Power Lunch - Rally Keeps Rolling, The ‘Exor-Swift’ 8/31/23

Episode Date: August 31, 2023

The tech rally rolls on, as today’s key earnings reports seemed to satisfy the markets. Will tomorrow jobs report be enough to keep it going as well? We’ll discuss.Plus, move over ‘Barbenheimer!’ Taylor Swift’s concert movie is set to debut the same day as “The Exorcist: Believer.” Will the ‘Exor-Swift’ be another jolt to the box office? We’ll explore. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch. Alongside Contessa Brewer, I'm Tyler Matheson. Glad you could join us today. Coming up, the tech rally continuing today. Two key things the markets are going to be continuing to watch. Earnings today, good enough. Will tomorrow's jobs report be just right to keep the rally going? Plus move over, Barbenheimer, a Taylor Swift movie coming out in October. It's a concert flick. The Friday the 13th, the same day as the new Exorcist. Will Excer Swift be another day? Jolt to the box office. Contessa. You see the mashup now is happening even with the movies, right? It's not just about couples anymore. Now it's the movies. Let's get a check on the markets here. You've got the Dow Industrials

in the red now off by a tenth of a percent of the S&P 500, up a tenth of a percent in the NASDAQ composite, up a third of a percent. It looks like it's the eighth update in the past nine sessions for the NASDAQ. Salesforce, keeping the Dow from being down more. It beat estimates for the current quarter, raise guidance going forward. It also says it is meeting targets for the profit margin improvement ahead of schedule up 3 and a half percent. The cybersecurity stocks on the move today. You have OCTA and CrowdStrike both jumping following their reports after the bell last night. Octa now up 14 percent and crowd strike up 8 and a half percent.

Tyler. All right. We begin with the markets. The NASDAQ staying red hot even as summer winds down. The major averages try to trim monthly losses. The NASDAQ in particular still up 30. 33% this year and on track for its best performance year to date since 2003. Will this rally that has taken hold in the past 10 days or so continue?

Let's bring in Michael Lansberg. He's Chief Investment Officer at Lansberg Bennett, private wealth management. Mr. Lansberg, welcome. Good to have you with us. August began in a notably soggy way, and with all due respect to Florida and South Carolina and Georgia where they're digging out from the sagginess. It is ending on a pretty positive upswing.

What does that tell you? Well, I think a lot of what's happening in NASDAQ land is the fact that earnings are really good. I mean, we went from an environment where it was 13% negative year-of-year earnings in the fourth quarter. Then the first quarter was negative 8. Now it's a positive 12%. So they're actually seeing earnings. Obviously, multiples have expanded. But tech earnings have actually been good, whereas the S&P earnings have gone the other way.

We're still seeing a deceleration. So that's kind of where the action is, is in tech, not obviously just those big. big seven names, but earnings are really driving some of this as well. Okay, so Michael, how do you suggest that people go, you think it's time to rebalance portfolios, how would they go about doing that? Well, I mean, part of it is the fact that, you know, those magnificent seven are up, I think, on average, 99% in the first eight months of the year. You probably can't chase them here.

I think you have to be realistic about kind of where you are from a time frame standpoint. So we do like some of the other names, you know, that are out there that haven't moved that are having earnings growth. As I mentioned, the SMP doesn't have any earnings growth, very hard to find. So when you do find it, I think those are some good opportunities to look there to rebalance away from some of the winds that have moved so much into some other names that have been a little bit slower, as well as look out of the country. You're suggesting United Healthcare McDonald's Diageo and Lockheed Martin as some of your choices here right now.

What do you think? Do you think that the volatility we've seen in August continues into September? I think you do. I think obviously with the inflation numbers are a little hotter, you know, and I think that was a July number that we saw today. I think in August they're a little bit hotter. I think the Fed moves again in August in September. August historically is a pretty volatile month to begin with. A lot of people on Wall Street aren't working, so the volumes are down. So part of it's just taking some money, slight profits off the table and allocating this some other places that have had earnings growth, but just haven't had stock price moves as much as some of those big tech names. So what do I do with those big tech names? Trim there?

Yeah, for example, like a name like Navidia that's up over 200 some odd percent. We love Navidia long term. We've had it long term. But when it goes from 4% of a portfolio to 9% in eight months, it probably makes some sense to take a little bit off the table. We still think it's obviously the best place to be for AI. But AI is not going to be a straight line up. And I think you've got opportunities to be able to trim, add to other things. we're in the risk management business. And obviously we want to make sure that clients can experience the whole run.

People forget it was only last year or all these big magnificent seven were down 40, 50, 60 percent in a year. You can have those corrections. You want to be rebalancing to some other parts of the U.S. as well some other parts out of the country. Well, yeah, Nvidia in particular, went from Penthouse to outhouse and back to Penthouse. You are a little bit, I would say, in the minority with respect to your prediction that the Fed will raise rates in September. Why do you think September will be a live meeting with a quarter point hike? Part of me has been, we've always heard for a long time, don't fight the Fed, but it seems to be,

everyone wants to fight it on the way up. Nobody ever fought him when they're cutting rates. And we just had a little bump up in PCE. Inflation's not 2%. It's actually bumped up. We think it continues to go higher. So I don't see there's a reason to not take him out his word that he raises. We have in our models one to two more before the end of the year. Maybe I'm wrong. it's not September, maybe it's December. But I believe you get one in September, you know, given kind of where we are with inflation being a little hotter than expected. What they like to see PCE-wise isn't heading towards two. It's heading back the other way. And again, I think you're going to see that with energy prices continuing to move higher as well, kind of across the board.

The consumers feeling it. Michael, you also say that you don't have to fight the Fed if you look internationally. Absolutely. I mean, we look at businesses who are countries from the top down and say, who's growing their economies and whose federal or central banks aren't raising rates to stifle that. And that's been an area, for example, Japan's been a large play for us all year. India as well, we're getting great GDP growth. And you don't have the kind of their central bank raising rates to kind of kill that growth. We think that's an opportunity. And specifically in Japan, we've actually liked to play where we're short the yen, you know, long Japanese stocks. There's ETFs that do that. They're actually doing quite well. In fact, almost, you know, NASDAQ,

with a lot less volatility and, again, more diversification. Michael Lansberg, it's good to talk to you today. Thank you for the advice. My pleasure. Markets climbing several hurdles during this two-week mini-rally. Tomorrow we get another one, the August jobs report. For more on the economy and the bond market reaction, let's get to Rick Santelli in Chicago.

Hello, Rick. Hi, Contessa, and thank you. I'd like welcome a special guest on today's important day-to-day. And tomorrow, of course, big jobs report. Jerome Schneider, managing director of Pimco, Jerome, welcome. And I'm going to start right out looking at today's data because I disagree with the conventional wisdom out there. All's I hear all day is that year-over-year core PCE at 4.2% was in line.

It might have been in line, but it was one-tenth hotter and the entire year has been above 4.1%. Over half of last year was above 5%. And we haven't been below 4% since September of 2021. Do you think in line's important or do you think that's awfully sticky looking? It's a little sticky looking. In fact, I think we have to caution investors from looking at too much of the minutia of any one data point, whether it's today's figures with spending an income or tomorrow's figures with jobs. The reality is that the notion of what is inflation is a complex notion.

We have the Fed themselves looking at several different indicators favored by the PC indicator, but the one today is actually pushed to be a more subdued level due to price level, indications, which are basically coming off the peak point that we've seen over the past few years. So the goods pricing, the services pricing, those are all moving lower and creating a more, perhaps euphoric marketplace for risk assets. But in reality, it's a longer term equation that's going to have more complex variables, specifically the wage variables that's going to come into play. So when we think about the Fed, longer term, when we think about the Fed, how much time do they have? I don't think you're going to get this thing under three and a half percent next year either,

do you? Well, one of the things that you have to... One of the things you have to focus on is that the Fed is perhaps more data dependent. But what they've explicitly stated in the Jackson Hole mission was that inflation is going to remain a focus, which means perhaps in the near term over the next three months, maybe even longer, there will be going to be less data dependent. So the conquest of inflation is a longer term, frankly, prognostication at this point in time, where you do have some upside propensity for wage pressures to come into the

equation as we enter into 2004. That's going to be the outlook as we look at average hourly earnings tomorrow, employment cost indexes, other factors that come into play, despite a very robust economy in terms of growth and growth outlook specifically in this third quarter right now. What about the savings rate today, Jerome? Savings rate moved from 4.3% in June to 3.5% in July. That's the lowest savings rate since October of 2022. Is that the nest egg that we see that's been giving some investors and some consumers, a little extra horsepower. What do you think about that, drop? Is it something to be concerned about?

It's absolutely something to be focused on, not necessarily concerned about at this point in time. It has been the basis of resiliency in risk assets and the market in general. The decrease in income was obviously noteworthy today, but on the flip side, you had the increase in spending, which obviously brings that savings rate down to about 3.5% or so. More specifically, though, what it also highlights is that nest egg,

that savings sitting on the sidelines on that private sector balance sheet, the consumers, has been quite robust. And in this outlook, which we remain more conservative at PIMCO right now, we have to be very mindful of the fact that the private balance sheet, the consumer, is actually in a much healthier spot than we've seen in other parts of a weakening economy where we're going to be more conservative. Rather, it's the public balance sheets that are basically in the focus now. There's many stories today about a pivoted PIMCO. They're starting to look at mortgages. And one thing I've looked at, if you look at the credit default swaps on investment grade credits, okay? They are at the cheapest levels in 18 months.

Year to date on investment grade and year to date on high yield spreads, they've really come in. It's made mortgages look cheap by comparison. Now all of a sudden everybody seems to be jumping into the mortgage arena. Is this the type of dynamic we should be worried about? Because these spreads that are shrinking in investment grade and high, They're shrinking on top of treasury rates that are much higher than they were just a few years ago. It's a key point, Rick, and I think investors should be focused on not necessarily that the spreads are very tight, but the economic outlook, which remains more conservative.

At PIMCO, we're still thinking that there's at least a possibility of a recession, not a high probability, but a possibility. And when you have that environment, you want to be more conservative with how you're allocating corporate credit. We think agency mortgages are a high-quality diversifier to that, that allows, you to basically be in the higher income world of the fixed income universe at a lower volatility point that complements your ability to earn a diversified sources of income. So we don't disagree with the fact that corporate bonds spreads and allocation of corporate bonds is perhaps a slight underweight at this point time, as it has been for the past few quarters, really predicated on a more conservative outlook for the economy, challenged by increasing funding costs,

but I'll tell you what, with tomorrow's data points who want to pay particularly close attention, all the wage components, of course, and the no way. that on the corporate arena, the faults are up, but investor demand is also up a very strange brew. Thank you for joining me today. Tyler, back to you. All right, Rick, Jerome Snyder, thank you very much. We appreciate your time of both of you today. Shares of Dollar General getting crushed today. Let's bring him Courtney Reagan for Market Flash. Hi, Tyler. Yeah, so Dollar General show is really suffering the worst day since June 1st, but the worst month since August of 2016. And the second worst monthly performance since its IPO in 2009.

So the discounter put up a really disappointing quarter with an unexpected comparable sales drop, lower traffic for the third straight quarter, a huge profit miss, and a slashed outlook. Dollar General calling out softer sales trends and shrink for the balance of the year, though some of the shrink is theft. Yes, some of it, too, damaged goods. Dollar General executives pointed to continued pressure on the low-income consumer. That's its core shopper, buying fewer items, relying more on that $1 price point that they have, buying closer to paychecks, too.

But J.P. Morgan downgrading shares to neutral, citing five headwinds that are actually much more than macro pressures. They think it's more of an operational issue and execution by the company because certainly there are others that are able to do well in this low income environment when they offer low prices. How is that a departure from what we've seen with Walmart? So what's so interesting about this is it's almost opposite of what we saw in 2008, 2009, when Walmart was losing share to dollar stores. if you might remember that consumers were going to dollar stores for these like fill-in trips. Gas prices were high, also buying close to paycheck, and Walmart was losing out. This time Walmart seems to be taking share from the dollar stores. Interesting.

Yeah. Interesting. Court, thank you very much. All righty. Coming up, the next retail earnings on the horizon, Lulu Lemon after the bell, the stock has been anything but a downward dog this year of nearly 20%. That is coming up. And as we had to break, a quick power check, Western Dillon. Digital leading the S&P 500, hitting a new 52-week high.

Losing power today is C.H. Robinson falling after a downgrade to negative by Susquehanna and a new price target of just $77 a share. It's above 90 right now. Power lunch will be right back. Well, delivering Alpha is just four weeks away, but you don't have to wait to start getting insights from some of the biggest names in investing. Leslie Picker joining us now with the details from her newsletter. It is called Delivering. Alpha. Appropriately named, right, Tyler? What a concept. What a concept. Today's newsletter features Alan Waxman, the CEO and co-founder of 6th Street. The firm is a huge player in the direct lending space. Waxman spoke about the explosive growth it's seen recently. So that whole dynamic right now,

the evolution of the financing market changing away from what was predominantly all banking activity, now to more private market activity. That is a mega theme that's really hitting across all asset classes, from corporate finance, the way corporates are financed, those small, medium, large-sized companies. You mean public, corporates? Public, private, it's public, private, it's real estate, it's infrastructure. The whole plumbing of the system and the way it's financed is evolving in a pretty accelerated way. All the capital that's gone into the direct lending space and the private credit space, some people have criticized that as being, you know, the potential for a bubble. Is that what

you see, given just your perspective on the space and your view of competitive? as well as your own book? It might be a bubble, but it doesn't pose systemic risk. And that's the important point, because a lot of the, at least the way Sixth Street does it is our capital. It's long-dated so we can match assets and liabilities. It's highly flexible. Waxman says private credit distributes the risk through institutional investors with longer-dated capital, as opposed to short-term deposit holders, guys.

So how did they do last year, do you know? We don't have their performance figures right now. But I know that their AUM has just grown tremendously. They're at over $74 billion in assets. And they span all sorts of high growth areas. You've got just growth itself, direct lending, which has been a key area for alternative investors right now, as well as infrastructure, real estate. They invest in agriculture.

I mean, they're worn out of a Goldman Sachs, former Goldman Sachs alum's who put together this firm. It was initially associated with TPG to do companies. to do kind of special situations work and then recently spun out and now they're involved in all of these pretty high growth areas. When you asked him about the bubble, he seemed to be tap dancing, walking on a tightrope just a little bit to say, well, we don't do it. And could it be a bubble?

Yeah, but it's not systemic. Which, you know, who's not going to say that? Did you get a sense from him that there's any concern about all of this being overinflated? I think that I didn't get a sense outside of what you saw in that clip right there, but I think his point about it not being systemic. is basically a note to regulators saying, if it's not systemic, you don't need to come and regulate this further, which would be kind of that next derivative of,

if it were a bubble that popped, regulators would say, oh, we should have been more involved here. So by saying it's not systemic and his rationale is basically, you know, you wouldn't need a taxpayer-funded bailout if this were to implode in the way that you would, if a bank were to fail. What he's saying is basically all of these regulations that we see in kind of the traditional banking space right now,

don't need to come into the private credit space because we have a different distributed risk profile. Our clients are institutional investors with longer dated horizon so that if it, you know, if something were to happen, then, you know, it wouldn't kind of ripple, have a ripple effect into the rest of the economy. At least not immediately. I mean, we don't know, right? We've never seen this before. Private credit in kind of this size and scale is a new thing. It's a new phenomenon.

And so we're seeing as... the banking system anymore. Not all in the banking system. It's not syndicated. Yes, it's with institutional investors, largely with the private credit side of things. But, you know, institutional investors are pension funds and endowments and nonprofits and all, you know, other areas of the economy. It's not just wealthy individuals that are exposed here. Leslie, thank you. All righty, be sure to subscribe to Leslie's delivering off a newsletter. It is chock full, chock full of investing insights from the biggest names in business. Scan the QR code on your screen or sign up at cnbc.com slash delivering alpha newsletter.

As Maui recovers from the devastating wildfires in Lahaina, the question resonates, how do we prevent another tragedy like that? Some companies are now working on what could be a solution. Jane Wells is out on the West Coast following this for us. Hello, Jane. Hi, Contessa, yeah, there's red flag warnings in Hawaii again today. Up in Northern California here, we've got some major wildfires. Isn't there something better than just a siren?

which doesn't tell you anything? Yes, when Power Lunch comes back. Welcome back to Power Lunch. Hawaii's devastating Lahaina Wildfire highlighted a growing need for a better warning system, especially because the fires are becoming more intense and they're popping up in places they never did before. Jane Wells is in Laguna Beach, California now where...

Jane, you're looking at new technologies that are being tested now, right? Yeah, I mean, look at this canyon. people in this luxury coastal town are very familiar with how devastating a fire can be. Now, like Maui, here in Laguna Beach, they have these speakers. Authorities in Maui reportedly didn't turn on the sirens during the Lahaina fire because they were afraid people would think there was a tsunami and run away from the ocean and into the flames. Well, instead of a siren, what if the speakers could speak?

This is a test of the Laguna Beach outdoor warning system. Laguna Beach has invested $1.3 million in a cloud-based alert system by a company called Genesis, which includes 24 speaker locations around town. System combines spoken messages with text alerts. They use a system twice last year to order evacuations during fires like this one, and the speakers can also operate off a satellite if the power goes out. While we have patrol vehicles and PD officers trying to do door-to-door knocks and drive-through on there, It's another way for us to just yell in their backyards and say, hey, pay attention, something is going on.

Hawaii does not have a system like this. Could it have made a difference? Many communities in California are using it now. It's also been installed in places like Fenway Park, automobile plants, and all over Japan, which became a customer after the Fukushima disaster. Using sirens that we were using in 1940 in 2023 in 2023 is a, is a, it's just, insane. Now Genesis says that its revenues will double in two years to a hundred million dollars. The installations ballpark figure average fifty to a thousand dollars each but what sets it apart says the CEO is not just the voice but the clarity guys. Yeah I mean that makes sense to me but we should mention Genesis is a publicly traded company but it's got a small market cap about a hundred

to twenty million dollars. I'm curious when you were looking at this and and starting to scout around. What did they say, what have you learned about why the alerts that we get on our phones about Amber Alerts or, you know, weather warnings? We all carry these around. Like, how come we're just not using the phones? Why are we even relying on physical speakers? Well, you need a system of everything until it goes out, Contessa. I mean, you need the Amber Alerts until you can't get cell service. You need police. police and firefighters driving around knocking on doors until they have to get out of there. And you need speakers as long as they will last until they burn down. And the good thing about

this particular system is it's hardened against power outages with some use solar power, some use satellite power. It's just one more thing when everything goes bad. You have another tool. Jane, thank you so much for the story. Really appreciate that. All righty. Oil prices are rising ahead of the Labor Day holiday weekend. Pippa Stevens here with the details. Hi, Pippa. Just now turning positive for the month of August. And now all eyes are on whether Saudi Arabia extends that voluntary production cut beyond September and into October. And there is expectations that they will make some sort of announcement on that next week, given that earlier today, Russia's Deputy Prime Minister Alexander Novak reportedly said that OPEC had reached an agreement.

And the cuts really are working. Saudi Arabia's exports so far this month are now at their lowest in more than two years. So another thing that's underpinning the market here is strong demand on the product side. So that's things like gasoline, diesel, and jet fuel. It's now on a seasonal basis above the pre-COVID levels. And we have a chart here showing the 321 crack spread, which is how refiners measure their margins. And you can see that while it's down from the off-the-charts levels of the last two years, it is still very healthy from a historical perspective. But again, capital's John Kildoff telling me that that $40 level is awesome at points in history. It's negative. And so that demand there is what's really driving oil prices here because if refiner's

are getting that large of a spread, they're going to keep buying, and that drives up the price of oil. And we're seeing higher gas prices, too, up 6.7 percent since Memorial Day, where normally you would see gas prices declining more than 3 percent in the summer, and that's factoring into a lot of speculation about where the consumer is going to pull back as well. Pippa, thank you. Let's get to Courtney Reagan now for the CNBC News Update. Hi, Court. Hi, Contessa. Former President Donald Trump's legal team filed a motion to sever his case from 18 co-defendants in his Georgia election case who were asking for a speedy trial. The court filing came hours after he waived his arraignment and pleaded not guilty in the case. It also came on the same day Georgia Governor Brian Kemp

dismissed calls for a special legislative session to remove the DA who brought the charges against Trump. Well, the Biden administration proposed a new rule today to eliminate the so-called gun show loophole. Essentially, it would require anyone who deals in firearms for profit to get a federal license and conduct criminal background checks, regardless of where they sell firearms. It is one of the biggest attempts to regulate the sale of guns in the U.S. in years and likely to be challenged in court. Harley Davidson is recalling more than 65,000 motorcycles because they could be more likely to crash.

According to Federal Highway Safety Regulators, some models of the soft tail motorcycles have an issue with a fastener on the rear shock absorber that could damage the back tire and make it loose pressure. Harley says it will replace the part for free. Tyler, back over to you. All right, thank you very much, Courtney. And ahead on Power Lunch, Lulu Lemons, winning streak. The Athleteisure Giant will try for its 12th straight earnings beat when it reports after the bell today.

Can it keep up the momentum in the ultra-competitive apparel market? We will discuss that on the other side of this quick break. Welcome back to Power Lunch, everybody. Chipmaker Broadcom could have a high bar to clear when it reports earnings after the bell this afternoon. Christina Partsenevilus joins us now with what, we expect. Hi, Christina. Hi, Tyler. Broadcom is the last tip maker to report this earnings season, and after we saw a pretty muted stock reaction to Nvidia and Marvell post earnings last week, there's a lot of worry about how high that earnings bar is set. Fortunately for Broadcom,

ownership is higher on the buy side when compared with Marvell technologies, for example, given its lowered Ford price to earnings valuation 21 times versus 34 times, and its larger revenue contribution from artificial intelligence. How so? Well, Broadcom makes Ethernet and custom silicon used in AI infrastructure. So it actually has tangible exposure that goes just beyond the processors made by Nvidia. Another positive for Broadcom is it's usually a little bit less cyclical than other chip names. In five of the last six quarters, all of its various semiconductor business segments grew year-over-year. Investors, though, will want to know or hear more about Broadcom's acquisition of cloud computing software provider VMware. It did get the green light

very recently from the UK. Now Broadcom is waiting for regular. review from China. Seems like it's going in the positive direction. Overall, though, Broadcom is seen as an actual AI play aside from Nvidia. And if it closes in the green today, that will be 10 months of positive games out of the last 11 months. Not too shabby, given the cyclicality of semiconductors and the fact that it's not named Nvidia. Shares are up 3%. All right, Christina, thank you for that. Lulu Lemon on deck to report after the bell today. And Wall Street expected to see some earnings growth there. The athletics apparel maker has had a nice run of beats.

It beat 11 consecutive quarters. So the question is, can it do it again? Our next guest thinks Lulu's metrics are peak. Expectations, of course, are very high. But the risks are growing of a slowing consumer. He has an underperform rating on Lulu and a $250 price target. Let's bring in Randy Connick, retail analyst with Jeffries. Hey, Randy, good to see you today.

Give me a sense of what you think the challenge. are for Lulu to come in and beat again? Look, I actually think Lulu Lemon's going to beat the quarter. I think everyone thinks they're going to beat the quarter. The question is going to be is where do we go from here? What's next? What's the next year and what's in the next couple of years? And I think what the market doesn't really think about

is the category that Lulu Lemon plays in, which is basically apparel. Apparel is a very competitive industry. We were talking about maybe on this program eight years ago, eight years ago about Under Armour being the best in class darling of the athletic apparel space. So, you know, our concern about Lulu Lemon is that the category of athletic apparel is, you know, much smaller than athletic sneakers, for example. And we'd actually prefer Nike where Nike is in a duopoly with Adidas, and we think that's a better category.

So our real risk here with Lulu is that we think they're going to start to run into a wall in the next couple quarters where the growth starts to slow and expectations just are getting too high. And you're seeing it there on the screen at right now, looking for signals that the belt bag catalyst is waning. Literally, I just said upstairs with some of my younger colleagues, I said, wait, a belt bag. Is that a fanny pack? What is it? Wait, it's a fanny pack. But it's back in style so much so that even the 10-year-olds, Randy, are giving it as a birthday gift, 10-year-old boys. Why is a specific fashion item like, they call it a satchel, not a belt, bag, but whatever. Why is that a specific item like that so important to a retail brand,

the size of Lulu? Yeah, and Satchel, we've all seen the movie Hangover, so we understand. But it is a belt bag, is what they call it. But, you know, I think the issue here is this belt bag is basically a fad. We've seen these fads come and go. And the actual contribution to revenue of the belt bag to Lulu Lemons revenues is not that high. But what happened in the year of 2020, starting around this time is the belt bag craze got so severe or so hot that it caused extra amounts or excessive amounts of extra traffic and transactions to occur in the company's store and on their website. And you just pointed it out.

There's people are giving these gifts to 10-year-olds. And if you remember about 20, 20 years ago, coach ran into a problem where they were expanding their assortment to a younger audience, a teenager, if you will. started to alienate the core customer, the mom of that teenager. You know, what Lulu Lemon does with this belt bag attracting the 10-year-old is it could alienate the core consumer and have them go to other brands, like a brand we're seeing in the marketplace really grow right now is Viori. So, you know, competition's always just coming up the corner, and that's something that we

want to watch and monitor for Lulu Lemon going forward. Viori is very good. I have several of their garments, which I bought online. I would say the one thing I would challenge you on is the idea that Lulu Lemon for many, many years now, has been able in a way not to reinvent themselves, but to stay fresh. When you go into a Lulu Lemon store, chances are it's going to be maybe the second or third most crowded store in the mall after the Apple store. Look, I don't disagree. The company's done a great job of keeping things fresh.

But at the end of the day, they're also starting to reach into other product categories to try to extend that growth. Case and point is the footwear offering. The footwear offering hasn't done well for the company. And it might show the company's strategy is getting a little kind of, you know, going in the wrong direction. So that's our concern going forward is a lot of the easy growth has been had here. And the growth ahead will be tougher to come by. How important is China to Lulu's growth? Yeah, China is a great story for the company. I'll admit that. And I think they've done a great job there. But when you think about the contribution of China to the overall fundamentals, it's less than 20% of the business. Obviously, the balls on the stock will point to China as a growth story going forward. And they're not wrong in that. However, you know, the way the stock will trade going forward is really what happens in the United States market. And that's where they've done, you know, done excessively much better.

than the balance of the retailers out there in the U.S., i.e., you know, metrics are at peak levels here. So what we think is going to happen from a stock trading perspective is the market's going to really focus on what happens in the United States, irrespective, of the nice growth in China. And that's what's going to matter to the story of the stock as we go into 2024. And again, we think those risks for the U.S. market are now rising. All right, Randy, thank you very much. Randy Connick, we appreciate your time today. Thanks, guys.

And coming up, following the money, billions in federal funding from the Inflation Reduction Act, starting to trickle into the economy. But will it be enough to move the needle with voters come election time? We'll discuss that when Power Lunch continues. Welcome back, everybody. A new Ford Battery Plant is heading to the city of Marshall, Michigan, thanks in part to funding from the Inflation Reduction Act. And while the plant is expected to bring tens of thousands of jobs and economic activity to the region, not everyone seems to be happy about its arrival. Our own Emily Wilkins is live on the ground there following the money trail for us. Hi, Emily.

Hi, Tyler. Well, when Biden signed a law incentivizing electric vehicle battery producers here in the U.S., he anticipated that it would lead to developments like Ford deciding to build a 3.5 billion electric vehicle battery plant right here in Marshall, Michigan. Under the new law, Ford can receive tax credits for batteries and EVs, and that helped Ford decide to build here in the U.S. rather than building abroad. Sue Damren's own Schulers, an iconic Marshall restaurant that's been serving the community for more than 100 years. She said the new factory and the 2,500 jobs it brings

will give businesses like hers a boost. We are excited about the opportunity for there to be the jobs that will be coming back to our community. And one of the things that we look at here in the restaurant is that when people come to the jobs that are being created, those people will have families, so there'll be spouses and children that will come to the area because of those jobs. The excitement has been mixed with concerns about the factory's impact on the environment and that Ford is collaborating with the Chinese battery company, contemporary AmperX technology, to help create the batteries.

Ford has also received more than one billion in subsidies and tax breaks from the state. The facility won't be done until 2026, and some residents tell me they'll have to wait then to see. what the ultimate impact on Marshall will be. That could complicate things for Biden, who is running on the impacts of the law. Back to you guys. So the objections to the plan, we just saw several billboards indicating that there are people who object to it, are what? Environmental or the fact that it's going to overwhelm the small town with traffic? What? I mean, it's a number of things. I mean, the folks in Marshall, this is a small community in a rural area. A lot of folks really do not want that to change. They moved here to kind of get that

country lifestyle. They don't want to have a big factory in their backyard. And I have heard from a number of folks who continually bring up that Ford is partnering with this Chinese company. Now Ford, of course, will own the plant. They'll be the only one to get the subsidies and the tax breaks. But just the word China has brought some concern to this community for what this factory is ultimately going to look like. Ford's been trying to address some of the environmental concerns, explain a little better about what it's doing. But for a lot of residents here, I mean, all that they're seeing right now is an empty field with a lot of construction going on.

It is going to take a while for the jobs and the economic benefit to really materialize. Great reporting, Emily. Thank you for that. Appreciate it. Next, customers, cans, and components will get the trade on Salesforce, Campbell Soup, and Cummins and Fresh Three Stock Lunch. Power Lunch will be right back. All righty, the FTC has secured a settlement with Intercontinental Exchange, Inc. over antitrust

concerns regarding its acquisition of Black Knight. The proposed order settles the Commission's claims that the deal would drive up costs, reduce innovation, and limit choice in the mortgage technology area. Under the terms of the deal, Black Knight will divest and empower optimal blue to Constellation Web Solutions, another provider of mortgage-related software tools. Let's get to today's three-stock lunch. And first up, we have Salesforce shares up higher today, 6% for the week after reporting strong second-quarter earnings. Goldman Sachs raising its price today, its target implying upside of more than 50%. Here with our trades is Victoria Green, G-squared, private wealth, CIO, and a CNBC contributor.

Victoria, Salesforce, you're a buyer, seller or a holder? I'm going to be a buyer here. If you look at the option markets, you had a lot of activity in those 230 September calls, which means a lot of investors are also seeing that there's more blue sky ahead. Look, their margins were great. And it was a story about them being able to expand their margins, raising their forecast to keep 30% plus margins. And then the thought that maybe this enterprise IT has been slowdown that they've been experiencing, maybe bottoming out and we can see growth. And, of course, they announced some AI-driven product enhancements that'll come out. And they gave San Francisco a really nice shoutout, calling it the AI headquarters of the world. So it's nice of them to kind of try to

boost the city. Yeah. Let's see if they can do anything about the problems at street level. All right. Let's talk about Campbell Soup, going the opposite way. Chairs popped initially after reporting results, matching profit expectations, topping sales estimates because of easing costs and steady demand for snacks. What do you think of Campbell's Soup? All right, it's a buy here. But full disclosure, absolutely hands down, goldfish crackers are my favorite snacks. So I might be a little bit biased here. honest, just being honest. But look, it's something to like. It's all about the snack story. Snacks have been growing as a percentage of revenue and now produces more than 50% of their snails,

sales, not snails, sorry. And then they have the Rouse story. They just announced that acquisition. What a great compliment to the Prego brand, kind of expanding into a little bit more luxury brand for them. So I see a lot of upside. It's a 14-time PE, three and a half dividend, quality staple, trading pretty cheap right now. We think there's upside. As we continue to see demand in the snack sector, we think it's going to continue to grow those sales, and that's really where the growth engine is for this company. That Raios sauce is good, man, that jarred sauce. Not cheap, but it's good. You see how everyone's favorites plays into what we cover here on CNBC, right? How about Cummins? Earlier on Squawk on the street, Cummins CEO said she sees the company continuing to be a big player in China, despite the slowing economy.

We see the stock down 5% this year. Is China enough of a momentum fuel? for you, Victoria? Yeah, it's still a sell here. I believe she called it depressing or depressed because China really has not gotten it going. It's only about 8 or 9% of their overall revenues, but still, it's a big headwind. The things I'm most concerned around is, one, BMO Bank came out recently saying, hey, their transport specifically trucking loans are under pressure and they're seeing growing problems in the trucking sector. And two, Cummins' aftermarket segment is slowing down a little bit, and that is seen as a leading indicator. They didn't raise any of their guidance or

forecasts, which leads people to think there's a lot of headwinds, and even their management is indicating there are headwinds, and China doesn't get going. They're really facing a double whammy, so it's still a sell for me here. I think it's more likely they go to 200 and retest those T65 highs. Victoria Green putting the brakes on Cummins. Thank you, ma'am. Appreciate your time. Go grab yourself a handful of goldfish. All right, coming up. Step aside, Barbenheimer. There's a new Hollywood movie duo coming that's sure to make your head spin. I'm not or Taylor Swift wants to be seen in a split screen like this? We'll discuss that and much more when Power Lunch returns.

We've got about four minutes left in the program. And a bunch more stories you need to know about. So let's get right to it. Move over Barbenheimer. Get ready for the Exor Swift. Well done. Oh, that's the next big movie event. Julia Borsten joins us now to explain this dynamic duo.

Well, Taylor Swift's concert movie is going to be launching on October 13th. That's the same day as The Exorcist Believer. It's a film coming from CNBC's sister company Universal Pictures as well as Blumhouse. Now, this has sparked some chatter on X, formerly Twitter, about how this could potentially launch the next Barbenheimer double feature phenomenon. Swift's record-breaking heiress tour,

all two hours and 45 minutes of it, will be available for fans at the movie theater for a lot less than the cost of her concert. Tickets are priced at $19. for adults, get it, 1989. And all the major theater chains will run the movie for four weekends. They're going to be appealing to the three million fans that attended the U.S. leg of Swift's tour. And also to all the other fans who could not afford to go or make it there.

Now, the box office, which is still lagging pre-pandemic levels, could use another cultural moment to sell tickets and get people into theaters, especially this fall when many of the big budget movies have been pushed next year, thanks to the actors. I saw, Julia, the AMC was having to set up a queue for people to even buy the pre-sale movie tickets and that it was acting a little glitchy or having lag times or whatever. Massive demand. Massive demand. Well, I'm wondering if that helps ticket master and Live Nation when they're trying to explain why some people couldn't get through because of the bots getting involved and swooping up.

You think there's going to be a resale market for movie tickets? Maybe. Or maybe they'll extend the run or out. more showtimes, but I did hear that the major IMAX theater in New York City sold out by 9 a.m. This morning. So huge demand. All right, Julia, thank you for that. Tomorrow, September 1st, that means interest on federal student loans will begin accruing again ahead of payments, starting in October. An estimated 44 million Americans have student loan debt. They've been warned this moment is coming, but this means now that we do expect to see some impact from

student loan payments having to begin. Yeah, I think money has to be paid one way or another, though I heard, I believe it was one of the administrators of the student loan program saying that they weren't going to really start to enforce collections for another eight or nine months at a minimum. All right, a federal judge says Burger King will have to face a lawsuit accusing it of false advertising. Yes, in the class action suit filed in Florida, it's claimed that Whopper Burgers appear much larger on menus and ads than they do in real life. Can you imagine that? Burger King Parent Restaurant Brand says the claims

are false. In fact, they say they use the actual Whopper Burger in the picture, but hello people, maybe you should be blaming the photographer who makes it look so beautiful and appealing. Food stylist who makes it look good. I say you be the judge. You go. Well, that's what the judge says.

He says the jury should have a chance to see the pictures and the burgers. They're going to have food stylus and they're making it look really good. Double Whopper with cheese. G.K. Have it your way. They're just saying we went on the way. The Wopper King, the Burger King, whatever his name was.

A woman's volleyball match in the Midwest drew a crowd of 92,000 fans last night. The University of Nebraska says the game at Lincoln Memorial Stadium broke the world attendance record for a women's sporting event. The team defeated Omaha 3 and 0 in a suite. Memorial Stadium's official capacity is just over 85,000 for football. Standing room only, baby. Put seats and standing room only help make the field. Give it extra room. Congratulations to the very good women's volleyball team of Nebraska and thank you for watching power lunch