Power Lunch - Power Lunch 9/18/23

Episode Date: September 18, 2023

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, everybody. Hope you had a good weekend. Alongside Kelly Evans, I'm Tyler Matheson. And coming up, three strikes and they're out. Auto workers striking at certain plans. Actors and writers still out. And now health care workers could be set to walk off the job in the next week at Kaiser Permanente. We'll get the latest on all of these battles.

Plus, we talk about the possibilities and the possible problems of AI with tech innovator Steve Case. We'll get his take on Elon Musk, possibly building a fact. in Saudi Arabia. Kelly. Tyler, thanks. Let's first get a check on the market. It's flinging on to some gains about two-tenths of a percent across the board today. Earlier, we were flirting between gains and losses, so we're still plenty of room

to see how this shakes out into the close. Watching Clorak shares closely today, the company was hit by that cyber attack. It now says we'll have a material impact on its first quarter results, in part, by pushing up IT costs. Shares are down three quarters of 1%. They've sunk a little bit. Now we'll have more on that coming

up. And Jobi Aviation has rise after announcing they'll build a manufacturing facility in Ohio, expecting to build 500 electric vertical takeoff and landing aircraft known as EVTOL or EVTOL per year. Still, this stock has been quite volatile, as you can see, almost a 6% pop to almost $7 a share. And Arm Holdings is lower, the big IPO from last week after Bernstein initiates on the stock with an underperform rating. You can see a 7% drop now to $56 a share still above both the IPO and the OpenB. price time. All right, Kelly, workers are striking back across nearly every industry, it seems. We've seen lots of picket signs over the past few weeks. The latest being the UAW, of course,

putting the auto sector at some risk. Hollywood shutdown still showing very few signs of ending, if any, and now even health care workers are calling for actions. But we start with the auto workers and the big three. And Phil LeBow has the latest. Phil. Tyler, we're here in Toledo, Ohio, across from the Stalantis plant where they build the Jeep Wrangler and the Jeep Gladiator. We've got about 20 UAW members behind me picketing at this gate. And by the way, there's like 10 gates here. So you get about 20 to 30 at every gate and they rotate throughout the day. The impact here in terms of production, it is substantial.

Now, the Wrangler is one of the best selling steel or Jeep models that Stalantis has here in the United States. But also when you take a look at the impact for Ford and GM at their plants that are suffering a strike right now, GM, 3,650 vehicles lost production. That's what would happen if there's a strike that goes through the rest of the week. Ford, 4,000, and then you here have Stalantis at 6,600. By the way, speaking of General Motors, it may curtail production at its Fairfax, Kansas plant. That's where they build the Cadillac CT4, the Chevy Malibu. Why?

Because stampings that are used in those vehicles come from the GM plant in Wensville, Missouri. UAW is on strike there. So if you can't do stampings, you can't build in Fairfax, Kansas. Don't be surprised if we see announcement about the beginning of layoffs for as many as 2,000 workers, perhaps as soon as the next couple of days

from General Motors. And then you've got Ford and Stalantis. They held more talks with the UAW today. That's about all I've been able to gather in terms of the talks. It was not deemed as measurable or different. I think this is an ongoing negotiation, guys, where we're going to hear about them talking on a pretty regular basis,

but they're still very far apart in terms of coming to an agreement. Finally, take a look at the auto dealer stocks. The reason I bring this up, we're still seeing product flow to the dealers who have bought models. In particular, full-size pickup trucks and full-size SUVs. Those are the most profitable and popular models that are for sale, and as long as that production continues, the dealers will continue to have inventory of some of those most popular models. back to you. Phil, a quick question. At the point at which these actions resolve themselves,

do you expect that they will resolve at different times at different manufacturers, or will it all sort of be all at once within a matter of a day or two? My guess is a little bit of the first, where you have one negotiation that is wrapped up, and it may take a few more days for the other automakers to wrap up their negotiations. Remember, these are not. not completely identical contracts, but they're very similar, very, very similar. So once one gets locked in, whenever that happens, that's a pretty good indication that perhaps the next contract will locked in with another automaker. And there's always somebody who is last, usually by a few days, you know, doesn't usually

drag out longer than that. Is the UAW worried that the move to electric vehicles will reduce overall workforce head counts over the next decade, or do they see the possibility that that switch is going to mean more rather than fewer jobs? Oh, they know it's fewer jobs. Tyler, it takes fewer people to build an electric vehicle. You don't have the engine and transmission manufacturing. Now, what they would like to see is the battery manufacturing facilities. Those are set up in this country under joint ventures, let's say between General Motors and a Korean battery company or Ford and a Korean battery company. Those joint ventures are not governed by this contract.

The UAW would like them to be governed by this contract. So that's one of the sticking points that's out there. Very interesting. Phil LeBoe, thank you very much, and you'll be following it for us, I know. Phil LeBoe. As that strike begins, the one in Hollywood goes on and on. Talks are set to resume this week, but they clearly miss the hope for Labor Day holiday. Tensions are palpable as some now try to cross the picket lines. Drew Barrymore facing backlash from unions and their supporters after initially announcing she would try to resume her show despite the strike to help avoid further job layoffs.

Julia Borson has the latest for us and Julia, it's got to be day 110, 15, something like that now. It's been a really long time. Right now we have Drew Barrymore folding to pressure as the writer's strike drags on. And the writer's strike is in his 139th day. the Screen Actors Guild strike is in its 66th day. Barrymore backtracking on her decision to return to the air today without her three union writers and with picketers outside her studio. This decision made after backlash on social media.

The talk as well as Bill Maher also delaying their returns to TV while other daytime shows, including the view, have resumed. Now as picketing continues, the AMPTP, the Alliance of Studios, is meeting with the Writers Guild on Wednesday. this news sparking hope of resolution. The WGA just now sending us membership and email saying that they won't comment while they are negotiating, but, quote, know that our focus is getting a fair deal for writers as soon as possible. Meanwhile, Raymond James warning in a note today, quote,

while we think studios and investors have braced for the impact on fall programming, a longer strike could be more noticeable from the viewer's standpoint and be a continued overhang on the stocks. The strike just adds to the pressures on the AMPTP member companies that include a soft ad market, cord cutting, and steep competition in the streaming market. In the meantime, the cost of the strike on Hollywood community is massive, estimated at more than $5 billion nationwide, according to the Milken Institute. Guys? I'm curious, Julia, has virtually all creative work stopped on movie, television projects,

or are there people out there, directors, writers, creative people, who behind the scenes are even now talking about and maybe working on future projects? Or is it really frozen in place? It's really frozen. I mean, these guilds are very serious about making sure that the Writers Guild, does anyone who's member of the Writers Guild is not working on a project that could be benefiting the studios that they're negotiating against. So there have been some talks of having sort of some of the independent studios do productions. There's, of course, production overseas. But when it comes to production, remember, you really can't shoot anything without actors. Things really have come to a screeching halt.

So I think there are plenty of writers who may be working on the Great American novel or be thinking about independent work that they'd like to be doing. But nothing that is under contract with an AMPTP studio can actually be moving forward. forward right now. There is a sense that as soon as this strike is over, production is really going to take off again. And there is a big backlog of things that were ready before the strike that as soon as production can start again, there's going to be a real backlog. And it's actually going to be probably hard to get production space into higher, higher crews then. And I think people are hoping that that happens sooner rather than later. All right. Julia, thank you very much. Julia, Borsten, covering the Hollywood strikes for us.

And now to the third leg of the labor pains in the U.S. right now. A deadline looming for one of the largest health plans in the United States. 60,000 workers at Kaiser Permanente on the West Coast voted to authorize a strike of a deal's not reached by September 30th. 98% of the votes were in favor of authorizing a strike. The biggest complaint is money. Workers saying wage increases have not kept pace with inflation. They also say understaffing has led to long wait times and neglect. of patience. So Kelly, as we look at all these labor disputes, we're seeing sort of unintended

consequences of inflation. Prices soared quickly. Wages really didn't keep up, and that was the workers, or the ones who were feeling the pinch. Even though wages have risen and more workers in more enterprises are making more money, it didn't keep up with inflation, and so they feel like they've lost place. It lagged big time in the early months. of it. So yes, we've inflected since, and it looks like real wage gains have been better the last couple months, but it doesn't matter because, first of all, inflation isn't coming down in places like groceries, especially gasoline, especially especially gasoline, especially, especially, and especially, you know, the airline workers and stuff, the 40% and those kinds of things, it really galvanized others to step up and say, we're going to go for this as well. This might be our moment. All right. All right. Still to come, we are two days away from the Fed decision and hardly anyone expects them to hike rates again, except our next guest.

He will explain his contrarian reasoning and what it would mean for stocks. And in today's power check, it's all about what people want and what they don't. Because Apple's one of the biggest gainers on the S&P up more than 2% leading the Dow, as analysts say early orders for the iPhone 15 seem strong. And on the negative side, Moderna, even as the Pfizer CFO cast doubts on how many people will get their booster shot this fall, Investors, you can see, sending that stock lower 8.5%. As we go to break, here's a quick glance at a 10-year yield ahead of that Fed meeting, zooming higher this morning, but sliding as the session goes on. We touched about more than 435, as you can see right there. A 431 Power Lunch. Now, we'll be right back. Welcome back, everybody, to Power Lunch. The major averages off-session highs ahead of a key Fed decision on interest rates. That comes Wednesday. We'll be there for it. While the Fed is widely expected to hold rate steady, our next guest says, He thinks we could see a surprise rate hike here on set. Greg Branch, managing partner at Veritas Financial Group and a CNBC contributor.

Greg, welcome. Explain your argument here. Because you're pretty much alone. I am pretty much alone. I've been pretty much alone for probably a few months now, Tyler, so the feeling is not a new one. I think that when we look at all the data, there are troubling sides about inflation. And, you know, for the last few months, I have been hearkening that we haven't actually really seen much disinflation.

So it hasn't been subdued. It hasn't been subdued. Inflation. And we are still counting the wins that we scored last year and several months ago as inflation is continuing to go down as we're continuing to experience disinflation. And that's just not the case. Corps has been going up 30 to 40 basis points since October. We had two months of reprieve from that in June and July, but now we're back at 30 basis

points. And when you look at the underlying metrics, only electricity, use cars, and airfares decline more than 70 basis points. And we have to wonder when the runway for that, with the strikes, with the fuel, with energy costs, when that runway will run out as well. And so we haven't been seeing much of disinflation to begin with. We were lapping the base effect from last year,

these huge numbers from June and July, that runway is going to run out. We are seeing across the board in various industries, as you guys just covered, other costs, costs of capital for businesses. And so I think that with the PPI we just saw, with the uptick and inflation in the last couple of months, with still record low jobless claims and still record low unemployment, that the Fed may very well be moved to do another 25 basis points. And do you expect at this meeting or in November or does it matter?

Both. On the one hand, I do, you know, if I had to place odds, I would say that. this meeting. Now remember, my terminal rate is six and a quarter. This would get us close to there. It would get us close to there. I mean, we're probably close than most thought we would be to begin with. When I made that forecast a year ago, many called it alarmist or ludicrous or

and other choice adjectives. But, you know, we're within reaching distance now of it. But to your other point, I'm not sure it really matters. At the end of the day, with a 525 basis point raise already, does another 25, does another 100 to my terminal rate target, is that what makes the difference? Or is it that we haven't felt the full impact of the 525 that they've already done?

I mean, I could go way out there and say, maybe they should be cutting rates right now. Yeah, that's right. I could tell you a story in which all of a sudden, you know, you get to Q4, maybe Q1 of next year, the economy starts weakening, everything's falling apart.

Right. People's heads are falling. No, but and you look back and you say, you know, they're supposed to be a leading body. All the leading indicators are terrible and have been. The yield curve's been inverted. All the rest is, and we're kind of, we're just waiting for the full effect to come, right?

So if they, if they were to go off of what they, what could happen in six months time, it might tell you something very different than kind of what's happened for the past six months. I would say that you're making a non-consensus argument with that case as well, though, Kelly. When I'm on these shows frequently, I've had other guests say that we've reached a trough in earnings. And so I'm not sure that the consensus view is that. that the macro environment's going to be that difficult. No, it's not. I'm just saying, you know, that if you were sort of say, hey, I think they should keep hiking.

I mean, there is an argument to be made that actually policy is already too tight right now. Yeah, we could make that argument, certainly. What I think, though, just based on the conversations that I hear you guys have and that I have, is that I'm actually probably a little bit more dower on the consumer and the macro environment for businesses than most. And so I have a hard time reconciling that with rate cuts, certainly for this year, which we talked about all at the beginning of this year. And even into next, I doubt that we get rate cuts next year. So let's leave the theoretical, the sort of the ethereal stuff on inflation and the Fed. And let's bring it home.

What's this going to mean from my money? What's it going to mean from my stock holdings? Right. So I think that we're going to revisit exactly what we saw last fall. I think that we'll revisit that 3,800 level. And, you know, for me that's... So you see a sell-off coming. Absolutely.

If we're not already in it. If we're not already in it. And it's really, this is based on the difference in my view and consensus's view. I don't see how we get from three straight quarters of negative earnings growth with a toughening environment, with cost of capital that's higher, with PPI indicating that supply costs are higher, with more challenges on the labor front. I don't see how we go from negative 4% negative 5% earnings to a flat third quarter. I don't see how we go from that to a negative to a positive 8% fourth quarter or 245 in 2024. And so I'm at 225. And when I put a 17 or 18 times multiple on that, that gets me to 3,800.

That's not consensus's view. Consensus view is 8% in the fourth quarter and 20% next year. And I just don't see how we get there in this macro. Interesting. Greg, thank you very much. My pleasure. Appreciate it. Greg Branch. Still to come, IPO, TKO. Some of the most anticipated names said to go public, seeing their valuations cut down dramatically.

But is a lower open price actually better for them in the long run? We will discuss in Tech Check next. The Big Tech IPO is back. First Arm, now Instacard and also Clavio, another venture-backed company. But these listings are looking very different than a few years ago. Chabosa has more for us in today's tech check. Deirdreau? Kelly, we're still early in this round of IPOs. There's only been armed, but of course we are looking ahead to Instacart, which is a well-known household name. And Clavio, which is an enterprise software

company that has been popular with investors a few years ago. But as you said, we're in a very different time. One, the market's more fragile. We don't know how they're going to go this week. And this time around, it's been characterized by down rounds. That is when a company raises money at a lower valuation than their last round. So as we know, Instacart was valued in nearly $40 billion just a few years ago. It's going to go public around $10 billion. Clavia was well. It was valued at around, I think, $10 billion in its last funding round. It's going to go public around that slightly less. So it maybe tells us that bankers are being conservative this time around. There's also the issue of scarcity. The floats in these IPOs are incredibly small,

to what we've seen over the last decades. And members from Deal Logic, on average, companies have sold 16 to 29% of their shares in IPOs over the last decade. Arm, Clavio, and Instacart, they're all floating less than 10% of outstanding shares. So that's very different, and that could lead to some volatility

on those first trading days. Part of that, too, Kelly, is they're looking for Cornerstone investors. These are investors that agree, or are given an allocation of shares at the IPO. Big names like we saw with Arm, look for. in Amazon or an NVIDIA, in the case of Instacart's looking to Norwegian's Norway's sovereign wealth fund, and that provides a little support in hopes to drum up some more retail enthusiasm.

So it's interesting to see what happens, Kelly, but all of these factors, they're important for the sustainability of this window staying open. For sure, I think it's much better for kind of public to get in on the downside than on the upside. But what about employees, George? I mean, do we have any sense of whether they're still going to be well in the money at these levels? Are some of them frustrated that they're going to get maybe a $9 billion

instead of a $50 billion valuation or whatever for their company? Absolutely. I mean, a lot of the employees, especially the earlier ones, they'll be okay. And there's things they can do in the cap table and financial engineering to make sure that employees come out, okay, they make some money from this. But it is complicated. And it's not as much as if they were looking at a $39 billion valuation. But Kelly, you and I have talked a lot about how downgrounds could be good for the retail investor,

but a word of caution here as well. The last time we saw sort of evaluation that, let's call it flat, that was Uber a few years ago in 2019. It was disappointing because it had raised so much money as a private company, and the IPO was sort of around that amount. It still didn't do well. So investors got to be careful, and there's some similarities between the two, right? They're both gig economy companies.

They're both, we're seeing increasing competition at the point of their IPOs. Instacart is profitable. That's a key difference. But important to keep in mind that just because it's a downround IPA, doesn't mean it's going to be a good investment. Great point. Deer, thank you. We appreciate it today, and we'll see how it goes this week.

Dear Gebosa reporting. All right, oil prices holding above $90 a barrel. So how much longer until maybe we hit 100, Pip Stevens? The calls are growing more and more frequent as WTI and Brent continued to make new 10-month highs. Earlier today, when asked about if we might see triple-digit numbers, as Chevron's Mike Worth told Bloomberg that he said it sure seems like it. We got UBS this morning saying that they see Bren at $90 to $100. In the next few months, part of that is thanks to interest from financial investors.

Brent's future structure is now in steeper backwardation, meaning that six months out, prices are $5 cheaper. And for the first half of the year, that was $1 cheaper. And so there is interest to make money as those contracts roll. We also had Citi's Ed Morris saying that we could see prices above $100. He, of course, has been a noted bear. But he said that gains this year probably means weaker prices next year. And one area to continue to watch is heating oil futures, of course, a price. proxy for diesel. Those are down today, but still up 30% in the last two months.

Diesel prices at the pump up 23 cents in the last month while gasoline has stayed flat. And in the PPI report last week, we saw that diesel between July and August rose 41%. So that is really something to watch here going forward. Wow. And airlines down again today. And warning that, yeah, that the higher jet fuel costs are eating into their profits. Definitely. But thanks. Thanks.

Let's get over to Kate Rooney now for the CNBC News Update. Kate. Hi, Callie, the sheriff of Los Angeles County emotional today as he announced an arrest in the deadly ambush of one of his deputies this weekend. The sheriff says the 29-year-old who ambushed deputy Ryan Clickenbrummer at an intersection this weekend was arrested this morning. He says tips from the community led to authorities arresting that suspect. In this case, Ryan's family will never see him again. Planned Parenthood resumed offering abortion services in Wisconsin. content today, they were halted for more than a year following the Supreme Court's overturning

of Roe v. Wade because of an 1849 state law that providers feared could be enforced that banned that procedure. A judge ruled last month at the 144-year-old measure does not apply to medical abortions. A federal judge ordered Starbucks to face a lawsuit claiming some of its drinks don't live up to their names. Consumers complain some of the coffee giant's refreshers actually don't have the fruits that they're named after as a main ingredient. Starbucks tried to throw out the complaints saying no reasonable people would be confused and that baristas could have dispelled any confusion. So talk to your local barista there, guys. Back to you. All right, know what you're drinking. That's the lesson. Kate, thank you very much.

Head on Power Lunch, we will speak to Power Player Steve Case about the state of tech amid growing regulation and the birth of AI. We will be right back. Welcome back to Power Lunch, everybody. By now, we all know about the pros and cons of artificial intelligence, or maybe we think we do, but concerns about the lack of AI regulation triggering a first of its kind, closed-door summit with tech leaders on Capitol Hill last week. Here to weigh in on that and more. And all things tech is Power Player Steve Case. He's chairman and CEO of Revolution and the co-founder of AOL. Welcome back to CNBC, Steve. Also, the author of Rod. the rise of the rest, which is now out in paperback or is tomorrow. It comes out on Tuesday. Steve, welcome once again. We're going to get to AI and the meeting last week on Capitol Hill. But one of the things that leaps out at me is that you see a direct connection between some of the divisiveness that we're experiencing in this country, the bitter, bitter sort of anger. and how technology jobs and technology capital is distributed regionally across the country. Would you explain the connection between the two and why you see it so clearly?

Yeah, for the last decade, about 75% of the venture capital backing these new companies with these disruptive ideas have gone to just three states, California, New York, and Massachusetts. So the other 47 states are fighting over the remaining 25%. And this venture capital is used to start these companies and create jobs in those communities. But most communities are not benefiting from new companies, but sometimes are being hurt by the disruption of some of these new ideas. So that's why we're trying to level the playing field and try to make sure everybody anywhere in the country has an idea that's a shot at building a company, kind of a shot at the American dream. And you're also creating jobs and hope and opportunity in those cities. And oh, by the way, from an investor standpoint, which is obviously the interest to your audience, you can generate great retirement. turns by backing entrepreneurs in these places. And that's what we're proving to do with our

rise-to-rest venture fund. But so how do you do that? How do you, I don't mean to say, break up the concentration of wealth and, and maybe of ideas. How do you do that and rather more democratize capital and opportunity and the funding for entrepreneurship? Well, we've been working on this for a decade, including we've done bus tours, about 50 different cities. We now have investments in 100 different cities. We've built a network where we're now have a co-investments with over 400 regional venture firms. So we've built it over time, really trying to establish this national network to support local entrepreneurs in these different communities. And we're seeing great example of these, you know, popping up just in Atlanta, for

example, we backed the company called Hermius. It's doing a Mach 5 engines, getting a lot of attention in Fayetteville, Arkansas. We've backed the company called Acre Trader. It's got a lot of momentum around a platform to invest in farmland. In Raleigh, North Carolina, we back to a company called Pryon, actually an AI company, started by the founder that sold his technology to Amazon to create Alexa. He's focusing on AI for the enterprise. We're seeing these companies all over the country, and we're encouraging other venture capitalists who historically have just focused on the coast to pay more attention. And the pandemic has been, in an odd way, helpful here. We've seen more of a dispersion of talent, people moving to different cities and the beginning of a dispersion of

capital. So we're making progress, but the reason I wrote the book, and it is great that the paperbacks coming out tomorrow is we wanted to tell the stories of these companies and these cities that are on the rise. And I do think hold the potential to help divide, you know, unite a divided country by creating more opportunity for more people and more places. And that was before, Steve, you knew the troubles that San Francisco was going to run into, although it seems like they've done quite well, actually, in retaining both in San Francisco, Silicon Valley, all of that, kind of like the AI startup capital and all the rest. I don't know if you're seeing that kind of spread out throughout the country, but I was also going to ask, at a time when the IPO markets are not so friendly,

does that affect the potential funding for Revolution's, you know, kind of target companies for the next generation? Well, Revolution, we have a seed fund, a venture fund, and a growth fund. They each operate a little bit differently. But Rives where specifically, because we're investing in these different cities, they actually never really benefited from the market boom a couple years ago when valuations got higher. It was harder for entrepreneurs in these cities. to raise capital. But the converse is when things corrected, there is less of a correction in these rise of the rest cities. The other part of your question in terms of AI, I think it's

worth noting that AI has been around for decades. It's integrated on products and services we use every day. Some of the focus around chat GPT and generative AI has gotten a lot of attention. And the San Francisco area has definitely led there. But we're also seeing AI meet the real world. AI kind of disrupt and big industries, healthcare and other industries like that. One company we backed in Chicago, Tempice uses AI and genomics to diagnose cancer and other diseases. So I think as you start seeing AI integrated with these other technologies and embedded in trying to disrupt some of these big industries, you'll see more and more of those AI-powered companies in the middle of the country in these rise of the rest cities.

The entrepreneur Elon Musk, who is prone to provocative statements last week called artificial intelligence a, quote, civilizational risk. Do you see it that way? And if you do or don't, why? Well, I see AI both ways. It has great power to improve things in fundamental ways. I mentioned how it can save lives in cancer. A lot of different things it can do that can be very, very positive for us and the world.

At the same time, there's no question there are risks, just as where there was the Internet. There are some benefits, but also some risks. The good news is even last week, as you mentioned, here in Washington, D.C., the number of key tech executives, including Elon Musk and many others, met with the Senate leaders to start talking about this. I think we need much more of that dialogue between the policymakers and the innovators. It's not like the early days or the Wild West days where the innovators just could do things willy-nilly. Now we really need to have that discussion and make sure we strike the right balance, including, by the way, how do we strike the right balance in terms

of competition? There's a risk with AI that the big, big companies get bigger. Big tech gets even bigger, and it stifles some of the innovation that comes from young companies from startups. So that's one of the issues we're focused on making sure that these AI platforms are open to allow competition, just as the phone networks were open four decades ago, and allowed companies like AOL and many others to compete. Yeah, I see that the idea that the big companies have the money, the capital, to get the data that powers AI. But I want to come back to that important modifier there.

He called it a civilizational risk. existential risk to mankind. I get that technologies have positives and negatives, risks, and potential benefits. Do you see it as a civilizational existential risk? Well, sometimes Elon tends to go for the bold statement as the Walter Isaacson book reflects, I mean, I have great respect for him as an innovator, but he tends to sometimes be a little bit of hyperbole, particularly on his own platforms. I see the risk associated with AI. I saw the risk associated with the Internet.

I saw the risk associated or heard about the risk associated with new technologies, such as agriculture technologies 100 years ago that when a time when 90% of us worked on farms, now it's 2% because we're used technology to grow more food at lower cost, which is a good thing for society, but did force us to retrain a lot of those farmers to work in factories. And similarly, we need to retrain people to work in the companies of the future, the industry of the future. But we need to also do it, which ties in with the rise of the rest of the book, all across the country. This won't work for the country if it's only in places like Silicon Valley. It's got to be all across the country supporting innovators who are

creating jobs in those communities. All right. Steve Case, you know, putting in the call for democratization of opportunity. Thank you so much. It's always good to have you with us. We appreciate it. Thank you very much. Real estate, whether it's home building, maintenance, or outdated heating systems, The whole thing has a massive carbon footprint. After the break, we'll take a look at one company trying to reduce emissions from old-fashioned oil-based heating. Clean start is next. Welcome back. Real estate is one of the worst environmental offenders when it comes to carbon emissions. Even worse than cars. Older buildings fueled with oil-fueled boiler systems top the list of offenders.

So what's the solution? Diana Oleg joins us with her continuing series on climate startups. Hi, Diana. Hey, Kelly. And, you know, I grew up in a pre-war building, so I know what we're talking about. about here, those systems. Most of the time the heat is just way too hot in one room, cold in another. So the race is now on to electrify these buildings, but that'll take a lot of time and money. So one startup is trying to reduce emissions from what's already there. The answer to old-fashioned dirty, oil-based heating is electricity and heat pumps. Companies like block power, gradient, and run-wise are working on that transformation.

But a Brooklyn, New York startup called Kelvin is working to improve. and decarbonize the existing old systems. They invented the COSI. The COSI is used to get control over those old radiator systems. We're able to stop heat from being released unnecessarily into those hot rooms and get it more efficiently to the cold rooms, which increases the efficiency of the building and makes it more comfortable. The COSI is basically smart insulation around the radiator that improves steam distribution around the building.

It can push the heat more efficiently to close. cold rooms and also store heat in the enclosure when the boiler's off so you can use it later. As a result, the boiler doesn't operate as much, burning less fuel, saving money, and lowering carbon emissions. The cozies are controlled by the user with a simple interface that lets them set the temperature, including scheduling, et cetera. And all those systems are connected to the cloud, to our databases, which help determine what the building is doing in response to the individual need of each room.

Kelvin says it has 10,000 coesies installed today and expects to triple that by next year. Fast growth that is attractive to investors like 2150. It's happened to be the most elegant solution we came across for those very hard to decarbonize whole buildings. And yet a viable business that can scale with venture type returns. In addition to project financing, Kelvin is backed by 2150, Third Sphere and a Vesta fund. Total funding so far, $36 million. And the government's IRA funding has been huge for Kelvin. A tax credit is helping them offer lower income buildings of subscription model at no cost.

That's something they wouldn't be able to afford otherwise. They're also a big part of New York's local law 97, one of the prescriptive items in the law, actually, which requires owners of large buildings to reduce carbon emissions starting next year with the goal of a 40% reduction by 2030. So a lot of homeowners are familiar with if you have to do the scan for the old oil. tank to see if you still have one of those around. Now, it seems like those are becoming pretty much obsolete. So for the apartment buildings, this is really kind of the next battleground, it seems like. Yeah, and we've seen a lot of companies that we've actually profiled here. One was called block power, which was electrifying buildings. But again, it's a huge task in a

place in New York City where pre-war buildings are the norm. And so to get that oil transferred to electric is going to be tough one. So this way, at least you're reducing emissions while you still have the oil there. And what's the financial impact of all this? to the typical renter. Yeah, I don't have to tell you guys how much oil prices are going up and so that plays into your utilities. But Kelvin says they can reduce the costs

by 25 to 40% of oil just by having to heat less. Interesting. All right. Thanks, Diana. Good to have you in the house. Great to be here. Will we see you Wednesday in Washington? Tuesday and Wednesday at Climate Week, New York City.

I will be here. We'll be here. Climate Week. Why else would I be here? All right. Good to be with you. All right, coming up. looking for some technical support as it loses some ground, we will discuss that name and others next.

Welcome back to Power Lunch, everybody. Time for some tech. We call our Geek Squad for some technical support to take a look at some movers of the day and the year and see which ones offer opportunity. I'm welcoming Jay Woods here, Freedom Capital Markets Chief Global Strategist. Good to see you. Thanks for calling me a geek. I appreciate that.

First up is Carvana, and we've talked about this one before. But I mean, look at this. So now it's up 1,000% this year. Analyst at Wedbush think it has more room to run. They just upgraded it to neutral from underperform. What do you see when you look at this? Yeah, so we did talk about this last August, and it was one of the things we mentioned was this little saucer bottom we see with the little cup.

Now, when we talked about it last time, it was retracing this area here, the gap up, and it came back and it tested what? It tested its 50-day moving average. So let's see if we can erase that. So this is the new line in the sand and support. But the thing you got to watch is this level here of resistance. Okay, it got there once before it failed. It pulled back.

So this is constructive. Do you know roughly what price point we're talking about? Roughly right now it's $44. Got it. Before when we were here was $36. So it is moving. It's moving up rather quickly. This is in an area now around 52 where I don't like the setup right here because it's more of a

coin flip. Will it come back, pull back to 44? If you're a believer in the stock, yeah, maybe this is the time to buy it on a dip. I'm someone that wants to have price confirmation, so I want to buy it on a breakout. And this is where technicians get a little bit of a bad rap. Well, it's at 52. If it goes to 58, it's up six points, you're missing it. But I want to be sure from a risk-reward point of view, because if it does break out,

and we have until next November to watch November 3rd is when their earnings are coming out for that next catalyst. We did have a wed bush upgrade, but let's see what that next catalyst could be. I would probably buy it on a pullback with the stop set around that 50-day moving average, And then I would chase if it gaps above that little area here. Interesting. What a strange and unexpected year it has been for Carvon, especially with all of the problems we've seen. Let's move on to Nvidia, which has been giving back some ground.

Down from the all-time highs in August. The stock's still up 200% this year. This one, I mean, it's the stock of the day, the moment, the year. What do you think happens here? Well, something's changed. All right. We want to see two things here. We had a nice gap here on an earnings.

We had a nice gap here on a monster earnings report. And this candle, this is very important to watch. This was earnings day. It gapped up to 520 after hours. It opened at 502.10, traded at 50261, I believe, was the top. And it reversed. It closed on the low. As a technician, that price action is horrendous.

All right? We had what we thought was another breakout to another level. It failed. So what has it done ever since? It came back. It retested its 50-day moving average. It also failed there. So what I'm looking for, and I love in a video over the long term, I think this is one of those stocks.

You buy, you put away, as Dan Ive says, it's early innings in the AI story. This doesn't get any better. But right now, if you're looking for a pullback, there's 98 days until Christmas. You may be able to get it on sale and put in someone stocking a little lower. Would you be watching for the 200 day as the next? Let's not go to the 200 day. Yes, that would be a problem because then you're filling this gap here, and that's at 375. What I'm looking for is a pullback to about 403.

That was August 14th. That was its low. And then maybe digest and go sideways in this area and you have a nice neutral trend. And then wait for the next earnings. That's not until around Thanksgiving time. So I think it's on pause right now. It's not the end of the story. But the sentiment did not follow price this time.

The sentiment was great. Price led and price always leads sentiment. Very interesting. All right. That brings us to KB Holmes, the home builder. They're going to report later on Wednesday. Lenar last week had that earning speed on the top and bottom line, but traded down after the results. What does KB look like to you?

All right. This is a technician 101 line in the sand. You have what we call a neckline, a shoulder, a head, and a shoulder. All right. So what happened? We had strong volume here on the left shoulder. This is good. Broke out.

Stocks up 47% year to date, having a tremendous run. Are there headwinds? Yeah. Mortgage rates continue to be extremely high. Absolutely. have precedence. We had Lenar last week. They had their earnings out. They beat. What did they do? They traded lower and they broke down to the 200-day moving average. So right now with this setup, given how, you know, the stocks have acted in the sector, given the run and given the setup,

I see technically, I think this 47 and a half, 48 level, while it held so far today and Friday rallied from there, despite earnings, it could break down and then, you know, head and shoulders top. You have an easy calculation. You take the neck line to the top of the head, and then you add that seven points, you subtract it from the neckline. We're talking 40 and a half. All right. Two-hour-day moving average around 42. So I think that's a safe assessment on a pullback and maybe a better entry point if you still believe in the long-term store. Fascinating. A couple of stocks here that have had a change, like you said, a change, a change, both NVIDIA and KB and maybe Lenar as well. Jay, thank you so much. We appreciate it today.

We got necklines. We got heads. We got shoulders. We got saucer bottoms here in this segment. We give it to you every day here right here on PowerLine. All right, coming up, giving a whole new meeting to the phrase data wipe, the latest on a major hack in Clorox, in closing time next. All right, welcome back to the stories you need to know. The latest company to be hacked is Clorox. And Amon Javers joins us now from Washington with more. Hi, Amon. Hey there, Tyler.

The Clorox Company is trying to clean up its IT systems today. The company announced it had been victim of a cyber attack back on August 14. But today it's saying that the financial impact of that attack will likely be material to its quarterly results. Clorox says the attack damaged portions of its IT infrastructure, which caused widespread disruptions of its operations. That led to a lower rate of order processing and an elevated level of product outages. Clorox says it can't tell yet if the impact will be material to its annual performance as well. Now, the company now says it believes it has contained the attack and is transitioning to normal processing on the week of September 24. It says it has resumed production at the vast majority of its manufacturing sites, but the company can't say exactly how long it's going to take to get everything back to normal.

The company also didn't offer any insight into who the hackers are, whether they have demanded a ransom, or whether the company has negotiated or paid any money in exchange for access to its own systems. This disclosure now comes on the heels of last week's major hacks of MGM Resorts and Caesar's Entertainment, conducted by a group that some researchers call Scattered Spider. not clear if scattered spider is at play here in the Clorox attack as well. No indication on who carried this out. So very quickly, 30 seconds left. This did not merely affect financial or HR. This affected production. Operations, yeah, their ability to actually put product on shelves. That's why they're saying it could be material to their quarterly results. But they say they do have everything up and running. I asked them for an update on the investigation. They said the investigation is ongoing. They brought in some outside consultants for it. Very interesting.

Amen, thank you very much for following that story on Clorox. We appreciate it, and we appreciate you for joining us on Power Lund. Closing bell starts right now.