Power Lunch - Real Estate's Disappointing 2024 & Consumer Goods Price Wars are Beginning 7/5/24

Episode Date: July 5, 2024

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

Welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Matheson. Glad you could join us. Stocks are higher today after a strong gain in jobs, 206,000. But another tick higher in the unemployment rate to 4.1%. Bond yields turning a little bit lower on the news. So is the stage finally, finally set for a rate cut? The pressure on President Biden growing by the day.

Democratic donors threatening to cut off money if he doesn't step aside. What options do the Democrats have? Let's do that and a check on the markets in the meantime. Let's take a quick look at the S&P and NASDAQ setting all-time intraday highs today, and continuing to rise above those levels. The Dow hanging on to a 15-point gain meantime. And we're looking at shares of Nvidia lower again after a rare downgrade. New Street cutting the stock to neutral saying shares are fully valued.

AMD and Arm, however, are both with nice 5 to 7% gains today. And energy is the worst performing sector. Every single stock in the group is lower, although oil is higher and nearing $85 a barrel as we've watched the path of Hurricane Barrel. We'll have more on that coming up. Big banks also lower next Friday. JPM and Wells report their results, kicking off earnings season. But right now they are in the red. All right, speaking of kicking off, let's kick off with the jobs report, the U.S. economy adding 206,000 jobs in June, and our next guest says that is exactly the kind of number the Fed would like to see. With the unemployment rate ticking up to 4.1%, he says the case for two interest rate cuts by year end is even stronger.

He's Gus Fochay, PNC's chief economist. Gus, welcome. Good to have you with us. This number, 206,000 is kind of a Goldilocks number, not too hot, not too cold, I guess. That's right. And we've seen job gains of about 175,000 over the past three months. That's close to the economy's long-term potential. And then we also saw a bit softer wage growth in June, which is what the Fed is looking for in terms of inflationary pressures there. So I think this report is pretty much what the Fed was hoping to see. And this does support some Fed fund rate cuts towards the end of this year. Do you think that the Fed has threaded the needle of sort of arresting inflation but avoiding a recession? It sure looks like that at this point. You know, we still have good job growth. We have good wage growth. Wages are increasing more rapidly than inflation. So we should see consumer spending continue to increase through the rest of 2024. And we should see slower inflation.

Shelter inflation should slow. The slightly softer job market should reduce inflation coming from the labor market. So it looks like we will get continued low unemployment and inflation that is moving towards the Fed's 2% objective. So there's only about a 6% chance they could cut in July, Gus, which would be at the end of the month, 30th and 31st. Should those odds go up? I mean, why is the Fed going to wait until September? They want to make sure that inflation is starting to slow. again. So we made significant progress on inflation in 2023, and then that kind of stalled in the

first part of 2024. We've had one good month of inflation readings in May. June should look good again, but they don't want just one or two months. They want three, four months indicating that inflation is slowing and moving towards 2 percent before they move. So I think end of July is too early, but September or perhaps November, I think are both in play at this point. Does the likelihood of an interest rate cut suggests that we're going to begin, we're going to embark on a series of interest rate cuts, or maybe just a couple, one or two this year and then more wait and see on the part of the Fed? I think the Fed will move slowly, so we may see cuts at every other meeting, for example. I think that monetary policy is contractionary right now. It is weighing on growth, and that's what the minute said from the last FOMC meeting.

that's what Chair Powell has been saying. But the officials are, they're not quite sure what the neutral rate is, the rate where it's neither adding to nor subtracting from growth. So they don't want to move too precipitously. They want to take their time. But I think given the strength of the economy, they can do that. And so they cut every other meeting. They see how the labor market responds.

They see how inflation responds. And they can afford to be cautious with this. Interesting you bring that out, because I don't know, you probably saw those comments by Williams within the last couple of days where he said he doesn't think the neutral rate is higher than it used. A lot of people think the neutral rate because the economy hasn't slowed much on what they've done so far. Neutral rate could be three, four, I don't know, five percent. But he says, no, it's probably not much different from the low that we had expected it would be, which means policy now is really, really quite restrictive.

That's right. I mean, that may very well be the case, but it's certainly not, we're not seeing that in the economy, right? I mean, we still have good GDP growth. We still have good job growth. We don't know the answer to that question. The neutral rate is an unknown. We can kind of guess at it, but there may have been structural changes with the pandemic and the recovery that we've seen. So given that, that's a good reason for the FOMC to be cautious and to take their time cutting rates so that they don't cut too much. And then inflation starts to pick back up again. Gus, thank you as always.

It's very nice to see you. Thank you. Have a great weekend. Gus Foschet. That's the macro talk. now to the market reaction. The S&P is on pace for its fourth positive week in five with new all-time intraday highs as investors bet economic weakness later this year will lead to those cuts. Our next guest says what matters for long-term investors is whether those recession fears become a

reality. Let's bring in Brian Jacobson. He's the chief economist with Annex Wealth Management. So, Brian, it seems like no matter if people are split on the question of downturn now or later or whatnot, they all seem to agree the Fed should be cutting here. Well, that does seem to be the case. I was looking at X. and then on LinkedIn and everybody's saying about, you know, let's just get on with it as far as the rate cuts. But the Fed wants to be incredibly cautious. They feel like they can. But by cautious, I think that just means that come September, they'll be in a position where they'll be able to start confidently cutting rates, probably at an every other meeting clip. Now, if they do that, I think that we can

avoid a recession. We do know that manufacturing has effectively been in a recession with an ISM manufacturing index below 50, 18 out of the last 19 months. The breadth of job gains there has been very narrow. And so some parts of the economy have already gone through a recession. It really does seem to us that the Fed, they can really pull this off as far as avoiding an actual broad-based recession, provided they do start cutting come September. So in that context, what do we say about markets? Do we say that the kind of narrowness of the leadership and the fact that the top, you know, stocks are 37% of the market?

Is that a reason to be concerned that it's masking an underlying slowdown? Or is that a reason to be excited about the prospects for AI? What do you think? I think that that's exactly right. I think that the strength of the top names has really masked the weakness underneath the surface. We did have, if you look at the Russell 2000, effectively another earnings recession. You've had not just a double-dip earnings recession, but almost like a triple-and-quadruple-dip earnings recession over the last few years if you counted as being two consecutive quarters in a row of declines in

earnings per share. If you look at some of the other sectors as far as the declines in the earnings, really there has been an earnings recession kind of rolling across the different sectors and sizes. It's been the big boys that have really kind of carried the day in terms of earnings and also with the price action. So if we do get the Fed beginning to cut, avoiding that broader-based recession, you could see a decent junk rally from this point forward, but it all does hinge on the Fed changing its tune. I want to turn back to inflation a little bit. Inflation has come down, but prices really haven't so far. They are still above where they were. Do you see a scenario

under which prices could actually decline if the economy slows and companies have to discount to attract customers? Yes, I think that is maybe one of or more out of consensus calls, though there are others who share that view, is the idea that if we do get this slowing, we are already seeing consumers fatigued with these high prices. There's already reports about how back-to-school shopping discounts are going to probably start next week already.

So price wars are beginning. We have already seen it as far as with the goods prices information, that with the most recent report in the PCE, those prices are down about 0.1% year on year. When we get the CPI numbers next week, we'll probably see that trend continuing. Granted, it's mostly in durable goods, not necessarily a non-durable, but you could see that begin to widen and get a little bit deeper. And then with service sector prices, that's really the part that you've seen the positive

inflation. But even that could begin to slow as we see those market rents begin to feed into the way in which the BLS calculates the owner's equivalent rent numbers. I mean, outside of housing and maybe areas that are always sticky like education and health care, there is a lot of disinflation and a lot of slag. Lumber prices have crashed. We've talked about what's going on in the grocery store aisles with consumer prices, where there's a lot of pressure on those companies now to start cutting things back.

E-commerce prices from Adobe's report. Those have been declining for two years now. That covers a lot of things, apparel furniture and the rest of it. So it's not crazy to talk about that. It's really, it's education, it's health care. It's all the stuff that's subsidized by the government where things just always keep going up. even where we saw all the job gains this past month again. Well, that's absolutely right.

It does seem like if you work for the government or health care, you're in a pretty good spot in terms of the job creation, other areas. It's been a little bit weak. If you look at the persistent price pressures, it really does come from those areas that are really getting, as you point out, those government subsidies. That's pretty much been the story since the government has been subsidizing a lot of these areas. I mean, if you look at the cost of higher education, despite, look at all the issues that

higher education is encountering. a number of small liberal arts colleges struggling financially, but what's been happening to tuitions? Have those rolled over? Well, no. It really, it's because it's being paid for by subsidized by taxpayers. Is there an out-of-sort-of-consensus stock market sector that you have your eye on as one that could potentially do better than the averages for the remainder of the year? Well, this might be a little out of consensus. I think that actually international is going to have an opportunity to shine from this point forward, mostly driven by two forces. Number one, the UK as an example, they already had a recession last year. Lots of Europe did,

so they're beginning to recover. The ECB is cautiously cutting. But the moment that the Fed suddenly changes its tune about the path of rate cuts, we could see the dollar weaken. So at this point, I'd probably be taking the under as far as with the dollar, will it appreciate or depreciate. going to depreciate, and that would actually redound to the benefit of U.S.-based investors when you think about investing in those foreign companies as also an investment in their currency. So that might be the most out of consensus view is the idea that we are actually slightly overweight international equities. Okay, so maybe a little help from rebounding economies and a tailwind from a weaker dollar.

Brian Jacobson, thank you very much. Thank you. And coming up, the negative effects of President Biden's poor debate performance, still emerging, some supporters, pausing donations, others calling for him outright to step down. But as the campaign bides time to decide the next move, what's the impact on the election? We'll talk about that next, and check out shares of Baxter. That stock popping on reports it's in discussions to sell its kidney care unit to Carlisle for more than $4 billion, including debt. Welcome back to Power Launch, everybody.

Calls for a Biden replacement continue after what our next guest called the quote, worst performance ever by a major party candidate in a general election presidential debate. And he's changing his outlook for certain swing states because of it. Joining us now is Larry Sabato, professor and director of the center for politics at the University of Virginia. Larry, welcome back. As always, it's great to see you. You look at the election the only way it makes sense to look at it, and that is state by state. What did the debate do in those so-called swing states? did the calculations change? Well, we haven't had a lot of good data out of individual swing states

yet, Tyler, we will. But the overall picture clearly moved in Trump's direction from a lead of maybe two points somewhere in that vicinity to a lead of six points. Now, think about that. Six points, that's a lot in this very polarized partisan era. And that means that most of those swing states, and credibly could be all, have moved in Trump's direction. And the map is expanding. We're getting states that we're leaning Biden or leaning Democratic, like Minnesota, for example, potentially leaning in the other direction. So it was not a successful night for Joe Biden. I know that isn't a bullet. Yeah, and you, and you, no, not a bullet. But you have, the way you look at it is, is leans or

likely Democrat. Some of those have moved into the toss-up category. You're saying some may have moved even into the lean GOP category. Let me ask you this question. Tonight, well, today, the president is taping an interview with George Stephanopoulos.

And my sense is that on debate night, he had, quote, a bad night. That's what they all say. My contention would be that he could have a good night tonight, a good night tonight, but that wouldn't change the fundamental issue, which is that a large plurality of the electorate think simply that the president is too old to run and carry out another term. And that won't change.

That's true. And you had 51 million people watching the debate with all due respect to ABC. I don't think they're going to have 51 million people watching that interview. But even if they did watch, what you said is absolutely valid, the White House bill up that first debate and said that all of our doubts about Joe Biden and his mental capacity would be cleared up. Well, no, they were made ever so much more murky. And it was shocking. Look, you can't get those images out of your head.

And I say that from a nonpartisan perspective, just looking at debates, judging it against other candidates from 1960 on. It's not enough to say it was awful. It was catastrophic. So are you going to somehow wipe all that away with a short, relatively short interview with an ABC anchor? I don't think so. Larry, the point was made last hour that a lot of these congressional Democrats might be watching those polls you're referencing. When should we expect them to come out?

Because if they come out unfavorably, we could see more than, I think, the two so far who have called for him to step aside. We could see more. Yeah, well, that's the key right there. That had donors. We've had so few donors and congressmen in office calling on Biden to step down that he's felt no great pressure to do so. But I think a series of polls coming out public and private, remember many of these office holders and the donors have access to private polling, when they start to see the numbers deteriorate and they start to match up in their state or in a swing state near them, what they have felt based on they're watching the debaverage. then I think there will be a reaction. Whether it will be enough, you know how people are in politics. They don't want to get out front because they're the ones who'll suffer if it goes in the other

direction. So let's move from out front to behind the scenes. I think there have been two sitting congresspeople who have called for him to step aside and some donors who have gotten a little gun shy here. Those are the ones who have gone public with their views. What do you think is happening behind the scenes, not in the cloak rooms, that's such an antique thought, but what do you think is happening behind the scenes at the White House, among the donor class, on Capitol Hill, in the state capitals with respect to the Biden candidacy? Well, donors and officeholders, I can tell you, they're talking amongst themselves, which is, by the way, one of the problems in getting a solution to this. They all tell each other how horrible it is, and they've got to do something

about it. And they'll talk about circulating a letter. And apparently some have done that in Congress, but we haven't seen it. It hasn't been released. Maybe it will be or maybe it won't be. So nothing's going to happen until a lot of other people go public. Take us through the mechanics if the president decides that he is going to step aside. Take us through the mechanics of what would take place to find another nominee. And is there a a likely successor nominee who is not named Kamala Harris? That's a great question. I wish I had a really good answer to it,

but I have a medium good answer to it, which is, A, we don't know, Tyler. We have no idea what they will actually do because it's unprecedented. But I would think, based on the comments of people like Jim Clyburn and influential congressman from South Carolina, who is in the leadership and the House,

House, that they would try to have what he calls a mini-primary, which I think of as debates in three, four, five places around the country for people who want to run. Now, it can't be just anybody. They'll have to show they have support from X number of delegates. They've all been elected already to the convention. They'll have to show they have support from a certain number of delegations, certain number of actual delegates. And then they'll get into the debates and apparently debate.

and then move from there to the convention, at which point, I guess they'll have final speeches or presentations, and we'll actually have a convention that matters that picks a nominee. Will it be messy? This is the Democratic Party. Of course it will be messy. Any of us who've been around them, as I have, for decades and decades, it would be messy with the Republicans too. But they are drawn disproportionately from the managerial party, the managerial class. rather, but I think it would be messy, but it would be a good way to do it. The alternate is to have

Kamala Harris designated really by Biden and other Democratic leaders, Obama, Clinton, Hillary Clinton, Michelle Obama, Nancy Pelosi, you fill in the blanks, whoever you want in there. That's another way of doing it. And the issue is that only she can inherit the money. Is that right, the $250 million or whatever that Biden currently has? Well, I've been told there, are ways to do it, but it might be tricky and it could be subject to challenge. Whereas with Kamala Harris, it's very straightforward since it's a Biden-Harris ticket. And the delegates, while pledged to Biden, are really pledged to the Biden-Harris ticket. So that's the easiest way, at least for the money and for legal requirements, getting on the ballot. But they would probably

be able to work it out. It would be difficult, but very possible. Ohio is, of course, the potential. the great exception because they have this ridiculously early deadline in early August to get a nominee on the ballot and the Democratic Convention is in later August. But I assume all these things could be fixed. What's really important is they need to get a nominee who can compete and potentially win. That's what Democrats want. But could it be Biden? I mean, that's the argument that the big donors, some of them are making, is that he still has the best chance. Well, that's what some people think. He'll have to show tonight, and I think every single day in events that are not dominated by a teleprompter,

that he is capable of doing the work as president, even continuing as president, for the remaining months of his current term. That's up to him. Larry, always good to see you. Larry Sabato, University of Virginia Center for Politics. Appreciate it. Elsewhere, Bitcoin is hitting multiple technical backstops and crumbling below them. It's now around $56,000 amid the decline. We'll explain and discuss whether it has to fall further, further ahead.

Stay with us. Welcome back to Power Launch, everybody. Let's check out the S&P 500 Communications Services sector. Why not? Let's look at it. There it is. Highest level since 2000. Not an all-time high, however.

Meta, Alphabet, Netflix, lifting that group. Now let's turn to the bond market where yields are falling after this morning's jobs report and increased chatter that lower interest rates may be around the corner. Rick Santelli is around the corner in Chicago. Rick. Absolutely, Tyler. This report goes a long way to fuel the notion that rate cuts may be coming from the Fed. Look at a one-year chart of the unemployment rate.

At 4.1 percent, it's nearly a three-year high going back to November of 21. It doesn't end there. Let's look at a one-year chart of average hourly earnings. Dipping under 4% at 3.9, it is a three-year low. And how did all that play out in the Treasury complex? Well, look at twos and tens. Look at the volatility that we had at 830 Eastern. Up, down, but ultimately, here we are on the lows,

basically close to the lows for the entire week. As a matter of fact, let's open the chart up for the week because this is really quite incredible. We are now at 460 in a 2-year, We're down 15, 1-5 basis points on the week. And a 10-year, not far from that. At 427, it's down 9 on the day. It's down 13 on the week.

These are big moves. And underscore the range in 10-year is basically 4.5% is where the resistance is. And what's really important is next week, guess what? We have threes, tens, and 30s auction, which always cements the eyeballs of the world on those maturities in the topic in an election year, debt and deficits. Tyler, Kelly, back to you.

Thank you very much. Rick, Rick Santelli. Let's turn now to the energy sector. The worst performer on the index today, Pippa Stevens here to defend it. No. And it's good name and its reputation, Pippa. You know, we had boom, bust and out equilibrium. And there's just no love when it comes to equilibrium for investors.

Every component is in the red today. Part of that is thanks to Nat Gas. This just continues to fall off a cliff down. another 4% today and now hitting the lowest level in seven weeks. You see it there. And part of this is because we've seen an uptick in production that has come back online, especially in the northeast. And then, of course, we had some pipeline maintenance down in Texas. That's now complete. And so that means that more gas is now flowing, which cuts prices. And then finally, storage just remains that really big overhang till about 20% above the five-year average. Now, heading into the weekend, though,

Hurricane Barrel is what everyone is talking about. So it made landfall in the Mexican Yucatan province earlier. Peninsula, I should say, earlier today, it has weakened, but then as it reenters the Gulf, it is expected to get stronger once again. And now the cone of uncertainty, the hurricane's path, now includes a larger swath of Texas. Corpus Christi is about 5% of U.S. refining capacity. That region is very closely much. So that's why oil is higher? Well, actually, if we get, I mean, potentially, but if we do get a refinery outage, that's actually bearish for oil, because if you have fewer refiners operating, then demand for crude drops, but it is bullish for product prices because then fewer rineries means product prices had higher.

So a lot to watch here. I understand why the storm would be pushing the price up potentially, but it's weird that the energy stocks are underperforming. I think we've seen that they don't correlate with oil in the way they used to, and it just comes down to opportunity loss and if other sectors look more attractive. And I really think it is. I kind of joked about it, but it was boom, bust and out equilibrium. And they're all doing very well.

They're supporting all their buybacks and their dividends. Cash flow looks very good. but it's just not all that exciting with not gas under pressure and oil having no clear upside catalyst. True. All right, Pippa, thanks very much. Let's get to Contessa Brewer now for a CNBC news update. Contessa. Hi, Tyler.

Israel's prime minister says there are still gaps between negotiators working to reach a ceasefire deal between Israel and Hamas and the nine-month war in Gaza. Those talks restarted after Hamas reportedly made a revised proposal on terms of the deal. The Israeli prime minister's office says the head of Israel's intelligence agency, just returned from talks with mediators, and negotiations are expected to resume next week. Iran delayed closing the polls to 10 p.m. local time to give voters more time to make a choice for the country's president in a runoff election. This race pits a hardline former nuclear negotiator against a reformist lawmaker. The first round of voting saw Iran's lowest turnout in the Islamic Republic's history. More Americans are complaining about air travel. Consumer complaints to the

Transportation Department skyrocketed to 97,000 last year. That's up 11,000 from the year before and the highest number since the COVID-19 pandemic began in 2020 when, you know, airlines had to figure out what to do about all those canceled flights. More complaints, even though airlines reported a drop of more than 1% and canceled flights from a year earlier. Tyler. All right. Thank you very much, Contessa. Still to come, real estate has a real problem. That group is the only sector in the S&P negative for the year. Lots's not working, but is anything holding strong? We'll explore that one next.

Welcome back to Power Lunch. During the first half of the year, real estate was the worst performing sector in the S&P, and it's still the only sector in the red year to date. Can it make a comeback in the back half? Let's ask Ron Camden. He's the head of U.S. Reets and CRE Research at Morgan Stanley. Ron, good to see you again. Last time you were on a little more than a month ago, Prologis was one of your top picks,

and it's up 8% since then. A pretty nice gain, better than the S&P and the whole sector. What do you do now with that one with the whole space? Yeah, so thanks for having me on. The real estate sector has suffered from two things this year. One, rates have been much higher than expected. If you think about real rates, so rates adjusted for inflation, they're up 40 basis points this year, when most people at the beginning of the year thought that rates would be going down.

So that's been a headwind. But the second piece of it is, going back to sort of your comments on prologis is earnings have actually been a little bit slower, a little bit more disappointing to start the year than people anticipate. When we look at earnings revisions in the real estate space, we see they've been coming down in the 2 to 3 percent sort of zip code. So our recommendation is to stay selective here. The interest costs headwinds, the cost of capital headwinds that's been playing in the sector at the beginning of the year continue into next year. I like to remind, you know, people that rates are coming. Most reach are issuing in the 5.5 to 6 percent range when they

have debt coming due closer to four. So that's continued to be a headwin. So you've got to stay selective in this market. Is there any glimmer of, almost anybody we have on who talks about commercial real estate is down on office stocks. How about you? Is there any glimmer of hope there? Yeah. You know, we've been very bearish office as well, particularly in the Sun Belt and the

West Coast. I think the one glimmer of hope that we would have is sort of Midtown Manhattan. So when you think about Park Avenue, Avenue of the Americas, Sixth Avenue, where we've seen some activity. I think it's too early to turn sort of outright constructive, but that's where we're seeing sort of the best leasing and occupancy trends, which is the exact opposite from sort of the Sunbelt market in the West Coast, where we've seen occupancy continue to go in the wrong direction. I'm young enough to remember the real estate collapse in the late 80s in the Sunbelt. It was a lot of commercial real estate that went down there. Is that a possibility? No, I think this cycle, when I think about commercial real estate, it's much, much more diversified, right?

So we've talked a lot about office, and we've seen office values already go down 30%, 3-0 from peak to trough based on appraisals. But if I think about some of the other asset classes, like industrial, where values have holding pretty well, some of the other sectors are doing well. So I think you'll see some idiosyncratic, some persistency, some capital structures that are out of place on the office side. But I think the whole commercial real estate as an asset class probably fares better than that previous cycle. What would be the biggest swing factor, Fed rate cuts? Because I can't imagine trimming 25 or 50 maybe by year end is going to move the needle that much. But it must help. I think I agree with your comment.

I think 25 to 50 basis points is a marginal tailwind. think is enough to sort of get the sector going, I think you need some form of re-acceleration in the growth function. So if you think about the S&P where you're looking for 8% growth this year, 13% growth next year, our real estate investors are looking for sort of two to three percent growth for the next two years. So we need some form of either technology or innovation or just in certain demand to get growth at least in the mid single digits for people to get interested again. Ron, thank you very much. Ron Camden. Morgan Stanley. We appreciate it. Thanks for having me.

You got it. All right, still ahead. Bitcoin and other cryptos losing steam. We'll discuss the fallout for that sector when we return right here on Power. All right, Bitcoin down 3% right now, $56,000. And that is actually quite a rebound from the depths it hit earlier today. Down 3% right now. Joining us now is Tenea Mukia. Tanaia.

Hi, Tyler, it's great to see you. So today's big move is largely about Mount Cox. This is the big exchange that 10 years ago went bankrupt after a major hack, and the trustee of the exchange has now begun repayments to creditors, which was expected. It said last week that that would start some time in July. So you saw that in Bitcoin's price. It fell under 55K for the first time since February, although it's actually trimmed some of those losses, like you just said. Nevertheless, it has broken below a key support level at $57,000. And if it struggles to reclaim that for too long, Tyler, $49,000, it becomes new support.

So this is likely a short-term move. There is nothing about it that fundamentally alters the positive second-half outlook for Bitcoin. Investors still expect it to retest its all-time high this year. So you may see some try to build exposure into this dip. I was speaking with Zach Pandell from Grayscale, and I like the way he framed it. Think back to how closely we were watching the halving earlier this year. So that was a known positive supply event. It lowered the amount of Bitcoin supply that's being produced.

And now we have this other source of Bitcoin supply coming in and kind of negating those positive effects of the having, at least in the short term. So you're seeing Coinbase and micro strategy stumbling. And, of course, miners are under pressure. Additionally, $131 million in Bitcoin liquidations, long Bitcoin liquidations in the derivatives market over the past 24 hours. So that also adding pressure to prices. Today, a quick question. A lot of people who missed the move in Bitcoin maybe in recent years were looking to Ether as a possible. place to jump in because I believe that

ETH approval has not happened yet, so maybe it could experience like a similar rally. But Ether has been hit twice as hard as Bitcoin this week, which maybe makes sense because it's usually twice as volatile. Anyway, what are you hearing on that front? We are expecting to see those S-1s for the ETH ETS filed

any day now, at some time this month for sure. So we know that the exchange has got approval a couple of weeks back to be able to list those, and now we are just waiting for the funds themselves to file those S-1 registrations. It is looking, you know, the outlook is very positive for that. I think the broad expectation is that those will be approved.

And, you know, it's not, I think that there are bigger movers between now and, sorry, not movers, drivers, between now and the end of the year. So think of the macro and think of the upcoming U.S. election. But certainly in the short term, should we see those ETH-ETH-E-TF approvals, I think that you will get a little bump in ETH. Right. Tenea, thanks very much. Tenea McKeel. We appreciate it. Thanks, you guys.

Coming up, talk about a shot in the arm. Chipmaker, Arm Holdings, jumping 30% in just the past month, including 6% today, thanks to the AI rally. Is it too late for investors to jump in here? We will ask our trader next in three-stock lunch. Don't go anywhere. Welcome back. Let's get to three-stock lunch. With our trades, today we welcome Victoria Green.

She's CIO of G-squared Private Wealth, a CNBC contributor as well in Victoria. It's great to have you here. Let's start with Amazon, which is higher again, a record high, in fact, could. maybe have its first close above 200. The frustrated investors, Victoria, think that Jeff Bezos is selling every time it hits 200 and they want that overhang to go away. Nevertheless, what would you do with the stock? Amazon, for me, is a buy, even at this level, because if you back the chart out, it's just this beautiful long-term growth chart since 2022. And it's not like you've had some crazy exponential. They just continue to expand their lines of business, continue to grow revenues, continue to

gain market share in new areas. And I absolutely love this stock because it's not. not just retail. Now it's AWS. That's better margin business for them. Probably going to hit 40% in the next five years for margins for them. ADWS now about their second biggest behind retail. Then it's advertising and advertising is coming along great and that's a huge high margin business for them. Eventually next couple years could be a hundred billion dollar line for them. And then they continue to push into other areas. Look at the Saxon-Nemans deal. Amazon's taking a stake in that. Could they suddenly become logistics support and tech support and start licensing that out to other companies. So I just love the fact that not only do they take care of their

existing lines of businesses, they continue to grow more and more faster revenue growing businesses, ads is the number one growth business for them right now. And I love this story with Amazon. It's a buy for me. I think this is going to be the $3 trillion club within the next five years. Wow, that is an endorsement for Amazon. Let's move on to Arm Holdings. One of the largest chipmakers in the world stock up 30 percent in the past months. Shares have more than tripled since the company's IPO last year. What would you do with ARM, Victoria? Arm is still a buy for me because you have to put that in the context of what the semiconductor space has been doing and what other stocks have been doing. I mean, Tesla ran up 25% the last four days. Some of these tech sectors are moving

fast. It's a momentum rally. And Arm has a player in everything. Literally 70% of the people in the globe have something that Arm has touched. 99% of smartphones, what their CEO claims, are having some sort of ARM IP. Remember, they don't manufacture anything. They're in a total IP space, but they have designs everywhere, and their designs are better. Assuming they continue to have this edge on their competitors, their main people that they supply are companies like Apple and Navidia and Qualcomm and all of these big boys that are seeing massive growth and demand. I think Arm continues to grow along with the semi-space and is well positioned, especially if we get that faster cycle in smartphones, which we're expecting. We're expecting a faster recycle in smartphones. We're expecting some up cycles and PCs that speaks very well for Arnors. arm's ability to continue to grow revenues in this space. I know it's expensive, but it just hit new

highs and not typically good when you look at the chart. It could continue to push up from here. One of the great post-IPO success stories, Arm has been. All right, you mentioned Sachs a moment ago. Let's move along to Macy's, which is higher on news. This investor group raised its takeover bid by $300 million. Stocks up nearly 10 percent, although no Amazon involvement here that I've heard. Not yet. But look, for me, this is sell it, get out of it. Look, they've been playing this game three times. Now they had it in December, they had it in March, and now we've got a sweeter deal. My concern is the stock has been bouncing around about 18 and a half to 20, 21 for the last like eight months. It's done nothing. And they're touting this turnaround story. So my concern

is the board of management is going to put more belief in their turnaround story and they're going to turn down this offer and you're going to see the shares pull back. Because right now, they are. They're thinking they're growing. But I think there's a big, that speed bump coming down the road from Macy's, which is the consumer's flow down, which is expected to hit department stores a little bit harder than say specialty retailers like a TJ Max or a Ross. So I just don't believe what Macy's is doing is sustainable. I know there's a lot of excitement, right? We're turning around. We've right sides. We close some stores. We're going to get the ship going. I just think the ship can't move. It's just too antiquated a business model for me. So absolutely love to sell it right here,

get a little bit of profits. But this deal hasn't been done. What is it? Fool me once. Same on you. You feel me twice. I mean, now we're full me three times. But I can't buy it. I'm sure the investors are hoping, you know, maybe a third time's a charm for sure. Victoria, thanks for your help and all your thoughts today. We appreciate it. Thanks, Kelly. Victoria Green. We will be right back.

Welcome back. Here's a quick glance at markets, which have moved towards session highs with a down, now up 61 points, and it's the laggard, although it is helped by Apple, which happens to be one of NFL legend Eddie George's picks in this year's stock draft. Eddie now has a commanding lead up 43 percent, thanks to. to his selections of Apple and his top pick in video. Wow, scorching. We only have a couple minutes left in the show. Want to look at a few vacation stories in honor of this Friday,

which are getting some attention on CNBC.com. Of course, Sima Modi has helped us, is here to help us go through them. Our travel reporter, Seema, there is quite a lot that people are sort of buzzing about, let's say. Yes, and travel is on everyone's mind, so much so that 36% of Americans say they are willing to go into debt to pay for a vacation.

Now, on the service, it doesn't seem like a good practice, financially, but emotionally, spiritually, taking a vacation, of course, can be good for you, an opportunity to create new memories with family. It certainly generated a big debate online. So, Tyler, I got to ask, is it okay to go into debt for a vacation? I am going to borrow at 24% for the spiritual comfort that I'm going to get. I think vacations are best financed out of savings, not out of debt, particularly if you're financing it using a credit card at a very, at a very high rate. I think that's a bad idea.

Good point, Kelly. People are so obsessed with the traveling and the posting on social. They think everyone else is doing it, so they should do it too. This is a thumbs down from me. Okay, social media, interesting. You just mentioned that. Here's the next big story that's catching our attention. More people are looking to rent

cars on their summer travel trip versus using their own car. Of course, there's a lot to consider here when making this decision. The article lays it out very clearly here on CNBC.com. Maybe you've got a Tesla and have some range anxiety, or maybe you just got a lot of kids with all that stuff, you therefore need a bigger car. So do you rent or do you use your own if you're taking a room?

It's like you're talking to me. I happen to have one of those aforementioned cars, and we're taking our 18-year-old away to college. We can't pack it full enough. So I have rented a big SUV to drive to his distant school to do this. It's not a vacation rental, but if you have a lot of stuff that you have to transfer, sport to, let's say, a state park or a beach or whatever. I can see renting a car to do it if you don't have that. I want to rent an RV. And I would like to know. That's a great idea. Wouldn't that be

fun? With five kids. Well, it may be some grandparents and maybe some babysitter. I mean, just maybe some neighbors. Caravan. I'm bringing you guys. Yeah, but I would like to know if that's a possibility. Last one, an op-ed from our friend Doug Boneparth and his wife, Heather. They say, we should skip those vacation photo ops and instead enjoy the moment. It's nice to have photo. and videos to remember those special moments, but people get far too consumed taking the photo versus just enjoying being in front of the Eiffel Tower, being in Capri, enjoying the breeze.

I have a scandalous take on this. Take the photos. Okay, I look back at it now. The photos might be the only thing I remember or have. From any of these vacations, I'm spending all this money on and going into debt on. I wish I had taken more videos.

My son hates it when we say, we've got to take a picture, we've got to take a picture. But I'll tell you, some of my favorite photos are photos we took while on vacation, in particular last year in Norway. Seema, thanks. I second that. Appreciate it.

Take it. Check out all those stories on CNBC.com. Thanks for watching Power Launch, everybody. Closing bell starts right now.