Power Lunch - Nasdaq rallies to record high as Wall Street tries to end the week on a high note 10/25/24

Episode Date: October 25, 2024

The Nasdaq hit a new all-time high, boosted by megacap tech stocks, as investors look to end a volatile week on a high note.Many names boosted the market ahead of their upcoming earnings. Nvidia rallied about 2%, and shares of Meta, Amazon, Microsoft and Netflix each rose more than 1%.  We’ll you all that you need to know ahead of the weekend.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi, everybody, and welcome to power lunch alongside Sima Modi. I'm Tyler Matheson. Good to have you with us, Seema. Thank you. Thanks for coming. Dow on pace for its fifth straight down day and its first losing week since the beginning of September. That's about the last time it rained here in New York. But the NASDAQ hitting a new record high today ahead of reports from five of the magnificent seven next week, chip stock, Seema, helping to lead the way. And Tyler, shares of Capri Holdings losing nearly half their value after a judge blocked the company's merger with tapestry. The FTC argument, that the merger could decrease competition, and we are seeing stocks really respond to this. We have the FTC official coming later on in the show. Tapestry moving up heavily here on a deal that may not get done. And another FTC action we're watching, a new click-to-cancel rule. Consumers love the idea of an easier way to cancel subscriptions.

Who knows how many subscriptions actually have. Several companies, including Comcasts, the parent of this network, are suing to block that rule. The FTC wants to make it easier for people right. right there with a button on the page to cancel a subscription that you don't want anymore. And obviously, the businesses that have so much tied up in subscription revenue, they may not really want to make it. At a time when especially media companies are increasingly relying on subscriptions as their model that they're using. As their revenue strength.

Yes. All right, with the presidential election less than two weeks away, we start with an alarming report involving Tesla CEO Elon Musk and Russian President Vladimir Putin. The Wall Street Journal reporting that Musk has been having secret conversations with Putin since late 2022. The journal says the discussions have been confirmed by several current and former U.S. European and Russian officials. But according to NBC in a press briefing today, Putin's press secretary denied the Wall Street Journal report, saying Putin only had one contact with Musk before 2022. For more on this, let's bring in Bill Browder, CEO of Hermitage Capital Management.

Bill was previously the largest foreign investor in Russia until 205 when he was denied entry to the country for exposing corruption in Russian state-owned companies. And Jeff Sondfeld is Senior Associate Dean for Leadership Studies at Yale's School of Management, as well as the CNBC contributor. Welcome to both of you. Mr. Browder, let me begin with you. Why is it dangerous or why is it dangerous for Elon must be talking to maintaining contacts with Vladimir Putin? Well, first and foremost, these contacts took place after the war started. So we have an illegal invasion of a neighboring country by Russia, by Putin. The world has condemned it. And then you have a person who's the richest man in the world, a person who owns the major media outlet, which is

X or Twitter, as most people call it, and a person who's potentially going to play a major role in the U.S. government going forward if Trump is the elected president who has had secret conversations with this person who we all considered to be a dictator and a criminal. And so it's quite worrying from my standpoint having. Also, Jeff Sondonfeld, a business person who is involved one way or another in national security ventures such as SpaceX and Starlink, both of which have national security implications here in the U.S. Yes, it's a great risk. And of course, it's an honor to join you and SEMA, of course, Tyler. But being on with Bill Browder, as I don't know anybody more courageous that we ever have on CNBC's air. And it's, it is, I won't say it's a joy to be with him, but it's an honor to be with him on this topic. If I would add to his point is, he knows as well, if not better than almost anyone, just who about Vladimir Putin is, too. This is just not another hostile person.

This is, it is not overstated to say it is, he truly is the Adolf Hitler of the modern world. Just this week alone, we saw the amazing culmination of him at the hub of the, what George Bush called in 1992, the axis of evil, is there he was, sitting with all these hostile parties at the, both at the Bricks Conference. But the missiles that he's getting, the rockets that are coming in from China, that he is supporting, the aviation support that he's getting control equipment, that he's at the center bringing that in, that he has done. And Putin has asked must do favors for China to not let Taiwan connect to Starlink. That's really troubling. And as you mentioned, the business angle on this. And of course, he has 10,000 North Korean troops in Russia being trained to go. in to Ukraine, and he's training the Houthis and Hamas in Syria and six bases that the late

Ash Carter Secretary of Defense had warned us about is that there is a conspiracy here. President Bush was right. And now for Mosque to be dallying with that is alarming. He has a history of 22 years of working with Putin, as we know, from Walter Isaacson's great book. But the intensification that Bill Browder reminds us about since the invasion is really alarming. You have national security assets in the hands of a private business person. That's what scares us.

A $2 billion contract to Starlink, you know, to SpaceX to run Starlink. Bill, you heard Jeff just right there call it alarming, not only maintaining contact with Putin, but potentially providing favors as well. Also take into account President Trump, who, if reelected, has suggested that he would bring Elon Musk into the U.S. government. Your reaction there? Well, I find the whole thing scary and distasteful. It used to be that Republicans were tough on Russia.

And all of a sudden, we have this sort of version of the Republican Party that is friendly with Russia. And Donald Trump has made all sorts of overtures towards Putin. And now apparently one of his biggest supporters who's out on the campaign trail offering people dump money to register to vote has had similar types of relationships with Putin. It all is very troubling for me. somebody who's spent my entire life trying to do whatever I can to contain Putin, including freezing assets, confiscating Russian assets and doing whatever is possible so that Putin doesn't succeed. I don't like to see Putin gaining any power and the fact that he's rubbing shoulders with potentially if Trump wins the most powerful man in the free world. And then the richest

man in the free world is a very worrying thing for me. I'll start with you, Bill, and then I'll get Jeff your same reaction here, as worrisome to me. me as the idea is that Elon Musk is speaking or connecting one way or another on a regular basis with Vladimir Putin, is the idea that Putin was able to assemble in Russia this week some of the leaders of the world's most populous countries, including Narendra Modi of India, Xi Jinping, leaders of the UAE, Saudi Arabia, I believe, was represented at, was at the table or at the meetings, or on the periphery of it, and the director general or the secretary of the United Nations. This is Putin sending a big, to me, middle finger to the West and saying,

you think you got me isolated? You better think against suckers. Yeah, well, it's absolutely appalling, particularly the General Secretary of the United Nations. And Putin is an indicted war criminal. He's been indicted by the international criminal court and to have the leader, the head of the United Nations going there and glad hands. and shaking and hugging and posing for pictures, it really is a major, major, as you say, middle finger to the rest of the world. And I'm kind of perplexed why we don't use our leverage, the G7, the most powerful economic players in the world, to make sure that that kind of stuff isn't tolerated. We have a lot of economic leverage, which we could use.

Yeah, to that point, to Bill's very excellent point. there? Why aren't we coming back at them and trying to impose some kind of standard on these countries that are going over there and making nice with Vladimir Putin? Well, you know, we are imposing sanctions. The sanctions are reasonably effective. They could be enforced a little bit better. We have some mid-level players in our Treasury Department that have not enforced them, frankly, as much as they could have. We have some G7 partners that are worried about upsetting some Greek shipping magnets in terms of carrying some of the fuels and things. But basically, the sanctions that have been quite effective on controlled substances,

on chips, on a lot of critical parts. And the withdrawal of the 1,200 major companies, as you know, that we had a lot to do with encouraging here, pulling out of Russia, have had a devastating economic impact on Russia. Their economy is down anywhere from 60 to 90. percent. Nobody on the planet believes Russia's numbers except the IMF. We don't know what's going on there, but we have actually recorded the IMF's own chief economist saying they have no visibility. All the national income statistics basically have been suppressed by Putin since the second quarter of Q2. So he invents a GDP each day. His economy is averaging. It's the stalemate. He is going to take Kiev in three to five days. He said, Keev, in three to five days. And that was back in, you know, February

2022. So he's downmated militarily economically, Tyler. So he's trying to... Why is Elon Musk so interested in maintaining such a close relationship with Russia? As you point out, the economy's not doing well. They're involved in this geopolitical TIF right now with Ukraine. You know, why would Elon Musk continue to maintain a relationship with Russia? What are the business interests if you look across Tesla, Starling, Neurolink, and SpaceX? He's a mercurial guy. He likes the attention. As we know from Isaacson's book or just watching him each day, he likes, he's a flamboyant and scary person at times. He's obviously brilliant, but that mercurial side of whether or not it's going to be leaf blowers or

flame throwers he's developing one day, next day he's doing amazing things. But that mercurial, grandiose side is, he gets the flattery from Putin that he likes. But certainly, of all the companies have pulled out, virtually no company other than perhaps McDonald's, had as much as 10% of their revenues coming from revenue from Russia. They're mainly about 2 percent, is that this is a company which is, as I just had a call with a number of economists that were Russian refugees this morning, Russia won't make it by the spring of the second quarter of 2025, unless, not to make this partisan, but unless President Trump is elected, because they've run out of running room. They're out of military supplies. So, Mosque is being flattered and being courted by Putin,

And he's falling for it, just the way I'm sadly, like President Trump sadly, are being pulled into that fold. Jeff uses a very courtly word, mercurial. I wonder if Mercurial is a synonym for reckless on the part of Elon Musk. Is what he's doing really reckless and potentially damaging? And I acknowledge Jeff's point that the sanctions have had a crippling effect on the Russian economy. But the optics of this gathering in Russia earlier this week is sort of beyond the reach of sanctions.

He wins on the propaganda. That's the only thing he's really good at. He's losing militarily. He's stoutaimated. He was losing diplomatically. But on the propaganda, he's exceptional. And frankly, to walk out the limb here, it's no coincidence that October 7th happened the way it did with his involvement. with Iran, the Houthis, Hamas, and Hezbollah is this is a lever that he helped.

Bill, tie it all off there, will react to what my last question and also what Jeff just said. Well, Putin has been very, very successful at ruling by symbolism. He always finds ways of, as Jeff said, the economy is not doing well, but he can do these things like gather all these individuals in Russia, even though he's an indicted war criminal, even though he's totally ostracized in the West, he can find ways of using leverage, either in some cases people who are equally horrendous, like the Iranians or the North Koreans, or he can use some basic bribery for smaller African countries. And he gets enough of these people together. And then it creates this impression that, yeah, he's got something to offer,

to the rest of the world. And yeah, he's doing fine. And yeah, we don't need to think that he's doing so badly when his whole purpose of this is to create an impression that everything is going fine, that he's an accepted leader. The economy is fine. None of it's true. But it sure, that imagery sure works well. Yeah. It doesn't matter whether it's true or not if you can create the image that everything is fine and that and make people believe. leave the sorcery behind the image that you're trying to create. Gentlemen, we have to leave it there. Fascinating conversation.

Bill Browder, Jeff Sonafeld. Appreciate your time today. We do have some breaking news on cryptocurrency company Tether. Amon Jabbers in Washington with those details. Amen. Seema, the Wall Street Journal just popped a story over the past couple of minutes saying that federal prosecutors in Manhattan are investigating the cryptocurrency company Tether for potential violations of anti-money laundering.

and U.S. sanctions rules. The Wall Street Journal in the past few minutes also reporting that the Treasury Department is considering sanctions against Tether because of the widespread use of Tether by criminals on the internet. Obviously, sanctions against Tether would prevent U.S. persons from doing business with the company. So that is a concern, particularly a concern potentially here for Cantor Fitzgerald, which has an extensive business relationship with the cryptocurrency company. We do have a statement here, from the company in the Wall Street Journal reporting, Tether saying to suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous. We work actively

with U.S. and international law enforcement to combat illicit activity as we've publicly demonstrated many times. And guys, the Wall Street Journal offering some context here, which is that this investigation in the Manhattan U.S. Attorney's Office, prosecutor's office, has been going on for some time now, possibly several years. So not clear how soon they might get to. a resolution of that investigation, but that story popping within about the past 15 minutes. Guys, back over to you. Amen, thank you so much, Amon Javvers. Coming up, the Dow on pace for five straight down days.

The NASDAQ, however, is on a tear. We've got Amazon, Apple, Alphabet, meta, some big chip players on deck to report. Next week, we will lay out the trade and what to expect next. Welcome back to Power Lunge. The NASDAQ rallying to an all-time high today with MegaCap tech stocks leading the way. It is the first time the index has hit an intraday record since mid-July, and it comes ahead of next week's busy slate of tech earnings with five of the magnificent seven stocks expected to report quarterly results.

Joining us now to discuss is Mike Bailey of FB Capital Partners and Patrick Moorhead from more insights and strategy. And Patrick, you've been on the conference circuit here overseas, and I know you've had a lot of insights on what's actually happening on the ground for a lot of these companies. what stands out to you as we get into earning season? Yeah, the biggest thing that stands out, and this shouldn't come as surprise to anybody, is AI. As I've been on CNBC multiple times saying, the gravy train of AI infrastructure continues.

The invidias, the AMDs, the broadcoms, it will continue. And then there's even some downstream benefits that we're starting to see, even with software companies like service, service now. So I think the big read going in is what are these companies doing with AI? Are they incrementally taking advantage of these opportunities? From the conversations that you've had, those concerns that hyperscalers are starting to cut back on spending because there's still some questions about the return on investment of artificial intelligence, do you think those concerns have gone away? So there was a lot of discussions, but you didn't have instituted. institutional investors pounding their fists on the table and the Microsofts, the Metas, the Googles,

they just kept investing. And I expect when we see next week with Google and Microsoft and Amazon and meta, you're going to see pedal to the metal. You're not going to see CAPEX reductions. I think each successive quarterly earnings that we get down the street, there will be a lot of questions, and there should be questions. And in 18 months, if we don't start seeing the downstream impacts, it could get ugly. Mike, we look at valuations.

And with many of these stocks now trading very close to their all-time highs, are you starting to get concerns about valuations? So short answer is it depends. I know we've got, as you said, the five of the big Mag Sevens are reporting next week. Some of them are starting to get a little bit expensive. I would flag a couple names, Apple starting to creep up there. Meta, again, expectations are starting to rise. we're having a higher and higher bar that these companies need to clear in terms of getting investors excited. There are a couple that are, frankly, looking relatively reasonable, if not inexpensive.

Google, your Alphabet is trading a significant discount. Amazon, again, as that company just generates massive earnings growth, you're seeing that multiple, that valuation really continue to be well below average. So there's sort of a nice spectrum out there of names to invest in in MegacapTac. Plenty of growth, but I think you can pick names that are trading a little bit below average, or you can go for some of the names or sentiment as really starting to creep higher. Mike, Google is one of your choices. Explain why you like it, as is United Health and one other, I can't remember. But go ahead. Talk to me about Google. Sure. So we do like Google. I think getting into this idea of markets hitting all-time highs, we see it again and again. I think

it is important to make sure you've got some growth in your portfolio that's trading in a nice valuation. Basically, you want to give yourself some wiggle room. What if there's a problem? Do you own stocks that are already baking in maybe some negative sentiment? So Google, again, very nice growth this year, probably similar growth next year. In fact, in some ways, it's growing as fast as meta, but trading at a 20% discount. So we like owning stocks like that. Some of the other ones that we're looking at, again, outside of tech, I want to make sure you're diversified, United Health. Again, it's generally had very nice growth long term.

It's been beaten up this year. And so there's another opportunity to buy that one at a discount, likely to go back to mid-teens' earnings growth in the next year. too, pretty compelling. The last one, within tech, it's a little bit different, is roper. So kind of not on the front page typically. Patrick was mentioning AI, AI is really just crushing everything in tech is doing nicely. However, if you want to own something that's a little bit outside of AI, Roper's interesting. It's almost publicly traded private equity. They buy up other software companies. Doing pretty well. Valuation has gotten back to a much more sort of reasonable range. Something interesting to own. Patrick, we also hear from Intel next week.

I know you've been less confident of a Qualcomm takeover of that company. You recently spoke to Pat. I think you actually saw Pat Gelsinger in the gym, if I'm not mistaken. You said he was ripped, which I didn't realize. But more importantly, what do you think the fate is of Intel as we've tried to understand how this turnaround actually takes place? So many investors have written off Intel. And that's a huge mistake.

And listen, I totally understand it. I've been in and around Intel for nearly 35 years. They're trading below book value with. a lot of tangible assets, not goodwill. And I do believe that they're on track with 18A. They still have challenges. They're losing CPU market share to AMD in both the data center and client. They came out with a, what I would say, good enough volley of announcements to get them

at least slightly more competitive. And they missed the data center GPU market. They made other investments. They invested in accelerators and they invested in high-performance computing GPUs. And they're on track in 25 to come out with their first AI GPU. Probably not going to swing everybody around the room. But I believe there'll be a lot more competitive in 26. The year to evaluate Intel is going to be 25, beginning of 26.

I understand that, you know, investors may not have that potential, but those people who are looking for longs to go with, I would do the double click on Intel. Do you think that Qualcomm arm holdings dispute results in going to trial? I don't think this goes to trial. And even though both companies have the highest ratio of lawyers to employees of any companies that I'm aware of, they both just want this to go away. I've talked to executives at both companies. They both believe that they have,

the best case going. Of course, they would say this. I see points of view from both sides. The two companies need to watch this because in a Qualcomm's largest customer, and the other hand, Qualcomm doesn't have a next best option here. It's not like they're going to go to Risk 5 or X86 or something like that. And then in the meantime, Qualcomm customers, are making clear commentary that they'd like to see this get resolved. They don't like the risk. Qualcomm has been giving assurances that it's not. Trial comes up supposedly December 16th. I don't think this goes that far. I just think it's posturing at this point. We'll see. Sharp exchange of words by both sides. Patrick Morehead, Michael Bailey. Thank you so much for your time.

All right, after a quick break, we're going to dive deeper into the tech earnings, taking a look at one potential way to hedge Apple, our market navigator with some very sophisticated trades on Apple coming up. Welcome back to Power Lunch. A quick check on markets here with a Dow currently down 210 points, but as we've been telling you, the NASDAQ new highs up a quarter of 1%. Domchu, what is in today's market navigator? We're going to talk about that NASDAQ trade a little bit more and go into the internals of the biggest influence, which is Apple. the biggest waiting in the stock index. Now, it's a very big week ahead for Apple.

The company's launching its Apple intelligence AI products, releasing new iPhone sales data. Its latest earnings report is due up here. The stock is up more than 35% in just over the last six months or so and over the last year. But our next guest has some thoughts on how to protect some of those gains if you are along that stock and worried. So joining us now as Mike Co., chief strategist over at openinterest. Mike, this is a very pivotal stock. Some would argue one of the most important, if not the most important, if not the most important report of the earnings season by its weight and NVIDIA, of course. Take us through what

you think is the downside scenario for Apple and why you are looking to protect it. Yeah, I mean, your earlier guests, actually, we're just talking about the fact that Apple's valuation is really getting pretty heady here. I mean, we're trading around 35 times forward on a price to sales basis. I think it's about as high as it has ever been. The last time we got up to valuations like this on an earnings basis was probably the tail end of 2021. not a great time to buy the stock of course it fell about thirty percent over the course of the following year along with uh... the market more broadly but you know this isn't necessarily a real growth story i think uh... the

iphone sixteen sales which i think some had thought and originally even i had thought might represent a refreshed super cycle i think it's probably going to be more like three percent is year-on-year growth in uh... iphone sales so it's it's a spectacular business but it's priced for growth that i don't think we're going to see Now, what exactly is the strategy then? If you are along the stock, the simplest thing in the options market is to buy a put or downside insurance. But you're taking it a little bit more nuanced with how you put that insurance protection on. What exactly is that? Yeah, that's right. And one of the reasons for this is that, number one, it is, of course, probably the most broadly held stock. It's for any closet indexers out there. They're going to continue to hold it. So the stock doesn't tend to move very sharply on earnings. It tends to. to trend, you're probably looking on average, it moves of somewhere in the four to five percent

range. In fact, going back a decade, you know, the worst case I actually saw was somewhere between eight and nine percent to the downside. So buying a put, of course, is an outlay of premium. You need the stock to fall precipitously before that insurance really kicks in. So what I was looking at is something called a put spread collar, where you buy an at the money put, call it the November 230 puts, then sell an out of the money put. I was looking at the 215s. Bear in mind, you know, looking at maybe four or five percent moves probably in the worst case and then selling the 240 call when you do that trade as a package against your long stock you're not really laying out any premium so you still get participation up to 240 bear in mind you know the all-time highs here

are just under 238 so selling that upside call is basically giving away any upside beyond its all-time highs and it gives you you know modest protection in the event that you get a pull back of you know call it four or five percent or so all right Big week for Apple for sure coming up. Mike Coe, have a nice weekend, sir. We'll see you soon. Thank you. All right. I'm just curious how popular these type of strategies are in the run-up to earnings. Also taking into account Apple's 35% run this year. It's a big move for those people who don't want to pay a lot for that insurance. So, I mean, buying a put protection piece outright costs a lot of money.

But by selling off some of the upside and downside on either end of it, it's a way to cheapen that protection. So it's if you're already along the stock and looking to protect it at a certain level, You're giving away some of the upside, giving away some of the downside profits. So we'll see what happens there. Good insight. Domchu, thank you. You got it. Ty.

All righty, after the break, ever had that moment where you check your credit card statement and realize you're paying for a subscription you don't want? When you get to cancel, you find there are all kinds of roadblocks and curtains and so forth to prevent you from doing what you want to do. Well, the FTC has taken notice implementing a new rule for companies. We've got the details next. Welcome back. I'm Kate Rogers with your CNBC News Update moments ago in Arizona. President Biden addressed a U.S. policy that forcibly separated generations of indigenous children from their families.

The federal government has never, never formally apologized for what happened until today. I formally apologize. These children were sent to federally backed boarding schools for more than 150 years for forced assimilations. Biden called the apology long overdue. This afternoon, former Abercrombie and Fitch CEO will be in a New York courtroom to enter his plea in his federal sex trafficking and prostitution case. Prosecutors say the dozens of men were allegedly recruited from 2008 to 2015 to have sex with Jeffries under false promises of modeling jobs for the company. His lawyer says he will plead not guilty. And Miami Dolphins quarterback to a tongue olivia has been,

cleared to play Sunday against the Arizona Cardinals. After the dolphins say he passed the league's five-step concussion protocol, he has not played since he suffered a concussion in week two of the season. It was at least his third in his professional career. Tyler, back over to you. All right, Kate, thank you very much. Well, the Federal Trade Commission finalized its quote, click-to-cancel rule last week,

requiring media subscriptions to make it as easy to cancel as it is to sign up. And the media industry has responded with the, NCTA Internet and Television Association suing the FTC, along with two other groups, arguing that the FTC overstepped its authority and failed to provide evidence of the cancellation problem. The NCTA is made up of multiple media industry players, including Warner Brothers Discovery, charter, and CNBC's parent company Comcast. Joining us now to discuss the rule and the response is Douglas Ferrar. He is FTC's Director of Public Affairs.

Doug, welcome. Good to have you with us. As I understand that these new rules apply to situations that entail what's known as a negative option. You'll have to correct me if I'm wrong about that and explain if you wouldn't mind what a negative option kind of subscription is. Yeah, absolutely. It applies to negative options, which are basically when you sign up for a subscription and then you're not, if you take no action, it will not be canceled. And, you know, this has become a huge problem across the economy. You know, we, the rule is very simple. It just says if you, if it's, it must be as easy to cancel your subscription as it is to sign up.

And that's true with both digital subscriptions, but also in person, things like gym memberships. And the problem is really, really widespread because, you know, most American consumers have about four and a half subscriptions each. And we know this grew a lot in COVID. The FTC takes a lot of consumer complaints. And in 2021, we had about 40 complaints a day on average of people trying to cancel subscriptions and now we're up close to 70 this year. And it doesn't just cause people money. I mean, this is an infuriating thing to go through when you're being cycled through

one telemarked phone call after another or you have to jump through some outrageous hoop like sending a notarized letter to your gym in order for them to let you out of your subscription. And at the bottom line is if your business model is based on forcing consumers to pay a regular fee to you against their will, you're going to have a big problem. So this is not merely, doesn't merely apply to subscriptions that you might sign up for online. It could be subscriptions that you sign up for in person. That's absolutely right. And the rule is the same. It has to be as easy to cancel as it as it is to sign up. Does this mean in practice then that if I sign up online for a subscription for Apple News at $9.99 a month, and it goes to, and it goes to, you know, and it goes to,

on unless I cancel, that there will have to be a clear tab on the welcome screen that says, cancel my subscription? How would it get applied? Well, the basic way it's applied is that consumers must know that the information they're receiving is true, clear, and easy to find. People have to know what they're agreeing to before they sign up. Sellers have to be able to show that people knew what they're agreeing to before they sign up. And then, yes, Yes, there must be a way to cancel that is as easy as it is to sign up. How does the FTC view the lawsuits from other media companies who say that this ruling, if it goes into effect, would be unfair?

Well, we're not surprised that we've been sued and we're ready to defend the rule in court. I think zooming out a little bit, you see a trend where big business lobbyists and their attorneys think they can click their heels together and say Chevron doctrine three times and regulations go poof. But, you know, the truth is far from that. I mean, the FTC has never once brought a Chevron doctrine case to court, and we won't be using it to defend this challenge either. We're 110-year-old agency operating under a very clear statute. And actually, this Click to Cancel Rule is a revision of a rule we started in 1973. So we're revising a 50-year-old rule.

Consumer protection rules like this are clearly authorized by the FTC Act, and we look forward to proving that in court. Douglas, I also want to get your thoughts on today's news. Tapestry's $8.5 billion deal of Capri being blocked by the FTC, how do you respond to Tapestry? The company says it faces competition from both lower and higher end-priced brands and that this merger would have been good for consumers. And now you have companies within these two enterprises that see that they are now less financially stable because this deal may not go through. Well, we're obviously delighted by the judge's decision and the judge looked pretty skeptically on that argument as well. And we're not surprised. I mean, both of these companies talked

frequently about the market for affordable luxury, which is how we defined it in our suit. And these companies compete fiercely with one another. You know, Wall Street investors use that same market definition. And so actually, we were a little surprised that this lawsuit was met with such skepticism in the markets. You know, the district court judge in the opinion repeated multiple times that whatever witnesses say on the stand, she's going to weigh that a little less heavily than what witnesses and business executives say prior to murder review starting. And in this case, they were very clear that they were aggressively competing against each other on price and for workers.

And I think zooming out, we were a little surprised about how the analysts reacted to this merger when we challenged it. Companies who define the market in their own words, and then compete fiercely with one another, those are going to raise big flags if they seek to merge. And hopefully those flags will be raised in the boardroom before mergers of this nature are considered in the future. Well, both companies have filed an appeal. We'll see how far the FTC goes to kill this deal.

Capri down 50%. Douglas, thank you for your time. This is Douglas Ferrar of the FTC. And be sure to join CNBC delivering Alpha's Investor Summit in New York City on November 13th. Investors and leaders will convene to provide insights, ideas, and announcements, and analysis to help you deliver meaningful returns, you can scan the QR code on your screen right there or visit cnbc.com slash delivering alpha. You can see it on the list there. You see who's on that list there. Ben Affleck is going to be there. Producer, investor, investor,

entertainment. And former husband of some people. Many reasons to come. We'll be right back. Welcome back to Power Lounge. Let's get a check on markets with the S&P 500 fractionally higher. Still at that record high, up 146 points on the day. Industrial is lagging behind in today's trade. This as yields are pulling back for the second straight day after hitting three-month high earlier this week. Let's get to Rick Santelli in Chicago for more on what we can expect in the bond market this today and next week, Rick. Yeah, I'll tell you, there's a lot going on not only today, but next week we get our first look at GDP for the third quarter. We have jobs numbers coming out.

It's going to be a huge week. But right now, we had this morning some important data. We saw University of Michigan final read improved nicely over mid-month reads. We saw everything improve on current conditions, expectations. What you're looking at there is a chart of 10 years. And the important part here is it has improved dramatically. But it's well below where it was pre-COVID. So when we talk about hard landing, soft landing, no landing.

Remember, we were between 90 and 100 pre-COVID. Now, how did twos and tens react for the week? Well, I can tell you this. We're basically unchanged on the day, and we're up 14 basis points on twos and tens as they sit right now. It is a big move, and once again, we could describe potentially why rates are up. Maybe there's improvement in the economy to some extent.

Maybe there's more inflation expected after the election. Maybe there's more inflation after some weather events, but no matter how you slice it, it has been a one-way trade since the Fed cut, 50 basis points. Tyler, back to you. Mr. Santelli, have a great weekend, sir. Big week of earnings coming up. You probably know that five of the Magnificent Seven will report, but what about the other companies? Our three-stock lunch trader will give us some other names to watch next. All righty, time for three-stock lunch.

We are trading some names with earnings on deck. and here with our trades is Anthony Forcioni, excuse me, he is a vice president and portfolio manager at Rockland Trust. First up is Merck, the Farmer Giant reports third quarter earnings before the bell on Halloween. Shares are down about 4% on the year, but Anthony, you say the stock looks cheap here and anything but spooky. It does, Tyler. Thanks for having me. So hopefully it's not a, it's not a trick and more of a treat next week. But yeah, the call on Merck is pretty straightforward. It's a valuation call. The stock is trading at 11 times forward earnings, 8% free cash flow yield, and there's a lot more free cash flow to come. So the stock is just too

cheap. The concerns around Ketruda are well understood by the market. And I think the market is going to feel hopefully a little bit better about their Gardasil product after this call. We met with the company pretty recently and felt better about those prospects. So the stock is just too cheap here for the franchise that it is. Up next is EcoLab, the water treatment and systems company reporting results before the bell on Tuesday. The stock is on a tear up nearly 30% in 2024, but it's down 3% in the past week. And Anthony, you say it's perhaps worth holding the shares for now. Yeah, absolutely. We've been fortunate to own this for clients for a long time. We really like the company. They're well positioned in essentially cleaning and sanitizing products

for a wide array of industries. They had a little bit of a reset last quarter, so I think expectations are much better heading into this quarter. And they still have ample room for organic growth and margin improvement. So we really like this company going forward. And finally, let's stick with water and go to the water tech provider, Zylam, a report before the bell on Thursday. The stock also having a strong year. It's up 13%. Some are stronger than that. But 13%. I'd take it. If you said at the beginning of the year, you want to make 13%. I'd say, yes. What do you say on this one? Zylam. Yeah. So this one is a very new position for us that we just started dipping our toe in. So we're watching it really closely. But as you said,

they play in the water industry, which is a very solid industry. They're well positioned. They still have room for significant growth in organic growth, but also in margin improvement through their acquisition of Avoqua. And also they're focused on simplifying the business. So this one's a little bit more controversial. The stock is at its surface not super cheap, but cheaper than it has been historically. So we're starting to like the risk-reward here. We would encourage people to look at it and certainly buy it on more weakness.

Anthony, thank you very much for your time. We appreciate it. And have a great weekend, Anthony Forsyone at Rockland. Thank you. Remember, you can always hear us on our podcast and be sure to follow and listen to Power Lunch wherever you go. We'll be right back.

And we're going to pivot to the markets here, notable strength and tech, but worth noting the NASDAQ 130 points off of its all-time high that it hit earlier this morning. Leading and lagging the S&P, Decker's surging on an upbeat forecast. Uggs helping boost sales while housing material manufacture Mohawk industries sliding lower on that weak guidance. You'll see shares down about 12 percent, Ty.

Boeing back in the news, as it has been so often recently, reportedly exploring now a sale of its space business. Interestingly, CEO Kelly Ortberg told Phil Leboe earlier this week that while they haven't decided on any sales, the company would prefer, quote, doing less and better than doing more and not what. Well, let's listen. We're going through a portfolio process right now to look at the overall portfolio and see what do we want to look like five years from now. And that may include streamlining certain things. I haven't come to that conclusion yet. I think our core business of commercial aircraft and core defense products will always stay with the Boeing company.

But there's probably things that we can streamline and be more efficient. I would rather err on the side of doing less and better than doing more and not doing it well. And I think there's some cases where we can do less and do better. Well, Boeing has its work. Either way they go here, they've got their work cut out for them and a big sort of reclamation project going on. The next 10 days are going to be very interesting. There is an election coming. And there are five of the seven magnificent seven reporting earnings next week.

So I'm expecting a very busy, volatile week in the markets. Absolutely. We have five of the magnificent seven companies reporting. So where do you have to be? You've got to be watching CNBC. That's where you got to be. Anyhow, have a great weekend, everybody. Enjoy this last weekend of October. Thanks for watching PowerLine. Closing bell begins right now.