Power Lunch - Shop ‘til You Drop!, and Trouble at The FTC 2/15/23

Episode Date: February 15, 2023

Americans went on a spending spree to start 2023, as retail sales jumped 3% in January – well above expectations. Is that good news for those fearing a recession, but bad news for those hoping for an end to Fed rate hikes? We’ll debate. Plus, an FTC commissioner just resigned, and blasted the Chair on the way out. We’ll talk to a former FTC Commissioner about the drama. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch, along with Kelly Evans. I'm Tyler Matheson. Glad you could join us. Coming up, Americans went shopping in January and out to eat and to the car dealer. Retail sales up 3% well above expectations. Now, is that good news for those worried about a recession? Yes, it is, but maybe some bad news for those hoping the Fed will stop Kelly raising interest. Plus trouble at the FTC. A commissioner resigns and blasts the chair on the way out saying Lena Khan is abusing her power. We'll talk to a former FTC Commissioner about this squabble and what it means for corporate America and dealmaking. First, it's good a check on the markets, though. Stocks have been bouncing back throughout the day after those stronger numbers that Tyler mentioned.

If you thought the market was worried about more Fed rate hikes, well, pretty much everyone's green except the Dow right now, down 19 points. So the S&P is about flat NASDAQ up half a percent, small caps, up three quarters of 1%. All right, let's check in with Christina Partsenevales, who has some detail in color on what's moving in the markets today. Christina. Of course. We do have some stocks making some moves. Stock's coming off the lows of the day. With once again the NASDAQ, the only industry really in the green.

The S&P 500 is flat right now. But Airbnb is actually the biggest winner on the NASDAQ 100, up, what, 13% after a blowout quarter on top of already high expectations. And they issued a strong Q1 guidance, clearly benefiting from pent-up travel demands. You can see the shares are up 13 and a half at this point. EV makers like Ribian and Lucid also leading the pack after Biden announced a deal with Tesla, allowing widespread access to Tesla's charging stations, so that means time to share. And then on the New York Stock Exchange,

video game platform Roblox soaring right now, above, about 24, almost 25% after it revealed, a 14% increase in paying users during Q4. I'm sure a lot of parents of small children get that. And then call it risk on or short covering, but some beaten down names are getting some love today. Lending platform, Upstart, Buy Now, Pay Later, Lender, Affirm. And then Carvana, which is the online,

use car retailer that really just got beat up over the last several weeks. It is up 11%. Kelly? Wow. Continuing the theme. Christina, thank you very much. Let's turn to the big story driving the market action today. That retail sales report, smashing estimates, jumping 3% in January, food service is leading the way with a 7% gain, motor vehicles, home furnishing electronics, those doing well also. Here to break it down and look ahead to the retail earnings we're about to get. Stacey Widlitz is here president of SW Retail Advisors. Stacey. Is this just a rebound from the weakness at the end of the year or real strength? So there's no doubt there's real strength here, Kelly. We don't want to get too much ahead of ourselves because January right is a really small month. But I think there's a couple of things going on. Obviously, everybody's out eating and drinking, but the furniture numbers were a bit of surprise.

But if you listen to companies like William Sonoma, they'll tell you that the whole out-of-stock issue that's been persistent over the past few years is now getting solved. So perhaps some of those orders were filled in January. I think the other thing is that retailers were incentivizing the consumer, and we saw that, to shop into January. Hey, you know, if you buy a gift card in January, we'll give you an extra 10 bucks. So there were some of that. And certainly there was some, a lot of clearance in January as retailers try to normalize

and get through those backlogs from the past few months. But, you know, it's absolutely good. news as we look into the new year. Was it already priced into the stock, Stacey? Or do they still reflect a decent discount? So I think this was a surprise, obviously today. And I guess it was even more of a surprise because last week, if you listened to somebody like a Capri who was talking about destocking the wholesale channel for some of these retailers, it's up to 40, 50% of their business. They were talking about a de-stock in wholesale, wholesale business down 25%. So if you put that context, even some of the brands that are super strong, they were talking about a lot of the department

stores being really modest about future orders. So I think this is like, this is definitely a double positive surprise. You say that some of the weaklings in apparel may actually show some strength, which ones and why? So Tyler, if you think about it, you know, the apparel numbers were okay in January, but we really haven't had a winter, right? We've had a very kind winter and some really nice weather recently. So what I've seen is a little bit of the spring apparel is getting a bit of an early jump start here. So I think as we in the next couple weeks, we hear from retailers, there might be some extra optimism. We always worry about the pull forward situation. But I think you could see an American Eagle. You could hear some green shoes from Target, which is still an underdog.

So I think some of these stocks, particularly that are apparel focused, you could get a pop into the commentary over the next several weeks. And gap? Maybe? So, you know, it's interesting. So Gap, it's particularly Old Navy, has been promotional more year over year. And that's what we look at to see if things are worse. But in the past six weeks, it's kind of been flattish year over year to even, in some cases, modestly better. So things are certainly not getting worse there. Is that enough to move this stock? Probably. Wow. So Stacey, if I were to say, well, wait a minute, you know, Capri's got more of a leading read on this and maybe the retail sales report was a one-off. Would that be a plausible interpretation or no? I think right now, again, January is so small and there were so many different things going on, extra clearance, fulfilling orders that were backlogged. So, you know, I think we really need to see, particularly the March numbers, to understand what does spring look like. We certainly know that full-employed. here. Customers are taking on more debt. We know that, especially at the low end. So there are puts and takes here that in six months, the consumer might be a little bit more stretched here. But I think in general, good start to the year, obviously. Yeah, absolutely. Stacey, great to see you. Thank you so much.

We appreciate it. Stacey Woodland. Well, our next guest says the new retail results may impact the Fed's timing of reducing the magnitude of future rate hikes, but also says the Fed doesn't need to cut rates to sustain the recent rally. He's betting on some growth stocks to do well. Let's bring in Peter Anderson, chief investment officer at Anderson Capital Management. Peter, welcome. It's always good to see you. Thanks. So what do you make of the recent data economically, the jobs numbers, these retail numbers today, and the effect that those may have on the pace of Fed rate hikes and when the Fed might pause. Tyler, I think the Fed has really done, I dare say, an artful job at managing his current regime of rate hikes and blending in. Remember, we started this last March, so almost about a

year ago. We will start to see those impacts now, March going forward. And I think it's very challenging to blend those past hikes, the impact of those past hikes, with his current pace. And I think he's doing a very, very good job. I think he's flexible. And I think he's giving himself a long runway. So even the retail sales numbers we've seen today, he will certainly factor that in. But he's being quite artful, I think, in terms of anticipating the impacts that we're going to have from the past hikes with the current actions that he has to take. The caron we just ran says that all the Fed has to do is stop raising rates. Is that to help the stock market? Is that to help the stock or to help the economy or to help in the fight against inflation?

In other words, why are you saying that? And is that what you're urging the Fed to do here? All of the above, yes. I think, you know, they're hopelessly interconnected. And to isolate one of those questions, I think you cannot answer it without anticipating the other two questions. So all these things blend together. And what I would say, probably a very smooth landing.

Against all the negative criticism that I'm seeing, the very sentiment now in markets is extremely negative. I'm quite positive about the way it's been going and also what I think will happen through the rest of this year. And two stocks, Peter, that you like here, I smile because, you know, Cody and Invidia. You know, I feel like you should have a Mohawk or something if we're talking to you about, you know, those. Why these two? Well, I gave those as almost extremes. And you're right. You know, Nvidia is a very hard tech company, AI play, kind of abstract in the most abstractions you can be, right, with artificial intelligence and debating whether or not that has a long runway. Whereas Cody is a high-end fragrance and cosmetic company, but it's very, very simple.

The thesis there is it lost its way a couple of years ago. It bought some mass market assets from P&G. the CEO really didn't know what was going on. They levered themselves up 40 times, okay, with leverage. And it's a classic de-leveraging story. They are now down to four times leverage so that extra cash flow will help them return to their basic knitting, which is not Mohawks, but close. It's more like a high-end makeup in fragrances that they've always been known for and they lost their way.

So I think that's a very relieving type of strategy compared to all the other abstractions that we talk about with AI and Nvidia and those kinds of platforms. All right. All right, Peter, thank you very much. As always, good to see you, sir. Peter Anderson. Thank you. With a more hopeful message. Some news coming out of Washington to bring you.

Now let's get to Kayla Taushy for the details. Kayla. Kelly, the nonpartisan Congressional Budget Office says the federal deficit will average $2 trillion over the next decade, a dramatic increase from prior base. line projections that it attributes to legislative changes, increased spending, lower tax revenue, and higher interest rates on government debt. The CBO now sees the 2023 deficit at $1.4 trillion. It has a $400 billion increase from its prior projections, and it sees a cumulative deficit widening by $3 trillion or about 20 percent to a total $18.8 trillion by 2033. At that rate, the deficit would represent 6.9 percent of GDP in 2030. That's nearly double the average.

average rate for the last 50 years. CBO says it expects elevated borrowing costs and muted GDP growth to last several years and sees inflation hitting the Fed's long-run goal in 2027. As for the debt limit, CBO says Treasury could exhaust its creative bill-paying measures between July and September or possibly earlier if the U.S. brings in lessen capital gains taxes than in prior years. The CBO's reports assume the government's taxes and spending programs remain unchanged. President Biden is set to deliver remarks on the deficit later this hour, though both parties, it should be noted, have argued it's the other parties proposed policies that would drive the deficits wider. Tyler.

All right. Thanks very much. Kayla Taushy. We'll be watching that one. Obviously, a politically contentious issue. Coming up, AI in the markets is nothing new. People have always used computers to try and get an edge, or almost always. But could this new wave of generative AI change the way trading is done. Plus, Coinbase shares jumping today, even though the SEC is considering a rule that could threaten part of that company's business. We'll bring in the news and get to the bottom of what's moving the stock when we return. Welcome back, everybody. The SEC considering new rules regarding crypto, which could be a threat to companies like Coinbase. Kate Rune now has more. Kate. Hi, Tyler. So the SEC is looking to increase requirements for what types of companies

can legally hold investor assets, which could affect Coinbase and some other big crypto firms out there. The commission is looking to expand the scope of requirements for qualified custodians, which usually include things like banks and brokers, but crypto companies like Coinbase have also started offering that service of storing assets for institutional investors. The proposal is meant to include other assets, not just crypto, but the SEC chair, Gary Gensler, calling out the industry explicitly, he says crypto companies' current practices, might not meet some of these new requirements. In a statement, Gary Gensler saying that today's rule covers a significant amount of crypto assets,

and though some crypto platforms may claim to custody investors' crypto, that does not mean that they are qualified custodians. Coinbase responding in a statement saying that after today's SEC proposed rulemaking, we are confident that it will remain a qualified custodian. And as a reminder, they say their client assets are segregated and secured as well. Coinbase does custody billions of dollars in crypto right now, including for grayscales Bitcoin Trust. It's been seen as a key part of its business, especially as some of the other revenue streams like trading slowdown. And guys, as you mentioned, the stock is higher

despite this news. An analyst I just talked to said this is objectively bad news for Coinbase, so it can be a bit of a head scratcher here. I'm told this is more likely a short squeeze playing out. S3 partners sent us some data. Coinbase right now is among the top 10. Most shorted names, not really trading on fundamentals today. You can see it's up more than 14%. Back to you. Great point. There's a few others as well, Kate, where there's no real catalyst other than that stat.

Kate Rooney, thanks. As the SEC reigns in one trading fad, and even bigger one is still emerging, AI. We've all been watching technologies like Chat GPT develop over the past few weeks and months. Maybe it wrote you a love letter for Valentine's Day or gave your kid an idea for a college essay. But those uses seem to be just the tip of a very deep iceberg.

Because the thing to remember about this technology is that it's open to application. Considered chat GPT is a standard model car, but any programmer can take the frame and make modifications allowing it to do things previously not thought possible. For instance, algorithmic trading. The market expected to generate $33 billion by 2030.

It's currently dominated by the likes of Citadel and Morgan Stanley. But could any one person utilize AI to create a trading platform of their own? On par with that of the big funds? A shift like that could totally democratize stock trading. But is this untestest, technology open to manipulation or worse, could it even trigger collapses? Greg Zuckerman is a special writer at the Wall Street Journal.

Greg, it's great to have you here as we explore what people are already doing. I follow people on Twitter who are already building AI platforms. What are the implications here? Yeah, so it's exciting. It's challenging. I'm a little wary of people throwing themselves into developing their own AI programs, mostly because Wall Street has been at it for years, even decades. Machine learning in particular, a subset of AI, has been the focus.

I mean, early on, obviously you had algorithms, these recipes, trading recipes, and frankly, about 54% of all trading right now is automated. So we're already there when it comes to Wall Street. It's no longer the traditional kind of trade or pick up the phone and figuring things out in terms of execution. But in terms of developing the trading ideas, frankly, hedge funds and, others have been at it for a while, and they're still having problems applying machine learning and trying to make a lot of money from their trading ideas. What does AI or machine learning do well in a trading context, and what does it not do well? Sure, so it's really good at picking out

patterns, and that's what quads do, and that's what some other traders do, and they're good at eliminating sort of the biases that you and I might have, emotional, fear, greed, that kind of stuff. So if you hand those decisions over to computers, then it's great. The beauty of machining learning is that it can learn. You learn from past mistakes. It learns on its own. It comes up with ideas on it so on. The problem is when it comes to trading, at least, unlike languages, things are always changing.

The data is changing. Let's say, I don't know, you have a GE, General Electric once was a financial kind of company and no longer is. There's been a spinoff and the computers don't know that. So it's noisy, as we say. It's not clean the data. So those individuals who are trying to become quads and machine learning experts have some challenges ahead of them. That said, we even talked with Ron and Sanna about this, Greg. And he's not alone.

A lot of people are going to start layering in these technologies to do what effectively their employees already do, which might be to look through charts of past recessions or to study correlations, you know, and look at sector timing and that kind of thing. should we just expect AI to become part of an offering and maybe one that's more efficient or maybe one that creates more herded trades? It seems as though some some are going to try to build it themselves, do it themselves, maybe some 17-year-olds are going to solve this and do better than the pros from their bedroom. But for others, professionally, it feels like this technology is going to start showing up everywhere. I do think so. I think first you're going to see it, though, in sales and research, those kind of endeavors.

where you can't automate you're already hearing buzz about people learning and turning to ChachyBT and other kind of AI type of techniques. I do want to remind people that when it comes to machine learning and quantrating in general, you're competing against some of the Mines PhDs at some of these firms Citadel Renaissance has hundreds of PhDs, and they apply a man plus machine approach. So in other words, it's really difficult just to turn all the decisions over to the machines. partly because they have to explain those decisions to clients, not necessarily a medallion in Renaissance, but other kind of firms. And when you get in touch of a client,

they want to know why you made a certain move by or sell something, and you can't tell them, you say, well, the machine told me too. It was learning from the past. It's hard to kind of get away when you've had a loss there. And again, data is really noisy. And cleaning data, there are hundreds, if not thousands of people in the industry,

focused on that. So an individual in their upstairs office trying to compete, I would caution them to be a little bit careful. Yeah. At the same time, we've seen even Charlie Munger today talking about how this technology has great promise, but it's hard to separate something with a real edge from something that doesn't have it. How is anybody ever going to know? Well, we'll see who ends up making some money from this thing and not. Yes, machine learning techniques can pick up on all. kinds of trends and patterns that the human eye is unaware of, doesn't see. Sometimes those patterns

are not real, though. They're ephemeral. There's a reason why they shouldn't be bed on necessarily. So, yes, those who turn the decisions over to the machines will pick up on patterns that maybe you and I can't figure out, correlations that we didn't even think about. And sometimes they're valuable, but other times they're not. And just to kind of caution people, Medan, probably the best hedge funds in history, the pioneer when it comes to quantum investing and algorithm investing, they only get it right about 51% of time in terms of their hit ratio in terms of their trades. They know when to lever up. They know which 51% they get it right. They know what they're doing. But there's reason for caution there. Is it bad? As I listen to this, and I think the more and more that people

are kind of feeding in these data and running these sometimes spurious corollah, go, give me our cash in, Greg. I mean, I would put someone who kind of has that institutional memory up against any of these data sets that can be so flawed? Yeah, I do have to say that I'm a big believer in systematic trays. In other words, or systematic approach to any decisions. We are apt to make mistakes as humans. And if you can turn the decision of or if it can be informed, your decisions can be informed by some sort of system.

And if it's a computerized system, that's great. I think you can get some real advantages. You see that in pilots sitting in the cockpit. They've got checklists. they've got a systematic approach. So I do believe in the systematic approach, but turning it over completely to the machine or the computer, as it were,

there are challenges there. So fascinating. Thank you, Greg, for joining us to talk about it today. The dawn of a new era, Greg Zuckerman. All righty, ahead on our program. Today's working lunch, John Ford, brings us his interview with the CEO of a software startup looking to support corporations' employee resource groups. Plus, FTC, see you later.

the sole remaining Republican on the FTC resigning and parting with some harsh words for Democratic chair Lena Kahn. We'll be right back with that story. Welcome back, everybody. Yields are rising today after that strong retail sales report, a 15-year high, in fact, on the two-year. Rick Santelli with the latest.

Rick? Yes, and let's look at that two-year. At 462, it's 10 basis points away from its highest close of this cycle and actually going all the way back to 07. That was in November at 472. 10 basis points away. If you look at the 10-year, it's high in October of 23,

was over 40 basis points above where we're trading near 4 and a quarter. Why do I bring that up? Because as aggressive as 10-year notes have been, and they're now at the highest yields of 23, the fact that they haven't been able to cross some of the larger extremes is meaningful, especially if you're looking at the spreads. Look at twos to tens, even though it had a bounce. It's still within striking distance of four-decade inversion,

But there's dueling yield curves. The real recession spread three months to tens is the least inverted in nearly six weeks. Tyler, back to you. All right, Rick, thank you very much. We've got some news now out of Washington affecting some of the biggest tech companies in the world. And Aiman Javers has it from our DC Bureau. Hi, Aymann. Hi, Tyler. Well, that's right. The House Judiciary Committee under new Republican Chairman Jim Jordan has just fired off a spade of subpoenas to some of the biggest tech companies in the world demanding documents and information. related to what he says is Big Technologies' alleged efforts to suppress freedom of speech. Here's what Jim Jordan says in his press release about these subpoenas, which were issued this afternoon. First of all, he's sending these subpoenas to the chief executives of Alphabet, Amazon, Apple, meta, and Microsoft.

He's asking for documents and communications relating to the federal government's reported collusion with big tech to suppress free speech. He's saying here that Congress has an important role in protecting and advancing fundamental free speech principles, including by examining how private actors coordinate with the government to suppress First Amendment protected speech. So the question here is whether Jordan and his committee, now that they have subpoena power, because Republicans are in charge on the House side on Capitol Hill, we'll be able to come up with evidence backing that premise. And to what extent the tech companies are going to decide to fight these subpoenas and what extent they're going to cooperate?

We'll reach out to all the tech companies and let you know if we get any inkling of what their strategy is here and how to respond, guys. What is he driving at, if I heard you correctly, in the assertion that tech companies coordinate with the government to suppress or restrict free speech? What's he driving at there? So the broad concern among conservatives has been for a long time that the big tech companies, you know, dominated as they are by liberal programmers based in San Francisco largely, have taken efforts to suppress search results and the things like that on conservative issues and

amplify them on liberal issues. And the question I think that Jim Jordan is going to want to know is to what extent was there any coordination between the Biden administration in the first two years of this presidency and some of those tech companies on issues of political significance, you know, and all the hot button cultural issues that you might imagine, if any of those were done at the request or in coordination with any Biden administration officials or executives. We saw a hearing last week on Twitter on Capitol Hill under a different committee, the oversight committee on Capitol Hill, exploring a similar set of issues of whether or not Twitter was coordinating with the Biden administration in terms of how it handled the Hunter Biden lap, or the Biden officials in terms of how it handled the Hunter Biden laptop story. So this will be, I think, a similar series of questions. And, you know, the big question will be, what do they get in their drag net as they throw these subpoenas out there?

All right, Amen, thanks very much. Amon Javers, reporting from Washington for us. All right, let's go to Bertha Coombs now for a CNBC News update. Bertha. Hi, Tyler. Here's what's happening this afternoon. Nikki Haley is formally starting her run against former President Donald Trump for the GOP presidential nomination with a call for Americans to, quote,

stop trusting the stale ideas and faded names of politicians from the 20th century. And I have a particular message for my... fellow Republicans. We've lost the popular vote in seven of the last eight presidential elections. Our cause is right, but we have failed to win the confidence of a majority of Americans. Well, that ends today. Within the last hour, Florida GOP, Representative Matt Gates said that the Justice Department has ended its sex trafficking investigation. him with a decision not to charge him with any charges or crimes. And a ninth grader has reached his goal of delivering 20,000 valentines to hospitals and

nursing homes in the Washington, D.C. area. Back in September, Patrick Kaufman asked school students to start making the cards. Next year, he hopes to expand his valentines by kids' effort nationwide. That is a great story, isn't it? Because not for nothing, Bertha, but we didn't need to come home with 17, you know, so much candy. So, you know, my kids don't need it. And it would make the day of some of those. That's a great idea.

Yeah, for folks who might not get one who were in an nursing house. By the way, I was buying valentines like the night before. This kid was planning six months ago. Yeah. Even more impressive. Bertha, thanks. Ahead on Power Lunch, no need for an emergency back for this stock. Generac shares soaring following an earnings beat.

The company expects weak sales over the next few months, but giving him, investors hope for a rebound in the back half. We'll speak to the CEO directly about this next. The backup power company Generac reporting fourth quarter 2022 results that beat Wall Street estimates for EPS this morning. Shares getting a boost up about 8% today after being down 51% over the past year. The past few months the company has performed very nicely in the market. However, joining us now for a power lunch first on CNBC is Generac. CEO Aaron Jagfeld. Mr. Jagfeld, welcome.

Good to have you with us. Thanks for having me, Tyler. Business is good. EPS higher, higher than expectations compared with a year ago. But revenue is kind of flattish. Am I characterizing that correctly? And how can you get that one back in gear and how soon? Yeah, that's exactly what happened.

Tyler, we said that we're working through a destocking issue in the field. We shipped a lot of product really in the first half of last year, and I've been working through the second half of last year and beginning of this year on reducing those field inventories. So we think that that de-stocking will be done here by the end of the second quarter and that by the second half of this coming year, we should be back to growth again. What is the segment your business for me between the household market, the commercial market, institutional market,

so that I get a clearer and viewers get a, a clearer sense of where most of your business comes from? Yeah, a good chunk of our business is on the residential side. So about 60% of what we do is serving homeowners. And that's with everything from home standby generators to backup storage devices, smart thermostats through our EcoB division. So that's about 60%. And the other 35 to 40% would be commercial and industrial type of backup generators for telecommunications providers, wastewater treatment plants, manufacturers, things of that nature. How are your input costs affecting your business? In other words, what you have to pay for labor, what you have to pay for raw materials, what you have to pay for

transportation and so forth. So how have those costs been felt by you? And then how much of those higher costs, I assume they're higher, are you able to pass on to consumers? The pricing power question. Yeah, definitely. I mean, our products are, you know, they're durable goods, right? So there's a lot of steel, there's a lot of copper, a lot of aluminum, the costs to get them here in terms of logistics costs, the labor cost to put them together. All those costs, well documented over the last 18 months, much, much higher. We've had to pass along quite a bit of that to consumers. You know, I would say anywhere depending on the product, you're talking between 10 and 15 percent, maybe even higher in some categories. We've passed that along to homeowners and business owners.

It's, you know, obviously they're accepting it. They don't like it. We don't like to have to do that, But at the same time, we are seeing input costs kind of level out here finally. So it's good that we're starting to see some of those costs come down, actually, especially around logistics costs and around certain metals costs. We are starting to see some moderation there. Obviously, labor costs are, you know, they go high. They stay high, right? I mean, labor costs rarely go the other way.

So there are some costs, which we believe are going to be higher for longer. Erin, it's Kelly here. And what's it been like for your business to go from one of these kind of steady-as-she-go-hum-drum, if you will, companies? to a whipsawed stock. The stock was $500 a couple years ago. It was almost like crypto. It's like you were a doge coin.

What was that experience like, especially because it was backed up by real demand. We had this huge influx of homebuyers and then people looking, obviously, for backup generators. And how complicated did that make things from a business planning point of view? And what's the hangover like now? Did you ever look at that time and go, like Elon Musk famously said, you know, our stock doesn't make sense at these levels? Yeah, I think you can make the argument. maybe the stock got a little bit ahead of itself, you know, even last year at some points, but the year before certainly.

You know, look, our company, we produce, you know, backup power supplies. We're moving ourselves into position more as an energy technology company. So again, I mentioned things like smart thermostats, you know, solar plus storage, energy management, EV charging. We have a new EV charger we're launching here this year, really more focusing on the ecosystem of energy around a home or a business. And I think, you know, where the stock price got to was a reflection of a couple of things. I think first and foremost, this transition we're going through, I think got the market excited.

And I think we're, you know, hopefully can remain excited about that. And the market can remain excited about that as we think about the future. But also, you know, you think about the in the context of some of the larger profile outage events that happened February of 2021 in Texas, right? You had a massive blackout that occurred. Obviously, that's a part of the market that was very hungry. for product then for a period after that. So demand certainly spiked 2021, 2020, even last year, 2022. And now we're starting to normalize a bit, which is great. You know, again, we got ahead of ourselves a little bit with inventory in the field. Right. But as we work through that here in the

first half of the year, we're going to be back to, we're going back to growth again in the second half. Yeah, back to boring. I mean, I, you know what I'm saying. I don't mean it's boring, but, you know, not, not Dogecoin. Aaron, thanks so much for joining us today. Really appreciate it. Erin Yogfeldt of Generac. As corporations strive for more diversity and inclusion in the workplace, employee resource groups are becoming more important than ever. Up next, we'll take a look at one startup offering software solutions and support to companies with groups like that. It's our working lunch. And as we hit to break in February, CNBC is celebrating Black Heritage through the stories of some of our teammates, contributors, and leaders in business.

Here's CNBC VP of Business Operations, Philip Marman Helm. Having a father from Ghana and a mother from New York with southern roots, I've always felt connected to both my African and, and my American heritage. The values of education and perseverance were instilled in me at an early age, and I take those values with me in my career as a finance and a business professional. My advice to others is to identify your talents

and work to attain the skills necessary to succeed in your career, but also recognize that success in your career is about so much more than your technical skills. Mentorship and support networks are a great way for you to build the network and understand how to navigate the workplace. As companies cut costs and layoff employees, pressure is building for ways to measure the effectiveness of diversity efforts and to boost morale with the workers who remain.

Today, John Ford brings us up close with a startup CEO whose company uses software to host employee events and collect data on the results. John? Yeah, Tyler, Jasmine Shells is co-founder and CEO of 5 to 9, a platform for bringing employees together. It manages the guest list, tracks attendance, keeps things private. It sends out surveys when it's over, for example. The tech layoffs have made these last few months challenging since human resource departments have been a hard hit. But Shells has had good examples in financial management and toughing it out. When she was growing up in Toledo, Ohio, her father went from a lucrative accounting job to starting his own firm, and there were some lean years.

He went from having this BMW to, you know, this van. I remember that didn't have heat and, you know, that had rust on the side, but, you know, He took me to school every single morning. He never missed it. Pick me up every single afternoon. And I saw that struggle. But I also remember my dad was there for every single one of my activities. He always encouraged me to go after my dreams.

And now he has his BMW again. So I also saw how dedication, how it pays off. But then with entrepreneurship, how exposure is key or with anything that I think a kid is looking to do having some exposure to seeing others in your life who have done it really matters. Economic turbulence can be especially challenging both for early stage startups because capital gets harder to come by and for HR departments, which are among the first to get their budgets slashed. Shell says she's focused on lean operations and achieving benchmarks she'll lead to raise a series A after this year. She also said founders she knows are trying to

use the economic uncertainty to boost customer loyalty. Well, one thing that founders are looking to do is for their current customers, really focusing on them. So, hey, can we upsell within this account, even if, let's say, procurement comes back and wants to negotiate the contract, well, can we negotiate something where it's a multi-year agreement that locks it in for two to three years? So there is really a big focus on customer success because we do understand that a lot of budgets are being monitored very close right now. that some sales cycles, you know, a lot of founders are saying that they're seeing another 30 to 60 days being added to what would be a traditional enterprise sales cycle.

This is something for public market investors to watch. Because remember, Amazon and Microsoft said with their cloud business, they're both making these adjustments, right, to optimize for customers who don't want to spend more on cloud but want to get more out of it. Also, we saw this deal that Uber had with Google and with Oracle for cloud where, you know, those cloud providers threw in these extras. Creating that value during this period is important. And if investors can track whether companies are able to do that without just losing margin. Right. Could be good. Huge. So she's a business-to-business kind of company. What size are her target companies? Who's she going after?

Well, she started off going after smaller technology companies, mid-sized companies. But she said in this next year, they're really going to reach for larger enterprises as well, because the platform is capable, and that has all kinds of lifetime value benefits for her. I would think that just from the thumbnail description of the business, that's where the sweets would be larger enterprise companies. John, thanks very much. Thank you. John Ford. Always interesting to meet those folks.

Up next, partisan politics bleeding into bipartisan commissions, the last remaining Republican, resigning from the Federal Trade Commission, in what's being called a, quote, noisy exit. We'll explain the details of this juicy one next. Welcome back to Power Lunch. The last remaining Republican Commissioner on the FTC is resigning in what she describes as a, quote, noisy exit. And an op-ed published in the Wall Street Journal, Republican Commissioner Christine Wilson,

claiming the FTC Chairlina Khan, quote, disregard for the rule of law and due process has left her no choice but to resign, leaving the commission in an unusually unbalanced state with three Democratic nominees and zero Republican ones. For more on what this means for the legitimacy of the FTC and its ongoing antitrust cases. We're joined by Bill Kovacchik, sorry, Bill,

former FTC Commissioner and Chair, and it's great to have you here. What were your thoughts, as you saw all of this playing out over the past 24 hours? This is going to make the commission majority much bolder in its program. It's a tremendous relief not to have a well-informed insider who's going to call out

every apparent error that you've made and invite opponents to shoot at the most vulnerable elements of your program. So it's going to push the commission and the direction of being more aggressive. It's also going to give your opponents on the outside, the commission's opponents, more ammunition to shoot at you. These are arguments that will be raised in court. You can expect that Commissioner Wilson's closing statement will be quoted in briefs, maybe quoted in judicial opinions, and it's going to encourage legislators who don't know that the commission should be traveling on this path to resist giving it more power and perhaps to also bear down more in oversight. Doesn't the president have to appoint two non-democrat members of the commission? And what is the

timeline, or is there any timeline or deadline for doing so? The president must appoint them. They cannot be Democrats, but there's no timeline. And my guess is that the president might be inclined to take a leisurely approach to filling those slots and when they are filled to pick someone who's not going to be aggressive in calling out apparent errors of the majority. Does Commissioner Wilson, so far as you know, have a strong case that she's made in this op-ed in the Wall Street Journal in which she accuses the chair of failing to follow due process, of violating norms and regulations having to do with having previously expressed opinions on cases that are then coming in front of, while she was not an FTC commissioner, that are now in front of

the FTC, and she should, according to member Wilson, should recuse herself. She raises some legitimate points about the operation of the commission, and these are points that are worthy of debate. What is striking to me is that she raises them, a particularly harsh way and seems to foreshadow that there would be a clear outcome and the resolution of those issues. That's not so clear. But what she's also done here is to set out, again, for observers on the outside of the agency, a path that they can take. Whatever the ultimate disposition of those issues, you can be sure that Commissioner Wilson's arguments will be cited to the courts, will be raised before the Congress. She in many ways has given them the coordinates

to shoot at in any future challenges to the agency. So has she undermined or helped her case here or her objectives, Bill? I think that in one sense, she has aided her case because she has provided an agenda that the commission's opponents and doubters can use to attack the agency. I would say in another sense, though, she's undermined it. For the longer term, this is bad for the agency's brand, and that the commission is, not selling toothpaste or another commission, another consumer product. But agencies build reputations that are vital to their effectiveness to work in court. And in intangible ways,

this type of broadside undermines that reputation for the commission so that even for matters where Commissioner Wilson might support commission intervention, this allows opponents to say, why would you ever place your trust in a place that's operating like this? Yeah, very sophisticated analysis here, Bill. Thank you for that. Let's, if I could turn you just for the time we have left to Activision Microsoft, how do you think that is going to go down? Microsoft, obviously, no stranger to these kinds of antitrust objections. I'd say there are two crucial things to look at, and those are the resolution of the reviews

in the United Kingdom by the Competition Markets Authority and by the European Union. Commission, Microsoft must persuade them not to issue a prohibition decision. That is to persuade them that there are behavioral or structural solutions, short of a prohibition, that will allow the deal to go ahead without competitive dangers. If either of those institutions chooses to block the deal, that is to issue a prohibition, that will enable basically the FTC to wait the transaction out. So the crucial thing to look at, does Microsoft achieve a settlement with these other two authorities, or does one of them decide to block it? Do you think they will? What do you expect here quickly?

I'm skeptical that they will achieve that result because there is almost a competition in the world's competition system to show that you are at least as tough as the next guy. And I suspect, especially in Brussels, an argument that weighs heavily on the commission is, can we afford to allow the United States to appear to be more demanding in this area than we are? They're playing our song, Bill. We've got to leave it there. Bill Kovac, thank you so much. We appreciate it. And we appreciate you for watching Conrad Line.