Power Lunch - Power Lunch 4/19/24

Episode Date: April 19, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi, welcome to Power Lunch, everybody. Alongside Sima Modi, I'm Tyler Matheson. Glad you could join us for a Friday. Coming up, Netflix, Tumbling after earnings. Does that make now a good time to buy that stock? We've got three traders with three different perspectives breaking down Netflix and giving us their own stocks to watch, heading into next week's flood of earnings reports. And the 2024 CNBC's stock draft is less than a week away. Coming up, we'll introduce this year's participants and draw the draft order. Is there a Caitlin Clark or Caleb Williams, it can't miss prospect in this group. And now, let's take a look at the markets here with two hours left in trade. Stocks are trying to hold on to some gains, but it's not happening with the Dow in positive territory, S&P 500 lower by 6 tenths of 1%. And the NASDAQ, the underperformer, down over 1% as investors digest the latest earnings from Netflix

and also Nvidia, a lot of the Mag 7 stocks underperform on this Friday. Looking at the weekly numbers, the Dow now higher for the week in the S&P, down for the third straight week, having its worst week since late October. The NASDAQ down more than 4 percent. Worst week since late 2020, Tyler. All right, oil prices easing now after briefly spiking earlier in the session after reports of that attack in Iran, presumably by Israel. Our next guest says the geopolitical backdrop for investing is foggy with uncertainties. And while he remains optimistic, he also says the S&P 500 is due for a 5 to 10 percent correction. Let's bring in our good friend Ed Yardini, President of Yardini Research.

Ed Good, as always to see you. Thank you. Why don't we start with the geopolitical issues? They remain there, though. Do you take some comfort from the fact that what appears to have happened overnight was a very measured retaliation for Iran's strikes on Israel last weekend? Well, I think since the start of the Middle East War in October 7th when Hamas attacked Israel, there's been increasing concerns that push will come to shove between Israel and Iran,

and it certainly did when Iran attacked Israel with that barrage of aerial missiles and drones. And the Israelis have pushed back with their retaliation, but it looks as though both of them are signaling to one another that they really don't want to get into a major war at this time. So I think Israel is going to have to continue to deal with Iranians. Iran's proxies in Lebanon and in Gaza. And for now, at least, it's not going to be a direct war with Iran. But it's the Fogar War.

You never know. You never know what could happen. Let me turn, if I might, and as we always must, to the Fed. Should we just quit talking about the Fed for a little while? Because it seems like they're going to sort of take the rest of the year off. Well, that's exactly what I wrote yesterday in my so-called. quick takes. I said, you know what? I had a picture of a hammock. And I said, you know, maybe the FMC can do exactly what you said. Just take the rest of the year off, chill out, enjoy their vacation,

and come back after the election. After the election, there's a couple of days later, there's an FOMC meeting. They could come back for that. It does feel like we commentators have milked this weed past the point that it's producing anything. I mean, it appears that way, at least. I mean, at the same time as markets, I guess, tried to understand, Ed, what the Fed will do next? What do you make of the internal selloff we're seeing in certain sectors like industrials and tech? I was just looking at a name like Nvidia, which is now down about 17% from its recent high. Yeah. Well, I've been thinking that it's time for a rest here, at least to pause in the market.

We've had an extraordinary move to the upside since October 27th of last year. year was almost a vertical assent. And the leadership clearly was technology, but it did start to broaden out. I think now the market has been weighed down by the realization that the Fed may actually not ease at all this year. Remember, at the beginning of the year, we all remember that the markets were thinking six to seven rate cuts. I was thinking two to three. Now I think there'll be no rate cuts at all, though I guess it's possible there might be two in November or December. Things can change on a diamond, this crazy world we live in now. But all in all, I think that some of the winners are just, we're going to see some profit

taking. And I think there's going to be a more defensive posture. Maybe some people are still going to go into energy as a shock absorber against more shocks out of the Middle East. But I think the market may just tread water here for a while. We could have a 5 to 10% correction. I'm not quite sure it'll be as bad as 10%. but we're getting close to 5% correction.

We're through the 50-day moving average. If we get down to the 200-day moving average, that would, in fact, be a 10% correction. And is that on this idea that Treasury yields will continue to move higher, maybe even break above 5% that psychological level for the 10-year? Well, I think at this point,

the markets have pretty well discounted, that there won't be 6 to 7 rate cuts. Maybe there'll be one, maybe two. But so to the extent that the market still have to give up on what I think is exaggerated expectations for more rate cuts anytime soon. We could see the 10-year at 5%. And whether just seeing that number spooks the market lower, we may very well find out. But I don't really think we're going to go above 5% on the 10-year.

I think what keeps me optimistic is I think there's way too much pessimism about the inflation numbers of the first three months of this year. The CPI numbers everybody interpreted is hotter than expected. But, you know, if you take out shelter, I always like to take out what doesn't support my story. If you take out shelter, if you take out, if you take out shelter, the core and headline CPI inflation rates around two and a half percent. So that's pretty close to what the Fed wants. And we know that shelter inflation is coming down. I know people have to live somewhere. Yeah. It's funny. When you take out all the things, I have to spend money on.

Inflation is pretty low. Yeah, exactly. It's always the stuff that hurts me. It's the shelter. It's the taxes. It's the gas. The whole thing of food. Got to eat, man.

Ed Yardinney. Thanks. Appreciate it. Thank you. Tim Cook, wrapping up his tour of Southeast Asia, Vietnam, and Indonesia, Singapore, all on his itinerary. But what does it mean for the company's strategy in that region? Steve Kovac here with that story.

Hi, Steve. Tim Cook ate pretty well, too, I think. Yeah, I'm sure he did. So, yeah, Tim Cook, meeting with world leaders out there in South Southeast Asia and hinting at new investments for Apple in the region. Trip is also happening, of course, as Apple looks for new areas of growth, following those steep sales drops in China as much as 13% last quarter, and having to diversify its supply chain out of China.

Stops included on the tour, Vietnam, Indonesia, and Singapore, and Cook met with the leaders of each of those countries. Those are also the countries we've heard Cook point to as areas of record sales growth, but not growing enough to make up for the declines in China. of course. In Indonesia, Cook said he would, quote, look at adding Apple manufacturing there. There's nothing there yet. In Vietnam, a manufacturing hub for Apple, he met with the prime minister and talked about increasing investment in existing manufacturing, and in Singapore announced a $250 million plan to expand Apple's offices there. Now, a year ago, Tim Cook

made a similar visit to India, and since then, India has reportedly rapidly increased manufacturers of iPhones in the country since then. But ahead, head of Apple's earnings in less than two weeks. It's important to know these are long-term initiatives. Apple is still heavily rely on China for sales and the vast majority of its supply chain guys. What would it be doing in Indonesia? Increasing manufacturing. Manufacturing. It would be manufacturing. That was specifically what he's asked. Would you, and the president of Indonesia, in fact, ask them, please bring your factories here and start building. And what about Singapore? Same manufacturing? No manufacturing. It's mostly knowledge workers and things like that. They do have a campus there.

and they're adding to that campus, presumably, to hire more people. Different. All right. Steve, thank you very much. Steve, Steve, sticking with the region, the world's biggest election is underway in India, where Prime Minister Narendra Modi is up for re-election. Nearly a billion people will go to the polls over the next six weeks. Now, India's growth story hinges on continued economic reforms. Experts say Modi's promise of strong economic growth at a time when China's story continues to unravel, has, in a way, shielded the Indian leader from criticism of his handling.

of human rights issues and the government's continued purchase of Russian and Iranian oil. Investors meantime continue to pour in the MSDI India ETF up nearly 30% over the past year versus the emerging markets ETF up just about 1%. There's double lines. Jeffrey Gunlock who in February said India is the number one recommendation for his clients in 2024. Let's discuss this and more with Detania Kandari, portfolio manager, global emerging markets at Morgan Stanley Investment Management with assets under management of $1.5 trillion. Dithynia, it's nice to have you on.

Clearly, a lot of excitement around this market, but how could this election present some level of risk for your bullish stance here? Yeah, I think, you know, I think there'll be three things that I'm, you know, looking forward to with the government and if the consensus holds on the BJP victory. One is, you know, fiscal consolidation path, which has been very interesting and key,

which helps the government to spend on infrastructure, therefore that spending to remain, and just prioritizing CAPEX. So I think this should be what we could expect from the policy side. You know, the risks, again, can be an oil price hike because India's current account, fiscal accounts, get impacted negatively.

Anything above $9,500 in oil prices, impact the macro stability because at this point, inflation's under control, current account deficits are much, much lower than the past. The fiscal trajectory is on a good trend and even real rates are pretty decent at 2% positive real rates. So the stable macro, along with consistent reforms is needed. Anything that goes against some of the macro indicators related to the oil price can be a negative at the margin. If you look at how investors are allocating their money, U.S. versus international,

it still seems like U.S. fund managers are a little reluctant to put more money into the emerging world, even though you have these sort of secular growth stories, whether it's India, Taiwan, Vietnam, why do you think that is, or is that going to change soon? I think that, you know, the U.S. market and U.S. exceptionalism has led to flows. There's a lot of the home bias. So there's also academic work done on this. And unfortunately, when emerging markets actually start performing, that's when money really starts coming in, even in the past in the 2000 run. I do think that, you know, they, as I mentioned, their fiscal, their debt situation, again, it's a heterogeneous asset class. So there are differences and different idiosyncratic stories.

But overall, the growth differentials and the interest rate differentials, which have favored the U.S. so far, which have helped the U.S. US equities and kept, you know, the emerging market as an asset class lagging, I think that that's kind of peaking because a lot of the markets are beginning to see the growth upside because they're cutting rates. Also interest rate differentials with U.S. rates where they are, the differential with the rest of the emerging market seem to be at peak. So I think that there will be some interest as the performance improves over time, especially at this point I see, I feel like there's lots of opportunity with the geopolitical drawdown that's happening globally. As you look around the global markets, and I guess I would call Europe not an emerging market,

and I know emerging markets is a specialty of yours, but if you were to take me on a cook's tour around the world and say, okay, here's where I'd put most of my chips. I'd put a little less chips here in this part of the world, a little more here. How would you sliver it up? Would it be Asia X China? Would it be China X Asia? Would it be Japan, Europe, what? Yeah, think about this more, you know, not regionally,

but individual pockets of the world with respect to country and also thematic decisions, right? So I think, A, within the U.S., I definitely broadened just from a passive perspective, the equal cap versus the S&P index. Outside, I think there's a lot of opportunity emerging in pockets of Europe where the cheap euro is actually going to provide a good trigger to earnings because nearly 50 to 60 percent of the European earnings, depending on the market, come from outside Europe. So the domestic economy is less relevant than the global economy.

And we are seeing a pickup in global industrial production, global trade. So lots of European pockets in consumer brands, in luxury, even in industrials that look great. Japan, I would be positioned for companies that benefit from an appreciating currency given the way that yen has depreciated so far. We have to kind of be discerning on how to be, you know, how do we slice and dice that market? And in the emerging world, you know, pockets like India, Indonesia, Mexico with the near-shoring, some pockets of GCC where there's a lot of diversification out of the oil into the non-oil economies and even some frontier markets down the cap curve are looking interesting with huge economic adjustments and recent

IMF packages. So lots of opportunities have opened up. Attention's been on the U.S. So far. And I'm wondering if on that no valuation, does that change your thesis? Because a lot of these markets are trading at a higher, at a premium to the U.S. Some of them not really like Europe, et cetera, even pockets of Japan and some of the other markets are not at a premium.

And even in countries like India where valuations are at a premium, the earnings have kept up. So even the relative earnings have kept up with those high valuations. So I'd be worried if that rolls over. But I wouldn't say, you know, U.S. does look like the most expensive. European small cap, for example, is at like trend lows. And, you know, if rates come down, these are floating rate companies. and they could actually, you know, get a trigger in terms of their earnings, especially in Europe. Makes sense.

Dutania, thanks for lending your expertise as Dutania Kandari from Morgan Stanley. Up next, the halving is happening. A long-awaited event in the Bitcoin space taking place over the weekend, those details after the break. Plus, the TikTok ban being tucked into a house foreign aid package. We've got those details next on Power Lunch. Bitcoin bouncing back a bit today after getting as low as $60,000 on. Wednesday. This comes before an event known as the halving. Kate Rooney joins us from San Francisco with what to expect. I mean, I know this event doesn't happen that often, Kate. Yes, Ema,

this is a big event. It happens every four years, and Bitcoin has only really been around since 2009. So it's the fourth time a halving has happened. It's this pre-programmed code. It's in Bitcoin's code, and it's a way to slow future production of Bitcoin by changing what are known as the block reward. So essentially new Bitcoin is created by the... These miners, you can see those high-powered computers. Companies behind those run these in pretty much data centers. They are validating transactions. That's what's happening on the back end. But for doing that, they receive new Bitcoin as a reward. Right now, they get six Bitcoin. It's going to fall in half. They're going to get three Bitcoin, hence the name halving. So this

controls Bitcoin's scarcity, which is a big deal. It's a part of the appeal and why some call it a deflationary asset. It also ensures that over the long run, the supply of Bitcoin is capped at 21 million. The big question, though, for investors, what's going to be the price impact? Because this is so widely expected, the consensus based on investors that I'm talking to say that in the near term it is likely priced in. Bitcoin's up, see it up slightly today. But it's doubled in the last year or so it's up about 50% year to date. So it does appear to be largely priced in. But if you look at the previous three events like this, they did also mark the beginning of these longer bull runs. This time, though, is different. Glass Note analyst.

say that the new ETF demand, you've seen this flood of ETFs get approved in the beginning of this year, that might have more influence than this halving because of those ETFs, there's more institutional demand as well. So some analysts out there are saying that that ETF dynamic, it could actually outweigh any of the upside here from the having. Others think the supply reduction is limited. I was talking to one investor earlier who says it's going to reduce the whole supply right now by less than 1%. This person at least did not see it as a price catalyst in the near term. One other impact investors are watching closely is those publicly traded Bitcoin miners that I mentioned by reducing the output of the commodity they're producing Bitcoin in this case. It does threaten their revenue, which is why you've seen pressure on names like Riot Blockchain and Marathon lately, guys. So what's happening here is not a reduction by one half in the amount of Bitcoin outstanding. It is a reduction by one half in the amount of new Bitcoin that gets added to supply thereby.

lengthening the time until Bitcoin gets to that 21 million? 21 million, yep. Right? Have I got it right? You nailed it. That's exactly it, Tyler. So I think a lot of people hear halving, yeah, you crashed in. Great.

But you hear halving and you think, oh, right, the supply is reducing. That's not the case. Like you said, it's just sort of lengthening the timeline until Bitcoin can get to that 21 million cap. But when you talk about this deflationary asset, asset. You'd think that the code is written so that it would reduce the supply. It just takes a lot longer. And so there's still decades, some estimates of, you know, at least 100 years until they reached that cap because of this. But I think a lot of people don't know that a bit about

Bitcoin. It's kind of an interesting dynamic, very unique asset in that case, that it really is just computer code. It feels like something out of the book of Revelation or something like that. The great having time. Big moment. The parting of the Bitcoin. Right. Yeah, exactly. Thanks, Kate. Further ahead, the number of family offices has tripled since the pandemic, managing trillions of dollars for the world's wealthiest families. We're going to take a look at that growing trend. Plus, super micro computer falling sharply today. The details on super micro after this.

Some big moves in chip stocks today. Invidia down 6%, AMD down 4, but that big number is super micro, down 20%, as you see there. Let's get to Christina. Ports and Evelas at the NASDAQ for a quick market flash. Christina. Tyler, I guess a lot of investors are asking, what is Super Microhiding? The Silicon Valley-based server assembler seen as an AI darling, which shares up almost what, 600 percent.

You can see that under $575 over the last year, even with today's 20 percent plunge. But this morning, Super Micro announced its earnings release for April 30th. Sounds normal, but didn't pre-announce better than expected earnings. And now shares are on pace to break a five-month wind streak. According to Wells Fargo, seven out of the last eight times super micro announced an upcoming earnings report, they also said they would be good earnings. In Wells' view, this should be considered, quote, a negative, important AI data. So there is, though, a glimmer of hope that one time they didn't pre-announce,

the earnings actually came out in line with prior guidance, not below, so maybe there's a chance this would be the case on April 30th. Expectations, though, are high for this name. It's constantly talked about as an AI darling, but that's also why you're seeing competitors like HPE and Dell falling in sympathy with this name today. I'm curious what your thoughts are on besides Super Micro, the move we're seeing in Nvidia, Christina, is the outlook of this company. How much is hinged on its new Blackwell trip,

which I remember you're reporting it's supposed to come out maybe end of this year or early next year, which is the power efficient chip, which perhaps could help with the scarcity of power issue right now? They claim that it could because it's extremely, it's way more power fission than the previous iterations, but there was a Wells Fargo's note from two days ago that said, even with every single Blackwell iteration and every other Intel iteration, it's still not enough to overcome the massive increase in power. For the actual earnings report, there's still a lot of loyalty and strength behind this name for Nvidia specifically, and that's

because they are the AI play. However, the sector as a whole, the SOX, the SMH have actually been falling just over the last month when compared to the NASDAQ and the SMP 500. Three main reasons for why we're seeing the chip sector down. You're seeing it down in tandem with the 10-year treasury climbing higher, so cost of capital, a concern. The second major point two is the ASML outlook and the Taiwan Semi outlook we got yesterday. Kind of disappointing for every non-AI business segment.

So you're seeing that trickle over to the entire sector. And then it's overbought. A lot of people got into this trade. There's a lot of momentum traders that don't follow the sector as much. And so they're pulling out on that momentum downwards. Yeah, we'll see what earnings next week from some of the big tech names tell us about chip demand, supply.

Christina, thank you for that. Very helpful. Thanks. Let's now get over to Amon Javers for a CNBC News Update. Hi, Amon. Hey there, Seema. The full jury for former President Trump's hush money trial is now set. Six alternates were chosen today after the 12 main jurors were seated on Thursday.

The jury consists of seven men and five women. Opening statements could begin as early as Monday. Now, just as the full jury was impaneled, a horrifying scene outside the courthouse. as a man apparently lit himself on fire inside the designated protest area. According to the NYPD, the injured man was taken to the hospital. His condition is still unknown. And as lawmakers debate Ukraine aid on Capitol Hill, Ukrainian president Volodymyr Zelensky told NATO members today his forces need seven Patriot or other high-end missile systems

to counter Russian airstrikes. In a fiery speech, Zelensky said the current level of foreign aid is, quote, very limited. NATO Secretary General Jens Stoltenberg followed the speech by pressing allies to dig deep into their inventories to provide the weapon systems. Back over to you. All right, thank you very much, Aiman. Netflix down big after some weaker than expected guidance, breaking a winning streak for that streaming giant. So what should investors do? We'll get you an answer using all the tools of the trade. That's next. Welcome back, shares of Netflix down around 8% today, despite posting top and bottom line beats and a jump in subscribers.

The company pivoting its focus, and we want to dig into that stock with every tool at our disposal, fundamentals, technical, options. So we gathered a panel of experts on fundamentals. On fundamentals. It's Boris Schlossberg, a BK asset manager on technicals. Katie Stockton of Fair Lead Strategies and on options. It's Kevin Kelly of Kelly Intelligence. Seema?

Let's start with the fundamentals. And Boris, how does Netflix look to you here? Clearly, the stock, a loser today. Yeah, I think it looks troubled at this point because the key thing with Netflix, of course, is they did miss their estimates just a little bit. That's not the bad story. The story here is I think the model is getting tired. And I think Wall Street started to see it for a couple of reasons.

One, saturation of consumers. Two, the increase in prices is clearly having a little bit of a drag. And three, no real blockbuster content. And they're even guiding to the point that they're going to increase their revenue, not from additional subscribers, but from additional revenue per member, partly through ads and partly through content sharing, which is frankly, I don't know going to be how popular that's going to be. So essentially, what you have is an untested model.

Before, they used to be an all-you-can-eat buffet. Now they're becoming a very selective a la-card pricing model, and it's really untested as to whether that's going to be possible going forward. Additionally to that, they're really seeing, you know, while the rest of the streaming is not really a competition to them, they're definitely seeing a lot of competition from free TV, namely YouTube and also, of course, TikTok. So going forward, I think it's a big question whether the company is going to trade as much as a gross stock used to be. If it simply starts to trade like a media company on pure free cash flow basis, there's a very serious chance you're going to see

price earnings compression. And that means the stock could trade as low as 500 or below. So to me, at this point, it's a pause or a sell. All right, on the fundamental take, a bit of a soggy outlook. Let's go to the technicals. Katie, how does the chart look right now? Well, first, I would say it's a long-term uptrend. Netflix has been trending higher since 2022, and it still does have the support of our monthly trend following gauges. That said, of course, today we have a gap down below the 50-day moving average. That is a setback.

At the same time, we have an intermediate term overbought downturn. That means one of our indicators has reversed lower supporting downside follow-through in the next couple of months. So we would look for this corrective phase to then persist. However, usually after a gap down like this, you'll get a little bit of a rebound. So we're not advocating to our clients that they sell into weakness, rather take that first oversaw bounce and perhaps reduce it. I really cannot rule out that 500 level that was just cited, and that's because there is some support down in that area. And yet that 500 level is still actually within the context of that long-term up So a corrective phase seems in store here over the intermediate term.

But to me, it's just a counter trend move within the broader bull market cycle for Netflix. Well, watch that 500 level. Looking at the option bets, Kevin, what do you see there? Yeah, what's surprising today is given the significant move to the downside, you're not seeing overly bearish activity. You're actually seeing more calls than puts being traded to 1.2 times. And a lot of those calls are actually near-dated and up through the 590 strikes. So that's pretty interesting.

The other aspect, too, is you're not seeing ball expand. So post-earnings, ball's actually collapsed. So you're not seeing a lot of uncertainty around the name. Now, the stock has moved a lot this year. So this might just be the options market saying, hey, this could be an opportunity to take advantage of the dip in the price today. All righty. Thank you very much, Kevin. We're going to now go sort of the bonus round here, Boris.

We want to get some trades ahead of next week's earnings based on your investment schools of thought. So back we go to the fundamentals. Do you have a stock, Boris, that catches your eye from a fundamental standpoint as we head into earnings next week? Yeah, I absolutely love meta. I mean, meta is, I think, the shining star amongst the techs right now. It has a chance to grow revenue at nearly 20% while still trading essentially at around 20%. 25 PE. It's using AI very well to serve to serve both the advertisers and the customers right now quite well. Its engagement is up, ironically enough. I was shocked to find out that,

for example, Meta saw its engagement up 3 percent, YouTube 1 percent, and TikTok actually saw its engagement down for it 4 percent. So that's very positive for them. And ultimately, you know, there's sort of, I think, an embedded call option in meta in a sense that maybe TikTok gets banned. You know, it's not it's not a better I'm making. But, But it's certainly a possibility and they would be the absolutely prime beneficiary of that because IG would get all of that flow. So I really love the stock. It's amazing the recovery story they've had and they probably have far more to go. All right.

So you like Meda. Katie, from your vantage point, what name has the best looking chart going into earnings? Well, I don't know about best looking, but Alphabet certainly stands out in our work from a longer term perspective. The stock is a long recommendation of ours right now. And it has broken out to new highs, cleared some major resistance around 151. And that breakout bodes well for upside following through for the balance of the year. In near term, we do have an overbought condition, but we don't have any cell signals, meaning countertrend indications from alphabet ahead of its earnings report.

You know, it's hard to get an edge right ahead of the earnings. Of course, it does create volatility at times. But if that volatility is to the downside, much like Netflix, we would love. look for Alphabet or Google to ultimately discover support within the context of positive long-term momentum. And you like Alphabet better than Apple? Oh, yeah. So Apple, as you can imagine, has a bit of a double top formation below some key support right now. It's been a laggard within the mega-cap complex. The one good thing, if Apple were to avoid confirmation of its breach of support, which is roughly 169 to 170, that would be a bullish shakeout on the,

the chart. So that's something that will be scrutinizing in Apple over the next week or so. All right. Let's move on. Kevin, two tech plays here, fundamental and technical, but yours in the options area, is anything but a tech play? Or I guess maybe you could make it partly so. Yeah, it's old school tech. It's actually in the oil patch. And if you look at getting great exposure into earnings next week on a name that has a great chart, it's ExxonMobil. And so when you take a look at the stock, it's actually breaking out here. And so there's a great opportunity to go out to September. So you can get earnings exposure now, get another earnings exposure, and get the peak driving season. And what you can do is actually go out and sell the September $110 put by the September

$125 call. It's going to cost you about $2.30. And it's going to get you unlimited upside. You'd have to buy the stock at $110. But that's a good position to be in because Exxon Mobil is the biggest buyer of its stock itself. And we're actually seeing a floor for oil around the $79 price. That's where the U.S. actually wants to buy more oil to put it in their strategic petroleum reserve. And ExxonMobil on a fundamental basis is doing well because they're halfway through a plan to a mock $25 billion annually in free cash flow from operations through 2027. So they're most likely going to increase their dividend. But one of the things they like doing the best is buying their own stock. So we think heading into next week's earnings, ExxonMobil on a fundamental technical,

as well as with the options being priced so low, a 2.8% move next week for the options. Implied volatility is low. It's a great opportunity to get long Exxon mobile. All right. Kevin, thanks very much. For Schlaasberg, Katie Stockton, Kevin Kelly, thank you all, very much. A lot of stock picks there. Still ahead, an aid package predicament. A potential TikTok ban is wrapped up in House Speaker Johnson's multi-billion-dollar aid package. for Ukraine, Israel, and Taiwan, we are going to break down what's at stake ahead of the House vote. And remember, you can always hear us on our podcast. Be sure to follow and listen to Power Lunch on your favorite streaming service.

We will be right back. S&P 500 down 1%. I'm going to draw your attention to the markets here with the NASDAQ hitting a fresh intraday load down over 2% with names like Netflix, Apple, Amazon trading down. As investors confront this new reality of the Fed potentially prolonging its next rate, cut. But three major political issues colliding in Washington that could impact your money, aid for Ukraine, a potential TikTok ban, and the future of the House speaker. Emily Wilkins in D.C. to lay out the drama for us and a busy weekend ahead. Oh yeah, Seema, Congress is going

to be working this weekend, partly on that $95 billion package of aid for Ukraine in Israel. Now, it did clear a major hurdle today and now does appear set for passage tomorrow afternoon when the House gets back. The bill, of course, includes funding for Ukraine, for Israel, the Indo-Pacific region. And then there's also this fourth group of bills, national security focus, and that includes that measure that requires that TikTok either divest from its parent company bike dance or face a potential ban in the U.S. A group of hardline conservatives, they've rallied against this bill and additional funding for Ukraine. But Democrats threw Speaker Mike Johnson a rare lifeline on a procedural vote this morning. Johnson said that while the bill wasn't

perfect, it was an improvement from the Senate version. This is the best possible product that we can get under these circumstances to take care of these really important obligations. And so we look forward to the vote tomorrow. Democrats are expected to help pass the age package tomorrow and signs show that it is likely poised for passage in the Senate as well. However, Johnson's support of Ukraine in the face of GOP opposition still could cost him his job.

A third Republican, Congressman Paul Gosar, said today that he too will vote. to remove Johnson if that vote comes up. In a statement, he said that Republicans, quote, need a speaker who puts America first rather than bending to the reckless demands of the warmongers, neocons, and the military industrial complex, making billions from a costly and endless war half a world away. Now, Johnson has not blinked in the face of threats

to his speakership. He told reporters this week that he is a wartime speaker and that the events on the world stage are too important to play politics over. Guys? Emily, a couple of questions. Number one, does Speaker Johnson, is he confident, do observers believe that he has the votes to do what he wants to do? In one notable point a few months ago, particularly on the impeachment of Secretary Mayorkas, he miscounted. He thought he had the votes but didn't. Well, the great thing that we saw Tyler today, I mean, just in terms of the votes that are there, is that it was very clear that a majority of Republicans and a majority of Democrats, do want this package to pass. It was just a procedural vote, but you saw more than 300 lawmakers

go ahead and vote for that. That is a very, very, very comfortable margin. And the way that they're even moving this package is done so that it's broken down into four different pieces. That means that folks who might be opposed to Ukraine aid can vote for the other three pieces, and it's more likely that that package is going to be able to get all the way through. One other very quick notion here. The Ukraine's support was at one point tied up to border security. Has that, disappeared as part of this four-part package? You know, it really has. Johnson tried to have another vote on border security today,

but it's just not a part of this package. I mean, you remember the Senate kind of came up with a plan for ways they can move on border security while voting on a Ukraine aid that did not wind up passing the Senate. It didn't have enough momentum. And so this is the path that lawmakers have chosen to take just because it is so difficult to find any sort of bipartisan agreement when it comes to border security.

Emily, thank you very much, Emily Wilkins. And coming up, all in the family office. The number of family offices has tripled since the pandemic. Managing trillions of dollars for some of the world's wealthiest folks, we'll look into why when Power Lunch continue. Welcome back, everybody. The number of so-called family offices managing money has tripled since the COVID pandemic and now totaling more than 4,500 around the globe, according to a new study.

Our wealth editor, Robert Frank, joins us with the details. What explains the trend? Well, Tyler, the growth has been, The number of family offices in the world has tripled since the pandemic, as you mentioned. They're now over 4,500 of them in the world. That's up from just 1,300 in 2019. That's according to Prequent. Family offices, of course, they're the in-house investment firm for wealthy families,

typically worth $100 million and more. Total assets for family offices now topping $6 trillion. So they account for a larger share of capital markets than hedge funds, private equity, or even venture capital. Increasingly, they're putting. their money into private markets. They're moving away from public equities. Their favorite allocation for this year is private credit, followed by real estate and private equity. They're also replacing traditional private equity in a lot of big deals. Michael Dell's family

office, they helped take Endeavor Private this month. That was a $13 billion deal. Family offices are also replacing private equity in the oil and gas sector. A group of family offices bought Colorado gas producer Pure West for $1.8 billion. The other favorite sectors this year include biotech, AI, and health care. You can read more about family offices and where the wealthy as a whole are putting their money in my new Inside Wealth newsletter. You can scan the QR code there, find out all about what family offices and high net worth investors are doing right now. Well, Robert, we also want to ask you about some of the techniques that the rich are using to avoid state taxes. What are they?

Well, there was a great article in Bloomberg that mentioned a lot of people are idling their SUVs on the GW. bridge to make sure they enter Manhattan just at midnight. A lot of folks that fly out of Teterboro in and out to make sure that they just spend a certain amount of time in New York. That's because, as I reported last week, states are cracking down with audits on people that claim to now have tax residency in Florida or elsewhere. And it's not just counting the days, although that's important. They also want to find out where your dog is getting treated, where your dentist is, and whether your refrigerator in New York is truly stocked, because if it is, it means you didn't really move. So the auditors right now, especially in New York, California, they need revenue.

So they're challenging these wealthy folks that move during the pandemic and say, we don't think you really move. You owe us taxes for the past three years. So how would they know if your refrigerator stock? Yeah, take pictures? They come in? They come and visit you. And with AI now, they're able to look at your phone records and figure out, well, your phone says you were in New York. You didn't really move. All right. Got to leave it there, Robert. Thanks. Thank you guys. All right, coming up here on Power Lunch, the stock draft is nearly upon us. Less than a week away after the break, we will reveal this year's draft order after this. The CNBC Stock Draft is back.

In less than a week, 10 teams will compete once again for the championship, including the returning champion, Charlotte Flares team, woo! The electrifying climate in Nvidia fueling her victory. What's your strategy when she returns to the ring this year? We'll find out next Thursday at 2 p.m. I got to get her outfit. All right, welcome back. As you just heard, the 2024 stock draft nearly upon us next week, next Thursday.

Now it's time for the official SEMA draft order. Here's how it's going to work. We're going to draw the names and introduce this year's contestants beginning with the 10th draft. All right, go ahead. 10th pick you pick them. Honored. Number 10 will be. Is Joey Chestnut, Joey Jaws 16X Nathan's Hot Dog eating champion?

He's a hot dog champion. At pick number nine, we have Druski. The four lifers. He's a content creator and actor that I've never heard of. And next is Jillian Michaels of Cash Crew, the fitness guru. I follow her. Oh, Julian Michael, yeah, I know who she is. Okay, and then this is we're up to the number what?

Number seven now. Neve. Neve Shulman, Market Fish, host of Catfish. Another person I've never heard of. Next is Kenny Smith, the Jet Academy. Oh, I've heard of him. I'm a big time NBA champion. You know this person.

Great guy with Barclay and Shaq on TNT, TBS. Next, this is a good one. The next pick. Austin Echler, the team is experience. You know who he is? He's the Washington Commander's newest running back, Brian, brought over from the L.A. Chargers. Oz Perlman, Oz knows the mentalist who has been on C&B, the best magic. He's good.

I even know him. All right. Now we're down to pick number three. Pick number three in the draft is going to be Charlotte Flair. Team Wu, WWE Star, last year's champion. She'll be back. I love it. Number two is Eddie George.

This is Steady Eddie, the former NFL rookie of the year. Great player with the Titans, Ohio State guy. And then, oh, this is so appropriate. Brianna Stewart, money machines, two WNBA titles for college champions. In this week of women's basketball, who better than Brianna Stewart to get the first pick? Thanks for watching Power Lunch. Great to be with you this week. Thank you for having me.

Closing Bell begins now.