Power Lunch - Reversing Course, Amazon’s Satellite Strategy, UAW Update 10/6/23

Episode Date: October 6, 2023

It’s been a wild day for the Dow, as the hot jobs report initially sent markets lower. Payrolls defied expectations, soaring by 336,000, and fueled fears the Fed could hike rates yet again.But investors aren’t backing down, with the averages swinging higher, and the S&P 500 trying for its 1st positive week in 5. We’ll tell you all you need to know.Plus, we’re keeping an eye on 2 major events: Amazon’s rocket launch for its first-ever satellite deployment, and the UAW President giving a live update to union members. We’ll track both for you throughout the hour. 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 Launch, everybody, alongside Kelly Evans. I'm Tyler Matheson and two major live events we're watching right now. First, a major rocket launch about to happen any moment. A couple of minutes from now, this is Amazon's first deployment of Internet satellites to take on SpaceX's Starlink. Plus, the president of the UAW, Sean Fane, speaking shortly, giving an update to his members on Facebook Live. We will bring you those comments such that they are newsworthy and once we have them. Kelly. Let's get a check on the markets. In the meantime, already a pretty wild day for the Dow. Currently up 333 points near session highs after the big jobs report that was in 8.30 a.m. Eastern time this morning. Initially sending a shock down investors' spines as it defied expectations soaring by 336,000, feeling concerns that that could lead to more Fed rate hikes. But then investors may be rethinking that. Bond yields reverse lower and stocks are near, as I said, session highs NASDAQ, up one and a half percent. Let's bring in Guy Berger now. He's LinkedIn's principal economist. Ron Ansana is Chief Market Strategist with Dynasty Financial and a CNBC contributor,

and Jeremy Bryan, a senior portfolio manager with gradient investments. It's great to have you three all here. And Ron, I'll start with you. And, yeah, I mean, take this where you will. I'm tempted to say it's a sign that good news is good news again, although plenty of people are maybe kind of looking through it and questioning just how much to rely on this report. Yeah, I think, Kelly, look, I mean, I'd rely on, and I know there, you know, and Carl Kentonia brought this up earlier this morning, there's concerns about the sample size and the number of respondents and the payroll employment report and et cetera.

But we've seen upward revisions in the data. The data have been consistently good. Wage inflation has consistently slowed down. Overall inflation has consistently slowed down, whether it's last week's PCE deflator, which over three months is running at a 2.1% annual rate. That's the rate the Fed looks at. oil prices coming down, gasoline prices coming down. The question is, can the Fed take yes for an answer? You know, Goldilocks has not left the building, and I think they ought to recognize that. So let me kind of let you answer the question, Ron, before I move on, do you think they're done hiking still?

We're close. I mean, they may go one more time just out of paranoia, but, I mean, they should be generally, I believe they're done. And the data continue to support that point of view. Guy, I'll bring you in on that. You see a lot more granularity about the labor market day in and day out. Does this job report confirm what LinkedIn would tell us is happening or no? It was a little stronger than I would have expected, but I think the underlying message was maybe that the cooling off that we've seen the labor market is starting to moderate. That's on the hardest hit sectors like technology, you know, may have gone through the hardest part of their retrenchment in terms of hiring. I think that part is apparent in our data. And I guess with Locke, that cooling phase, we may have hit stabilization on that,

while at the same time a lot of the inflationary pressures we had are coming off the boil. So let me turn to you, Jeremy, if I might. You say that your biggest worry is a slowdown in the U.S. consumer. If there is high employment and relatively high job security, people who lose jobs are able generally to move on to new ones pretty quickly, what would cause the consumer to stop doing what they do? Yeah. I mean, that's largely been our wonder a little bit here, too, is that if you look at consumer stocks, they're acting like we're stopping spending. And we just had a jobs report that was significantly stronger. I think Ron nailed it with regard to the other items that are coming down that the fed's watching with regard to why they would increase rates going forward. So that's been a little bit of our question, too, because the market certainly seems to be taking the other side, at least at the outset, and in bringing those consumer stocks down and saying, saying we're going to have this slowdown. But in our opinion, as long as the U.S. consumer has a job

and is confident that they can get a new one if they need to, I think they're going to continue to spend money. And yeah, they're not going to buy houses maybe and those kinds of things, but they'll pivot to other items and they'll continue to spend there. Is the market today saying, Jeremy, that, hey, we buy this Goldilocks soft landing scenario. And, hey, good news is good news? I'm always a little cautious both on one and two things. One is one reading of a jobs report that was significantly higher than expected and two, one day of market performance. I like the fact that it did turn around because, again, it's under that thought, but everything right now revolves around interest rates. And so if we can even see a stabilization point, maybe even

slightly coming down on those long rates, and with the numbers that we're seeing right now, there's no reason that we couldn't have a Q4 rally coming through here. Ron, Q4 rally? Yeah, like the seasonals favorite, the presidential cycle favors it. If the Fed does indeed indicate that it's done at some juncture along the way, that would certainly be a tailwind. So, yeah, I think so, Kelly. I mean, you know, there are a couple of variables outstanding that may make it a little more difficult.

And up until recently, that was, you know, the rapid rise in oil prices. But when you look there, we've come down almost $11 since September 23rd. we've seen gasoline prices fall almost 80 cents a gallon. So some of the things that were kind of in my mind that might have been problematic from both an inflation and a Fed policy perspective have reversed course and become more favorable and may have opened the door to that kind of seasonal rally that we get from October, not just October through January, but all the way through April next year. Guy, well, let me, quick question here on LinkedIn.

Where are you seeing the most sort of job curiosity, job activity? Well, I'll tell you, I think that just generally, the sectors like healthcare education, the government, some which were very strong in today's report. For example, the government added more jobs and most in the other sector. You know, those still look resilient. We haven't seen many hiring declines. But I think the other side that I think is interesting. Again, I talked about tech, some of the other sectors, then particularly hardhead that, you know, tech hiring is about half of it.

I'm sorry, gentlemen. We're going to go to Morgan Brennan now for the launch of Amazon's satellite rocket. Let's go to Morgan. Hi, Tyler. That's right. So we're T-minus 30 seconds right now to lift off. This is another milestone in the commercial space race. You can see it on your screen right there. As Amazon gets ready to launch the first two test satellites to low Earth orbit, these are the first prototypes of Project Kuiper, which is Amazon's plan to build a network of more than 3,200 satellites in low Earth orbit to provide high speed internet access anywhere in the world. And lift off of the United Launch Alliance Atlas 5 rocket. And there it goes. So today's mission is dubbed prototype flight flight, or proto flight. It's being carried out by United Launch Alliance.

It's the JV between Boeing and Lockheed Martin. It's an Atlas 5 rocket on your screen that's lifting off from Cape Canaveral, Florida. And this has been a long time coming. Four years and 11 months so far, with Amazon's overall investment in Kuiper, expected to be upwards of $10 billion. Now, these first satellites that are on that rocket on your screen, they're going to be used to test the tech and internet connection before the first production spacecraft head to space early next year with beta testing for customers by the end of 2024. Now, once all of that happens, this is why this is a big milestone right here. Once all of that happens, Kuiper will put Amazon in direct competition with SpaceX and its Starlink service, kicking off the latest chapter in the Jeff Bezos versus Elon.

Musk's space rivalry. Unlike SpaceX, which launches Starlink on its own Falcon 9s, Amazon struck the largest commercial rocket deal in history last year, securing dozens of launches from ULA, including this one, Arian Space and Amazon's sister company Blue Origin. So guys, so far, this launch looks successful. It's the 158 for ULA. In about 15 minutes or so, what's going to happen is the first stage is going to fall away. The second stage is going to deploy those two satellites to low Earth orbit, and then testing will begin to happen. Those satellites will be brought online over the coming days. Sure. The site of those rockets taking off never gets old.

I mean, the power and the complexity of them. It's really amazing. When all is said and done, Morgan, between SpaceX and this Amazon project, how many of these low-Earth orbiting satellites or garlands of satellites will there be? thousands upon thousands just to put it in perspective Tyler SpaceX already has more than 5,000 satellites on orbit they have hundreds thousands of customers as well across the globe Amazon is playing a little bit of catch up for lack of a better term here but they're expecting to put 30 more than 3,200 satellites on orbit in the coming

years as well so and that's just two companies there are other companies and other startups that are also working on their own broadband constellations as well. Very interesting. And one assumes that there's enough space in space to accommodate all of these thousands of satellites. That is spurring demand too for startups focused on just that, space traffic management. Right.

Very interesting. Very interesting. Morgan, thank you very much as we watch that. Any news, please get back to us as we watch that rocket go up. Wow. We'll have more on Amazon itself. Next block. Talk a little bit more about the implications.

All right. And we want to thank our market panel, Guy Berger, Ron and Sondon. Jeremy Bryan. We appreciate your being with us as well, and I know you understand why we broke away there. Nothing against you guys, but rockets are really, really cool. All right. Meanwhile, the president of the UAW holding a Facebook live event right now. We're currently collecting the headlines, but in the meantime, joining us now is Tom Narayan, a global auto analyst in RBC Capital Markets, and Anne-Marie Utes. She's an attorney at Foley and Lardner represents auto suppliers based in Detroit.

Let's go to Tom first, if we might. What are you sensing on where this strike is, how close or closer the parties are to an agreement, or by contrast, how it might expand and to where and how soon? Yeah, I think, you know, we're in, what, week three of this work stoppage? one was six weeks, right? I think that's a great reference point to use. And we have been getting closer, right? Both sides have come in closer to each other. This time it's different. The targeting all three. Last time it was just GM. There's probably smaller impact to each OEM. But I think looking at the 2019 example, six weeks, is probably a good barometer.

Who gets from? Go ahead. Who gets hurt most here? The manufacturers or the support? I mean, the work stoppage, it hurts the suppliers a lot more. Right, because the OEMs ironically get to keep inventories low and pricing higher, right? The negative is if this drags on and on for too long, then it does create a problem for everybody, not just the suppliers, because if it then becomes an affordability problem, now you can't keep car prices elevated because then you get pricing actually comes. down and volumes, then it starts hurting the car companies. But right now, it looks like the suppliers and not really the manufacturers. So far, the strike has largely, I think, spared the final

assembly plants of most of the Big Three Stalantis Ford and GM. Is that likely to change? It could. I mean, right now we only have something like 20 to 25 percent of the U.S. workforce really impacted. It's interesting. You look at the U.S. sales numbers last for September. They really weren't hit that much. Neither was inventories. They actually ran up into August and they were flat in September. So October, things should start getting, these will probably expand and get to more plants, maybe final assembly as well. But as we saw in 2019, there was a really quick snapback. We think the same thing will happen here. Dealer inventories are actually lower than where they were in 2019. So quick snapback, even if the

strike expands further. Anne-Marie, I'm bringing you in here to talk a little bit about strategy and the union's efforts here. Sean Fain has been widely praised for how he's handled this amongst members and taken on the big three all at once, but trying to kind of do it surgically. That said, a little bit of his Twitter promotion for today's event, kind of rubbed people the wrong way, making a bachelor analogy and so forth. Talk a little bit about, you know, I think because the strike's starting to bite, to Tom's point, the longer it carries on, you know, there's a lot of people here who aren't bringing home with their usually bringing home. Talk to us a little bit about the strategy from here on out

and what you might expect to hear from him both right now with his announcements and as this goes on. Kelly, thanks for having me. Sean Fain has been absolutely surgical in the targets that he is striking. We expect that to continue. He is so far hit different targets

and people say, well, how long will this go? When will this end? The surest sign that this strike will be nearing its, end, in our opinion, is when he starts hitting the engines, hitting the trucks, hitting the big profit lines for the Detroit 3. That will be a game changer in this strike. And we haven't seen it yet. He's been holding his power. And we have seen sometimes, you know, numbers that the automakers indicate, okay, we're 20, we offer 25 percent. We know whatever exactly it is. What should we expect the shape of a final deal to look like? What will tell you that?

that maybe both sides are getting closer? I think one thing's for certain, Kelly, when they get to a final deal, those higher wages that the UAW is being paid, that's absolutely going to trickle down to the supply base. We're going to see the employees in the supply base seeking those same price increases and rate increases. Where is that going to end up at the bottom line? Vehicles are going to cost more.

Consumers are likely going to end up carrying the bill for some of this strike when all of this is said and done. Is that a good thing? I mean, I think that's the argument that exactly some of the auto analysts are concerned about. Yeah, I think that when you see the UAW striking and getting wage increases of 20% or more, the non-union wages at the suppliers who support the Detroit 3 are absolutely going to come knocking for those same kinds of increases. It's a very tight labor market. And so far, suppliers have been shouldering a lot.

lot of the burden in the last several years. The Detroit three have been taking home record profits, and the suppliers in many cases have been struggling with higher interest rates, scarce goods, increased raw materials cost, and increased labor. So all of this is going to have a continuing trickle effect on the supply base, even once the UAW strike with the Detroit three ends. Tom, we mentioned yesterday General Motors was a below $30 stock. It's below, I think, we're at IPOed after the new GM in 2010. You know, so we might, you know, yes, the company shares are, you know, big three shares are higher today, but it affords like a $12 stock. And there's concerns about their debt levels as well

in this rising rate environment. So I think about all of that and the points Ann's making about the Detroit supply chain. And I wonder if it's a rather bleak picture for right now. Yeah, I mean, I think the bleak picture actually doesn't come from UAW. We've actually done some math on the actual labor cost hit. And I know I'm only looking at UAW labor. There's definitely non-UAW labor, but just the UAW piece itself, our math says a 30% increase in cost, which is where we think it'll pan out, is only about 120 basis point increase, decrease to profit margins. So it goes from like 8% margins to like 7% margin.

So I don't think that's the end of the world, and that's over four years. The bigger issue, and I do agree with what you're saying, is price mix coming down. We're at Lekard Rebel, New Car pricing. that has to come down at some point. And while labor costs may be 100 basis point hit to margins, what if price mix goes back to 2019 levels? That's like a 400 basis point hit to margins. So I think that's the bigger issue.

If we have affordability problems next year, high interest rates, people just can't afford to buy a car. Now we have a big problem. I think that's where investors are pushing these stocks lower for that reason. It doesn't help the EV market leader, Tesla, just did another round of price cuts. That has to have, I mean, if your point of,

about margins is right. And we see downward pressure, certainly on their EVs, but even on their regular cars. That sounds like a much bigger issue. And you're still bullish on Tesla, but are those price cuts even starting to bite in terms of what you think is going on with Tesla? Yeah, I mean, I think that's more of a threat to GM and the other companies than it is for Tesla. Remember, Tesla posted up a lower than expected delivery number a couple of days ago. What happened to the stock the next day? It was up like 6%. People aren't really buying Tesla because of its car business, right? It's really about autonomy. It's about FSD, licensing batteries, selling power electronics.

Tesla is actually pivoting to become like a supplier, not really an OEM. It kind of reminds me of Netflix when they change from selling DVDs and streaming. I think that's where people are trying to buy Tesla and supporting that stock. I can't see the same thing for the other OEMs, which are going to face downward pressure on pricing. And, Marie, as you talk to your associates, clients, I guess, in the auto parts supply, business, how worried are they about the transition from conventional engines to electric vehicles and how many fewer parts are required? I wouldn't use the word worry.

I would use the word preparedness. They're really preparing for the switch to EV, but the timing for that is really unknown. That's one of the reasons the UAW is flexing its muscle so much right now in these negotiations because it's planning the pivot eventually to EV. the stronger Tier 1 suppliers with strong balance sheets, they'll be just fine. It's the smaller tier suppliers lower down the chain who are being adversely impacted right now by the strike and who will be hit hard in some cases by the switch to ED. All right, Anne Marie, thank you very much, Anne-Marie Yutz and Tom Norayan.

We appreciate your time today. The UAW president has started speaking. We saw him in a little box there maybe a moment ago. We will bring you the headlines and the fillet. mignon when we get it. Coming up, as we just saw Amazon launching its first satellites into space for Internet service, we will talk more about what this means for Amazon and its stock next. Plus Exxon closing in on a mega deal with the shale driller Pioneer Natural. PXD leading the S&P, and we will dig deeper into those stocks when Power Lunch return.

Time for today's Tech Check. Amazon launching its first Internet satellites into space just moments ago. back on Earth, the stock struggling a bit, down 7% in the past month, all as we head into one of its most important seasons, of course, the holidays. Let's get to Deidroosa out west for more. Hi, Dee. Yeah, so, Tyler, you said at the holiday season, this stretch coming up is supposed to be the strongest financial period for Amazon, right? The e-commerce platform, it's well positioned when we're going to see Black Friday, Cyber Monday, Christmas, Hanukkah, and even its own prime day is kicking off in just a few weeks. that should all be good for Amazon. Yet when you look at its position within the magnificent

seven, it has been a laggard. It's down about 2% this week and almost 8% over the last month. And that is more than some of the others, just as it's heading into this period. It's acting maybe a little bit more like a retail stock than a tech stock. And part of the reason why might be the rise of Chinese e-commerce. I know we've talked about it before, but really the popularity of Chimu, which is owned by Pinduoduo, a Chinese company, has been astonishing. The app in the US only launched about a year ago, but it quickly vaulted to the top of the app stores. It surpassed even TikTok in terms of those downloads and another popular Chinese e-commerce company, Xi'an. So I was looking at some of the notes, and a lot of

Wall Street is starting to write more about TEMU and its place in retail. They took a look, Morgan Stanley this morning, took a look at the so-called Timo effect and found that thread up eBay, Walmart, and Amazon, they are among the American retailers at risk, as well as the dollar store. And that could change the fundamentals a little bit. You're hearing more and more. Analysts come on our network and say that tech is looking cheap. It's looking appealing again. But the fundamentals for Amazon may have changed a little bit with the sort of change happening in the retail, especially at the discount space. Yeah, I thought that was fascinating how they said that some of the dollar stores might be. You know, it's not that people are going to go get, you know, their toothpaste and what have you at, you know, at Chi and her team.

It seems to me like it's a little bit more of a fact. thing. People, the times that I hear people talking about, they're, yeah, I got $5, you know, plastic spandex pants or something. Yeah. But I will say that people aren't really going to Amazon for their toothpaste either. Amazon is trying to be that and move into the grocery space and offering more discounts there. But I think it's at that lower end where Amazon says it has the best prices. That's where it competes against Timu and Shien. And so it's interesting. I mean, you're not going to go there to Timur or Shian for some of your other gifts. But I think that it's, It's having an effect on the U.S. e-commerce place.

And it's something interesting to look for. I mean, you could also argue, though, that Amazon is decently positioned because it has this whole ecosystem. E-commerce is really its core and makes up the majority of revenue. But that's why the prime ecosystem is so important. They say, come to us. Pay your subscription fees every year because we'll also give you video and sports and all of these other things. Right. And maybe satellite internet, if this goes well.

Exactly. era, a new chapter. A good way to bring that around. Yeah, exactly. Dear Joe, thank you very much. Good to see you today. Dear Joe, Bosa, we appreciate it. Quick power check as we head to break. Beyond Pioneer, MGM is also one of the S&P leaders today. Up 5% despite the company reporting that cyber attack last month cost it $100 million. On the negative side, Church and Dwight, on the trend of consumer names heading lower today, those shares down 4% Power Lunch will be right back. Welcome back to Power Lunch. I'm Courtney Reagan. Here's your CNBC News Update at this hour. At least 18 migrants were killed early this morning and a bus crash in southern Mexico.

Most of the migrants were coming from Venezuela or Haiti. Nearly 60 people were on board the bus when it rolled over on a curvy section of the highway. Another 27 people were reported injured. President Biden said today he could potentially meet with China's President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation Summit next month. The president told reporters today no meeting has been a set up, though. The two world leaders have not spoken. since a meeting last November at the G20 summit in Indonesia. Chris Rock and Stephen Spielberg are collaborating on a movie about the life of Martin Luther King, Jr.

Rock is in final talks to direct and produce the project with Spielberg on board as an executive producer. Our sister company Universal Pictures is backing the drama after optioning the MLK biography, King, A Life. Tyler, back over to you. All right, court. Thank you very much. Ahead on Power Lunch, City says it's time to buy shares of Liberty Media's Formula One. All despite what appears to be growing pessimism around the Las Vegas Grand Prix and sports streaming rights and how much they'll cost, how much the return might be. We'll discuss that with the analyst next. And we're still watching comments from the UAW president, Sean Fane.

We will bring you the headlines when we have them. There you see him and his T-shirt slogan. Welcome back to Power Lunch Stocks opened lower after that jobs report. before taking a huge swing higher. The S&P, in fact, turning positive on the week, which would make its first weekly gain in the past five. Let's get to Bob Bassani at the NYSC for how we're setting up into the close, Bob. You know, this has been a great day to be a markets report.

It's been a little rough emotionally from September and into October. I just want to put that S&P chart up. This is a very unusual day. We have swung more than 90 points from the high to the low. We were 42, 20, half an hour into the open. 90 points. Now, is that unusual? A typical day the S&P will swing about 45 points. So this is twice as much as normal. So yes, it's a very unusual day. And look, essentially, it's been straight up after the first half hour or so.

So look at what's weak today and has been not really rallying at all. Well, rates move up dramatically. And of course, you see, not moving too much, real estate. Utilities are starting to catch a little bit of a bid. That's interesting. Staples have been weak, though. Look at the leadership, though. Look what's really moving, a little. bit more than everything else. Number one, China's been strong. Metals and mining stocks have been strong. Industrials have been strong. These are cyclicals. China's associated with commodities, too. Tech's also been a leadership group here. So it's interesting to look at some of the big names that are actually in the S&P that are moving. Freeport McMoran. This is a sort of a proxy for global growth, copper and gold essentially, eaten big global industrial, a big oil company. And oil was moving.

copper was moving earlier. No, this is not just on Exxon Mobil and the Pioneer deal. Oil, the whole complex was moving throughout the day. And other materials like Vulcan materials, all notably strong. These are cyclical stocks that are moving. So look what the market's doing and try to interpret what it's telling you about what's going on here. Staples Week, though, this is kind of curious. We have Lamb Weston with some decent earnings this morning, not doing anything. Walmart talked about those weight loss drugs recently and hasn't really moved. Church in Dwight's down, that's a little strong. range. This is so hard to figure out on the consumer staple side. But here's the most important thing about the jobs report today. It's about inflation. Average hourly movement, the wages, were below expectations. And that means wage growth is moderating. At the same time, we had job growth strong, much stronger than we all thought, but still strong. So what's the bottom line? Consumers still have jobs, but inflation is declining. And once people started to seriously look at that, you saw the market turn around. I know. it's a bit of a shock to everybody. It was to me on those job numbers, but this is not necessarily

bad news for the consumer. Next week, we're going to talk about earnings, which, by the way, have held up very well for the third and the fourth quarter. Tyler? All right, thank you very much. Bob. Bond yields, easing back off this morning surge, but the yield on the 10-year note still hovering near 4.8%. Rick Santelli is in Chicago with the latest, hey, Rick. Yes, a couple of things we've learned this week. I call it relinking. That even one interest rates are moving up and equity traders are biting their fingernails. Once you get a slight reprieve and interest rates consolidate, it's always been amazing historically how that becomes a positive and the equity markets re-linked to a different

level and can still be bullish, just like today. Another thing we learned, you could avoid a shutdown, but you can't avoid the bond vigilantes. And that is the story. It's about debt and it's about how we are dealing with it or not dealing with it and how the markets have taken the job as their own. Look at a week to date of tens. Yes, it's a wild week, but when you add in twos, you can see why, boy, the least inverted yield curve in a year. If you look back to 2007, we're going to be comping for 16 years, Tyler, for a long time because the high in the summer of 07 was just shy of 5.30%. And if you look at our rates on tens versus the

EU, the distance between them, 188 basis points. That's the widest in one year. Now, one other thing we want to point out, the dollar didn't really change much on the week, but it's hovering at lofty levels. Kelly, back to you. See, I'll pick it up from there. Rick, thanks very much. The UAW president wrapping up his speech.

Dom Chu's been listening in. He's here to wrap the headlines. Hey, Dom. All right. So, Tyler, the main takeaway right here as he, as UAW president, Sean Fain, wraps up just moments ago his Facebook live address to UAW members is that Sean Fane and the UAW have not announced any further strike targets today. That's the key takeaway here. What we have seen is each of these big three automakers shares rise to session highs after a little bit of

volatility between the 2 o'clock and 2.30 p.m. Eastern time hour when this was happening. I will also point out that Sean Fain did say that they are making significant progress, but there is no deal to announce yet. The UAW also says that GM has agreed in writing to place their electric battery manufacturing under the UAW's national master agreement. UAW President Sean Fain also says it will not strike at GM's Arlington, Texas plant,

also saying that General Motors, quote-unquote, leapfrogged the pack in negotiations with regard to that aspect of things, and also that Stalantis has agreed to reinstate cost of living allowances. Now, again, Tyler Kelly, this is very much about perspective during a negotiating process. These are the formal comments coming out of UAW and Sean Fain, the president. We have not yet heard any kind of a formal on-the-record response from either, any of the big three automakers. We are in the process right now of reaching out to Ford, GM, and Stalantis to see if they have anything to say with,

regard to hearing UAW President Sean Fain's comments just now. We will bring you those comments if we hear back from GM, Fort, or Stalantis. But those are the key headlines right now. And as you can see in the charts, Kelly, Tyler, a little bit of volatility between around 215 and 230 Eastern time. And now we're at session highs for those stocks. I'll send things back over to you guys. Dom, thank you. We're at session highs for those stocks on word that these strikes might not be expanding and also for the market broadly with a doubt about 410 points. Domchu, we appreciate it. Keep us posted on any further developments. Coming up, start your engines.

City upgrading shares of Formula One to a buy, seeing upside of more than 15% from current levels. We've got the analysts behind the call. And as we had to break, CNBC is celebrating Hispanic heritage, sharing the stories of influential business leaders. Here is Michelle Fure, president at the S.A. Lauder companies. Since I was a little girl, I have been surrounded by beauty in our Latina culture, watching my mom, take care of her skin, put on makeup, my aunt. Beauty is such an inherent part of who we are as Latinas. And so I took that passion that I had for beauty growing up as a Latina,

and then I turned it into a career. And I don't work a day in my life because I'm having so much fun. There, now where my kids are open. I had a wonderful little speech going there. The Dow is up 431 points right now. That's 1.3% to finish this busy week. on what appears to be a very high note. Shares of Liberty Media, meantime, Formula One, getting a boost following an upgrade to buy from neutral over its city group.

Investors seemingly growing more bearish on sports rights in general recently. But City says any concerns over the industry or the Las Vegas Grand Prix are overblown. Let's welcome in the analyst behind the call. That is Jason Bazinet. Jason, welcome. Good to see it. Let's take the concerns about the Las Vegas Grand Prix first. What are the worries there?

I don't even know what the concerns are. Well, I think the primary concern is that Liberty raised its cap X to, in the Vegas property, by a meaningful amount about a quarter ago that put a real crimp on free cash flow. And that cast a long shadow over sort of the intelligence of making that large investment. So that was sort of the first knock on the stock. And then worry number two is that the sponsor of the events will not collect ultimately the kind of rights or TV rights money that has been piling into sports properties for decades now.

Yeah, that one really emanates from your parent company. They signed a deal with WWE for some linear television rights that really disappointed the street. And it rattled investors' cages because they had viewed sports as sort of the safe heart. in a pretty turbulent media ecosystem, and this just cast a long shadow over overall sports rights. We don't think that the disappointing WWE TV rights renewal is applicable to Formula One, and the reason is very simple. About two-thirds of WWE's TV rights come from the U.S. market.

Right. And it's only about 3% for Formula One. Formula One is just a much more global property. So yeah, Formula One is hugely popular globally. and people watch it. I think it, I can't remember where it falls in the ranking of sporting events, but it's up in the top five, I believe. Is there room for, in your view, significant growth of viewership in the United States,

or is that just a long shot? No, I mean, you know, the U.S. is the largest sort of media market in the world. And Formula One had been notably absent in the U.S. in terms of having a real following. Liberty's management team is making gradual but consistent inroads. I would say it started with Drive to Survive on Netflix. They're now up to three races in the United States, Austin, Miami, and now Vegas. And that's causing the U.S. audience to grow.

And they're certainly not getting paid for the U.S. audience yet, but that's the long-term journey that we're on. Yeah, I have a neighbor who's an Australian who gets up at odd hours to watch these events. He'll watch the Saudi Grand Prix or the country. Katari or whatever it happens to be. So I don't underestimate the possible popularity of it. So you like the stock? We do like the stock. It's interesting in that there was some press reports that Apple might come in and secure the global rights for Formula One and pay $2 billion for those. That would be about double what Formula One is collecting on a global basis today. by our math, if that's true, you'd see a quick sort of 10% lift in the share price.

If it ends up not being true, I think that's totally fine. Our expectation is the value of Formula One sports rights will continue to rise about 8% a year. So either we're going to get some very, very positive news in the short term, or we just sort of grind higher. And there's one last thing that caused me to upgrade this stock is so much of this company's revenues are contractual that you really do. don't face any sort of macro slowdown diminution in terms of their cash flows. Interesting. Jason, before we let you go and not to harp on it, but I wasn't aware of what happened with the WWE.

So just give us 30 seconds on why that set off alarm bells. It reminds me a little bit of that. Was it the Premier League or something with the UK last decade when people similarly thought, like, wait a minute, this renewal didn't go as well as we thought. Does it tell you more about WWE, especially given everything that's been going on with that ownership, but just encapsulate that for us? Yeah, so they had two properties that they were renewing. One is raw, one is Smackdown.

The market had expectations that those rights would go up relative to the last contract, which was five years ago, by 1.4 to 1.6%, 1.4X to 1.6. That was the market's expectation. And the market interpreted what actually happened is something almost close to flat. And so that put a lot of pressure on TKO stock. Now, it gets a little too technical in terms of whether, you know, it was a step up or flat. But I understand the market's concern. Is that interest in the sport has flatlined, do you think, or no?

Well, the ratings have come under a little bit of pressure, but it's outperformed the broader linear ratings. And so it's sort of, you know, probably performing well on a relative basis, not on an absolute basis. I think the root issue is media companies are just not as certain about how much capital, they should be committing on a long-term basis when cord cutting is running as high as it is. I think that's the core of the issue. Yeah, no, I appreciate you bringing us up to speed on that. Jason, thanks for your time today. Good to see you.

Absolutely. Thank you. Jason Bazzanette. Still to come, Tesla's shifting gears, cutting prices for its Model 3 and Model Y in the U.S. After this disappointing third quarter deliveries, we'll trade it in a fresh three-stock lunch next. Welcome back. Take a look at the Dow higher by more than 400 points, and actually a little bit off the session highs we hit a few moments ago, which appeared to be propelled at least somewhat by this news that the UAW won't widen strikes.

Certainly shares of the big three move to session highs on that news as well. And let's take a look at some of the big movers of the day in our three-stock lunch. And we'll start with Disney, which is up a little over 2% after Bernstein called it the only credible challenger to Netflix and a sweeping bullish coverage initiation of major media players. We'll trade this name and more with Ava Ados, ER shares, CIO. She joins us for this today. Ava, welcome. Disney is a name that has traded very poorly. Is this now the start of a turnaround? What would you do here?

So last time we spoke about it, we were very shunit, but it has now reached a 10-year low. So its relative valuation is much more compelling. We also need to remember that last year, there was a huge PR shock, which we believe it's now going to change. With a new CEO who is well known in the community, we think there is a good chance for things to turn around. They continue to maintain a leadership position in both media and the park. Many people don't know, but the media attributes two-thirds of the revenues, and we need to remember that their EBIT margin is now one-third above its peers, and its revenue growth is double its peers. I think it's a buy at this evaluation right now.

All right, let's move on to the stock we have to mention every hour. Tesla, the EV-makers slashing the price on some of its U.S. versions, and Model 3 and Model Y car after reporting a drop in third quarter deliveries. Kathy Woods, Ark Invest, ETS, EF, also trimming its stake in the company by more than 25 million today. What say you, Ava? Well, we need to remember that $25 million, when their position is $725 million, is really insignificant. It probably reflects liquidation of assets of funds, liquidation of CUs creation units. And so I'm not concerned with that.

We have it as a fault. We actually have it as an underweight, but we do only. I'm discouraged with its relative valuation, which is high, but I'm encouraged with the fact that it's a very unique mega cap, which is equal to extend more than 10 other huge competitors. And so it's a very unique mega cap because the revenue growth is about 40% compared to the 0% to 10% that we see for other well-known mega-caps. So it's a very unique story. I think it's a hold. A hold. What about Exxon, whose shares are slightly lower, as our David Faber confirms the company is nearing a deal to buy Pioneer?

You like it? Would you buy the shares here? No, that's a sell for us. We're not fans of the acquisition. It's a $60 billion acquisition. That reflects 15% of Exxon's market cap. And we don't like the acquisitions for two reasons. There are two different, completely different companies in terms of management structure, in terms of profile and margins. Pioneer is an entrepreneurial company, and when a bureaucratic company like Exxon, based on a research, buys an entrepreneurial company like Pioneer, then there is a cultural clash. And so we are concerned that this is going to happen in this case. We also don't like the value, the price that they're paying.

We need to remember Exxon is trading at one times market cap to revenue. The rest of the sector trades below one, and they're paying about three times revenue. So I don't think the market will like the price that they're paying. It's a sell. Ooh, all right. Ava, for now, thank you very much. We appreciate it. Have a great weekend, Eva Ados.

All right, so many stories to get to, but so little time left. The weekend is coming. We'll get to as many as we can. In closing time, is it. Two minutes left, everybody, and several stories to run through. Let's waste no time and get right to it. Starting with a new study out of the UK, finding that long colds could be just as common as long COVID. in The Lancet concluding that like long COVID, other respiratory illnesses can also present symptoms more than four weeks after the initial infection.

Yeah, I think we've all probably had a long cold that's stuck around. I think my husband has one right now. Why isn't this going away? My head is stopped up. I don't feel like myself and certainly COVID can do that to you as well. Yep. So anyhow, a new trend emerging in the back-to-office push and that is coffee badging. Hmm.

The act of going into the office for a morning coffee, getting credit for showing up in person, but then leaving early and working the rest of the day from home. Our survey from Owl Labs found that 58% of hybrid workers admit to coffee baggage. What is there to admit? I'm so anti all of this, like, this, either you do, you're good at your job and you stay employed. I don't care what time you leave. Come and come. Come on you want.

This whole thing drives me crazy. Do whatever you want. If you're good at your job, you're good at it. If your employer lets you, they let you. And if not, goodbye. Take the coffee, leave the gun. What does it take it? Canoli, right, yeah, take the canoli, leave the gun.

Meta is reportedly paying some celebrities millions of dollars to use their likeness for AI chatbots, including Snoop Dog, Paris Hilden, even Tom Brady. This is according to the information. In many cases, the stars are paid a million dollars or more for just a few hours of work. This is my life goal. Yeah. I'd like to be Snoop Dogg. He has a pretty good life.

I'm not sure. Yes. Maybe he's not doing things that are good for his body. But at any rate, I can't think of a. a guy who has managed his career more stutely than he has. I think this is early days. This AI stuff or some of these celebrities,

it's going to be a whole new revenue stream. And give a whole new meaning to name image and likeness, virtual likeness, because anyhow, it's been a very interesting week and a very interesting day. Right now the Dow, as we handed off to Scott, is a higher by 406

points. And that, after a beginning of the week, there was anything but positive. Thanks for watching, Let's have a great weekend, everybody. And closing bell starts right now.