Power Lunch - Oil Slides, Shop ‘Til You Drop 11/22/23

Episode Date: November 22, 2023

OPEC delayed its planned meeting about production cuts, sending oil prices sharply lower. And it’s having an impact of bond yields and stocks as well. We’ll discuss the ramifications.Plus, it’s the busiest shopping week of the year, and a make-or-break time for most retailers. We’ll talk to an analyst who is coming from the mall to our set for a glimpse into how things are going. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch on a Thanksgiving Eve alongside Kelly Evans. I'm Tyler Matheson. Welcome, glad you could join us. Coming up, OPEC delaying its planned meeting about production cuts. That is sending oil sharply lower, though it has rebounded since hitting the bottom there. And having an impact on bond yields and stocks as well, we will discuss the ramifications. And it is the busiest shopping week of the year. A make-or-break time for retailers. We've heard some caution about the consumer on retail earnings. We'll talk to an analyst who's literally coming to the set from the mall and check on how things have been going, Kelly. And before that, let's get a check on the markets. As you can see, we have green across the board with the Dow and the S&P up exactly the same fraction, about half a percent today. The NASDAQ leading the way as it tries to crack 14,300 again, up about three quarters of 1 percent.

Lower bond yields definitely helping put wind in their sales there. And the big stock story of the day is also InVIDIA lower after its earnings. results were good. There were some concerns. It's both off the highs and the lows down about 1% right now at 493. We'll have more on that later. And as Tyler mentioned, oil down at latest check, about 1% today. Bigger declines earlier in the session. As OPEC canceled or postponed that meeting, a prolonged drop in oil prices, of course, would be deflationary, leading yields to fall. Those yields hit around 435, I thought, this morning, before bouncing back on some better economic news. On that note, let's bring in Steve Leesman with a look at what we've learned today. Hi, Steve.

Hey, Kelly, yeah, a full table of economic data before the Thanksgiving holiday, giving a mixed picture on the economy. Job was coming falling. That was good news. 209 from 233. Continuing claims also fell, though, they remain elevated. Perhaps there's some seasonal problems in there. But Durables, big miss to the downside, minus 5.4 compared to 4% increase. You wonder if higher interest rate spending is hurting the.

the potential for capital spending and consumer sentiment a little bit better than the first reading that we had from the University of Michigan. For the Fed, though, the Michigan inflation expectations numbers, potentially the most worrying. They ticked up even while reported inflation is coming down along with gasoline prices. So one concern could be for the Fed if this keeps going on is will the expectations become unanchored from the 2% target? Bond yields, they decline pretty sharply ahead of the 830 data, but then, hey, jump back up perhaps because the jobless claims data did not show more weakness. Lower job was claims could be a sign that the overall job market is not weakening as much as had been hoped. The result was to pare back the probability of rate cuts in the spring, create some modest chance of a near-term additional rate hike,

though just around 12%. It had been zero. None of it, though, enough to cause much indigestion for stocks. They could be feeding on that helping of low oil prices that could serve up additional consumer spending and less inflation guys at just the right time of the season. All right, Steve, thank you very much. Have a great Thanksgiving, my friend. Sure. Sure. Okay. Turning to the big moves in oil. West Texas Intermediate hitting its lowest level in nearly a week.

This is OPEC announced it's delaying its next meeting scheduled for Sunday. The postponement raises questions about the future course of crude production cuts. And here to break it down for us, John Kilduff, founding partner of again Capital and a CNBC contributor. What were the Saudis seem to be behind this delay in the meeting? What are they dissatisfied about? Good afternoon, Tyler. Yes, they're dissatisfied about the participation of the other members of OPEC Plus. In particular, it seems they're perturbed at Iran and Libya.

But there's others out there, too, that are eating away at the efforts of Saudi itself and undercutting, as we've been seeing with the price pretty much. declining pretty steadily here over the past several months, you know, undermining the Saudi efforts to get the price really back to $100 a barrel plus. In other words, that these producers, whether it's Iran, Libya, or others, maybe some of the African nations, are overproducing their quotas? Well, it's more a case of, like Iran, for example. So the Saudis put an extra one million barrel per day cut on the table and have engaged in it.

Meanwhile, Iran's production has been steadily rising and during the same period has risen by about 600,000 barrels. So offsetting much of the Saudi cut. And then when you add in what the United States has done and others, all of a sudden, this big, you know, Bali hoo by the Saudis to, you know, try to drain the swamp here in terms of supply is falling very, very short, Tyler. Where then would you say the price of crude most likely goes next, John? Well, look, I mean, I think the Saudis were looking to hit a bit of a home run here as we go into the northern hemisphere winter, the heart of it, that prices wouldn't fact get back up towards that $90-100 level. But now, given the economic struggles in China and now Japan, potentially recession in Europe and here, so the demand side of the equation is soft, Kelly. And also, too, the Saudis are going to have a heck of a time raining in the other producers. It's just how this has always gone.

Why they think it'll be different this time, you know, it was kind of a curiosity to me, but they thought they had it. They thought they had it. So therefore, I think you're going to see a test of $70 a barrel to the downside for WTI, possibly down to the mid to low 60s, especially if we have a relatively mild winter here in the northern hemisphere in the United States. That will be the killer for their outlook. What if the Saudis sort of throw up their hands and say, you know,

We're done trying to rope together or tape together these price, well, not price cuts, but production cuts. And they've done that in the past, Tyler. I can tell you early days in my career back in 1993, the OPEC cartel fell apart. Prices crashed. This is what happened in 2020. Right before the pandemic hit, the studies flooded the market. They are the lowest cost producer. So that is their ultimate go-to nuclear option.

Will they do it this time? I think they're going to put it on the table, and I think that's what they're going to be reminding all the other countries of between now and when they do finally meet next Thursday, that, hey, we're only producing 9 million barrels a day. They could flip a switch and go to 10, 11, push to 12, and that would be a mess for everybody. So that is their vail or not so veil threat,

And that is, again, their nuclear option, and I wouldn't take it off the table for a minute. What does all of this mean, John, for energy stocks? It sounds pretty bearish. It is bearish in the short term. But look, the demand's picture isn't changing. It's going to continue to stay, you know, elevated, robust. Certainly, we are, you know, vulnerable to various headlines, vulnerable to weather and obviously geopolitical tumult, as we've seen. So the energy companies should really, even if prices get down to 60, Kelly, they're minting money. Okay, even in the Permian, where the break-evens have gotten way down there towards the low 30s, let's call it, on a great average. They are minting money, doing great. They might get punished here and there, but they are a case of buy the dips for sure.

All right, John, thank you very much. Going to a good weekend. We'll see what happens next week. John Kilduff. Thank you. Thank you. And as we mentioned, bond yields are also rebounding after declines this morning. and economic data both at play here.

Let's get to Rick Santelli and Chicago with more. Curious, what you think of that? What do we hit, 435 on the 10-year, Rick? Yeah, earlier, well, 436 is the low yield that I saw. And boy, if you blinked, you missed it, definitely. It was around, I would think, about 740 Eastern time that we hit that level. And the reason it was so important, well, we'll get to that in a minute. Let's first look at the knee-jerk reaction of one of the data points in particular, Kelly,

and that was University of Michigan sentiment. If you look at this chart, look what happens at 10 Eastern. Yel's pop. Why did they pop? Well, it was a dual issue. We have sluggish University of Michigan growth, even though the headline number improved because it's a final read versus mid-month read. The improvement was small, still the weakest level since May.

And, well, if you look at the chart going back, as you just, pointed to last Friday, you could see why today's yield was so important when we moved down below that 437 level. It's because Friday and Tuesday we basically held 437. So, boy, it took it out and reversed quickly, and one of the main reasons it reversed, I like this chart the best. Here's a chart of one year of confidence against the one-year inflation. So weakest since May, although subtle improvement on confidence, you see that there, and then look

how the line moves as inflation firms up the one year hitting 4.5%. Listen, we could talk about the Fed being pleased that inflation's come down, but many people are paying close attention to some of the reversals, especially in this particular index and set of data points. Kelly, Tyler, back to you. Rick, I'll pick it up. Thank you. And have a very happy and healthy Thanksgiving.

The same to you, my friend, Rick Santelli. Thanks. There's breaking news on an explosion near Niagara Falls and a bridge between the U.S. Canada. Amen Javvers with the details. Amen. Tyler, that's right. This incident happening at the Rainbow Bridge separating Niagara Falls, Canada with Niagara Falls United States. You can see there images of law enforcement on the scene, a very heavy police presence. This is on the Canadian side. Apparently a vehicle entering into the United States exploded right at the border crossing there

from the United States, from Canada into the United States. What the FBI Buffalo field office has saying is that they are investigating a vehicle explosion at the Rainbow Bridge, which is a border crossing between the U.S. and Canada in Niagara Falls. The FBI adding here, as this situation is very fluid, that's all we can say at this time. I can tell you that the White House says that they are monitoring this situation as well. And the immediate question will be whether this was a freak accident of some kind or whether this was a deliberate act of terrorism. That, of course, will be investigated by officials on the scene and a determination will be made. One would expect well, it was Amon Javers reporting. We'll continue to follow this explosion at the rainbow

bridge crossing between the United States and Canada, and we'll get Amon's signal back up as we need to later this hour. Kelly. We're obviously learning more by the minute. Meantime, how might those moves in oil prices and bond yields affect the stock market today. Let's bring in Jack Gablin. He's Crescent Capital's founding partner in CIO. Jack, good to see you. Obviously, we have green across the screens for now. What's the significance you think of the drops in bond yields, the drops in oil? How big of a deal are they? Yeah, I think it's a really changing narrative. I think finally, at long last investors do see light at the end of the tightening tunnel. We are starting to see evidence of consumer slowdown, of economic slowdown.

We're seeing inflation abate. So I think all of these signals suggest that interest rates obviously come down, have come down from that 5% peak down to well below 450. And we expect slowing as a result. Meanwhile, of course, earnings estimates still hold pretty well in place. And that's part of the reason why we're seeing equities do as well as they are this month.

Does it keep going? I think it can. I mean, at some point, you know, of course, slowdown becomes a victim of its own success, so to speak. And if earnings do start to deteriorate. And one of the things I point out in a piece I sent out to clients today was if you look at, for example, same store sales, you know, you could pick whatever retail you want. But essentially, this save store sales growth that growth that we've seen over the last year is pretty much. matched inflation. What that really means is there's no volume growth and that all of the revenue increases that a lot of retailers and other companies have enjoyed over the last 12 months

was pure and simply pricing power. Well, if now prices roll over and we see that downtrend, that could start to hurt earnings and profit margins. I wonder, too, in that case, if that leads you kind of to one part of the market in particular over another. Well, I think for right now, I would say healthcare is probably pretty well insulated from the beggars of the economy. They've tended to lag, and these are high-quality companies, so we're not really looking for companies that have to refinance debt, for example. These are also companies, Metronic, EcoLab, Avvi, have not only strong dividends, but strong track record of dividend growth. So, for example, Metronic, 3.5% dividend yield. It's been growing its dividend at an annual rate of 7.4% annually.

EcoLab, 1.1% dividend, but it's been growing its dividend at a 5.3% annual rate. And then lastly, Avvi, 4.5% dividend yield growing its dividend at a 10.5% annual rate. So probably in an environment where as interest rates come down and things start to slow, high-quality growth companies that can pay shareholders pretty healthy and increasing dividends could be a good place to be. When does investing for a dividend turn into chasing a dividend? Well, I think that's the difference between quality and yield. So, for example, while dividends have been probably one of the least worst-performing areas of the market this year, wasn't because, I mean, there really, for two reasons. One is high dividends stocks tend to

be bond substitutes. And now that bonds are able to, you know, find at their own weight, so to speak, because of the Fed, a lot of would-be dividend owners have now shifted back to bonds. But the other part of the high dividend companies is they tend to be lower quality. They tend to have higher debt. And as this debt start to roll over, that's going to eat into their financial position as well. whereas dividend growers lower yields, higher quality companies, less debt, and have a good strong track record of growing that dividend, not just over time, but well in excess of inflation over time. All right, Jack, thank you very much, Jack Ablin. We appreciate it. Have a good holiday.

Thank you, Tyler. You bet. Coming up, getting to the core of the store, it's tough to tell how this holiday season is going to pan out for retail. Some signs pointing to consumer strength, others pointing to weakness. We'll look at that next. Plus, chaos in AI after a week of drama surrounding Open AI. We ended up pretty much back where we started with some key changes to the company we will discuss in Tech Check. Power Lunch will be right back.

Welcome back. We're about a month from Christmas, but this week is still the busiest shopping week of the year. The big question is what will be the split between online and in-store and which companies are poised to capitalize? We turn for some answers to CNBC senior retail reporter Courtney Reagan for more. Courtney? Hi, Kelly. You know, that's a question I've been asking for years. What ultimately will be this breakdown between in-store versus online sales? And now that many online operations are profitable or close to it, and with stores also fulfilling orders, retailers say it doesn't really matter where shoppers buy. Plus, the deals are typically the same online or in store these days. With the earnings reports, though, that we've gotten over the last week or so, a number of retailers like Target and Coles reported lower online sales than they did last year for the quarter, urban and example of positive. digital sales. The Adobe says online retail sales overall are up 5% for the first 20 days of November compared to last year. Now, Black Friday, again, expected to be the busiest in-store shopping day

of the year, according to Sensormatic, which tracks foot traffic in these stores. The National Retail Federation agrees Friday will be the busiest day, estimating 72% of U.S. consumers will shop in store and or online on Friday. That's up from 69% last year, and a record 3-quartered. of Americans will shop in stores and or online sometime between Thanksgiving and Cyber Monday. Spending $567 bucks over that five-day stretch, that's of 13% from the same time last year, according to Deloitte. A big question, though, Kelly, what will the in-store experience be like? You've got items locked up at a number of locations, online orders being fulfilled from store merchandise, will retailers be sufficiently staffed and stocked, at least enough to prevent maximum shopper frustration?

I don't know. We'll have to see. indeed. What's the answer there? I mean, do you think they do have sufficient inventory and people to handle? You know, I think the inventory is probably better in the areas in which they choose to put it out, frankly. There are some retailers that I believe have not chosen to put out the full stock of inventory and some of the items that are stolen more easily that are not locked up. But I think they do have it. Inventory levels do seem to be very good from what we've heard from retailers going into this holiday season. And when it comes to the staff, look, they've said that they want to hire thousands of additional seasonal help. And many of these retailers, when I've asked them,

are you able to find them? Most of them say, yes. You know, look, I think these retail associates are being asked to do a lot more than ever before. In some cases, they're having to provide extra security. They have to unlock these different locked up cases. Then they have to fulfill online orders, sometimes from in-store merchandise. Maybe they're doing self-chat. or checkout with sort of these handheld devices in order to make the process easier for shoppers. So it's asking a lot of these employees. I'm really going to see, want to be interested to see

how friction lifts or friction full this holiday shopping will be now that we're kind of back to normal with more people coming back to the stores. All right, Courtney, thanks very much. Happy shopping this weekend. Thank you, you too. Let's get one more insight on the scene at malls and what the consumers are buying.

Our next guest spent the morning at my mall. Garden State back. Kelly's as well. Garden State Plaza. Ed Iruma is managing director at Piper Sandler. Ed, what did you find? So a couple things. I think first Courtney was spot on. Inventory levels are very controlled. We went through a number of different stores and saw what I'd argue is kind of lower inventory levels than last year, consistent with what we've heard. Second, we saw traffic kind of billed throughout the day, which is a promising sign. And three, and this is always the key question, what will promotions look like? We saw a lot of retailers put their Black Friday promos on ahead of things.

Thanksgiving. Sometimes you see this sometimes you don't, but I think it does augur for a very promotional holiday. That's what Dana Tulsi just told us, she's seeing some promotions. You know, it's good the traffic. You'd have to pay me to go to the Garden State Plaza today. So you're a good man. Were there parking spots? I mean, when you get there at 9 o'clock, there are. But clearly, you know, as the day went on, parking got more difficult. You saw that traffic level come up. So the consumer is in the mood to shop, but I think they want those great deals. We talked yesterday with Connor Flynn of Kimco, and he was talking about how many retail locations are becoming destinations to pick up merchandise. How big a hunk of business is that?

I mean, pickup for many retailers is one of their biggest growth vehicles. Two of our top picks, Walmart and Target have invested significant amounts in pickup, and you see it in the results, right? It gives you that great experience of having something very convenient. And by the way, you know what you want. You've ordered it. You go to the desk. It is there. they hand it to you or they check you out or you've already paid for it? It doesn't even need to go to the desk, right? Walmart Target, you pull up, they know that you're there because you have the app on your phone, they bring it out to your car and away you go.

But if there's something you forgot, right, very easy to grab that one other item while they get that pickup for you. So it's convenient, it's fast. And then also interestingly, it can help with theft, right? Because they're controlling the product. So certainly that sounds big of an issue. We, what's driving foot traffic when, you know, at the stores? What are the hot destinations? Because luxury still looks a little weak.

I don't know what that Nordstrom store looked like. Is Apple still a big draw? I mean, what's bringing people in and where are the weaknesses? Clearly, the consumer is looking for great deals, great value. You know, electronics always popular during the holiday season. Luxury is, as some people have pointed out, has been kind of weak, right? That luxury consumer that has been so resilient over the past 18 months is finally starting to pull back. I thought I would just say 18 years because for luxury, it feels like you know.

ever want to bet against it. Why are they pulling back? Are they nervous about the economy? They just got what they need or want? It's probably a little bit of both. I think the luxury consumers very leverage their confidence, right? It's not an ability to buy. They still can buy whatever they want. It's how confident do they feel? And I think there's been something that's happened, if it's the macro conditions, if it's interest rates, if it's all the geopolitical events, right, that's really impacted, I think, this hiring consumer over the past six months. Companies that, let's talk about the, Courtney was just talking about hiring.

and that it was going to be, it was going to be a right. But if these companies haven't hired by now, are they going to for the season? I mean, by and large, I think the staffing situation is a little bit better than last year. You recall, you know, certainly coming out of COVID, they were hiring bonuses, turnover was extraordinarily high. I think what we're hearing from retailers today is, you know, it's always a challenge to find great employees, but it's maybe not as challenging as it was this time last year. Now, certainly, they're asking these employees to do more, right?

Do the pickup to watch the store more closely. But I think that the employment situation is probably less acute than it was this time last. Where does this leave you on the stocks? Especially we've had some big decliners like Walmart. We've had some big gainers like Burlington. Just as an example, where do you have the most confidence, both for better and worse? We like value a lot right now. So I think a Walmart and a target, you know, they give significant value of the consumer.

They have that convenient pickup. Off price, I think, you know, this is the one subsector in the third quarter. I think it was a real winner if it was T.J. Max, Burlington, Ross. All did very, very well. So the consumers looking for value, they're looking for convenience. The rest of the stocks could be very difficult. Target, though, that's somewhat controversial pick to be kind of a clear value winner. They've had a really tough year.

You think they've turned a corner? I mean, some of it is just there's a little bit more discipline there than there had been in years past. Inventory levels are very, very controlled. And so they don't need to be maybe as promotional as they were last year. All right. I will be doing some channel checks there next couple of days. Ed, thank you so much. And a shout out to your daughter as well.

Thank you. She is she is. She is. She's over there. Come on over. Come on, come on. Come on. Come on. Come on. Her name. Her name's Lizzie. Lizzie, come on in here. You got to go with your dad shopping. That's awesome. How old are you? I'm 11. You're 11. So you're in what? Fifth grade, fourth grade. Sixth grade. Wow. Cool. Smart cookie. Okay, good. Well, have a good holiday. All right. Welcome. Thank you both. Happy Thanksgiving. Further ahead. We'll talk in Vedia after the break. Stay with us. back everybody. More details emerging now on that explosion near Niagara Falls. Amon Javers has the details.

Hi, Amon. Tyler, this information coming from NBC News, according to four senior law enforcement officials briefed on the situation. The explosion in Niagara Falls was caused as a result of a vehicle crashing into the checkpoint structure at the Rainbow Bridge in Niagara Falls at the U.S. Canada border. The vehicle was traveling at a very high rate of speed, we are told. It hit the structure, on fire and then exploded. An initial search, according to these officials, did not find a secondary explosive or device. That is, there's no initial indication so far of a bomb in the car. There are two casualties, we are told. Those are the occupants of the vehicle. Authorities are now trying to determine whether the incident was intentional. And if so, what was the motive here? All of this,

of course, subject to change as more evidence is collected, but the information given by senior law enforcement officials to NBC News indicates a vehicle hitting that border guard position at a high rate of speed, then bursting into flames and then exploding. No indication so far of a bomb on board that vehicle, but two casualties do appear to be the occupants of the vehicle, Tyler. That's what we have for right now. All right, Amen, I'm sure you'll keep following it for us. Saman Javers reporting. Meantime, let's get to Contessa Brewer for a CNBC news update. Contessa.

Tyler, Israel's defense minister promised the war would continue in full force following the ceasefire in Gaza. Israel reportedly will pause the fighting for at least four days and release 150 Palestinian women and children in exchange for the release of 50 Israeli hostages now being held by Hamas. Hamas says the ceasefire starts tomorrow. A jury sided with General Mills, Kraft Hines, Kellogg, and Nestle in a lawsuit against the nation's largest egg producers and two trade groups. The suit argued United Egg producers and United States egg marketers conspired to restrict the supply of eggs forcing the companies to overpay. The jury will decide the amount of damages in a trial starting next week. The preparations have begun. Workers are carefully blowing up massive balloons to be featured in tomorrow's Maceous.

Thanksgiving Day parade. The iconic parade started in 1924, so almost 100 years old, quickly became a holiday tritian for many Americans, and nearly 28 million viewers watched last year alone. That's why so many gravy pots burned, because we were all busy watching the parade instead of watching what was happening. We've got to stir the gravy. Got to stir the gravy. Contessa, thank you. Ahead on Power Lunch. Stocks to be thankful for. We'll lay out some of the cornucopia of names investors should hold. That's today's three-stock lunch. Stocks to be thankful for when we were rich.

Welcome back. Chip Giant, Nvidia just blew past estimates for both earnings and revenue. Its sales of more than $18 billion are triple the year ago quarter, but the stock's still down today, as there are some concerns on the horizon. Christina Parts of Nevelas has a look at those issues for us. Christina? Well, Kelly, China actually remains a major concern at overhang for this name, even though management-insured investors, they could find growth from other regions.

And that's because U.S. export controls were expanded in October and are blocking sales to the country and would, quote, significantly impact Q4 revenues. And that's also limiting that $20 billion guidance number as well, as according to management. The CFO on the call admitting they don't know the impact of the controls over the long term, which is why it has a lot of investors questioning right now, how can Nvidia keep up this pace of beats that you're seeing on your screen from 11%, 21% to 12% just over the last three quarters and keep raising outlooks when China, without China, as a major customer.

There's also a lot of doubt over the sustainability of demand once the backlog, you know, that supply constraint for those GPUs everybody's trying to get their hands on. Well, once that gets worked down, aka inventory digestion, what does that mean for companies, especially those companies that are double ordering just so they can get their hands on those coveted GPUs will demand continue at this pace? But when you take a step back and you look at the stock, You're like, ah, it's down today. The earnings are great, but it's down, what, 3% off its most recent all-time high of $505.

It's actually really rare to see a stock continue to hit all-time high and actually have its forward price-to-earnings ratio of fall, which is often what people look at for valuations. Right now, it's trading at 32 times with the bulls arguing that's cheap, especially when you compare it to its five-year average. And to further add to that bull narrative, there are new products that are coming out. You have the H-200. There's another GPU coming out in 2025.

that could create a new replacement cycle according to management. There's expansion and software networking with management noting 18 billion in purchase commitments, which is showing us some visibility into the future, you know, possibly easing some fears, but nonetheless, stock reacting negatively. So, Christina, NVIDIA and VINDIIA chair. Tonguehister, I know. The chairs are down. The shares are down, but other competitors like Intel and AMD are moving in the opposite direction.

Why? Well, you have, if you remove China from the problem right now, which is an overhang, the narrative is still the same, that companies are still spending a lot of money on their generative AI systems, on their large language models. And InVity even said that they see like a $10 billion run rate for networking, $1 billion for software, and they believe it's going to continue to grow. So that bodes well for other players that are in the space like Intel, AMD. Intel has its big event. It's AI event, December 14th here at the NASA. day, AMD, December 6th in San Francisco, I'll be at both events. And then other players, too, I want to mention, you see Arista Network, like, A-Net, that's the ticker there.

That's a competitor when it comes to the Ethernet cables. You have all of these data centers. You need to connect them to each other. Arista Networks falls into that category, and they've been doing really well over the last a while. And there's two others that I also want to mention because they don't get enough love, but they are a big player when it comes to software automation. Cadence, CDNS, you can see up about 20% over the last

green reminds and synopsis, also up 24%. These are plays that maybe aren't as sexy as Nvidia because they're not mentioned all the time, but they do play a big role when it comes to creating the AI systems and the software behind it. Who said Ethernet cables aren't sexy, man? I know. I never thought in my entire, well, previously before joining CNBC that I'd be using sexy and Ethernet in the same sentence. Funny how that way this job takes you. Christina thanks. Good places. Yeah. All right. Sam Altman back as CEO of OpenA.I. an end to a dramatic standoff and an employee revolt days after the board of the startup fired

him. Deuter Bosa digs into who has come out of all this on top in today's tech check. D. It is still hard to say, Tyler, after all the drama of the last five days, kind of feels like we're back to square one. You've got Sam Altman, Greg Brockman, back at OpenAI, no mass exodus. It remains a nonprofit with a mission to serve humanity. Microsoft continues to bankroll and benefit from its ambitions, but the power has most definitely shifted, and that will be critical for the future of this organization. Five days ago, the board was made up of researchers and Silicon Valley Insiders, largely unknown to the broader public, save Sam Altman himself. Now you've got Corraceo, Adam DeAngelo. He's the only holdover, and he's joined by two of the most prominent

business leaders in business and economy, Brett Taylor, former co-CEO of Salesforce and former Treasury Secretary Larry Summers. Their initial task to vet and appoint an expanded board of up to nine people that will reset governance at OpenAI. As for who comes out on top, there's still so many questions, but it looks like Microsoft at least because Open AI can continue to operate as its research lab. And Open AI will take on the reputational and executional risk for Microsoft. Microsoft doesn't have a board seat yet, but, I mean, it raises the question. Does it even want one? existing investors, another group that for now seems to be the winners.

I'm told that the latest funding round for Open AI, led by Thrive Capital, is still in discussions. If Open AI achieves that $80 billion plus valuation, that's certainly good news for the early investors, who over the weekend weren't even sure if there would still be an Open AI. And finally, guys, you were just talking about Invidia. Interesting to think about their position in all of this. You still need those GPs. You still need all of the compute power. But I wonder, and some have wondered, if Sam Altman, and Greg Brockman went to Microsoft.

Could they have more capital for their hardware ambitions, as has been reported? Could they actually be a more credible competitor to an Nvidia? Just to be clear, Altman has gone back as the CEO, and I don't know whether he's chair, but he's the CEO of the company. Brockman as well, they're no longer going to be employed by Microsoft? No, they are not going to go to Microsoft,

but they will continue to work with Microsoft, and they have lost their board position. So Altman comes back as CEO reportedly. He's looking for a board seat. I don't know if that's going to happen. But it'll be interesting to see how it shakes out. If there's going to be nine members, how do they divide that between the cautious crowd

that's looking for generative AI to not distort civilization and how many people are going to be more commercial focused, right? You can imagine that Brett Taylor is someone with a lot of business experience. He's going to want to commercialize these products. But maybe we'll be cautious. The number 10. billion has been thrown around as the amount that Microsoft has, quote, put into the company. I heard a guest on our air, I think was Roger Altman yesterday, say that that 10 billion is a little

misleading because it isn't 10 billion in cash. It's 10 billion in credits to use at Azure. Is that right? That's correct. So the latest round, right, that Microsoft's commitment to put in 10 billion, and Amazon has had similar wording with Anthropic. It's up to 10 billion. And some of that is certainly in cloud credits. And in that way, we did a deep dive on this for a tech check weekly piece. That's money going out the door for Open AI to turn around and spend on Microsoft Azure cloud. So it's very win-win for Microsoft, right? They get the upside if the valuation goes up, but they also get it in terms of revenue to Azure, which, you know, it's obviously core part of the business. Very interesting. Okay, Deer Bosa, thank you.

Coming up, the travel rush is on. Thanksgiving weekend expected to break pre-pandemic records on the road and in the sky. We'll get a live report when Power Lunch returns. Welcome back, Thanksgiving weekend, along with shopping, Turkey, and football. There's a lot of traveling going on. Much of it taking place today. Phila Bow is out of Chicago O'Hare Airport with an update on how it's looking out there, Phil. Very quiet, Kelly.

That is exactly what you want to hear if you were traveling today. or this holiday weekend. How quiet is it? We're at Terminal 3. This is where American is based. Look back here. I mean, you hardly see anybody. I know it's the middle of the day. This is the law during the day. It'll pick up later today. But altogether, we've seen no problems at all here. Here O'Hare. 2.7 million people will be flying nationwide today. That's not the busiest. 2.9 million will happen on Sunday. More than 49,000 flights, cancellations totaling 629. You want to know how good it is? around the country to be flying right now? Take a look at the flight aware misery map. Now we often show this when there are cancellations and bad weather and you see a ton of red.

You don't see much red right now. Those little dots right there, that is basically a very clean day in terms of if people are flying. Take a look at the airline stocks and how they're doing today. They've actually been doing pretty well over the last two or three weeks. Earlier today they were up two or three percent. Now you see they're closer to unchanged or slightly positive. Bottom line is this, guys, when you take a look at what's happening with the airline stocks and also the good news today for Boeing in terms of getting the approval to go forward with FAA flight certification test flights with the 737 max dash 10, that's the long range max. I mean, if you are Boeing, if you are one of their suppliers, if you're the airlines, you're feeling pretty good about

things right now. Could be better, but certainly you like this compared to what we have seen during the past holiday sometimes. Absolutely, Phil. Thank you very much. Have a great holiday yourself, my friend. Tomorrow is Thanksgiving, of course, so it's only right that we express exactly what we are grateful for, and that includes in some cases our investments. We'll get a Turkey Day edition of Three Stock Lunch on the other side of this break. All right, time for today's three stock lunch today. In honor of Thanksgiving, we have three stocks to be thankful for here with our trades is Gina Sanchez. She's Lido Advisors, chief market strategist and a CNBC contributor. Gina, you say you're thankful for the cloud this Thanksgiving, and despite the AI hype

dying down a bit, you see a bit more to come from this space. So let's talk about a stock that if you'd own it, you'd be feeling pretty thankful today, and that's Nvidia, crushing Wall Street estimates, tripling quarterly revenue, but the shares are a little bit down, making it one of the worst performers in the S&P 500 a day, but you're thankful for it. I have, I, I've, If I owned it, man, I'd be thankful for it. Yep, this is one we've owned all year, and it has been the gift that keeps on giving. I think the China concerns are very real. So for the time being, however, it still scores well enough to be a part of the top 40 stocks that we put into our portfolio.

And it's maintained its position there. You know, that could change, but for now, this is the top maker of GPUs and, you know, chips that feed not just processors, but also, you know, the visual side, gaming, et cetera. So we just continue to see them being a major player. That's not going away anytime soon. All right. Then what about, don't forget about AMD, those shares up over 2% today and outperforming the market.

It lives in its Big Brother's shadow, but you're plenty thankful for it. We are plenty thankful for it. And actually, if we put these three stocks in order, this would actually be our favorite stock right now because AMD just launched their MI300, accelerator. And that is expected. You know, AMD, you think of them as sort of the bargain, you know, budget-friendly chips that go into solid-state drives, PCs, et cetera, kind of just the general

consumer space. But this MI-300 chip, this MI-300 accelerator could actually make a play for significant AI computational programming and could buck up against Nvidia. So there's a lot more to come, we think, out of AMD. And last but not least, another one you love, and that is Microsoft, all-time highs recently for that stock. Why are you thankful for it? Look, Microsoft is one that I own personally, and this is one that, you know, as, you know, we have benefited from the environment, you know, this is a company that has been incredibly innovative in terms of how they work with customers and clients, grow those customers and clients, and then benefit from them, as they get stronger.

The margins on Microsoft are massive. I mean, we're talking huge margins compared to the rest of, you know, the rest of the space. And we just see the cloud world continuing to expand, even if we go through, you know, a tightening in spending and a tightening in IT budgets, and a lot of people are expecting that. And that's actually, I think, been somewhat priced in. We think that there's still a lot of room to run for Microsoft. All right, Gina. Thanks.

You have a great holiday, my friend. Thank you. Happy Thanksgiving. You too. I'm saying I'm thankful for Gina Sanchez. Yes. Still ahead so many headlines, but so little time. We will power through as many as we can in closing time next. Welcome back three minutes and several more stories to get to before we go today. Starting with tomorrow being the first Thanksgiving of the OZempec era, which could make for some awkward Thanksgiving dinner conversation. People taking OZempic, WeGoV, or other popular meds are afraid of judgment from family members if they don't eat.

as much as last year or skip those desserts tied. Skip the pie, skip the wine, the whole thing, smaller portions. Being now on the preparing side of this, I understand. They're like, please eat. I labored over this for days. We have several vegans coming, which is sort of antithetical to a Thanksgiving feast, but they're bringing their own dishes. All righty, the FCC proposing a rule to ban early termination fees for cable and satellite service contracts as more and more consumers cut the cord. I don't know how I feel about this. I mean, I'm not sure why the government needs to get involved in that? You know, as ever.

Okay, you know, probably bad for the providers and probably, you know, if they had better service in the first place, maybe they would have avoided people getting so irate with them all the time. They will also provide people a pro-rated credit or rebate for the remaining days within a billing cycle. Okay. So there you have it.

There you go. All right, as the housing affordability gap widens, the age of home buyers is also rising. According to the National Association of Realtors, The median homebuyer age has jumped 10 years in the past two decades from 39 to 49. First-time buyers also had a median age of 35 this year compared with 29 back in 1981, and repeat buyers were 58 years old compared with 36 in 1981. It's partly the aging of the population.

It is also the fact that houses cost more, and you have to have bigger money for down payments, and it takes longer to accumulate that. There's kind of this raging debate about whether the millennials are a lot worse off than their parents were. their age and based on what data point, you can find a data point to either support that or not support that almost day by day. This one would seem to go in the camp of, yes, it really is harder now than it used to be. Oh, all righty. Should I or should you do the honors? Okay, this is. The story that shocked the newsroom today, Darrell Hall is suing John Oates. I'm not sure who these two people are. But you don't know who

they are. I know Hall and Oates, but it doesn't have the same impact for me as. So Hall has a restraining order against Oates as well. The lawsuit is sealed so we don't know what Oates is accused of, but whatever it is, Hall is saying, I can't go for that. Oh, my. Well, they were one of the biggest duets of the 70s and 80s, and I had this feeling that they didn't get along because they don't perform much together. Interesting.

But in an era where you can rake in such massive ticket revenues from doing so, you know, a lot of money left. I think Daryl Hall had a very successful run with a concert with Todd Rundgren. where they played old faves. I would have liked to have seen it. It's hard to be this closely tied with someone for that long a period of time. Divorce. All right.

Thanks for watching. Party much. Happy Thanksgiving, everybody. I'm going to listen to Hall and Oates on the way. Yeah, do that. Closing bell starts right now.