Power Lunch - Power Lunch 4/9/24

Episode Date: April 9, 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.

Good afternoon, everybody, and welcome to Power Lunch alongside Dieter Bosa. I'm Tyler Matheson. Stocks falling today, but off the worst levels of the session. The Dowdown about 150 right now, 158. The focus on two big market events tomorrow, the latest read on inflation, and the minutes from the last Fed meeting. The other big market driver after the Fed chips, NVIDIA is lower by 3% today and down 13% from the high hit at the end of March. One threat to NVIDIA's dominance, more companies are working on the Fed. their own custom chips. Google the latest to announce it using arms holding technology. More on this coming up. But we begin with Intel. It also announcing a short time ago its plan for Enterprise AI. Christina Parts and Evelace joins us now with more. Christina. Well, Tyler, Intel is taking

aim at NVIDIA and AMD's AI chips by introducing its Goudi 3 AI chip, which they claim is better at inferencing, is better at power efficiency than NVIDIA's H-100 chip, which is the the main chip choice among companies building AI systems and that chip that we've been talking about for the last year or so. But Intel's Gowdy 3 provides open-based software, industry standard Ethernet Network. That's what Pat Yelsinger is seeing on your screen right now. He just mentioned maybe about an hour and a half ago. And it's going to be available through original equipment manufacturers such as Dell, HPE, Lenovo, Super Micron in Q2 of this year. Intel, though, promising it's going to be at a fraction of the cost compared to other competitors.

I just asked Intel CEO Pat Gelsinger about the cost on a media call that ended maybe about 20 minutes ago, and he told me that it was, quote, not a little below, but a lot below Nvidia's offering. They're not giving actual pricing just yet, but all of these stats are pretty compelling, but Intel still has a lot of software and ecosystem work to push out Nvidia, especially according to analysts when Nvidia controls 80% of the AI chip market. And Intel, we've got to point out, is comparing itself to Nvidia's chip already on the market, the H-100. And this quarter, NVIDIA, launched an updated H-200 GPU graphic processing chip, and has its next-generation Blackwell chip shipping either in Q4 this year or Q1 of 2025.

Intel says they can't compare themselves to those upcoming chips because they haven't come to market just yet. Intel shares, though, what, down 15%. just in the last month or so, down 12% last week after the company announced its foundry business, lost billions, and is going to continue to do so this year. So that's why Intel is placing a lot on these new AI chips and said that the AI PC as well will be, quote, the star of the show for the upcoming year. But let's see if it can turn things around for the company. So, Christina, you kind of mentioned this. Invidia is more than just the hardware, right?

It's this ecosystem that includes the Kuda software that it's developed. So even if Intel comes out with a so-called AI chip, it still has such a long way to go, right? Is this really going to hit on Nvidia's dominance? It will on the price point because it's priced out so many smaller companies that want to get their hold hands-on AI accelerators. But to your point, Nvidia has the lead with Kuta. That's the software that a lot of developers use, most developers use. And so what Intel is trying to do is make it more open source. They even launched a foundation about seven months ago.

They got a few companies on board about seven various companies saying that they want to push forward and that the software provided for these chips should be open, meaning developers can go and change the code and maneuver it to the way they want, whereas when you use Nvidia's chips, you have to use the CUDA software. So that's a little bit of a difference. So yeah, to your point, Nvidia does have the ecosystem, but the price point is a major selling point. We can't discount it, especially when companies realize that they may not have

the return and the revenue monetization when they're spending so much on their AI systems right now. But we will only see that outcome, but, in a year or two. All right, Christina, thanks very much. Christina, parts of Navilus. For more on Intel's new AI chip and how it impacts the other key players in the industry, like Nvidia and AMD. Let's bring in Matt Bryson, Senior Vice President of Research at Wedbush Securities. Matt, welcome.

Good to have you with us. Is this chip from Intel, a game changer either for Intel or for the? the sector? I don't think so. This is the third iteration of this chip. And when you think about where Nvidia is getting all of this business, it's not through, for the most part, the OEMs that were mentioned by Intel when they talked about where the chip was going to get sold. Rather, you've had Nvidia tell you that tell us that 50% of their businesses, the cloud service providers. They've mentioned before that social media is a major end market. All of those buyers are buying through ODMs for the most part. I would suggest that 80% plus of Indy's business is

those large type customers that Intel doesn't have yet. Right. This feels like it's more about Intel than it is Nvidia and Matt. And I just wonder if you think that Pat Gelsinger is trying to bite off too much. He's trying to create a foundry business essentially from scratch. And he's also trying to keep up with some of the other big players than AI at this point. Can you do it all? I think it's really hard to do it all. Now, having said that, for Intel, I think the most important piece to get right is the fab piece. If you can get the fat piece right, you can get your costs down. You can compete in your core markets, which are PCs and standard compete for servers. And then I think you have an opportunity to go after AI.

And Intel does have a larger architectural shift ahead. They have a product called Falcon Shores coming out in 2025. I think for Intel, if they're going to make it an AI, it's probably that product that makes it or breaks it for them. It's in such a tricky position because it's trying to keep up with AMD and Vividy on one hand. But its current business is also being disrupted by some of its biggest customers, right? the mega cap customers. So how does that all shake out? And is that acceleration on the one hand enough

to make up for the decline that it's seeing and it's more traditional chips? Again, I think it really comes down to whether they can succeed in Foundry and in their fab business. If they can get their fabs right, to some extent, they can be the fab for the new Google chip.

They could be the fab for Amazon products. Well, can it, Because you've got TSM and Samsung developing here as well. Why would a company choose to work with Intel when it's so new to this business? It all depends on how you execute, right? So whoever has the best fabs will win that business. And I think it will take time for Intel to get things right if they get things right. But then also in their core businesses.

So if I'm thinking about developing my own PC chip la Apple, I may not be able to compete with Intel and price if they have a good FAB. If they have a good FAB behind their own chip because they'll be able to get that chip at cost. And so again, I think it all comes down to Intel's work on the FAB side. And I think it's still a kind of TBD to figure out whether or not they've gotten things right there. Is the idea here, I hear, I mean, and Christina sort of hinted at it, is the idea that Intel is going to be, to the extent that it competes in these areas, that it is going to compete as the low price provider here? And that's a tough place to make money. I don't think Intel's goal at the end of the day is to be the low price provider per se. I think their goal at the end of the day is to be both. both the best fab and the best chip design company. I think in the AI space, Nvidia has such premiums that you can come in well below Nvidia's numbers and still make money.

And so I think for Intel, if you can't compete with Kuta and you don't necessarily have those large customers buying into your solution, there's only so many levers you can pull in prices. Yeah, Matt, help me understand the pricing side of this because I talk to a lot of startups. that are trying to take on Nvidia and San Francisco produce a more efficient, cheaper-priced chip, but they're not gaining traction. So why is it that companies would rather pay more for an Intel? Is it because of the compute power and everything that it provides? Why aren't these lower-priced chips?

Many of which are already on the market gaining any traction? Yeah, so I mean, I think people have gotten traction in niches, like Sarah Briss, for instance, has some revenue. Obviously, AMD's getting some traction. But you're absolutely right that NVIDIA has been able to maintain control of the bulk of the market. And I think a lot of it comes down to KUDA. So in creating this ecosystem and then not only creating the ecosystem but supporting it. So giving universities access to it, creating a whole subset of people within the AI workforce who understand Kuda,

I think that NVIDIA has created quite a trench. and it's going to take a lot to kind of push them off their position as king of the hill. Yep, keyword being ecosystem. That's what they've created. Matt Bryson, thank you very much for those insights. Meanwhile, Google, it is a tough race. Google has just announced its own custom in-house chips, and the proposition here comes down to compute, power, costs, and scarcity. A lot of what we were talking about. Google, though, is on both sides of this Gen. A.I. race. The company itself is developing models and applications, but as a cloud provider, it also needs to provide compute power to its cloud customers. So AI resources for which high-end chips are critical has to be rationed

in some way or another, or it needs to be brought in-house to reduce reliance on those outside vendors like an NVIDIA. The move also lets Google compete with chip makers like AMD and Intel. As we saw Intel's new Gaudi three chips, the chip wars, they are indeed heating up, and now Google can also position itself as a potential chip provider for cloud customers to rely on for AI workloads. So that is what Google and its MegaCAP rivals are doing. Axion is Google's latest expansion

into custom chips, which the company says is capable of a range of tasks from powering Google search engine to AI-related work. The success of Google's custom chips, so far, it has been mixed. Gen. AI darlings like Character.A.I. and Anthropic, they have used Google TPUs, but it isn't the full hardware software software.

stack that in vidias we were just talking about has belt and which has helped it retain its dominance and that ecosystem that ecosystem that they have exactly and you've got google right it already has this cloud infrastructure it's the number three player in terms of hyperscalers you've got a ws you got microsoft azure and then you've got google this is a real opportunity here actually for google to gain some ground if they have the right tools and it's all i'm told about openness and choice so any enterprise that wants to develop their new gen AI offerings, they want to go to the cloud provider that has the Anthropic, the chat GPT, the many, many other models.

And so it's a coming battle between these three giants, really. Yeah, and that's why you see all of these cloud events, right? You see it at AWS and Google Cloud Next is going on right now. They're all touting all these tools and all of their partners and all the customers sort of that are using their cloud infrastructure. So it feels like kind of a new battle. First it was over infrastructure, then it was over apps, and now it's over Gen A.I. Tools. Yeah, how it's changed.

The evolution of it. It's fascinating to watch. All right, folks, coming up, a former Bolero employee claiming the company threatened to report him to the FBI. He's now trying to sue over proposed extortion and retaliation details ahead. And as we head to break, a quick power check. On the positive side, you've got Moderna, higher on its improved cancer vaccine, on the negative side, Royal Caribbean, down 5% in the past week. Power lunch will be right back. Tomorrow is shaping up to be a big day for the bond market, the CPI, inflation number due out in the morning.

Fed Minutes released at the top of the 2 p.m. hour. We'll have it for you. Let's get to Rick Santelli in Chicago now for a look at how that anticipation is playing out in the bond market today. Rick? You know, it's playing out in a rather predictable fashion, actually. Let's start out looking at an intraday of three-year because we had a three-year auction today, the 3's 10's 30 package. 58 billion.

The auction did not go well. Investors shied away and most likely the reason, as Tyler pointed out, the risks of any surprise in the CPI number tomorrow. And how do markets react in front of big numbers? Well, we've seen yields pretty much falling all session for the most part, and they've been falling in a very parallel way, meaning the distance between all the maturities is roughly equal. That's a sign of a market in equilibrium.

Evidence of that. Let's look at the 2s 10 spread all. day, 24-hour chart. You see how sideways that is, despite the fact that yield's been moving down rather aggressively. Well, CPI in the morning, I'll tell you what many people continue to look at. They're looking at the CPI indexes themselves. This picture is a CPI core index, started in 1957. And basically, it makes new highs just about every month since 1957. This is the rate of change we're arguing about. And if that goes flatline, that line will start to balance off a bit, but there's not much flatlining on there. Just to point out the

indexes themselves. And finally, year-to-date of 10-year, like all maturity treasury yields, pretty much this week, they visited the highs of 2024 on a closing basis. That's the setup for tomorrow's big number. Deidre, back to you. Rick Centali, thank you very much. Take a look at the major averages. They've been lower today as investors look for tomorrow's CPI report on clues on when and if the Fed will start cutting rates. Let's bring in Brian Van Kronkine, portfolio manager with all spring global investments. Brian, thanks for being with us. What do we need to see tomorrow if you are hoping for at least one to three rate cuts to stay on the table this year? I think you're going to see a very, very cool print on CPI, but investors seem to be skeptical

of that right now. For what I can tell, investors are taking money off the table. They're fading the momentum trade that's driven a lot of the strong performance here to date. They're covering their shorts, they're basically saying, I'm not sure what's going to happen. And so I'm going to take money off the table. I would encourage investors, though, not to put too much stock, if you will, in this one print. Looks like Mr. Van Cronkite has left us for a little bit. Why don't we take a little break? We'll reset and come back and check in with you in just a moment's time. Shares of Eridium communications hired today after getting a contract from L3 Harris to provide services to the FAA. That adds Eridium to a list of companies.

which is depending on L3 Harris, which is in turn depending on the U.S. government for funding. Emily Wilkins is live from a radio communications facility in Rochester, New York. Emily. Hey, Tyler. Well, yeah, we are here in L3 Harris, where they create and build these military tactical communication radios that are used on the front lines in Ukraine.

This facility, it's got about 4,000 employees here in Rochester, and they've gotten about several hundred. million dollars in federal funding since the Ukraine-Russia war began. But of course, that federal funding has now run out. And Congress is struggling on whether or not they should be passing another $60 billion in funding for Ukraine. L3 Harris's president of communication system, Sam Meta, said that the delays have led to complications in the economy and in how the company functions. He says that it's not only impacted this facility here, but it's had an impact on this facility's 7, 470 suppliers, many of which are small and mid-sized businesses.

It will cause them to make some very, very tough decisions about employment. It'll cause them to have tough decisions about whether or not they can reinvest in capital, in capacity. We've also heard from them that it's created a little bit of concern about whether or not they even want to continue to be in the defense industry with this amount of unpredictability. At this point, about 61% of all funding that Congress has approved for Ukraine has actually gone to U.S. companies like this one here. Still, there is a lot of opposition in Congress, particularly among Republicans, to passing any more funding. Still, House Speaker Mike Johnson says he wants to find a way to get additional aid to Ukraine.

It's just a matter of how, and he's going to be trying to figure out exactly how to get his Republican colleagues on board. They returned to Congress tonight after a two-week break. And, guys, this is one of the top priorities. We're expecting to hear a lot more in the next two weeks about how they plan to get this done. You said they have how many employees there and how many of them are directly tied to work on Ukraine? Well, it's about 4,000 employees. I mean, they create these radios here that are used for Ukraine, but they also create radios that are used in the U.S. And actually, some of the technology that they send to Ukraine, they get feedback.

from Ukrainians and they're able to further develop the U.S. product based off of that. We do know that this facility did ramp up the number of employees that it had when the war in Ukraine began and some of that federal funding began coming in. It's a little difficult to say exactly how many since they have various customers. But Sam Meta did tell me that a lot of the contractors, they call him up and they say, hey, what's going on with this federal funding? We need to know, we need to plan. And that could impact a lot of the employees for the contractors down the line. There's really a big supply chain element here to this story. Emily Wilkins, thanks for bringing us that story.

Let's get over now to Contessa Brewer for a CNBC News Update. Hi, Deirdre, the Arizona Supreme Court ruled today that a near total abortion ban dating back to 1864 is enforceable. The ruling today allows the 160-year-old law to stand. It criminalizes abortion by making it a felony, punishable by two to five years in prison for anyone who performs one or helps a woman obtain one. The Civil War era law includes an exception for the life of the mother, but not for rape or incest. Italian officials say at least three people died today in an explosion at a hydro power plant in northern Italy. A local fire brigade says the blast happened at a dam on one of the artificial lakes that feeds into the power station, causing a fire to break out on one of its

transformers. Four people are still missing. Peter Higgs, the Nobel Prize-winning physicist who proposed the existence of the so-called God particle has died. His findings helped to explain how matter formed after the Big Bang. The University of Edinburgh, where Higgs was a emeritus professor, says he died following a brief illness. He was 94 years old. Deirdre, I'll send it back to you. Condessa, thank you very much.

Let's continue our conversation with Brian Van Kronkite, portfolio manager with All Springs Global Investments, who is back with us with a stable connection. Brian, thanks for holding. You were talking about the importance of tomorrow's CPI number. We're also heading into the start of earnings season. We had this conversation last hour that maybe the number of rate cuts on the table won't matter as much because the economy will be strong.

What do you think? Well, I think that's one thing to think about. I think the first thing is not to put too much importance on the singular data point tomorrow. I look back at the bigger picture. I was saying before that employment looks really tight despite immigration benefits and AI benefits potentially. I see growth remaining very strong to your point, and those aren't supportive of a cut. And then I look at some other data points. I see the NFIB index at its lowest point since 2012 because inflation continues to bite the hand of the small business owner.

And the Fed's very own survey data suggests consumers think inflation will stay above their 2% threshold for the next one and three years. So taking a step back, a nice cool print would be welcomed by the market, but the bigger picture shows a lot of reasons the Fed could stay on hold for longer the market's pricing in right now. You say you're cautious on the consumer, therefore you're overweight consumer staples, but lighter on underweight consumer discretionary. Why are you worried about consumers? Well, right now I'm seeing some evidence of the consumer's ability to spend beginning to fade. I think the consumer has held the economy up very nicely, and we welcomed that for the last two years.

But I look at delinquency rates, for example, with consumer credit beginning to get back to those pre-COVID heights. I see the ability for additional capital to be spent from excess savings really starting to fade away. I see some data from companies showing the consumers making tough choices, trading down and making those baskets a little smaller. All that suggests to me the consumers pulling back, which could put pressure on growth. So I'll also equal. I want to fade the discretionary decisions that consumers make and really lean in to the more defensive situations like consumer staples with beverages and some of the more stable consumer packaging companies. Brian, how do you think that's going to play out over earnings season and impact forward guidance? I think that's a really big question right now. Investors have to see companies provide optimism around their guidance, given where we are with valuations. So right now I want to own companies that maybe have less sensitivity to the volatility of the economy, where you can be maybe more confident or in a tighter range of demand, and then sprinkle in offense where I think the market's been scared. For example, commercial real estate has been the poster child of risk for this current cycle. And most of it's tied to some eye-popping stats around office property, for example.

but that exaggerates the reality. A company like CBRE is a great way to play offense and otherwise market won't be cautious because they've been investing through this cycle and their business is largely based on transaction volume, not prices. And if the market stabilizes rates or the Fed cuts, we could see their volume pick up. We can see their earnings accelerate higher

and they're at a trough right now while a lot of the more offensive buckets of the market are not at trough. Where are you on bonds and investing in fixed income right now? Is it an opportunity time to do that? And if so, where? I think the big-income market could be interesting. We're talking about pushing out on the curve right now.

A lot of money is in money markets, which tells me that the market is still defensive in some respects. So hopefully any pullback we have in the markets, we'll see a buy-the-dip mentality as we move out of money markets out the duration curve and also out into equities. But right now, I'd like the idea of moving out duration a little bit, but with a keen eye on credit, right? We forget that credit's incredibly important in fixed-income markets.

So right now, think about balance sheet strength. Think about picking up a little bit yield, but don't forget credit's really important to this part of the cycle. So, Brian, as we've watched the rise in commodity prices and some of the stocks there, the AI trade, you mentioned it a little earlier, has taken a bit of a breather. You look at an Envidio, which is down more than 10% since hitting an all-time high in early March. Where are you on this theme? And how does that change the market character going forward? I'm not surprised to see some of the initial winners on the AI theme begin to pull back.

It's really common for the market to exaggerate that first move out of the gate with a big theme like this. Then we'll see a pullback and then we'll see the market underappreciate the benefits of AI over the long term. But the underappreciation in my mind is not going to be in that first round of winners like Navidia, but in the companies that can utilize AI to drive efficiencies and to find some additional revenue sources. So I'm looking right now downcap actually into some of the names like in the fast food space where labor is tight and quality of labor can be questionable. Can we use AI to enhance the product quality, the service quality, and drive efficiency?

So the work we're doing right now is to move down cap and see if we can benefit from AI as opposed to by the early winners. Right, that seems to be a theme emerging. More breadth to this rally. Brian, thank you very much for being with us, Brian Van Cronkite. Coming up, a whole new meaning to the market's animal spirits.

We will talk to the head of a whiskey investment fund when power lunch. return. Welcome back. There's an old investing adage by what you know, and that's leading people to a new asset in online investing. It's whiskey. The distilled barrel financial exchange uses AI to price whiskey casks and allows for purchase, ownership, and sale of barrels all online. Here to discuss it is Todd Sanders, Chairman and CEO of Spirits Capital and the creator of the Distilled Barrels Financial Exchange. Welcome, Todd. Good to have you with us. Thank you. Appreciate being here. What exactly is traded on this exchange?

Is it deeds that represent ownership of a barrel of whiskey? Is it the physical commodity itself? What? It's the physical commodity. It's the barrels themselves. It's the barrels themselves. And are you buying them today? I mean, are you buying whiskey that is put in the barrels today for sale in 10 years after it's been aged?

Or what are you buying? And what is the speculation that you're investing? Well, this is a digital global marketplace that connecting industry participants from distilleries to brands to brokers to investment funds and allows them to buy and sell for their inventory needs on one centralized exchange. So give me an example of how a trade would work here. If I were an individual who wanted to invest and I wanted to invest in 500 barrels of makers mark. Is that what I would be doing with you or what? Well, this is not for the direct individual investor. This is for large traded barrels. This is for a distillery that's looking to sell 5,000 barrels, 10,000 barrels, or a brand that's looking to buy that. Or investing in whiskey has become very popular with institutional funds,

and it'll allow them to either purchase more or to look if they're looking to liquidate from their investment. Why would an investor want to invest in whiskey as sort of an alternative investment versus, say, wine or art or handbags? Well, whiskey is an unbelievable asset class, and it has its historical pricing has shown, as historical results have shown that it beats the S&P 500. It beats wine. It's the, you know, in the last few years, it's been the number one producing luxury asset class. Is it tied to consumption, Todd?

We had a guest on last week, and we were talking about sort of the decline of many generations drinking alcohol. Does that factor into the price? Well, when you look at the. historical pricing, because the asset just seems to return year over year in a positive, on a positive note, of course, things like consumption can come into, you know, will come into play. But overall, the asset class is very solid. So, so am I buying, I'm trying to wrap my head around what I'm buying.

If I'm, if I'm a distiller, who am I buying from? another distiller or if I'm a merchant? I'm not understanding. I'm sorry. So if you're a distillery and you're producing tens of thousands of barrels per year, you're always looking for other avenues where you can sell off your inventory. At the same time, a smaller distillery may have a larger brand that they need to fulfill in order to, and they have to go out to the market sometimes to buy a particular mash bill in order to satisfy those needs. All right. Todd, thank you very much for enlightening us and continued good fortune. Thank you very much.

Spirits capital. We appreciate it. Coming up, a legal battle brewing between Bolero and a former employee, the stock is lower for the year. We've got those details next. Welcome back to Power Lunch. The very strange saga of Bolero, continuing as a former longtime executive wants to see the company. He claims he was fired due to his age Now he's accusing the company of extortion as well. Gabrielle von Ruge has been following this company for a while, and she joins us now with all the latest twists and turns, Gabby.

Deirdre, yes, there's a lot of twists and turns with this case. So like you said, the chief information officer of Bolero, he says that he was fired for his age because he was too old, and this happened last May. Belero claims that he resigned. And after he separated from the company, he hacked into the CEO's email account, he stole company documents. this is what Bolero is alleging.

And they had asked him afterwards, you know, one of the executives called him and said, look, admit to what you did, admit to hacking in. We don't want to report you to the FBI. And if you do, everything will be okay. We'll pay you off. There will be a severance. And the executive said, look, I didn't do any of this stuff. And so then Bolero sued him for the hacking for violating his employment contract.

And now that employee, that former employee Thomas Tenasi is looking, is asking for the court's permission to counter sue his former employer for retaliation and extortion. So that kind of sums it up, but there's a lot more details than that, Deirdre. He is one of several people who have been involved in litigation against Bolero. Am I correct? I'm sorry, Tyler. You cut out there. Can he say that again? He is one of several people who have been involved in litigation of a similar sort against Bolero. Am I correct? That's correct, Tyler. So ever since 2016, Bolero has been embroiled in an EEOC investigation, and that's related to over 70 former employees who claim that they were fired based on their age or out of retaliation.

And this all kind of stems back into Bolero's growth strategy. And of course, Bolero denies these claims. It's very important to mention. This company has been around since the late 90s. But in 2013, they acquired AMF out of bankruptcy. They acquired hundreds of bowling centers. And part of the strategy was to turn these old, tired bowling alleys into hip hotspot destinations. And to do that, part of it was retrofitting these bowling

allies themselves, but another part of it, former employees allege, is firing older staff that work there and replacing them with younger, hipper, more attractive staff. So that's kind of the center of this EEOC probe and the EEOC has found reasonable cause in the majority of the cases. The ones that it hasn't, they're still under an investigation. And when the EEOC finds reasonable cause. That means that they believe discrimination has occurred. So, Gabby, what's been the impact on the actual business? We've been looking at the stock price that's lower on the year, but has that strategy worked even amid all of this litigation? And, you know, it's part of this class of leisure

facility stocks that should be doing well right now, right? The consumer is looking for experiences. So Bellaro had the same kind of pull forward effect that we saw with other leisure-based, service-based businesses. In the post-COVID, everybody came out. Everybody was spending lots of money, that has started to slow down and that has impacted the stock. But there's, of course, a lot of negative sentiment as well. I mean, you have to think about the indirect cost of this. You know, people who might want to go to these bowling alleys might read these stories and may not want to go there.

And then something else that's really important to mention is that Bolero is in growth mode right now. A big part of the strategy, it's a very fragmented industry. They're buying, they're still buying up tired old bowling alleys, retrofitting them, doing a lot of CAPEX. And they recently upped their CAPEX. guidance actually for the year. They're planning on spending about $350 million for fiscal 2024. That's up from 320 million. And that requires a lot of attention for management.

But what also is taking a lot of attention for management is this EEOC probe and now this litigation with its former executive. What is the material that this person, Tenes, who is, I guess, filing a suit against Bolero. The company alleges that he hacked into computers. and took documents, and then he and or others, if I'm understanding correctly, and you correct me if I'm wrong, he and or others then shared that information with outsiders, including journalists. What was going on? What was the nature of these documents and what was the sharing and to whom? So Tenassie as the chief information officer, he had access to the CEO's emails, just by virtue of his position. And after he separated from the company, Bolero claims that there was unauthorized entries into the email account.

And they say that the IP address for those entries trace back to Tenassi. And they also claim that on his company issued laptop, there was about 2,100 documents on there that he removed from the laptop, put onto a personal USB drive, and then wiped the laptop clean. Tenassi denies these claims. And Bolero thinks that Tenassi shared information from those documents, from Shannon's email, And also just from his experience working 20 years at this company with the media, with CNBC, with other media outlets, and as well as the attorney who's representing the former employees who have EEOC complaints. Now, Tenassie testified in his deposition that he hadn't shared any information with anybody. It's a lot of drama. And what do, let me, let me, because you interjected the name of CNBC.

What does CNBC say, if anything, with respect to whether we were given access to these documents? So we have previously written about Bolero, which is why Bolero had assumed or thought that Tenasi had given this information. They also claim that Tenassie had threatened to give information to us. What we do know is that Tenassie testified that he hadn't provided information, and CNBC doesn't divulge what kind of information it receives from where. Well, Gabby, von Rouge, thanks for bringing us all the twists and turns in that. Very dramatic. Indeed. To read the full story, and there's lots of details, please head over to CNBC.com.

New delivery numbers out on Boeing. We will trade that name in three-stock lunch when we return. Time now for today's three-stock lunch here with our trades. Malcolm Etheridge, CIC Wealth Management Executive Vice President, CNBC contributor. First up, Malcolm, welcome, and first up is Boeing. As safety troubles continue for the airline, or the airplane maker, excuse me, the company reporting it delivered just 83 commercial airplanes in the first quarter compared to the 157 it delivered in the first quarter.

fourth quarter. Lowest quarterly total deliveries in nearly three years. The shares down nearly 2% this afternoon. Your trade on troubled Boeing. Yeah, Tyler, I probably don't even have to say that this one is a screaming buy, I mean, screaming sell, excuse me, for me on Boeing shares and not even on the news today about the whistleblower complaint, but really it's going to take however long you think it's going to take Boeing to turn this company around, I would say double that expectation. And so I understand the temptation for investors to step in by Boeing shares here expecting that down 30-ish percent for the year is probably as bad as it'll get. But I have a feeling that it's going to get even worse, the more investigations come out. And I would encourage

investors to be patient here if you plan to step in and buy that dip. Ouch, as you said, down more than 30 percent a year-to-date. Up next, let's talk NASDAQ, getting an upgrade from Morgan Stanley, raising its rating to overweight from equal weight, saying they're bullish on the transformation story, shares of NASDAQ. They're up nearly 2% today. Malcolm, what's your trade here? Yeah, so I think that this one is probably a hold. Historically, this company does well as long as there's a bull market going on, but I don't really see a catalyst for them to continue to push higher from here, right? So if you think about the three major indexes, sort of fizzling out a little bit in the last few days of trading,

I don't really see where the NASDAQ goes unless the IPO market is, in fact, heating back up the way we got excited, think maybe it could, with the shares of Reddit that popped on IPO day in the days that followed. And so if that is the case, if we do see some more headline IPOs coming out, then maybe that's a good case for NASDAQ. But I would say it's a hold right now. There's no real reason for it to push up. And finally, Malcolm, it's 5 o'clock somewhere. Moulson Coors, beverage company getting an upgrade from Goldman Sachs. What's your thought on this one? Mount Moulson Coors. Yes. So I actually agree with the team at Goldman on this. when I think with so many younger consumers continuing to opt for things like seltzers,

hard seltzers instead of beer, wine, and harder spirits, I think it's interesting that Molson Coors decided to go in a different direction instead of cutting and trying to compete on price. They raised prices about 10 percent and decided to go more premium and go after those shoppers. And it's actually been working because the last six or seven quarters consecutively, they've been able to consistently grow revenue. And so I think that it's probably one of the better names in that craft beer space. So I do consider this one a buy going forward. Interesting.

Okay, Malcolm, thank you very much. Appreciate it. Come back and visit us soon. Malcolm Etheridge. And up next, Costco and the gold selling business, you might have heard. We're going to discuss that more power lunch next. We've got about four minutes left in the show. And several more stories that you need to know.

Let's get right to it. Small business optimism hitting an 11-year low, according to a new NFIB survey. A quarter of all respondents citing inflation as the most significant issue. Tyler, it kind of goes back to a conversation with Don Peebles the other day. Even though inflation is trending in the right direction, people are still feeling those rising costs. Well, $100 worth of groceries about three years ago is now. It costs you $125. And people see it and they feel it.

And it is probably the reason why whether you're a small business person or you're just an ordinary voter, people do not presume that the economy is as good as the numbers say it is. And they've got potentially higher gas prices, too. Speaking of higher prices, a million-dollar homes are becoming typical in a number of U.S. cities. This is according to a new analysis by Zillow. The boost in million-dollar cities. Here, there are now 550 of them across the United States. It seems to be caused in part by mortgage lock in effect. Mortgage locks in effect.

Naples, Florida, currently holds the most expensive home for sale in the U.S. that is a one thriving city with a lot of people moving there. Paramount losing more than one-third of its value since early December. When reports first emerged, it was efforting a sale. The lack of enthusiasm due to the company's ownership structure, which would tilt any deal to benefit the Redstone's over regular shareholders. The company is reportedly in talks with Skydance over a $26 billion merger. Tough to negotiate this in public.

Yeah, no, it absolutely is. It's been going on for some time now. It feels like forever. like this company is going to be merged with somebody sometime soon. All right, according to Wells Fargo, Costco, yes, Costco is selling as much as $200 million in gold bars each month. I haven't seen, when I've been to Costco lately, I haven't seen the gold bars. I tried to search it, actually.

Yeah, do you search it? Have you found it? No. You can't find on that? Maybe not. A retailer selling one ounce gold bars of nearly pure 24-carat gold for what is estimated to be 2% above spot prices. Gold hitting another record high today,

right around $2,400 an ounce. Maybe I'm not going to the jewelry. They have a jewelry center there in most Costco's, right? Yeah, I wonder if you can get it online or in the store, but then, you know, gold is very, very heavy. So how do you take it out? Take it out. And those checkers who check your receipts, they're going to be there.

They'll be frisking you. Where do you store it? That's my question. You need to buy a safe also. Got to have a safe, I guess. So there you go. With gold reaching all-time highs, you can get the physical stuff, too. Meanwhile, popular YouTube channel Dude Perfect securing a nine-figure investment in the range of $100 million to $300 million from private equity firm, Highmount Capital.

The funding will be used to open a retail store launching a streaming platform, intro toys and games in Walmart, even envisioning a theme park. Dude Perfect has 60 million subscribers on its main YouTube channel. I had to look them up. You got me. I'm so on in this world. Well, apparently me too, but I have an age. year old who loves Mr. Beast, who should have heard of Dude Perfect. But I heard them on Squawk Box this morning.

They were on? They were on? And yeah, they were, I mean, this is the new franchise, right? You have a popular YouTube show. I was looking at their videos, six, nine million hits a video, high production value. So they're costing more to produce. All right. All right, folks.

Well, that'll pretty much do it for this edition of Power Lunch. Glad you could be with us. The Dowdown about 175 points, 38718, as we wrap it up for the Tuesday. Stee. Closing bell starts right now.