Power Lunch - Power Lunch 8/30/24

Episode Date: August 30, 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.

Welcome to Power Lunch alongside Deerreboza. I am John Fort and shares of Intel jumping today more than 7% as the company looks at options to turn itself around. During this year's chip hoopla, the stock has lost more than half its value. We will ask our trader of Intel and other fallen stars can regain their former glory. And it is the end of our powerhouse road trip. We've been going across the country talking to local agents asking whether the prospect of lower rates is unfreezing the market. Plus, we will look back at the million dollar homes that we've seen. along the way. But first, let's get a check on the markets. You can see here that the Downdrest drills is underwater by about a quarter of 1%, the S&P 500. On the flat line, let's call it, the

NASDAQ comp, the outperformer by a smidge. But John, it is a very slow ahead of a holiday weekend. Yeah, a little narrow range. While the Dow might eke out a little gain for the week, S&P 500 NASDAQ are solidly in the red. So we're heading into September, which is typically a weaker month for stocks anyway, and with a Fed meeting looming. Let's bring in Mike Santoli now for a look at this market set up with about two hours left in the trading month. Mike? Yeah, John, going out kind of quietly and steadily for the month of September. The market's kind of holding serve here for any U.S. Open fans out there. 5600 is where it sits right now. 5600 plus or minus about 50 points is where it's at for the full two weeks. We've got through Nvidia earnings, obviously

got through the PCE inflation number today. And I've explained that this path we've been on as kind of losing faith briefly in the possibility of that soft landing scenario in early August. Then you had some other attendant liquidation events with the N. Carey trade. And then we've recovered that faith that the Goldilocks type environment is still plausible. It's not necessarily a sure thing, a done deal. It's not going to last forever. But right now, it appears that the Fed will be easing in September into a still, sturdy economy, take look at the volatility index over six months, massive spike, we've lost almost all of it, all of that intense activity, the intense volatility move has drained away at this point. And there has

been, even though the S&P's been flat for a couple of weeks, a lot of shifting around below the surface. So if you look at the NASDAQ 100, relative to the equal weighted version of the S&P 500, this is a six-month chart, it's tortoise in the hair, right? So the NASDAQ 100 races out ahead. it's well below its highs. You see the steadier, equal-weighted S&P 500, pick up some of that slack. And it's so far been pretty comfortable for everybody. One thing I'd mention going into September, yep, seasonal headwinds. Yes, we do have a Fed meeting.

And a big job number of good economic news is probably necessary to keep the market from, you know, losing its nerve again about the possibility of this soft landing. Got volatility spike with something else. Thanks, Mike. Well, as investors return their focus to the Fed, how will today's closely watch inflation data impact the Fed's next move and the market going forward. Our next guest expects a 25 basis point cut from the Fed at the September meeting. Joining us is David Smith.

He's chief investment officer at Rockland Trust Investment Management Group. Okay, David, good to see you. So you expect this cut, but overall, my question is, can the market overall kind of stay this expensive, relatively speaking, and keep getting over these freakouts? You know, it would be interesting, first of all, happy Labor Day weekend to both of you. You know, it would be very interesting to see how the market reacts to the 25 basis points. We are pretty confident, obviously, like most market participants are at this point in time,

that we're going to see a rate cut, and I think it's 25 basis points. I'm actually a little concerned if they did something more aggressive and moved as much as 50 basis points, because I'm concerned that the market participants may view that as the Fed seeing something scary in their economic data, and then moving aggressively to get in front of that. So I think 25 basis points is pretty well on the cards at this point. And I would expect that that will be the first in probably a series of 25 basis point moves as we progress to the rest of 2024 and into 2025, probably settling out in that low 3% range sometime at the end of 2025.

David, next sort of big data point for the Fed. It may not matter for the September meeting, but it could matter further out as the non-farm payrolls that we're going to be getting next week. what do you think we're going to see there? What would make a difference to the Fed's outlook? Yeah, I don't, like you said, Deere, I don't think it's going to have a real effect. I think they've pretty much telegraphed. They're going to move 25 basis points. I think that may have broader implications for the next meeting and whether or not they'll move incrementally at the next meeting or maybe skip a meeting and make a move in the following meeting. So the September 18th, I think, is pretty well baked at this point in time.

They'll continue to monitor the data, the jobs data, the economic data, the, Obviously, today's PCE was a positive number, I think, at 2.5%. So there's lots of data flowing between now and the next meeting. And I think that will be taken into account as they assess kind of how they're going to move going forward. The only way that that may impact the 18th is on the language coming out of the meeting and what Fed share Powell says about what they're going to do at the next meeting. David, it just feels weird to keep looking back and forth over our shoulder at the Fed, right? As investors try to figure out what stocks are going to decide, I guess at what point do you think, think the focus can go back onto fundamentals and the question of whether the overall economic

health demand the consumer strength perhaps is such that you can trust that companies are going to be able to continue to do well. John, great question. It feels like we've been focused on the Fed now for the better part of a couple of three years. And I don't know when we're going to get out of this. I suppose if we get to a rate environment that is neither, you know, aggressive or contracting, that will probably be at a point where then we can just just. look and sort of say, you know, status quo the economy is going to do what it's going to do.

But for now, the Fed has been very aggressive moving interest rates up to get inflation under control. That was a shock to the system. And I think they're going to begin to get into a pattern of reducing rates. I don't know how aggressively, but we'll be in a period of time now where rates will be coming down. If I'm correct, and then by the end of 2025, we sort of land at that 3% range and the economy is chugging along at the 3%, 2% range that it's at right now, I think then we'll be

to focus on fundamentals with the expectation that the Fed's sort of out of the game. But that's to be determined, obviously. We'll see how things play out. If we do get that 25 basis point cut, and you know, it's slowly and incrementally from there, David, how does that change your investment strategy? Do you start to look at some of the smaller, less profitable players over the winners that we have seen over the last year? Yeah, so as Mike just said, we're starting to see broadening. And I think broadening is a healthy thing. And I think if we do get to the scenario where we do have the soft landing, other companies will begin to participate, and I say participate, not that they haven't been going up,

but perhaps they'll begin to outperform. It's been a very challenging market for those who are invested broadly and don't concentrate in the Magnificent Seven or Fang or the top 10 technology-oriented companies. So I think that what will likely happen in a more moderate type of economic environment where perhaps interest rates are coming down and people look at evaluations of some of those AI plays and say, there's some other interesting things going on here. If the economy gets going and stays at a compelling rate, that these companies will grow their earnings in the low teams kind of level. And that's pretty compelling, especially for some of them who have multiples that are pretty low relative to the market overall and relative to their sectors. Speaking of, and this dovetails with what Mike Santoli is just telling us about the equal weight, you're bullish on Honeywell International Viva Systems and Chub so much that you own them all.

What do they have in common? Well, one of the things they have in common is they're all growing earnings at least at double digits, and that's compelling for us. In the case of Honeywell, we love the fact that it's an industrial with a broad end markets, no concentration really there. And that allows us to feel confident that even if one or two of the industries that they serve has some sort of glitch that there's enough growth from other industries that will offset that. Companies got a low double-digit earnings growth rate, a 2% dividend yield, and we think an opportunity for multiple expansion. Chubb, it kind of falls in the same category. Obviously, it's in a financials company, but it's also a teens-based grower, low double digits anyway. It's a 3.2% dividend yield.

And on top of that, we think there's opportunity for multiple expansion in that name, largely based on the strong pricing trends that we're seeing in property casualty insurance. All right. V's a different. You know, V's a tech name, supporting the healthcare industry. And there we don't have a dividend yield, and we don't have a higher earnings growth rate. but we have what we think is a very large opportunity for multiple expansion in that name. We always appreciate the detail. David Smith from Rockland Trust Investment Management Group.

Thank you. Thanks, guys. Have a great weekend. And as you've been hearing us say all day, the Fed's favorite inflation gauge coming in as expected. Bond yields slightly higher following those numbers. Let's get to Chicago for more bond market reaction. Rick Santelli, standing by. Rick, over to you.

Yes, and you know what? Keep an eye on that 2's 10 spread. it's getting ever closer to zero, and most likely it's going to start steepening. Jim Bianco is my guest today. Jim, real quickly, what do you think of the PCE numbers today? They came in as expected, you know, that there wasn't really much of a story to talk about it, 0.2 and 2.6. So that's why the market had very little move on it afterwards.

Am I wrong to think that we're probably not going to really ever see 2%. Two and a half the three is probably the marching orders that we're going to get from the market response back towards the Fed, but it's probably still not going to be the main issue they use to pull the trigger on the easing. I agree. I think that inflation is going to be the big story. I think it's going to stay sticky around 3% as well. That last mile that they keep talking about. And if they ease a quarter point and it starts to pop up even just a little bit, they're going to have some issues there. Yeah, exactly. You know, you cut rates and if the money data doesn't go the way you think, in other words, it's too strong, inflation pops up, there could be a bad reaction in markets.

Absolutely. Now, let's talk about the big elephant in the room, and you've been writing extensively about this. this. You know, we had that big revision in non-farm payrolls. It was, what, 850,000? 818. And ultimately, many think it should have been much lower. What's going on? And how does that tie in with immigration? The population of the country has been exploding higher because of immigration. All of these surveys, I have, there's some basis, the level of population growth. And that's what's throwing off both the household survey, the unemployment survey, and the revisions. The revisions look at tax data, which is basically not immigrants and they came to the conclusion we had 818,000 less jobs, but it might have actually

been 300,000 less jobs, 500,000 people took jobs that people under the table that people used to have that were paying taxes. Now, when I siphon through all this, here's what I think. I think seasonality is already not very good in these numbers and it's getting worse. COVID changed so many things, A, B, certain states, I just don't trust their numbers. And B, nobody knows how many migrants or immigrants are coming across that border. So I don't know how they could define some of these numbers. Would you agree with that? Yes. And the reason I would agree with it is we talk about the labor market. We think we're counting jobs. We're doing surveys. We're asking people how many they employ. We're making assumptions. And then we

weight those assumptions by the changing population growth of the country. That's why the unemployment rates going up. That's why the household survey is stagnated relative to the payroll survey, which keeps going up. And a lot of the data is throwing us askew. And we look at it and say, oh, the labor market's weakening. It might not be weakening. Maybe more people have jobs. They have more money. That's why consumption's up, and that's why inflation could stay sticky.

So what you're really saying is, is if basically the worst aspect of the labor market, what is the banner, a poster child of the weakening, is the rise in the unemployment rate. That might be the riskiest aspect of that report to basically bet the ranch on. I agree. And none other than Claudia Assam, what the Sam rule has said, be careful because of the increase labor supply. Right. She said she doesn't know if it's going to work this time around. Where is that increased labor supply coming from? It's coming from immigration. And so this data was never just structured to fit with an exploding population growth like we have now. That's what the problem

is. Real quick, we're almost out of time. If the jobs report next week shows that the unemployment rate holds or drops a little bit, will that make any difference on September 18th ease? Only to the extent that the Fed would go 25 instead of 50. 50 is still got about a 35% and chance of them going. Excellent. Jim Bianco, it's always a pleasure. We love to do floor hits together. Deidre, back to you and have that wonderful

three-day weekend. Rick, same to you both of you. Thank you so much for that. Still to come. Intel going into power saving mode, Lulu Lemon, cramping up, and Walgreens just cannot get out of the red. We will dive deeper on these names. In three-stock lunch, that's next. Welcome back.

Time for today's three-stock lunch. Today, we are taking a look at several stocks that have seen better days, and we're asking our trader, if there's any chance for a turnaround here with our trades as Scott Nations, the president of Nations indexes. First up, we have Intel shares. They're jumping 7% today on hopes of a business split, but the stock is still down over 55% this year. It's been a long time since the stock has seen good times. Scott, what's your trade here? That's right, but Intel as a hold, as you pointed out, up 7% so far today. It was up 10% at one point today.

And that's largely because the management has said that they are exploring strategic options. That's always good for a stock when management says that. And here Intel needs the help. They missed the AI revolution, and now they aim to become a contract or custom manufacturer. For other chip companies, that means that they're giving up the IP side of the business, which is disappointing. If you're as old as I am, and remember when Intel was really the thing, earnings disappointed earlier this month.

They've suspended their dividend, which makes sense and explains what's going on with the company, because if they want to become a custom manufacturer, then they're going to have to build capacity. And that is incredibly egregiously expensive in the chip space. Stock still isn't cheap, even though it's gone from over 50 to 21 and a half right now, 50 at the start of the year. So we'll have to see what management comes up with as far as strategic. options, but it's a hold right now. Oh, for sure. Up next, we've got Lulu Lemon. Shares marginally lower today after the company missed sales estimates,

cut its full year guidance. Stock down nearly 50% in 2024. So without showing off unattractive leggings, Scott, can Lulu turn things around? They can, and this is a long-term buy, not a short-term buy, but a long-term buy. The space has really had a tough time. It's been out of favor. But the product is everywhere. These products are everywhere. And so I expect a bounce. You're right. Lulu's been cut in half year to date.

But again, that's an overreaction. Partly because both revenue and earnings per share are expected to grow by 9% both this year and next. So with a forward PE of just 18, it's cheaper than the broad market. And Nike has a PE of 24 or P.E. 26. So Lulu's quite a bit cheaper than Nike. But the company can't have any more failures like it's breeze through leggings, which you refer to. They just can't afford to have any kind of misses like that.

They need to really start coming through and producing. Breast through. Is that a se-through? No, no. This is a whale tail issue where it makes your butt look like a whale's tail, I guess, is what people felt? I have not heard of that. You should be telling me about this. I learned last hour.

It's not about the tight leggings anymore. It's about the baggy sweatpants and the pleated trousers. So there you go. Finally, Scott, we got Walgreens Boots Alliance. The stock is down double digits this week after Pfizer announced a direct-to-consumer telehealth and e-commerce platform. The former Dow component down 65% this year. Now just a $9 stock.

Is there any hope for the stock, Scott? No, there's not. This is a sell. This is just a sell. The entire space is in trouble. The entire space is a sale. The customer experience is horrible. Shrinkage for customer products is.

horrible. The stock, as you pointed out, got killed on Wednesday as now Pfizer and Lilly are both going to create their own customer direct sale portals, which means that the prescription business for Walgreens is not going to be the revenue producer it was before. It would produce 55% of Walgreens revenue in the last quarter. That means that both sides of the business are challenging. So the prescription business is going to have a tough, We know that the retail side is really having a tough time. Dollar Tree recently pointed out that their customers are really feeling the pinch. That's certainly not going to help the retail side of Walgreens.

It's just a mess. The whole space is a mess. Management has not done a good job. So it's a sell. And if you decide to hold on, I'm going to say good luck. All right. Scott Nations, thank you. After the break, why one trader sees more upside for gold.

Market Navigator is next. Welcome back to Power Lunge. Let's get a quick check on the markets. The Dow here trying to climb out of a hole just about almost there at the flat line. The S&P 500 up by about a quarter of a percent. Sorry, yeah, and the NASDAQ up a little better than that, but everything fractional in a range. In today's Market Navigator, one trader sees gold behaving like it's 2007, and that could lead to a 10. percent to 20 percent upside from here. Joining us now is Brian Stutland. He's portfolio manager at

Equity Armour Investments. Brian, good to see you. So you're going to be looking to trade how with gold here and why? Well, I want to use options to trade gold. I think we're like you mentioned before. We're kind of in this area of 2007 time frame. If you look at some of the technicals going back to that time area, when I'm looking to trade it, I want to use options. You know, basically, basically gold's up about 20% year to date. But when I look historically how it behaves out of these sort of breakout timeframes, when you go back to 2007, let's say, for example, when you had this heightened volatility and this explosion in VIX in August of 2007,

and then the Fed started cutting rates, basically gold moved about 30% to the upside. So I think there's still some more room. I want to play it through the election. I'm looking at GLD ETF using options out to November expiration and buying the 235. 255 call spread. So what I'm doing is I'm going to buy the $235 call. I'm going to sell the $255 call. I pay, oh, roughly about $4.70 based on where the stock is trading right now. And I have that $20 range upside potential. And I'm only risking $4.70 to do this.

And is that $4.70 why you're using options and not futures? I mean, why not just use the futures here? Correct. Yeah, yeah. I have a little bit of a balance between the two. And I think because gold has already made that 20% move out of potential 30 or 40% upside move that I'm looking as that breakout occurred, I'd rather sort of limit my risk to some degree and start to use options. Maybe take some risk off the table and my exposure to goal, but I still want to have that exposure because, you know, we're still in this printing, money press printing era that we've seen for the last decade or so. So I want to see the upside there.

I'm just going to use a call spread to define my risk of that $4.70. All right. Thanks for showing the playbook. Makes sense. Brian Stutland, thank you. After the break, the final day of this week's Powerhouse Road Trip ending the tour today in Oxnard, California, a town you might not have heard of, but the average price for a home there is nearly a million bucks. Power Lunch will be right back. Welcome back to Power Lunch. It is time for our final stop in our Powerhouse Road Trip series. Taking a look at real estate markets across the country. On our final stop this week, we are hitting

Oxnard, California. One of the most expensive of markets. According to Zillow, Oxnard is number 71 in market size out of 100 markets with a median home price of $870,000. That is fifth in median sale price behind only San Jose, San Francisco, Los Angeles, and San Diego. Homes are spending an average of 16 days on the market before being sold. They're also selling for more than 47% above listing. For more on the Oxnard market, let's bring in Gary Eberhardt, Realtor with Remax Beach Office. Gary, tell us, about Oxnard. Why do people like living there? And what can you get? You can get a lot for an Oxnard. It just depends on what market you're looking for. Oxnard is unique because it's two

markets. You have a primary housing market. You also have a good secondary housing market. And a lot of the higher price points are in that secondary housing market, which would be considering our beach communities as well as the marina. You do get a lot of vacation rentals out there because the county Ventura does allow for Airbnb. So Silverstrand Beach and Hollywood Beach, you do get a lot of second homes. And that really brings up the prices that you see in Oxnard. For the most part, the primary market in Oxnard is going to be around that median home price of that 800 to about a million one. And then that secondary market is going to start around that million to about $8 million. Gary, you're in one of these homes, right?

Tell us about it. What can you, what do you get for nearly a million dollars? So today I'm actually around the golf course area. And around the golf. off course area, you can get a three bedroom two bath for about a million dollars, and that's going to be about 2,000 square feet. If you wanted to transition into the secondary market, which is considered the beach area, you can get about 800 to 1,000 square feet, a single level home, and you could either keep that as a primary or you could eventually Airbnb there. There's a couple properties like the one right there on the screen. That's in Silver Strand Beach. That one recently sold, I believe, for a million 10,000. And that could be used as either a primary,

residents or you could choose to keep it as a weekend home or Airbnb be that. And that's really what makes Oxarne a unique market is that we're in Southern California and they still allow for the Airbnb's in the beach areas. So, Gary, who's buying demographically and are they buying with cash? And I'm wondering that particularly in the secondary. Secondary market is a lot of cash. I'm seeing a lot of people who are selling their primaries in Los Angeles and they're buying secondaries cash in the harbor area. The harbor area is considered more primary, I would say.

But areas like Hollywood Beach and Silver Strand Beach, that's more of a secondary beach market. You see a lot of 1031 exchanges, people selling off condos in L.A. and moving to Oxnard. A lot of people, you know, they want to play a four-hour round of golf. They don't want to play a six-hour. They don't want the beaches that are super busy. And that's what Oxford offers you. It's a way more laid-back lifestyle than what they're used to seeing. The downside of it, is there's not a whole lot of high-paying jobs so that you can't really work in Oxnard and afford the $8 million house. That's why you're seeing.

I was going to ask, what did these people do to, you know, live in these homes, pay with cash and get to play golf all day or go to the beach? Gary, it's about an hour, right, from L.A. So do you see people that commute? Do folks work from home? It's a little bit of both. But Oxnard in that beach area, it's a little bit of an older demographic, I would say. most people are retired there and they found Oxnard either on a vacation a weekend getaway or they spent

an Airbnb and they realized that I'm only an hour away from Los Angeles, but I'm 45 minutes from Santa Barbara. And I can either work here for the next two years or commute for the next two years and eventually retire here. And that's really what we see. We're a very lively community in the summer months and it slows down a lot in the winter months. Like all locals, we look forward to after Labor Day, that's when our weather gets really good. and that's when really the tourism kind of slows down. Right, and with lots of Airbnbs in the area, I bet you get a lot of tourism.

Gary, thanks so much for bringing that to us, Gary Eberhardt. Well, with the end of this week's Powerhouse Road Trip, let's recap the type of homes you can get across the country for roughly a million dollars. In Miami, that's the country's eighth largest market. You get three beds, two bass, around 1,600 square feet. In Syracuse, New York, for that money, you get more than three times as much square footage.

A million dollars in St. Lewis buys four beds and four and a half bat. Yeah, four and a half bass and a lot of square feet. As he saw in Oxnard, California, one of the pricest markets in the country, a million-dollar home. It's $864 square feet. Is that a bungalow? I don't know. Which one are you taking?

Ooh, Oxnard probably. Yeah. You know I came here from California all the way. Yeah. I don't know about the taxes, though. Yeah, that makes Miami look a little bit. A little rough, exactly. Well, there you have it. Let's get over to Cape Bruni for a C&BC News update.

Hey there, dear Joe. Ukrainian president, Blodomir Zelensky today fired the commander of the country's Air Force. The dismissal comes one day after officials said a U.S. made F-16 fighter jet crashed, killing the pilot. In a video message, Zelensky says he decided to fire the commander to strengthen Ukraine's military leadership. And Japan's defense ministry today requested a record $59 billion in military funding next year. saying it needs to further confront the increasing threat from China. Japan says it plans to spend nearly $300 billion through 2027, which would put it third in spending behind only the U.S. and China. And just in time for a holiday weekend filled with sports ESPN and parent company Disney

are locked in a battle with direct TV over a new deal. ESPN's current deal with the satellite provider expires on Sunday, and while negotiations are ongoing, both sides say there is still a big divide, on the details. If a deal isn't reached, DirecTV's 11 million customers could miss out on the U.S. Open, college football, and NFL's first Monday night game guys.

Disaster. I know a few people who would be quite upset about that. Definitely. Us among them. Thank you. Exactly. Thanks, Dee. Still to come, exploring AI impact across every major industry. Today, we're looking at airlines. We'll be right back.

Welcome back to Power Lunch. The TSA is expecting to screen a record 17 million airlines. passengers this Labor Day weekend, with today being the busiest day, one key perhaps to managing the strain, artificial intelligence. For her latest installment of AI impact, our Julia Borsden is looking at AI in the sky. The airline industry is betting that AI can help it reach new heights. Major U.S. airlines, including American, United and Alaska Airlines, are investing in new AI tools to help speed up and streamline everything from ground control to customer service. service to route optimization. American Airlines took us inside its Dallas-Fort Worth Control Center

to show us its AI-powered smart gating tool in action. The technology developed in-house uses AI and machine learning to automatically assign gates to incoming flights, cutting down on runway taxi time. As soon as the plane gets at the gate, our passengers have more time to connect, our bags have more time to connect, our flight crews have more time connected. American says this tool has cut aircraft's taxing time by about 20% or two minutes per flight, which adds up to about 17 hours daily across the five airports where it has been rolled out. 60% of the customer traffic is making connections. This is a really big deal. So trying to do that manually, you should take us hours. Now with smart gating, we reduce all that to less than a few minutes. Alaska Airlines

is using what it calls ways for the skies. The tool deploys AI. to improve efficiency and flight paths. It helps design the fastest routes, which saves fuel and minimizes delays. It also has video cameras that use AI to analyze when catering, fuel, and baggage trucks arrive and depart, which alerts agents about timing and delays. Ultimately, cutting down on aircraft turnaround time at gates.

The use of AI, the use of improved technology, will enable them rather than massive layoffs, we're assuming that we'll see fewer higher suratrician and they'll be able to do more flying with fewer people. And United uses generative AI, not to prevent delays, but to communicate them, since consumers are less upset about delays when they understand the source. The airline's customer service department uses generative AI to craft what they say are detailed and empathetic messages during flight disruptions. United has used this tool on over 6,000 flights since March and says

since then, its surveys have found a 4% increase in customer satisfaction. Now, the airlines tell us that these tools aren't replacing any jobs just yet, but we do have to note that the implementation of these AI tools come after industry-wide layoffs. What the airlines do say is that these tools can drive efficiency in a way that workers haven't been able to on their own just yet. Okay, maybe this is hitting me at a sore time because I just had to drive. 13 hours to and from Michigan because I had flights canceled this month. Are we sure we want AI taking the blame for some of the issues that airlines have had? Because they don't seem,

it doesn't seem to be fixing stuff and wowing us quite to the degree that one might hope. Yes, of course, we all remember that big issue where Delta was not able to get people where they needed to be. And it may have ruined a couple of days for you, John. But I think what we're looking at really here is how AI can drive incremental gains, right? how AI can get you to the gate faster, how maybe it can even just shave off five or 10 minutes from a flight that might otherwise be half an hour or an hour delayed. When you're talking about AI taking over entirely,

that sounds like a risky thing. What this is about are these tools to help people do things in their jobs that they wouldn't be able to do as efficiently or have eyes on more different things or coordinate things with sort of an algorithmic efficiency that humans couldn't do just on their own. Well, I'm going to be looking for signs of that today. when I go to the airport on a Friday long holiday weekend.

Good luck, dear Dr. Thank you. I will need it. I need all the AI. I need all the human help possible. But Deirdre, if you get a text from United telling you why your flight is delayed,

will you be less annoyed because they gave you an explanation? Absolutely not. I will be just as annoyed. But good to know. Julia, thank you very much. Well, summer is ending and temperatures are cooling across the country.

But BIPA, it's always hot in those AI data centers. I love this story. Jensen Huang, he mentioned it on the Invitir earning calls this week, looking for ways to keep chips cool. Yeah, so we're talking about that liquid cooling market specifically. Now, it is still pretty small, but it's growing really fast, and companies are racing to get ahead. Vertive and Venn and Schneider Electric are all key players here.

And then there's also the traditional HVAC companies. Now, none of them have made a big splash in liquid cooling, but it's a natural extension of their business model and names like Train, Johnson Controls, and, carrier have all pointed to the opportunity. Now on NVIDIA's earnings call, CEO Jensen Huang said the number of data centers that want to go to liquid cooling is quote, quite significant. And that's because traditional air conditioning systems just don't cut it for Gen AI chips like those from NVIDIA, given how much heat they're generating. Liquid cooling can also

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