Power Lunch - Post-election rally takes a breather 11/14/24

Episode Date: November 14, 2024

Stocks are sliding today, as the post-election rally cools off. Wall Street continues to digest the impact of Republican control of  power in Washington. We’ll tell you all you need to know. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch on this Thursday afternoon alongside Kelly Evans. I'm Dominic Chu, and stocks are slightly lower today as you watch all three major indices down for the week so far. Producer prices today confirming yesterday's report on inflation, the PPI showing that we're getting closer to the Fed's 2% targets, but it's maybe a little bit hotter than some people thought. Kelly, CPI, PPI, two very different reads, but the PPI didn't come in quite as positively as the CPI did. I would argue neither one of them did. I can't believe I'm saying this, but I haven't checked the tenure yet today. And it's at 442.

It's stable, but it's not down. And I think that's why stocks are pouting a little bit after the run-up we've seen. Disney is one bright spot, though. Disney Plus posted a profit, Deadpool and Wolverine, and Inside Out 2, helping at the box office. Do we make so much dumb of the fact that they've gone from a 9% gain to just a 5% one? So I would say this. There may be a turnaround story in play at Disney.

The box office success is something that we're paying close attention to. I know that for at least Inside Out, too, it was the first movie that I had seen in a while in the theaters because my kids insisted on seeing it. And I will admit, I am a huge Deadpool and Wolverine fan, both of them independently, but I didn't see the movie until I just saw it this week on Disney's Plus for streaming. Oh, so there you go. You're lining their pockets both ways. And just to kind of go back. It's not just today's one day move. The shares are on their longest winning streak since 28. which is right before all these problems really kicked into gear about their business model. So a positive sign there. There you go.

All right. And then reports are out this afternoon saying that President Trump's transition team is planning to kill the $7,500 tax credit for electric vehicles. And representatives from Tesla are supporting that particular subsidy. So an interesting dynamic there as well. And this is maybe no surprise because Elon Musk has talked about this idea that those EV credits maybe do prop up some of the weaker players, Kelly. in this business and that Tesla doesn't need them. We keep showing shares of Tesla, which are down 5% today. I'm looking at, yeah, GM is positive.

Ford, an interesting reaction that Ford is slightly negative, and the weakest performer really is Rivian, despite this big partnership with Volkswagen. It's unveiling. So a lot of cross currents here. And perfect topic to talk to our next guest about. Sure, as these appointments and nominations roll in for the next Trump administration, version 2.0,

there may be opposition starting to build within the walls of the Senate. now, including how President Trump, President-elect Trump may treat Fed Chair Jerome Powell. Now let's bring in Emily Wilkins, who's gotten more on just what's happening with the state of play about these appointments, the confirmations, and just who's stoking the ire of the president-elect. Hey, Dom. Well, yeah, during his first term, Donald Trump, he appointed and then openly considered replacing Fed Chair Jerome Powell. And then, of course, Trump has suggested that he should have a say in interest rates. And now that he's coming back to the White House, some are concerned about how Trump could change the Fed. But the Fed has an alley in the Senate.

A number of senators told me that while they might have their frustrations with Powell and are open to some reforms at the Fed, they don't think that Trump should have a say in interest rates. Senator Tom Tillis, he's on the banking committee, oversees the Fed. He told me that the White House having a role in interest rates would be dangerous because then U.S. monetary policy could change with each new administration. He also said that it would be, quote, a mistake for the United States long term. Now, other banking committee members, this includes Senators Mike Browns, Kevin Kramer, Cynthia Loomis.

They also said that the Fed independence is critical here. But of course, as you guys were just talking about, Powell's just one of many questions facing the Senate as Trump prepares for his second term. And he has nominated some controversial picks, including Matt Gates for Attorney General. And while Trump has talked about using recess appointments to get his nominees through without Senate approvals, Senators that I've spoken with, they want to kind of help Trump here, but they're not ready to give up their power to provide a check on the president's choices. Listen right here to what Senator John Cornyn told NBC. I don't think we should be circumventing the Senate's responsibilities, but I think it's premature to be talking about recess appointment.

Guys, obviously yesterday, seeing John Thune elected over Rick Scott, who was kind of the, the choice of, let's say, Donald Trump's MAGEL World, kind of sent an initial message about what we can see from the Senate. But I think there are a lot of questions coming up as to exactly what happens with some of Trump's nominees and how willing the Senate is likely to either back Trump or provide a check to the presidency. We'll be following all that very closely, of course. Emily, it's early days still, and we all understand that.

But this is very much a story that will be, I guess, contingent on the confirmation process on this notion or concept of President-elect Trump's coattails? How much do you want to offend him by not supporting some of his candidates? How much do you think you can have power or influence over the future cabinet makeup? What is the buzz right now in the halls of Congress about whether or not the Trump coattails are enough to influence everybody to push through his agenda? Well, look, a lot of senators, they do realize Trump won a really decisive victory here. A lot of Republicans are talking about a mandate and a mandate from Trump.

At the same point, you do have to consider the fact that in some states where Trump won, like Michigan, Wisconsin, Nevada, and Arizona, the Republican Senate candidate lost. So there isn't necessarily a one-to-one for Trump support versus the down-ballot support. Plus, for a number of these senators, they know the states that they're from. Susan Collins, Lisa Murkowski, they know the states that they represent tend to have a lot of independents who want to see them necessarily buck their party on perhaps some of these more controversial efforts. And Tillis that I was just mentioning, he is up for re-elections soon. And while North Carolina, you know, has gone red for the last couple elections, it is still often

considered a state where Democrats could have a chance to win. And so I think for a lot of these senators, they're going to be balancing their own interests, their constituent interests, and certainly kind of as you heard from Cornyn and as I've heard from some other lawmakers who I've spoken with. They know that the Senate has power. They don't want to concede that power to the executive branch, regardless who is sitting in the Oval Office. All right. Emily, thank you very much, Emily Wilkins. And for more, let's bring in former Vice President Mike Pence's chief of staff, Mark Short. He witnessed some of Trump's discontent with Jay Powell during his first turn, among plenty others, probably. Mark, thanks for your time today and thanks for joining us.

Thanks, Kelly. Thanks for having me. Before we get to Powell, can we start with Gates, the congressman? what do you think this pick is really about? Well, I think that President Trump wants to be a disruptor, and I think it's really about going after his nemesis inside DOJ, but I think it's really counterproductive to those goals, because if Gates is looking to avoid some of the ethics report coming out, this is certainly a way to ensure it does in the confirmation hearings because people will look through those reports, subpoena the DOJ initial report, and you'll also probably call some of the victims as witnesses. And I think for the effort to try to get recess appointments that I think has a lot of sympathy

because I think both Republicans and Democrats have abused the advice and consent and delayed confirmations extensively. But you lose that sympathy when you nominate somebody like Gates because that will ensure Republican Senate do actually not recess. They'll go into a pro forma session to avoid the possibility of recess appointments. Okay, that's interesting because I was going to read you this one take that caught my eye, which said the pick was, quote unquote, brilliant because, GOP morale in the House improved overnight. Apparently, he was highly unpopular. You know, so now Trump looks like he can reward him for his loyalty while knowing the Senate can

never confirm him. You know, it spares the House's presence. It could save Florida's GOP, a messy primary for governor in 2026. Because to your point, this, the more that we hear about what's been going on, the less it's likely that his nomination ever actually advances. Yeah, I'm not so sure. It's as clever as that. I think the reality is that for Speaker Johnson, and you've now lost three Republicans to potential confirmation picks, and your majority is probably going to be about four when all is said and done. And so it creates a very narrow governing majority, as narrow as it could be, in the House.

And I think that additionally, it's important to remember that in 2012, I think it was the Supreme Court ruled on recess appointments when Obama had appointed LRB appointments during a recess. And conservative judges, it was a Scalia opinion, but Alito, Thomas Roberts, all sided with them to say you can only do recess appointments when, in fact, the appointment came a vacant during a recess. And so you have a conservative Supreme Court that's already on the record against the notion that the executive branch has this unilateral power for these recess appointments. So I don't know. To me, it seems like this is a big error on the part of the calculation on the Trump transition team.

Mark, it's Tom. I would like to be able to kind of pivot this towards the Powell conversation because there are so many of these conversations that I'm sure Kelly and I are both having right now among market participants, among investors, among traders. Just talking about the notion that there could be a massive Fed overhaul. Just how much of an overhaul can there be with the Fed? And what exactly is the relationship right now, as you see it, between President-elect Trump and J. Powell, beyond just what we've heard in the headlines and beyond just, just the public comments as he's made. What is he said in the Oval Office in the past? Well, Dom, I think that there's no question that there's a lot of tension there,

and I think that President Trump regretted the appointment of Jay Powell, and certainly in many cases blamed Secretary Mnuchin for the advice of that pick. I do think that there's a fair point that the president actually has, when the Fed now has $7 trillion in assets on its books, suggest when people say it needs to have independence is like is it not accountable to the people in some way when so many unelected people have such an enormous sway over the economy today. But I think actually Trump's complaints are really less about the management organization and it's more just about the outcome and that he really prefers lower interest rates.

And that was his biggest complaint against Powell during the administration is when the economy started going stronger and Powell was raising rates, he wanted them to stay low. And I think that you will see him very quickly and very soon beginning. to encourage J Powell to lower rates further than they are right now. Can you also build on that mark? I mean, what was the experience that you witnessed between the president and the Fed share? And it will be awkward if the market is now talking about the need for the Fed to possibly halt rate cuts at the very moment that President Trump is about to take office again.

Kelly, I think you're right. I think there's a lot of people in conservative circles who say, look, that's not as much to do about nothing. The reality is Powell's and retire in 26. and Trump wouldn't risk the ability to appoint his own person. I disagree that. I think that Trump will very quickly be looking to put pressure on Jay Powell to lower rates and whether or not Powell maintains his own position and does it for economic reasons

as opposed to pressure from Trump. We will see, but I don't think there's any doubt that the president feels he has, has been elected president of the ability to put that influence on the Fed. And so I think that you're likely to see more volatility there in that relationship coming soon. Yeah. So as we kind of digest all of these announcements, Mark, and we look to the Doge, the Department of Government Efficiency, which is extra governmental, if we can put it that way. What do you think is more significant? The fact that it exists at all and might put pressure on areas like Medicaid, which one analyst suggested last hour, or the reaction of certain contracting stocks to the Pete Hegset announcement at defense.

I mean, are both of those meant to signal fiscal austerity? And could that fiscal austerity be something that actually takes the heat out of this economy? Well, Kelly, I wish there was fiscal austerity. I wish that I wish success for this new commission and for Elon Musk. But I think the reality is that during the campaign, President Trump said he would not touch entitlements. And so if you're taking Medicare, Medicaid, Social Security off the table, the reality is with those three plus interest on the debt today, that mass is more than what we actually get in revenue. And so the reality is the discretionary spending is such a small portion.

I wish that there's plenty of places to cut there, and I wish them success. But if you're not addressing the major drivers of our deficits that now have $35 trillion dollars accumulated in debt, then I'm not so sure of the effectiveness. Oh, for sure. I mean, it's just, you know, if they, and look, you and I are giving them a narrower mandate, maybe they go in there saying, yeah, we're doing Medicare, we're doing Medicare, We're doing social... That would be great.

Sure. Good luck. I mean, there's a number of recommendations that exist out there, but cutting those programs in a meaningful way is difficult. Let's go through it. Social Security, Medicare, then defense, which is why I mentioned the Hegg says thing. There is some nervousness in markets about defense,

austerity, but given what's going on in the world, hard to imagine. And then interest costs on the debt. The only way you get those down is to get yields down, not rates. They're lowering those to get actual yields down. Yeah, I would actually be surprised if there are defense cuts.

I think that, as you recall, in the first couple years of administration, now as President Trump's legislative affairs director. And so in addition to doing the confirmation, one of the first big piece of legislation, was refunding the military because it had, I think, been depleted during the Democrat administration. And I think Trump took great pride in that. And so I don't think there would be interest there. I do think that I do think that the nomination of Pete Haguesteth is more focused on some of the cultural elements within the Pentagon and wanting to attack some of the DEI programs there more so than it is about wanting to cut space. Yeah. Well, on your way out, who is going to be, should be Treasury Secretary? I have no reason to think it's not the couple names that have been floated before. It's Scott Besson and the Canter Fitzgerald lead of transition.

Howard Lutnik, yeah. I think those are probably the leading contenders at this point. I think that Trump likes the notion of having people from Wall Street is, again, as we know, it's kind of a casting call in a lot of ways. And so I think that that's probably more appealing to him. It is ironic because Soros is such a, you know, a lightning rod for conservatives. And do you think Scott's messaging on, listen, this guy was, we're talking about his trading, we're talking about his investment, we're talking about him picking Drucken Miller, who then assembled our team. We're talking about all that and not his philanthropic activities. Well, sure, but I think that to suggest that Donald Trump this time is looking for a specifically

conservative list of cabinet picks. I think we've already shown his wrong. We've already seen him pick Tulsi Gabbard to lead defense, I mean, the intelligence community. And so I think that the piece, she's kind of dismissed that

notion, recognize that he's looking more for the visual than perhaps the policy pursuit. I see. So the Soros maybe gives him coverage. He's bipartisan. Yes. I see. Mark, thanks very much. Good to have you here. Appreciate your time. Great to be on with a fellow general and a fellow Deadpool fan.

I love it. Mark Short. Thank you very much. All right, still to come on the show, guys. Who's next? Netflix is dominating the streaming space as the only profitable platform. So is Disney following their lead? Speaking of Deadpool and Wolverine. We got more on that story coming up when Power Lunch returns after this. Welcome back to Power Lunch. Shares of Disney, as you can see, jumping after narrowly beating analyst earnings estimates in its fourth quarter. Growth in streaming, helping to boost its entertainment segment. Company executives saying that they are confident, in the long-term prospects for the business. Earlier on Squawk Box, Disney chief financial officer, Hugh Johnston, also expressed his optimism in the American consumer.

I think the consumer is gradually strengthening. So I think there was a period in the first half of this year where the consumer was really locking down because inflation hit them so hard. And people were struggling, particularly the lower-income deaths, I think you're seeing a very gradual strengthening, which is part of what we see in the streaming results right now. And our expectation is the parks will continue to gradually strengthen as well.

As we noted, we'll probably do better in the second half of the year than we did in the first half. All right, let's get some reaction from James Stewart, the columnist at the New York Times. He's also a CNBC contributor. He's also the author of Disney War. He knows a thing or two about the House of Mouse. Jim, thank you very much for being here. You heard Hugh Johnson's remarks. I mean, he was the former CFO of PepsiCo, knows a thing or two about the consumer.

Now he's the CFO at Disney, consumer brand as well. Take us through what this report. says to you about just whether or not the turnaround at Disney is really something to buy into? Yeah, I think this is a really historic quarter because it begins to answer one of the big questions, which is can anybody but Netflix really make money in the streaming sector? Because we've seen them lose just incredible billions of dollars. And there was beginning to be real skepticism that this business was never going to be profitable. I think Disney has now shown that there is a path to profitability for even

for the legacy companies that don't have the scale of Netflix or an Amazon. And the key here was they brought down the spending. They really put some discipline in there. And I hate to say this for all my friends in the creative community in Hollywood, but when they went on strike, they handed these companies a huge gift because they had to slash their spending, not just a little bit, to nothing while they were on strike. And guess what? They didn't lose subscribers. suddenly that competition of all that new material wasn't there, and people were very happy to watch material reruns and legacy properties. That was a huge revelation. I think we now see that working through also in the recent Warner earnings, which were quite strong. Jim, what do you think Disney has actually

done right incrementally between, say, a year ago period versus now? What makes you feel and what makes investors in Disney, who've been, at least as of late bidding up the stock, feel better? about CEO Bob Iger's strategy, beyond just the fact that there is cost cutting and they're trying to return to profitability, there has to be some kind of a long-term view that this is a company that can be restored to its former glory. I agree with that. I mean, I think Iger deserves credit, and he's getting credit, because he brought discipline in when he returned.

He said immediately he was focusing on profitability. Now, and remember, I don't necessarily blame his predecessor so much. The metric that Wall Street cared about was subscribers. and they didn't care what people were spending in order to get those subscribers. So we had an arms brace of spending among all these companies trying to lure the subscriber until suddenly investors said, no, we want profits. And I think Iger recognized that. And there's only one way to get to profitability there, A, increase the revenue.

And they've pulled four or five significant leverage there, the main ones being introducing an ad tier, raising prices, and even more significantly, cutting the spending. Those are the only ways to get to profit. And they've shown that you can get there. And I think what gives a lot of investors confidence about Disney is, unlike, say, a Netflix or an Amazon, Disney has the intellectual property that people want to come back to over and over again. They have a huge library. They have all, you know, generations of children's material.

And, you know, new kids are coming up all the time. It's new to them. And a lot of people just are happy to watch it over again. That's the great beauty of the intellectual property that they've amassed. So I think that gives confidence to investors that Disney can keep this street going. So, Jim, I mean, we're showing this graphic about, you know, streaming, linear television. I have a particular, and I'm sure many of our colleagues at CNBC do, about this kind of future of linear television, the future of cable. We've heard from even our parent company Comcast about some of the strategic options that may be considered with regard to reshaping, restructuring, how the television and linear television and streaming.

television landscape looks. What does it look like to you in the coming years? Well, it has not looked good now for quite some time. I mean, people who have called it a melting iceberg, melting ice cube, you know, whatever you want to look at it. We've been seeing, you know, steady losses of subscribers and revenue in the linear media world now for quite some time. And it's not stopping. I don't know if there's a bottom here, but the strategy has to be to move these very, you know, valuable properties. It produced really great content, you know, not to be self-serving. CNBC would be in that category.

And people are going to, people, there's a market for that. People will pay for it. The question is, what is the distribution channel that's going to be the most successful? So I think there is a lot of thinking going on about how to monetize some of these legacy assets that cannot just live forever in the cable ecosystem. And remember, cable was an unbelievably profitable. business for so long. There's a lot of room. It can still be profitable. You know, they're not losing money. They're just not making the kind of money they made before, and they've got to find

other ways to replace that revenue. And Jim, before we let you go, a quick last word, what has you most excited about Disney for the coming year or two? You know, I want to see the streaming numbers going up. I mean, the one thing that worries me is, can they sustain this level of spending. You know, Netflix hasn't backed down. They say they're still spending in the $17 to $20 billion a year area. How low can Disney spending go before they do begin to feel some competitive pressure and maybe loss of subscribers? So that's what I'm really going to be looking for as this year unfolds. All right. Jim Stewart, a huge Disney fan and author, I guess. He wrote the book on it. Thank you very much. We'll see you soon, sir. Sure. And this is an important chapter this week, potentially.

Still to come, a week of bad news for oil. OPEC cutting demand, weak China stimulus, dollar is soaring. How should you hedge this space? We'll discuss it next in Market Navigator. Welcome back to Power Lunch. Here's a look at the markets. Russell's not on there, but it's down 1%. Everyone else trimming by about a quarter percent today, Dom.

It's just about where it was when we started the exchange at the top of the one. Not a ton of movement. No, right now. All right. So crude oil right now is up slightly, but it's having a rocky week. dropping after cutting OPEC cut its demand forecast and the latest international energy agency market report showed that crude supplies will outstrip demand by a million barrels a day next year. All this as President-elect Trump is vowing to unleash a big oil boom in the United

States. Our next guest is here to tell us how he's trading crude and where he thinks prices are headed. So joining us now is Jeff Kilberg, founder and CEO of KKM Financial. Jeff, take us through the oil trade and why exactly you think that the bounce that we are seeing today, it's modest, but it could have legs? Well, Dom, I think it's counterintuitive to think this way, but if you talk about the pledge that President Trump had on his campaign, it was drill baby drill. And what you're seeing is price discovery is how low can WTI go. So you've seen a 5% drop since the election was won by President Trump.

But now we're seeing people reconfigure trying to understand what OPEC's outlook is for demand, is obviously weak coming out of China and India, but I think we're in an oversold condition. I think the technicals will bring us back higher. And I think this has just been overdone. It's been priced in. And at the end of the day, Dom, I don't know if all the oil executives agree as much as President Trump, nor will we see implementation of drill baby drill happen January 21st. All right. So if drill baby drill is going to happen, I mean, that could be bearish for crude, but you've got a way to play this kind of short-term move, maybe for some profits. How exactly would you trade it in? What strategy are you using?

Well, Dom, I want to use crude oil futures, the CME group, it allows you to hedge any exposure you may have in energy names, but also I think it's going to move higher. So despite the fact that we're seeing U.S. oil production at 13.5 million barrels per day record production, I want to be a buyer at 6850. That's utilizing the December futures contract, Dom. And I'm looking for a $2 move higher, up to $70.50. But I'm being mindful if we continue to see any follow-through on the risk off we're seeing in equities that could damage this trade.

But I'm using this stop because we always want to use stops when trading futures. Just a dollar loader at $67.50. So I'm risking $1,000 down to make $2,000. All right. Jeff Kilberg with the trade on using micro crude futures. Thank you very much. We'll see you soon, sir. See you, bud.

I take his point about the fundamentals, but I still think about the dollar as a headwind. For sure. And if the dollar keeps going higher and if interest rates keep pulling the dollar higher, you could just see that gold trade, the crude oil trade, metals in general, everything commodity based in dollars. Yeah. Could just take a hit on it. From that point of view, it's amazing Bitcoin is done as well as it has. It's not the dollar. Yeah, right, exactly. It's the anti-dollar. As we had to, that's right, as we had to break, CNBC is extending the deadline to nominate a leader for the 2025 CNBC changemakers list,

which recognizes women transforming business and philanthropy to nominate you have until November 18th, use that QR code, and join the CNBC Financial Advisor Summit on December 10th, bringing together industry experts to discuss market strategies, emerging risks and more. You can scan that FAQR code or visit cnbc.com slash f a. And Power Lunch is back with some key stock moves of the day right after this. Welcome back to Power Lunch. I'm Kate Rogers with your CNBC News Update. Israel attacked the Syrian capital today, killing at least 15 people. The Israeli military says its forces were targeting military sites and the headquarters of the Islamic Jihad group, which it says is a proxy for Iran. Israel has carried out attacks in Syria. for years, but only recently started publicly taking responsibility.

The attorneys defending Rudy Giuliani in his defamation case against two former Georgia election workers asked a judge for permission to drop him as a client. The exact reason for the request was redacted in the court filing, but it suggested he was being an unreasonably difficult client. And the Tampa Bay Rays will play their 2025 home games at the Yankees Florida Spring Training ballpark. Hurricane Milton shredded the roof of the race domed tropicatessen. in St. Pete last month. Repairs have been estimated at nearly $56 million to have it ready for

the 2026 season. The backup ballpark has roughly 11,000 seats. That's about 30,000 less than Tropicana Field. Kelly, back over to you. All right. Thank you very much. Kate Rogers. The major averages are trading lower across the board as the post-election rally is coming to a bit of a halt. But our next guest says the elimination of election uncertainty and some of the president-elects policies should really be bullish. David Spica is here. He's chief market strategist at Turtle Creek wealth advisors. David, welcome. And there's the argument about whether the policies are bullish and then the argument about whether they're priced in. So tackle both aspects of that. Well, Kelly, I think we did see some pricing in when the market

jumped 5% right after the election. But let's go back to 2016 when Trump had similar policies that he was planning to implement and the market continued to move higher. So we like cyclicals. We like U.S.-based companies. And we think obviously not all the policies that President, elect is proposing we'll get implemented. But if we get lower taxes and we get a better regulatory environment, that's going to be favorable for U.S. companies and it will drive earnings growth higher. And we think the uncertainty that's moved away as the election has been completed will increase capital spending, also good for earnings growth. There's no corporate tax reform this time around. And S&P multiples are at 22 versus 16. Does that cap the potential upside? Well, I think valuation

is something we need to keep an eye on. And so one of the things we're really focused on, Kelly, is we don't want to see an aggressive Fed rate cutting cycle next year. We want to see earnings growth expand, and that's going to require economic growth, capital spending, and animal spirits. And so the key today is that the market is looking for 15% corporate earnings growth in 2025. You're not going to get that if the Fed is cutting 100 or 150 basis points. The two just don't go together.

So we would like to see continued strong economic growth, higher earnings growth than what we saw this year, and then ultimately over time, the Fed can reduce the Fed funds rate to the neutral right, which is probably 3 and a 3.5%. But we don't want to see that that quickly next year. We think earnings need to go up in the market to be able to justify current multiples. No, I think that that would make everyone feel better. And that's, again, the corporate tax issue, you know, without that catalyst. But again, there's some positive signs kind of broadly speaking. You're favoring cyclical. and companies with high U.S. revenue exposure. I think the revenue exposure overall is, what, 40% for the S&P 500? Maybe that's too high. But Martin Marietta, Visa, into it, 40% overseas, I mean. So that's the way that you're thinking about this. Well, the market is expecting significant tariffs,

which will have an impact on companies that generate a lot of revenues overseas. So whether or not the tariffs occur like they're expected to, obviously those things are being priced in. So a company like Martin Marietta, which has virtually all of its revenues in the U.S., we think, will benefit. It'll benefit from increased development and construction as they produce aggregate and concrete. And it's got a 15 to 20 percent earnings growth profile. Into it's another company, virtually 100 percent of their revenues here in the U.S. They provide AI-driven tools for small and mid-market businesses and consumers, things like turbotax and credit karma.

And we think that the Trump policies and these animal spirits are going to increase activity, in the small and mid-market business arena. And we also think consumer spending will remain robust. And that's one of the reasons we like Visa today. Hey, David, it's Dom. How much are those animal spirits and how much of those Trump policies, how many of those Trump policies are predicated or need fuel from the Fed cutting interest rates? Is that going to be an important part of the discussion going forward?

Does this market, in order to be constructive, need the Fed to keep cutting rates? Not when you, and that's a great question, Dom, but not when you talk. talking about tax cuts and deregulation. Now, clearly, President Trump will want to see lower interest rates. However, we believe that the best scenario for the market is to have normalized interest rates, and we'll get there over time, not right away, but most importantly, broad economic growth that will drive earnings growth. And obviously, we need that both in the U.S. and overseas. But at the end of the day, the optimism that clearly is coming out of this election is something that needs to continue.

When you look at what gold's doing falling, the dollars rallying, these are all signs that people believe that at the very least, some degree of policies will get implemented, that will be positive for the U.S. economy and for earnings growth. And quite honestly, we'd much rather see that than an economy that's slowing enough that the Fed has the impetus to cut rates rapidly. That's not what we want to see.

We're going to get back to fundamentals driving the market. All right. David Speaker, Turtle Creek. Thank you very much. We'll see you soon, sir. All right, bond yields are falling today following the PPI report and comments from Federal Reserve officials. Let's get out to Rick Santelli in Chicago for more on the bond market action in today's bond report, Rick. Yeah, Dom, it was a rather confusing session. Still is. Let's take a look at the core PPI.

Just like yesterday, it was warmer. And this is X food, energy, and trade. It came in at 3.5%. Last month, it was 3.2 revised at 3.3.5%. Last month, it was 3.2, revised the 3. but obviously 3.5 is higher. As a matter of fact, every metric, every metric is higher than it was in September. And every metric but one is higher than expectations. What was equal was the headline up two tens. But yet the response in the marketplace was, well, unfazed for the most part. And the real question investors need to ask is why. And I think that's a pretty easy answer.

You had part of it. Fed officials. Fed officials seem very comfortable. with the progress of inflation, not necessarily the fact that it isn't where it needs to be. And the market and investors, they are only too willing to buy into the Fed's model and Fed speak. In terms of easing at these levels, even though inflation has been much stickier, as evident by the last two days' worth of numbers. Now, if you look at an intraday chart of two-year yields completely different than yesterday, Dom,

What we're seeing is short rates like a two-year note have reversed after lots of volatility are now higher on the session, whereas the 10-year, which yesterday reversed higher and steepen the curve is flattening the curve. And even though it's just recently turned up, it hasn't done it to the extent of twos. It's still down about four basis points from yesterday's closed. Tews to tens have given back a portion, but not all of the steepening from yesterday. ultimately, I think that the long rates are going to remain a little warmer, but I wouldn't look for investors to kick the tires too much.

They're buying in, and I wouldn't be shocked to see the equities have some type of reversal to the green going into the weekend. Back to you. Rick, we're going to hear from Powell in about 15 minutes. What would you kind of tell investors to watch for? That he's going to feel comfortable with inflation. I think that's the issue, and I think that the progress made and the progress made and the progress they see in the future brings them to a point in inflation where they continue to say

that it's under control. I'm not suggesting that the data necessarily suggests the same thing, but it isn't about the data. It's about the Fed. All right. Rick Santelli, thank you very much. We'll see you soon, sir. As we head out to break here, check out shares of advanced auto parts, AAP, higher after announcing a turnaround plan, which includes closing more than 700 of its retail stores. It comes as the company posted a surprise loss of 10 cents per share for the third quarter. We're going to highlight some more of the movers of the day when Power Lunch returns after this break. Welcome back to Power Lunch. Time for a quick power check. Look at shares of Super Micro, down 11% right now.

Extending losses from yesterday after the company said it would delay the filing of its quarterly report for the period ended September 30th. And of course, there's still Kelly in search of an auditor at this point. And the shares again, now they're at 18. Amazon, meanwhile, announcing Prime members can access new upfront pricing to treat five common conditions like men's hair loss. Hamzenhurst stock dropping 25% as a result. All right. And Norfolk's southern and activist investor Ankara is striking a deal to avert a proxy fight at the railroad company. Norfolk's board will expand from 13 members to 14 members as part of this particular settlement.

Norfolk Southern shares down 1.5% right now. And how about Burberry, which is trying to boost its waning sales by refocusing on heritage, designs and statement pieces under a sweeping revamp plan. The shares are up 20%, but have been really hard hit. They're trading at around $10. All right. And then Piper Sandler analysts are upgrading Campbell's Soup to an overweight from neutral. The firm is bullish on the Rayos brand that they just acquired for sauces, as well as improving U.S. measured retail sales and volume trends as well. Those shares up 1 and a quarter percent, and that is Kelly, your power check. Love Rayos. Use it all the time. Speaking of Gainers, shares of tapestry.

are the biggest one on the S&P 500 today. After scrapping plans to merge with rival luxury retailer Capri, of course there was DOJ pushback on that. We will get the trade on it and others in three-stack lunch right after the break. Welcome back to Power Lunch. Shares of win resorts among the biggest gainers in the S&P 500 today, jumping as billionaire investor Tilman Furtita disclosed a upst stake in the company. He's already had a stake there before.

Contessa Brewer has more on the story, Contessa. Well, Don, billionaire, Tillman for Tita increased his stake in when resorts to 9.9%. That makes him the largest shareholder in the company replacing co-founder Elaine Wynn. Now, notably, the SEC filing indicates a passive position versus an activist one, but why? And let me just say, I did ask for Tita for an interview. He declined. So let's game this out.

Could it be that the stock is on sale? I mean, that's what Carl Icon said earlier this year about his renewed stake in Caesars. Wins shares are sitting just about at their 50-day and 200-day moving average. In 2022, for Tita, who owns the Golden Nugget Casinos, took a little more than 6% stake in Wynn. The share price has grown about 60% since then, but is lagging the S&P. And look at the stock over 20 years. It's just kind of like, meh. I've heard from investors and industry insiders who gripe that Wynn should focus on growth in the U.S.

But, of course, when I interviewed CEO Craig Billings in October, he kept the spotlight on what he sees as the big opportunity to open up gaming in the Middle East with the new resort that Wynn is developing in the UAE. The stock today has bounced more than 10%. Wow. Contessa, thanks very much, Contessa Brewer. And let's turn to three-stock lunch now, trading some of today's other big movers. Here with our trades is Matt Maly, the chief market strategist at Miller Tayback. Matt, it's great to see you.

Actually, let's start with the stock that we were just mentioning. Win Resorts. What do you do with it here? And what are your thoughts? Well, I mean, you know, do you want to go against Timor Fertilla? I mean, just because he's buying it doesn't mean it's going to necessarily go up. But, boy, betting against him has not been a good one on the past. I mean, the stock is, you know, it's not crazy cheap, but at 20 times earnings, I mean,

every time it's traded below 20 times earnings the last three or four years, it has rallied back in a major way. And, you know, we're talking about what's going on with their expansions in the UAE. But I also like the situation in China. And you might be thinking, what are you crazy? I mean, China's, you know, they're slowing down, everything. Well, I'm telling you, I don't think. You know, they've said they're going to use a bazooka blast. They haven't done it yet.

That's disappointed a lot of people. It may not help them on a long term, on an intermediate term basis the next year or so. I think they will go ahead with that bazook blast. That will help their stock market and their economy. And I think Macau things will do much better there. And the fact that it's, you know, it's bouncing off an oversold condition, which is good. So I think it still has a lot more room to run. So I like this play.

All right, Macauza key there for sure. Next up there, Matt, is CNH industrial hire after Greenlight Capitals. David Einhorn disclosed he's building a medium-sized position in the firm. He made that disclosure at CNBC's delivering alpha event just yesterday. Einhorn called the shares cheap and said that the ag equipment sector is now ending a down cycle. So is CNH with its 6% gain one you want to buy into? I do. I mean, it's very cheap.

As Mr. Einhorn had said, at 9%, I'm sorry. nine times earnings. It also sports a very nice 4.3% yield. So even if it's a little bit early, it pays you to wait. But I mean, the stock, I mean, it's down 14%. It's just since the springtime, it's oversold on a technical basis. And so are things, some of the ag prices like especially wheat, which is down of 30% in the last couple of months. So I think this was another good play. It may take a little while for it to play out, but we don't want to have everything in Bitcoin in the Max 7 stocks. All right. Well, let's go to a totally different kind of tack here, which is tapestry.

The biggest gainer on the S&P today after they agreed to call off their planned merger with rival Capri. Now, the FTC successfully sued to block the potential mega deal, but investors might have thought they would revive it under a new administration. Do you like the stock? You know, I do like the stock on a longer term basis, but it's had this huge run. It's up 60% just since August. It's very overbought on a technical basis, so I think it's something not to chase. but rather to look for a pullback over the next couple of weeks to buy it. All right, Matt, thank you very much.

We appreciate your time. Matt Maley and Power Lunch will be right back. All right, welcome back. So everyone is noticing the recent rise, of course, in Bitcoin prices. Miami Dolphins wide receiver, Odell Beckham Jr., OBJ, tweeting, so who said taking my RAM salary in Bitcoin was dumb again? Now, this is part of a deal with Square's cash app. Beckham took his $750,000 base salary in Bitcoin.

That was in November of 2021 when Bitcoin was around $64,000. If he left it all, assuming in Bitcoin, he's earned about $300,000 in appreciation since that point. So remember when people who were doing real estate transactions and everything else? OBJ may be a little prescient. But there's a lot of jokes how people who thought they were, you know, doing great a couple years ago, and then they were, and now they are again, and maybe it will last this time, and maybe it won't. I don't know about my salary and Bitcoin. Anyway, thanks very much for watching Power Lunch.