Power Lunch - Nasdaq rises to start the week as Tesla rallies, Buffering & Suffering 11/18/24

Episode Date: November 18, 2024

Markets are mostly higher today, as stocks settle down after a couple of wild weeks. We’ll talk about where we go from here.Plus, Tesla shares are jumping on reports President-elect Trump is going to ease rules for self-driving cars. We’ll get the key details.And, millions of people watched the Jake Paul vs. Mike Tyson fight on Netflix. So many that the platform couldn’t keep up. We’ll dive into that. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Launch alongside Kelly Evans. I'm Tyler Matheson. Nice to have you with us on this Monday. Markets, a little bit higher today as stocks settled down after a couple of wild weeks, big post-election rally, and then a pullback last week. We're going to talk about where we go from here. The Dow Industrial's off ever so slightly, the broader markets, as measured by the S&P, a little bit higher, a little bit maybe of more calm breathing. Normalcy, feels like.

Maybe not for Tesla, though, which is jumping. today on reports that the Trump team is going to ease rules for self-driving cars. The analysts are quite excited about it. The shares are up 5%. Uber and Lyft are lower on this news by about 6% and 5%. Why would Uber and Lyft go down on this? I've been thinking about this all day long because to me Uber is always like a derivative play of autonomy because they're either partnering with Waymo or at some point benefiting from it. You'd think they would, I feel like they should all be trading up in sympathy,

even if it's a little bit of a longer run story. Because it feels like if the rules of the road become more favorable to full service driving or whatever it's called for Tesla, isn't that also going to make it? It would be great for Uber and left in the long run. Take that driver. Yeah, exactly. But maybe they think the near term is Tesla gets a leg forward and the others take a leg back. So did you watch the Jake Paul Tyson fight? I didn't even try.

I didn't know who can. I didn't try either. It's a good thing we didn't. We might have wasted our time evidently trying. Waiting for it to start in with the buffering issues. Yeah, well, millions of people evidently did watch the Jake Paul Tyson fight on Netflix. So many people that Netflix could not keep up, apparently. Apparently, there were lots of complaints about buffering, as you mentioned a moment ago.

Leading some to worry as Netflix is set to broadcast two NFL games on Christmas Day, where they might have maybe comparably sized audiences. I think those worries are legitimate. Netflix, listen, this is not the first. time this has happened. We had that reunion show a little while ago. They had issues. Issues with this. You got a couple months. I would love to know the backster. How many servers, how many Blackwell chips are required, whatever you have to do, be ready for this moment. This is Maker, this is the NFL on Christmas Day. Got to get it right. Better be,

ready. Shares are up, though. You'll get coal in your stockings. All right, let's begin with the markets. The stocks are mostly higher. So after two wild weeks with action driven by the election and politics. Where do we stand? Now let's bring in Mike Santoli from the New York Stock Exchange. Is this kind of a little bit of a pause that refreshes? Is it a reaction to what some might say are out of the ordinary cabinet choices on the part of the incoming president? What is it that's made the market slow down? Yeah, Tyler. I mean, I think a lot of that is all going on. Mild retrenchment within a longer term up trend. Now, of course, we're about five days into that process. The market peaked about a week ago, and it showed you that there was this really quick grab for the riskiest stuff in the market as well as cyclicals.

The market had a pretty strong assertive statement right after the election as to what the policy implications might be, tried to reprice in a hurry. And then we've, I think, since then, just kind of sorting it out and discerning genuine expected winners from non-winners. And it's really, I think, more of a healthy process. A lot of the frothy stuff did come back to Earth over the last. last week or so. What we have today is I think you have equity markets still watching the bond and currency markets. You have yields that are calmed down just a little bit. The dollar stopped going up and so the market can kind of breathe a little bit and try to figure out whether the aggressive repricing, for example, upward of financials and downward in health care makes any kind

of a sense. Bigger picture, the starting point for the post-election rally was pretty elevated, right? The market had been going up for two years. Cicicles were already outperforming. We already had yields climbing on the back of better economic data and reduced Fed expectations. So it's almost as if the implications, perceived implications of the election result were kind of partially priced in there in the beginning. So we've settled back in the S&P to the mid-October highs. That was the high before the election. And I think it's a matter of, let's figure out from here who really needs to chase the market higher into year-end, because I think positioning among investors is still pretty fall. People are pretty well exposed to this market at this point.

Mike, as we bring in our next guest who believes the market could experience a period of volatility, given the unknowns around post-election strategy. Joining us to discuss Jeremy Bryan, portfolio manager at gradient investments. So, Jeremy, welcome. Good to have you with us. How do you see the market moving from here? And do you say we may be in for a period of volatility? Put some numbers or some sort of texture into that. Sure, sure.

Corrections happen all the time. right? And especially in a post-election market that went basically straight up. So if you're talking about a five to 10 percent correction, that is a plain vanilla correction, right? That is not anything that we would be overly concerned by, but understand that that could actually happen, and especially around that time. Now, given what we think about the economy, and if you go longer term from that perspective, would we be using that as a buy signal? Probably. You know, because we don't see anything that's dramatically changed. changing from our investable thesis with regard to what's going on in the economy, what's going on with companies. But we did have a post-election rally, and we've seen kind of that come back. Could that go further than just coming back and go down for a little while? Absolutely. And that's where we would probably be looking to be more aggressive at that point in time. Mike Santoli, did Morgan Stanley just move to what did they do? Wasn't Wilson always bearish? Bring me up to speed.

He's been largely bearish to cautious. I think that they've kind of been finessing it by saying, you know, be in quality cyclicals for the last several months. So within the market, they've been tacking in a direction that we've actually been going. But, yeah, basically saying we've got about 10% upside from here through next year. I think that's kind of pro forma. I mean, yeah, it seems like a little bit of a turnabout for Morgan Stanley in particular. But in general, I am very mindful of what the strategists are going to be,

kind of how they're going to be arraying themselves, in terms of their outlook for next year, if everyone is super bullish and is saying 10, 15% next year, that might not be super bullish, but it's much more bullish for people who are coming into this year, then maybe you say we have the makings in the beginning of next year for some kind of a pause, something that tests that bullish consensus. But right now, we don't have enough, I don't think, in terms of sell-side targets to make that generalization. But yeah, basically saying when the Fed is at least in easing mode to whatever degree into a sturdy economy, It's been tough to bet against stocks.

So obviously lots of unknowns. We have so many maybe unintended consequences we should be on alert for. But at this point, I do feel as if the upside is the benefit of the doubt. So, Jeremy, do you agree with that thesis that Mike has just laid out? And the old don't fight the Fed. And if the Fed is in a longer term, whether they cut in December or not is to be determined, but whether they're in a longer term, de-escalating interest rates, I guess is how I would say it.

Bringing them down, right? Yeah, bringing them down. That's a simple way. How come I couldn't think of those simple words? Hey, that's what I'm here for. No, from a bringing them down perspective, we absolutely believe that's true. But here's what I would say from that is that I'll be interested to find out in conjunction with Mike here what they talk about when the strategists talk about valuation, because

there's no question we're elevated from a valuation side. So how do they square that? Can they say valuation can sustain at these levels? Because we're back to basically where we were in 2021 from a level from a valuation perspective. So from our side, that's what we would want to square because right now 15% annualized growth for 2025. That would just say that valuation is in line with earnings growth because that's what the earnings estimates are right now. But what we would want to see is how can they justify that component? And maybe it is that the Fed is supporting. So the valuation's can stay high. But that's what we'd be interested in finding out because that's going to be a big determinant about where the market goes from here is can we press that higher or are we at an area where that becomes too big of a headwind to keep the market rally going? Yeah, Mike, you can obviously weigh in on that. I mean, I think that there's also, you know, the kind of bread and butter earnings

that are going to continue coming at us this week. I know that Jeremy, one of your stocks is Target. I mean, like UNH, like Constellation Brands. So Mike Santoli, there's kind of the, the, the 30,000 foot point of view, and then there's kind of the day-to-day, what are we learning from the companies themselves? Yeah, exactly. And Kelly, of course, the story has been coming into this earning season that we're supposed to see a little more inclusive earnings growth story, where it wasn't just going to be so concentrated. That's largely happening, although 2025 consensus estimates are on the bit of a downtrend as we go through this reporting season. So I don't think the valuation meth gets much easier. I do think there are a couple of kind of talking points

that people will resort to here. One is it's just a higher quality index, and you have these dominant companies that are 30% of the S&P 500 that have sustainably high profit margins. We've never had this situation before so they can sustain some kind of a premium. The other piece of it is, given that fact,

the average or median stock is less overvalued, and maybe it's 18 or 19 times on average. So I don't think there's an easy escape hatch from high starting valuations imply lower, longer-term forward returns, but that doesn't say a whole lot about how the next couple of years might play in. All right, gentlemen, we're going to leave it there. Jeremy, thank you very much.

Mike Santoli, thank you as well. Now, let's get a quick check on bond yields, which have reversed a little bit lower after starting the day in the green. Rick Santelli joins us from Chicago with more. Hi, Rick. Hi, Tyler, indeed. If you look at an intraday chart, Tyler nailed it. We are drifting lower.

We're near the low yields of the session. But here's really what you want to pay attention to. Look at a two-day chart. It's what we know is an inside day, at least thus far, meaning we don't have a higher high yield than Friday. We don't have a lower low yield. We're in between. As a matter of fact, this could be the fifth, the fifth session in a row where we close between a yield of 442 and 445. That's really a tight range.

And you may say, well, heck, we're below that now. Well, as you look at that chart going back five sessions, we were below it many times, and it always seems to come back and close in the low. 440s. And this is important because consolidation at this level, I know everybody wants to know what's going on when it's rate. Look at the long-term chart. It's pretty easy. If you look at the left side, we've always seemed to have a stopper right around 4.5%. The right side's got that little squiggly, that's a weird consolidation. And maybe the most notable feature is that really since mid-sep rate cut, yields have pretty much gone up without a big correction. So we're not supposed to say that this is a calm market the way I'm The wide phrase it is, it's just stopped going up in yields. And the fact that it's pausing here really makes it so if we get a close above 4.5%. Watch out for a little excitement. Tyler, back to you. Rick, thank you very much. And coming up, what is Elon Musk's plan for Tesla, the controversial CEO, playing a big role in the Trump administration.

But so far, it hasn't been so great for Tesla, the EV credit in jeopardy. Musk distracted, many EVB buyers, not Trump supporters. but there is some potentially good news today. That is being reflected in the stock. We talked about it a moment ago, and it has to do with the full service or self-service self-driving. Plus, a potential deal to tell you about. Building products distributor, QXO is making a bid for beacon roofing.

According to Wall Street Journal, both stocks have market caps around $6 billion. Both move higher today on the news, although QXO is off its best levels. as you see there. Power Lunch will be right back. All right, welcome back to Power Lunch, everybody. President-elect Trump reportedly looking to make self-driving regulation a top priority for the Department of Transportation once he is back in the White House. That headline has Tesla shares up nearly 7% this afternoon.

And while our next guest points out that Tesla may not be the frontrunner in the autonomous driving race, he does, however, argue that they own the narrative. He just raised his price target on the stock. from 270 from 235. Dan Levy, a senior equity research analyst at Barclays, covering the auto space. Dan, welcome. Good to have you with us. Thank you so much for having me. Why is Tesla seemingly not alone, but why is it benefiting so much from this report that there may be a sort of a fast-tracking going forth on self-driving cars? Yes. So I think we have to take into consideration that part of what's gone on with Tesla, and it's not just today, but really in the last two weeks since the election, is really the magnification of the Elon premium in the stock.

From a fundamental standpoint or a business perspective, we think that could be mixed to positive for Tesla, maybe slightly negative on the EB sales side. positive in the perspective of easing autonomous regulation. But really what this does is it's Tesla being magnified as the Elon Musk premium. They can't bet against Elon narrative. And I think that's a lot of what's going on here. So you ascribe it more to Musk, his relationship with the incoming president, the fact that he's going to be highly influential and probably will benefit from that than anything else here. That's a lot of it. From an autonomous perspective, this can be a benefit to Tesla. Elon has talked about regulations in some way as a gating factor on their path of autonomous, but we just caution to not be too optimistic that easing regulations solves all for Tesla on the

autonomous side. In fact, the challenge they may have is that by easing regulations specifically, I think what Tesla may be looking for, what others may be looking for, is harmonizing state standards with federal standards. This actually gives an opportunity to arguably Tesla's largest competitor in full self-driving or fully autonomous driving Waymo to really fast-track expanding to other locations. How material, if at all, would the removal of the $7,500 tax credit for buying an EVB, to Tesla? It would likely be net negative. We think that roughly two-thirds of Tesla's U.S. sales benefit from that credit right now. We know that it's roughly 30 to 35 percent of their U.S. sales are leased. All leases get the $7,500. We assume the leasing loophole would be removed as part of this.

And then there's likely another piece of sales that are benefiting from the rest of the $7,500 credit. it would likely be negative. What that essentially does is it can be considered almost like a price increase. But on the flip side, the opportunity for Tesla is to consolidate share within the EV market because Tesla is really the only automaker that is profitably selling EVs in the US. So as top as this would be for Tesla, it's much tougher for other automakers that are right now losing money on EVs and really much more so need that credit. Is the technology ready for prime time, Dan, because I thought I saw last week in an industry publication that Tesla's cars are involved in the most fatalities of any brand or something to that extent? Look, I think we have to, we're going to learn more about where Tesla's technology is. I would almost look at Tesla's autonomous technology through two lenses.

One is on the consumer side. You know, you mentioned earlier that this idea of owning the narrative. They certainly own the narrative on the consumer side. Changing the regulations likely means maybe less pressure around some of the investigations they'd have from METSA. So they can continue to own the consumer narrative where the opportunity is or where the focus is on the full self-driving piece. And that's where we still have to learn more. They've said that they're going to have unsupervised FSD in at least two locations next year, California and Texas, potentially one extra state. And so we'll learn more about where it is. We would just caution. Have you ever driven a full self-driving Tesla?

Yes, I have operated a Tesla that is using FSD. What do you think of it? I think it's impressive technology. It is quite impressive the way the vehicle operates. I think, though, that there are going to be people out there who, will want to see maybe more certainty on the vehicle operations before opting in to that $100 a month or so. But obviously, it is very solid and impressive technology. More certainty. What does that mean? Is that code for something? What does that mean more certainty? Because I have experience driving with it, too, and I wonder whether what you describe as more certainty is what I would

describe as something maybe a little different? Yeah, I think that right now it is operating quite impressively. I think that there's still a question for some people about the comfort level they have when operating this technology where there's maybe mixed reviews on how much comfort you should have. Bang, bang, that's it. It is impressive technology. It is really, to me, an ingenious piece of software that does it. But the car gets a little spooked from time to time and you and you wonder how much can I really trust that it knows where this big semi-tractor trailer is and whether it's coming into my lane or not it's it is it is a question of of sort of comfort level Dan Levy thank you for that answer

appreciate it man thank you Tyler thank you Kelly you're very welcome I still have not experienced it and I'm wondering you should do it I'll have you a ride I'll give you a ride I'll give you right about Tesla, baby. Would we like in number three just in case something goes really wrong? What is that? Should both of us experience this, you know, we need a number three kind of here just in case it doesn't turn out well. Right.

We haven't left somebody a substitute. Yeah. The holiday shopping season is about to kick off. But while most investors are focused on the retail names, our guest is looking at some different under the radar payment plays. We'll explore that in market navigator after the break. Welcome back to Power Lunch. Dow is negative today. It's been choppy all session long, but we're headed back towards the morning session lows down 119. The SMPs up a quarter percent,

a little bit more for the NASDAQ, and we are talking some retail. We've got earnings this week. The holiday shopping season is about to kick into high gear. But my next guest is taking a closer look at the buy-now pay later space and is here to tell us how big a role he thinks it will play and where the opportunities might be. Jason Kupferberg is senior payments analyst at B of A Securities. And Jason, I also think if they move forward with trying to cap credit card rates, this is going to get more and more scrutiny. So where is your attention in the Buy Now Pay Later space? Well, hi, Callie. It's great to see you again. So within Buy Now Pay Later, the first thing I want to say is that we think there's a very strong value proposition for this product for both consumers and merchants. And that is really the key to unlocking this market. And if you look in the U.S., for example, Buy Now Pay Later currently is only maybe a mid-to-up

upper single digit percent of total e-commerce spending. So there is a lot of runway here still for this market. And again, given the strength of the value proposition for both consumers and merchants, we expect to see solid growth continuing. So one of the themes we are looking at is just the relative growth rate of buy now, pay later spending volumes versus the broader market. To give you some context, buy now pay later providers like a firm, an afterpay and Klarna, they're growing their volumes 20 to 30% right now. If you look at Visa and MasterCard, who are kind of a barometer for the overall U.S. payments market, you know, they're growing around 6% on total volumes. So there's clearly a share story here for buy and out pay later. Let's make this very actionable very quickly,

Jason, because you like square global payments. Correct me if I'm wrong here. FISERV, I believe. Why do you like these three? What kind of upside do you see and in what period of time? I'll start with Square, now known as Block, hard for all of us to get used to, but that is the new name of the company. So they have an attractive two-sided network. They have direct relationships with consumers in the form of both their cash out business, as well as their buy now, pay later business, which was after pay that they acquired a few years ago. And then they have relationships with U.S. small businesses, with merchants. That's their seller business. And we think that there is optionality here, in particular on that seller side of the network,

for volume growth to start re-accelerating incrementally in the fourth quarter of this year, and then perhaps to a greater extent in 2025. Global payments is a bit of a turnaround story of sorts, trading at a pretty depressed valuation. We think there's too much negativity baked in here. We think that some of their USSMB exposure could also be helped under a Trump administration, assuming that it does end up being positive for the small business part of the economy. And then you did mention FISR.

We also like FIS a bit. FIS is more of a software play, more on the bank side of things. Banks should also do well under Trump administration. And FISER has the clover asset for small business, which has been a real nice crown jewel asset for them. My physical therapist has been looking for a new, you know, like the credit card processor that she has is always driving her crazy. So I said, I'll ask for maybe Clover.

I don't know if that qualifies, but maybe she should look into that. She could look at Clover. She could look at Square. There's more options than ever. But yeah, she can definitely get some good functionality out of either of those platforms. There we go, investment ideas and, you know, business ideas. Jason, thanks. Appreciate your time today.

Thank you. Jason Cooperberg. Take care. Tyler. All righty, coming up, Netflix's Tyson Paul boxing match. bringing in some heavyweight viewership, but the stream took a lot of hits. So now we are questioning whether the platform can handle the NFL's Christmas games. Ho, ho, ho. We'll discuss that one next.

Welcome back to Power Lunch. I'm Kate Rogers with your CNBC News Update. Israeli Prime Minister Benjamin Netanyahu said today that Israel's air attack on Iran last month hit an element of the country's nuclear program. He didn't identify the component but suggested Iran's path to a nuclear. weapon had not been blocked. Israel launched the retaliatory attack against Iran last month, weeks after Tehran launched at least 180 missiles into Israel. A new Pew Research Center survey showed about one in five adults get their news from social media news influencers. That number rises to 37 percent for those 18 to 29. Pew researchers say the data shows news influencers are

emerging as a key alternative to traditional outlets. And New York City's MTA, board voted to approve Governor Kathy Hokel's amended congestion pricing plan today. Last week, Hokel proposed reducing the base toll to $9 from $15 for drivers entering Manhattan below 60th Street. She previously blocked the plan from taking effect. The changes now need a federal sign-off before the first of its kind toll can go into effect on January 5th. Tyler, back over to you. Very interesting. Going to make a lot of drivers edgy in New York.

Not that they aren't already edgy in New York. All right. Thank you. All right, welcome back. Netflix is higher today. The streaming giant coming off a huge weekend, the Mike Tyson, Jake Paul boxing match, reaching around 60 million households,

but it wasn't without problems. Many viewers found their apps crashing with a stream freezing or buffering or whatever. The issue seems to be that Netflix has not yet mastered high-volume live events. We saw similar backlash over the Love is Blind reunion. And all this is raising concerns about whether Netflix can handle

streaming the NFL's Christmas games without issues. For more on this, as well as the future of live sports streaming, let's bring in our own Julia Borsden and Alex Sherman. Julia, did you watch the fight? Did you see what the problems were? You know, Tyler, I did not watch the fight, but I did just talk to a source that's close to the situation about the NFL and also the Netflix. And what's really essential here, because those two NFL games that Netflix has scheduled for

Christmas Day. That is a big investment for Netflix. And my source tells me that the NFL has talked to Netflix since the fight on Friday. They're cognizant of the amount of traffic that Netflix can handle. And the source says that the NFL is confident in Netflix and the upcoming Christmas Day games on the platforms. So that's what I'm hearing from my source closest situation. But you can bet Tyler that Netflix is pulling out all the stops to make sure they do not have those kind of technical issues again because this NFL investment is really a big one for that. How would two NFL games on Netflix in terms of audience wishing to stream compare with this, what was it, 60 million who are watching Paul versus Tyson? It's not that big.

No, I mean, the NFL doesn't have the same international reach that a fight like this would have. So if you just take it in the U.S. based on other major streaming games that have already happened, you know, let's say we're in. Thursday night football or Amazon or even the peacock playoff game. if it's somewhere in that range, we're talking it, you know, somewhere between, let's say, 15 and 25 million. So less than half of the 60 million that we were talking about from a Netflix standpoint. But still, the NFL is not the same, in my opinion, as even this boxing match. This boxing match was a unique, you know, kind of fun, almost one-off event where...

It was an exhibition. It was an exhibition. The NFL is real when it comes to fans. They were damn serious about it. a game that's constantly buffering when they're used to be able to see these games every week in a format where this never happens. So the pressure

I think is much higher on Netflix to deliver even if the audience is lower. Let me just point Jets and Giants fans don't give a you know what if it buffers and delays and they can't see it. It would be an improvement. That's right. It would be an improvement. Yes. Julia, what other reassurances do you have about

how they're going to technologically pull this off? Well, look, I think the key thing here is that what Alex said is right, the NFL audience is much more domestic. This is primarily a U.S. audience. But one reason why Netflix wanted the NFL and why the NFL wanted Netflix is for the opportunity to introduce a more global audience to the NFL games. I do think that the NFL does talk to all of its broadcast partners. They have streamed other games before. Remember, they streamed those peacock games and those went off without a hitch.

So they're really working together to make sure that whether it's the NFL piece of this or the broadcast component of this, that they have everything in place from a streaming standpoint. But I do think that even though the goal is to bring the NFL more global with Netflix, for now, this will be a more domestic audience. But what's interesting with this idea of a fight is that typically these, if you want to watch a fight like this, it's more likely to be a pay-per-view thing. Whereas for Netflix, they offered this free to all of their subscribers. So maybe though people were frustrated that there were buffering issues or audio issues at the beginning, this was something they effectively got for free rather than paying for it separately. So I think that the NFL, Netflix really has to prove that this is going to be a key part of its strategy going forward, having sports, which is really valuable for advertisers.

Netflix talked a lot in his earnings call about the growth of his ad-supported business, and they're really looking at these live events, whether it's something they've manufactured themselves, like the fight on Friday, or something like double-es. where they have a show launching on Mondays starting in January. They're looking for those live events to be essential for growing the ads. By the way, Julia just mentioned it, I checked in with the WWE source, also not concerned with the Netflix ability to stream those live events. Now, of course, the WWE audience is also going to be nothing like the 60 million U.S. households. Let's move on to topic number two, and that is the NBA and its relationship with Warner Brothers that reached a deal now.

Apparently, in the legal battle that followed the league's decision. to sign a rights deal with Disney, ESPN, as well as NBC Peacock. As part of the agreement, Warner Brothers Properties will continue to have rights to NBA highlights. And this is a great relief to basketball fans. Here it is. Inside the NBA with Shaq, Kenny, Charles Barkley, and the key is Ernie Johnson. It's going to be produced by Turner, but it will air on ESPN. There were questions here when that deal went through.

that Warner Brothers Discovery had the right to match the contract. I guess that whole thing is done now. This settles that. That's right. So Warner Brothers tried to match Amazon's package, which was a $1.8 billion per year package for the next 11 years. Warner Brothers decided it didn't want to match our parent company, NBC Universal's package, which was more like $2.5 billion.

But the league basically argued, no, no, that Amazon package is streaming only. It is an exclusively streaming package. What you want, TNT Sports slash Warner Bros. Discovery, you would be putting the games both on cable TV and on streaming. We don't want that because we see the cable ecosystem dying, in essence. So we want to bring in Amazon, which has this large global footprint, much larger than Max, probably double, if not, even more than double the size of Warner Brothers streaming property Max. So that's why we want Amazon as a partner. Warner Brothers Discovery tried to get something, some extraction from the NBA, by suing the league, saying the matching rights were at least worth something.

Look, we paid for these rights in our last deal. They need to be, they need to count for something. And this is what they've walked away with. So in essence, it ends the 40-year relationship that Turner Sports has had with the NBA in terms of broadcasting live U.S. games. They will be able to broadcast some international games in select areas. And, of course, as you just said, they'll have these highlights. for all I care about is inside the NBA and that they bring Kevin Harlan over from TNT and broadcast some of these games.

It's the best in the business. That's what I'm saying. Sounds good to me. Alex, thanks. Julia, thank you as well. Appreciate it today. Shares of Uber are lower on reports that President-elect Trump could ease regulations on self-driving. It could spell trouble for Uber's grip on the ride share market, and we will trade it in three-stock lunch next.

Welcome back. It's time now for our three-stock lunch. And we're trading some of the key stock movers of the day. Courtney Garcia is with us. She's Senior Wealth Advisor at Payne Capital Management and a CNBC contributor, Courtney, welcome. All right, let's start with Nike because TD Cowan just trimmed its price target to 73, citing risks to the company's financial outlook from the impact of looming tariffs under the incoming Trump administration. Now, that's about a dollar or two below current levels.

Would you be a buyer of Nike here, Courtney? I wouldn't. I would stay on the sidelines here. and this is a stock that's down about 30% year to date. And as much as I want to take that and look for opportunities when something's down so much, you've got to say, why is it down 30% and are those pressures relieved? So there's a few things with this story. One are the tariffs, which you just quoted. So just in general, the China recovery has been a lot slower than everybody expected. And now we're going to administration, which has rhetoric of tariffs on China. And you can see

there's retaliatory tariffs from China to the U.S., which can negatively affect in Nike. But out of On top of that, you're seeing a consumer who has been stressed under inflation and is changing from Athleisure, which is big during COVID, back more towards traditional wear. And for people who are still buying in that space, there's a lot of competition here. You're seeing the likes of On and Hoka are really a competitive pressure here on Nike. And I don't know if that story is changing in the near term. So for all those reasons, I would continue to stay on the sidelines. Just bought some on sneakers.

They're very nice. Got to say. All right. Next up, CVS Health, the company reaching a deal with disqualification. investor, Glenview Capital, for four board seats just weeks after the health care giant ousted former CEO, Karen Lynch. Glenview's CEO, Larry Robbins, will join the CVS board effective immediately, along with three other directors, expanding the company's board to 16 members.

What do we think of CVS here, Cort? Yeah, and I think we've got to see a bigger turnaround story here. So in the short term, I, again, am going to stay on the sidelines. This is another stock that is very beaten up. But there has been a big shift here. Now, Tyler, I don't know the last time you were in a CVS. but it is really hard to buy anything there. You go and everything is locked behind these cages.

And so what's happening is people are actively choosing not to go to your local CVS and you're just going to buy something online. And it really puts pressure on their retail business. But out on top of that, you're just going to go buy your regular things like shampoo and body wash over at an Amazon because it's easier to do. But now Amazon is getting into the pharmacy business, which is really putting a lot of pressure on a CVS. And then you're looking at things like their Medicare Advantage space,

which has a lot of increased medical costs and is continuing to put pressures on their margin. So again, I don't see these lifting. I think the question is, are these new board members going to have a turnaround story? The hope is so, but until we see what that is, I would again stay on the sidelines here. All right, let's go to the kind of battleground area of the day,

which is really around these potentially loosened restrictions for Tesla and others on the self-driving front in a new Trump administration. Now, we are talking earlier about why would Uber be down? And the word is that, well, it increases competitive pressure because now, you know, Tesla's fleet of robotaxies here they come. Courtney, what do you think? Would you be a buyer of Uber here? I would.

I would buy on some of this weakness of the headlines. I do think self-driving cars are going to be the way of the future, but this is not happening today or tomorrow. These regulatory pressures are not really the biggest barrier to entry as a fact of the availability and the technology of the self-driving vehicles. And Uber is getting into that space. You're seeing partnerships with things like Waymo. And in the meantime, they've been consistently profitable.

You're seeing growth in both their. mobility and their delivery businesses. I think this is something you want to keep in your portfolio, absolutely. All right. She sticks with it. Hales it. Courtney Banks, Courtney Garcia. Powerlunch. Thanks so much for having me. Every year, wildfires ravaged the country, but now new AI tools are battling them. Julia Borsden joins us with her latest installment of her AI impact series on how AI is being deployed. Of all things, to fight fires, Julia. That's right, Tyler. Every year wildfires cause a loss of thousands of lives and billions of dollars in damage. And this year, over 8 million acres have already burned in the U.S. up from about 3 million last year.

But now tech companies, public utilities and government agencies are using new AI tools to fight back. Startup Pano AI deploys camera stations for $50,000 a year in high-risk areas. Pano's software detects early signs of smoke and fires and notifies local fire departments to drastically speed up response times. It's just not practical to build thousands of lookout towers staffed with humans, but it's extremely practical to put up lightweight camera systems and monitor them 24-7 with powerful AI combined with human intelligence to deliver the best of both worlds. In General Electric has deployed dozens of Pano AI cameras to protect the nearly 2 million people

who live in its area. With Pano's tech helping fire departments respond as much as, six hours faster than they would otherwise. But it's not just startups. Microsoft's AI for Good Lab has developed AI to help targeted response. In the wake of last year's Maui wildfires, the lab's AI analyzed satellite imagery

to notify the Red Cross about the most effective way to address local damage. Now, while the total number of fires grows annually because of climate change, AI can dramatically mitigate the damage from these fires, guys. Really, it's a case of these sort of eyes in the sky, in the case of the Pano AI, seeing smoke or flame early and getting deployed. Because if it beats conventional response times by hours, that can be the difference between millions of acres burning and maybe just tens of acres. Absolutely.

I mean, I think what's essential here, Tyler, is it's never going to be possible to prevent wildfires. But what's really important is that if you identify them, if you find them quickly, if you get people out there to put them out in the right moment, then you could really have a massive impact in terms of limiting damage. And that's what this AI technology can do. There are other AI startups that are looking for the smell in the air or they're looking more in urban areas to try to identify where there are fires because there are now so many cities that are just suburbs that are just, you know, in this sort of danger zone because. because they're close to areas where there could be wildfires. So I think the possibility for AI to really mitigate the damage is huge. Yeah, we're not in the danger zone, but in northern New Jersey, they've had smoke alerts because of fires.

We just don't have. Julia, thanks very much. Appreciate it. Now, Roblox is rolling out a host of new child safety settings today. In the face of growing criticism for lack of oversight on its network, we'll get the key details with the stock for actually lower after a break. Roblox is rolling out some new features today as they're trying to fight back against those child safety concerns that have been sparked on its platform. Steve Kovac is here to break down what to expect. We spoke to the CEO about this not long ago, Steve.

Yeah, we'll get to that in a second, Kelly. And let me just tell you what's going on here today with these updates. There are a number of child safety updates rolling out on Roblox today. And this is, of course, coming after that Hindenburg short-seller report. Though a lot has been in the works before we even heard about that one. Here's a quick recap of what's happening here. parents can now link their account to their kids' account so they can control things from their own device before you used to have to use the kids device to do it. That includes setting spending

limits, checking screen time, and setting limits on that. You can set it for 45 minutes a day, for example, and see who their kids and friends are and who they're talking with. Other big updates here, stricter limits for kids under the age of 13. For example, they can't message or talk to people outside of a game. And finally, content ratings, sort of like you'd see on movies or television shows, that ranges from minimal to restricted for more explicit content. And parents, of course, can control what their kids can access based on those ratings. Now, this is, of course, not going to be the end, and it's not just Roblox dealing with these issues. For example, meta has been pushing Apple and Google to do much more on child safety through their app stores.

And this is, of course, something we asked Roblox CEO Dave Bazuki about a few weeks ago when he was on this show. He said he's not really waiting on Apple and Google to make changes. listen. We are not waiting for Apple and Google. We are we are not depending on someone else. We build our safety systems both content, communication, AI-based safety systems. We have over 150 AI systems supporting our civility initiatives. So we're not waiting for anyone to do something else on their platform. So guys still a lot of pressure on these companies to do better and what was announced today. Not going to be a panacea for all these problems, but it is a step One of the concerns was with whom might your child be connecting.

And if they're now limiting it to people who they could connect through a game, does that really solve the problem? With these age-gating restrictions, it helps a little bit there, but there's clearly going to be more to do there. You've got to leave it there. Sorry about that. Thanks for watching Power Lunch, everybody. And closing bell starts right now.