate Rooney.

How might these shifts in sentiment and in planning affect San Francisco real estate? We asked developer Don Peebles about that last week. Here's what he had to say. We are definitely looking in San Francisco because I believe it is bottomed out. I think we talked about this before, Kelly, that we thought that that market was bottoming out soon. And the voters, as I've said, in these very progressive cities, the quality of life is so bad that they are now losing patience with these progressive policies. And that's why the mayor in San Francisco, London Breed was defeated. Well, our next guest has his finger on the polls of San Francisco as well.

He's the owner of one of the city's largest office buildings, the Transamerica Pyramid building. Michael Scho is founder, chairman, and CEO of Chauveau, and you're here on set with us. Welcome. Thank you. Thank you for having you back. Just describe what the past two weeks have been like. So there's tremendous amount of optimism in the city. I think Sam Maltman's selection to join the transition team is a key, is a key moment

because it does show that Daniel Lurie actually is connected to the city. He knows what people need. He knows what people care about. And I said to Mayor Breed a couple years back. Your job as the mayor is to make people feel loved. You need companies to feel like you want them there. Pick up the phone, call them, make sure they stay here. We saw that that didn't really happen.

I can see from Daniel's work, and I know Daniel from the campaign, that he is invested in the companies. He's invested in tech. He's invested in AI. And he's invested in the safety of San Francisco, which is the most important thing. Yeah. You know, I look at what could happen, you know, in the next few years. And if anything, I look back at the past 20 years and think, you know, people in office and mayor can have a very big impact. I mean, look at New York and how things went very differently under Bloomberg and de Blasio and successive administrations. What do you think is going to happen right off the bat here? I mean, what do you foresee? Is it deregulatory? What? So I think Dan Lurie won on change, no different than how Trump won. We're seeing all of even California as a whole.

almost 40% voted Republican, which is the highest number in 20 years. We've seen double the amount of Republican votes in San Francisco itself. So there is this notion of change that is needed there. And he ran on a very simple message, common sense politics. It's not about a shift. He's not calling it a shift or this earthquake, which really some people think it's about common sense politics. It's about safety.

It's about getting drugs off the street, getting homeless off the street, and bringing people back to downtown. And I think with that commitment, and he's totally commitment because, you know, he doesn't need the job. He wants the job. He is committed to making the change and change on day one. This is not a guy that's going to sit there and wait for things to come to him. Is AI going to bring a sort of second sort of wave of prosperity and job creation to San Francisco? Well, it is already.

You know, I sat here with Kelly a few months back, and I've been saying that AI, there's bubbling in the market. You know, you just showed some data. But that data is still, that 15% number is already historic because we're seeing what's really happening. There's 65 leases signed this year alone when it comes to AI companies in San Francisco. 50% of all VC money in the world is invested in San Francisco. So when you're seeing all that money being invested there, you know that jobs are being created. The jobs are being created. People need commercial space.

There's an interesting moment there that people only want to be in the top buildings and the top location. in San Francisco, but AI is definitely the number one engine in the city. But I think what these companies are comfortable that the sort of quality of life issues that have been so chronicled and maybe amplified correctly or incorrectly in the public press, that those, they're not obstacles now. Well, first thing you said, they were amplified incorrectly. They were in one specific area. And they were exaggerated because of the news.

But the reality is today we're seeing a lot more people in San Francisco. You know, we were just talking about this. We opened the Transamerica pyramid on September 12 back to the public, the park, the Transamerica Park. There used to be zero people coming there. There's almost 4,000 people in the park weekly there to see the art show, the public programming. So we're seeing people coming back. We're not seeing the crime or the drugs on the street. It's secluded in specific areas, but there's definitely a lot of change.

It still has to happen there. Is work from home kind of a... still very much the case. In other words, how much is the population in downtown San Francisco led by people coming into the office five days a week? How much might we still move in that direction?

And how much might we not? I don't know if their dynamics are the same as we might see in the rest of the country. Well, the main reason that people work from home is because their home environment is better than the office environment. So why get in a car, sit for an hour and go to the office if it's better at home

in my kitchen or my bedroom? It's quieter. You have privacy. But the reality is there's no collaboration, there's no growth. sitting behind in a zoom in your pajamas in your bedroom right so companies we're seeing are pushing employees to come to work but us as landlords have to give reasons for for employees to come to work so as far of the transamerica remastering obviously we put 400 million dollars in the block to create amenities and to create reasons for people to come to work if it's restaurants or

bars or spas or gyms things that they don't have in their home and we're seeing today occupancy they told you in the building, higher than it was pre-COVID times. Wow. Very interesting. Well, good luck with what you're doing and good luck for San Francisco. It's there. Thank you. It's there. Yeah. Michael Schwove. Thanks very much. Good pleasure. All right, CNBC is extending the deadline to nominate a leader for our changemakers list.

It recognizes women transforming business and philanthropy. You can nominate a changemaker now through November 22, which is Friday. Scan the QR code or visit cnbc.com slash changemakers. we will be right back. Welcome back to Power Lunch, everybody. Let's give you a check on the markets now, as stocks are off their worst levels, but still lower for the Dow Industrials

by about 170 points, about 4 tenths of a percent. Initial reaction to sell stocks on increased Russia-Ukraine tensions, those have largely faded. S&P and NASDAQ are in positive territory. Those fears prompted an earlier flight to safety, buying in the bond markets, and prices up and yields down,

and analyze that for us. Let's go to Rick Santelli in Chicago. Rick. Yes, Tyler. You know, you really nailed it because equities paint the same picture as treasuries, but in an even easier form. Because the lows of the session in equities were basically the first trades of the day. Even though the Dow's in the Red, it was still at the lowest level when it first opened. And the moral of the story is, as you look at two year and 10 year on one chart together, is that there's a lot to unpack here.

Whether it was 3 a.m. or 4 a.m., first at 3 a.m. New York time, we saw the headlines nuclear response potentially to the new conventional types of warfare that Ukraine was using against Russia. We saw yields drop. Then about an hour later, Ukraine actually used a long-range missile strike within Russian territory. We saw another yield drop. So as we sit right now, twos and tens, well, they're down several bases. points. The counterfactual here is maybe they would have been up 10 or 15 basis points because obviously any types of nuclear threats or this escalation in geopolitics I thought would have warranted a bigger response in the marketplace. And as you pointed out, Tyler, much of this is already reversed out. And even if you look towards Europe, here's guilt and boons, the UK and the

European tenure on the same chart. Those are two-day charts because of the handover of their time zone. And you could see almost identical. Pentical patterns with regard to 3 and 4 o'clock equivalent Eastern drops in yield. But in all markets, it's worked its way out to some extent. The moral of the story here is that geopolitics, as scary as it sounds, doesn't have a long half-life in the markets like it used to. Tyler Kelly, back to you. Rick, thank you very much, Rick Santelli.

Meanwhile, shares of Walmart hitting a fresh all-time high after posting a beat and raised third quarter. We'll trade it and a couple other names in three-stock lines. right after this. Welcome back. Let's close things out here with three-stock lunch. Chad Morgan Lander is back. He's senior portfolio manager at Washington Crossing Advisors. We heard your kind of top-level thoughts, Chad. Now we get to get a little tactical. And we're going to start with Microsoft. They just unveiled a host of updates to cloud and AI services at the Ignite Conference in Chicago.

CEO Saia Nadella spoke exclusively with CNBC, touting historic demand for their 365 co-pilot platform. AI is doing that for all knowledge work, whether it's in customer service, whether it's in marketing, whether it's in finance, whether it's in sales. And this co-pilot, co-pilot studio and agents has been transformative. It's the fastest. I mean, just to put it in perspective, it's the fastest selling, adopted suite of Microsoft 365 ever in our history. And, Chad, some have questioned the stock's valuation in part, you know, given valuation, its performance, it's lagged a bit. Even some questioning the Activision deal. What do you do with it?

So we've owned this stock for over 10 years in our rising dividend portfolio. We'd be a buyer of it. We think that overall this company's stock price can go well above 600 over the next several years. 50% of their revenue, just to simplify it, is coming from subscription-based business. That cloud computing side of the business is a reoccurring revenue business, and they will upsell the small, large businesses with AI. as well as with data security overlays, making this a very lucrative business over the long run. Growth rates 10%, profit margins are around 50%.

We would be a buyer of this. All right, let's move on to Walmart. The shares hitting a new all-time high after topping third quarter results. Company also raised its full-year sales forecast, citing customers making more discretionary purchases, ordering more home deliveries online, and also getting an early start. to the holiday shopping season. I know, I know, Chad, you've bought my present already at Walmart. I did. Good. Okay. So Walmart, we have been owners of this again for 10 years. The flywheel is working. So all the business investment that they put in over the last three to five years is now paying off.

What they did on these earnings is they beat across the board. And you saw that the reek, the consumer is spending. So it's not as if they're rolling over. In particular, it looks like the high-income earner cohort is going and gravitating towards Walmart. So that bodes well for the stock price. They have growing margins. In particular, you're seeing them bring in the consumer from the food side and then upselling them with brands. So not to worry about the tariffs, two-thirds of their business or their products come from the United States. States or assembled in the United States. And they'll pass on that tariff to the consumer or pushback

on the supplier. Well, perhaps then we'll move along to my favorite story of the day, which is Intuit. The Turbo Taxmaker is one of the worst performers on reports that President Elect Trump's new Doge Commission could introduce a new tax filing app. Of course, there have been efforts before to kind of simplify the filing process. Chad, is this a legitimate reason to sell the stock or would you be a buyer here? So we're, we would be a holder of this. This is based on of valuation, we think this is a high-quality company that's growing profitable, well-capitalized. The problem here is that about $6 billion of their $18 billion comes from the consumer side of the business. This looks as if this is a long-run, perhaps headline risk concern. But overall,

we think that this isn't an immediate concern. They're building out their platform on the business side, in particular on the middle market side. And we think overall that this is a really good company, but the valuation to us doesn't make sense at this inflection point. Be that way. Chad, thanks so much. Appreciate your double time today. Chad Morgan Lander. All righty, that brings us to the end of the hour. We've got Keith Urban, Vince Vaughn. Hey, where do we go from here? Thanks for watching Power Lime.