Power Lunch - S&P 500 Back To 5,000?, Eyes On iPhone Demand 9/25/24

Episode Date: September 25, 2024

The Dow and S&P 500 each hit record highs in earlier trading. But we’ll hear from a market expert who thinks a correction back to 5,000 on the S&P is on the horizon.Plus, we’re keeping an eye on Apple. Some troubling signs are emerging about demand for the line of new iPhone 16s. We’ll tell you all you need to know. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, everybody, welcome to Power Lounge. Alongside Kelly Evans, I'm Tyler Madison. Good to be with you. Good to be with you. And stocks right now are mixed. But once again, the down-the-S-P-500 hit record highs earlier in the session. But today, we're going to hear from someone who says a correction back to 5,000 on the S&P 500 is possible. I guess it's always possible. Well, I always pay attention when Barry Bannister says it. You know, he's got a decent nose for calling some of these turns. And at a time when we're hearing kind of universally about stocks running higher into your end, I'd like, to hear his case for the opposite. Interesting to see. We're also hearing from Vice President Harris today with more details on her economic plans, specifically how to increase domestic manufacturing, and this is one area that both candidates seem to agree. Yeah, both candidates seem to agree.

The difference obviously is in the details of the kinds of things they're willing to do. Former President Trump very, very strongly out in favor of higher and higher and higher tariffs as a way to bring back what he calls American jobs that have been offshore. And we're watching Apple as some troubling signs emerge from Wall Street with regards to iPhone demand. Let's bring in Steve Kovac to talk a little bit about that. This is demand for the new product? This is for the new iPhone 16, and we saw just shares just now. We're off about a percent on this.

And this is coming off some notes this morning from UBS and Morgan Stanley, pointing out that wait times with their iPhone 16 are shrinking and shorter than they were a year ago for the iPhone 15. That's especially true for the pro phones. those more expensive models. UBS is calling it, quote, an increasingly concerning wait time gap. And Morgan Stanley estimating that there's a 50% chance Apple actually cuts iPhone builds based on these soft demand signals. Now, UBS was focusing on Apple's biggest markets, of course, U.S. and China. You can see right here the gap from a year ago with the iPhone 15. Now, one caveat here is that supply is likely better this year. That's from better manufacturing around COVID, some opening up in manufacturing.

Manufacturing in India and a bunch of other stuff going on. And then, of course, we're waiting for next month, Apple intelligence launching as a software update, but with some limited features, the most advanced AI features like that new version of Siri you see advertised so much. That's probably not going to happen until next year. So we're going to have to wait at least another month or so to see if there are any good signals here that the AI launch improves the demand picture for this iPhone 16 lineup, guys. I'm not sure I understood those charts.

I beg your pardon. What is it showing? So what is showing is the wait times, if you go on Apple.com and try to buy a phone right now and it says, we think it's going to ship to you in 15 days or whatever, those wait times are shorter than last year, indicating that demand is lower. Correct. I see. I see. So the analysts, they spend every day poking around these wait times as their only, it's the only data we have for iPhone demand until we hear Apple reports. Is it your suspicion, or is it a suspicion in the industry that particularly,

potentially one of the reasons the demand is softer is that the consumer is being more careful. That could be part of it. That's especially in China. We know what China is going through. We saw the stimulus yesterday. That might be helping stuff. But yes, especially in China, there's a huge concern there and also in the United States. But also in the U.S.

I mean, you had a thing in the last hour about Halloween spending being down year over year. I'm not saying people are giving Halloween gifts of iPhones. Sure. No, but in general, yes, there is a concern about that. Let me just throw this into the mix. other than DoorDash got an upgrade today. The analyst said, since our last coverage note, we have grown more comfortable around the consumer. So how could it be that Apple is uniquely, and it's a higher price, I don't know, to be sure. And look, also we don't know, because this is

just the only data we have. Is it the best data? No, it's the only data we have right now, until we actually hear the results come from Apple. And we're not going to get the clearest picture until the end of the December quarter because these earnings, the next earnings reports, only going to reflect like a week and a half of these sales. Yeah, that's right. So we'll listen for guidance, of course. Can I throw this out here?

We're going to talk to Julie in a second. What are we all buzzing about the past hour? What were you and I talking about the second you sat down, we were talking about the meta glasses. Every time I put that headset on, I am a headset, that pair of glasses on, and I would like to get some. I'm going to admit it right now.

I'm not using my Apple device. And I can't imagine Apple taking kindly to this. And this is really interesting. thing president. I know Julia's going to get on this really soon, but yes, that is another part of it. And also part of that, the beginning of that meta presentation was all about their headset and how it's cheaper, a lot more content on those headsets compared to the Apple Vision Pro. Than the Apple. Correct. Yeah, very interesting. It's worth noting. Interesting time in this business, isn't it?

Yes, a lot of change. Fun for me. Thanks, Steve. Yeah. Shares of meta are rising to record highs, even as Apple's under pressure this afternoon. As the company holds that developers event, we were just referencing, they're up about 2%, 62% year to date now. These launches are all about AI and I guess spectacles for lack of a better term. Julia Borson is here with all of the headlines. Julia, run us through it. A lot of big news from Mark Zuckerberg just out in the past hour. First up, a new lower price Quest 3S headset. It's going to retail for $299 and we'll ship on October 15th. Zuckerberg calling it the best mixed reality device today. and it's $200 less in the $499 version out now.

He says it brings some features from that higher-end version, such as group fitness classes, and the ability to integrate more effortlessly with Microsoft Office for use by the Enterprise. Now, the other big piece of news, meta-a-I, the company announcing is now used by over 400 million people, including 185 million people using it across Messenger, Facebook, WhatsApp, Instagram Weekly.

Now meta-announcing that users can, talk to Meta AI and it can talk back to you. So you can ask questions or give it commands. And users can pick out a celebrity voice among a number of celebrities that Meta's working with, including John Chena, Judy Dench, and Aquafina. The company is also unveiling more AI capabilities for its meta rayband glasses, including live translation, the ability to analyze video or set reminders just by looking at something and talking into the glasses. Then the Big surprise that Mark Zuckerberg announced around augmented reality, meta unveiling its augmented reality Orion prototype,

which Zuckerberg called the most advanced glasses the world had ever seen. They're not a headset. There's no wires. He says they weigh less than 100 grams. You can see through them. And then you can also see the holographic displays that are projected onto them. Now, one note about Orion, they are just a prototype, which will be used internally to build new features and experiences.

No timeline when consumers can buy them. But Kelly, you can bet that they're working to make them accessible to consumers. And in the meantime, we're playing around with these new meta AI glasses, which they've added all these new features to. And as you can see, the ability to turn them into sunglasses when you walk outside. Transitional lenses is part of it. This is where we're going to all get confused, Julia. Are you holding the – I'm going to have to call them the raybans.

It's the only way to identify them because what the company is. calls them, flies out of my brain. Yes, so these are the meta, rayband glasses. These have been out for a couple of years. Every couple of months, they introduce new features for them. So these are getting smarter. They're smart glasses that are getting smarter. Now you can ask questions, give them commands, set reminders through these glasses. The augmented reality glasses, they're not a headset, I said, they're glasses, those are a prototype. We're going to be getting a demo of those shortly. And we'll also be talking about

with Chris Cox, who's the chief product officer. Those are a bit bigger, a bit chunkier, and they are not for sale just yet. I think the question is how eventually meta starts to merge some of the capabilities that Mark Zuckerberg just showed off for the new Orion glasses, where you're actually projecting images onto the glass screen and when and whether they're able to merge some of those capabilities into these very lightweight ray bands, which I'm holding right now, which these are just AI smart glasses. They're not holographic.

They're not augmented reality. They're really, they look just like regular glasses. The other ones are a bit bigger and chunkier because there's so much computing power in them. And that's the prototype. Yeah. They can basically, as Sam Lest and Tyler was saying last hour, the use case more replaces almost your AirPods.

You can listen to music on them and kind of just have basic function. Yeah. I've got a pair of reading glasses that kind of look like those Orion glasses. They're big and chunky and funky and olive green. Yeah, they're good. Julia, thanks. Appreciate it. Let's go to Starbucks now, shall we? If you're in fear, people seem to be going to Starbucks. Let's go there now.

CEO Brian Nicol continues to cross things off his to-do list. His new focus is getting back to the table for talks with unions. Kate Rogers joins us now with more on where those talks stand. Hey, Kate. Hey, Tyler and Kelly. Starbucks and Workers United will resume talks this week to work toward a foundational agreement to be used for collective bargaining. It's the first under new CEO Brian Nichols tenure and the latest since the relations between the coffee giant and union thought earlier this year. The two parties exchanged letters earlier this week underscoring their perspectives. Nicol, in responding to the union and in a departure from the tone of prior leadership of Howard Schultz, said, quote, I deeply respect the right of partners to choose through a fair and democratic process to be represented by a union. If our partners

choose to be represented, I am committed to making sure we engage constructively and in good faith with the union and the partners it represents. That's notable as well that he reached out to the union within the first month on the job in responding to their letter. Now, in its initial letter to nickel, the union wrote, quote, we know that many of your dedicated customers, as well as future generations of customers, have a vested interest in the outcome of our negotiations and reaching a foundational agreement. A reminder for viewers, just under 500 Starbucks locations have opted to unionize of some 10,000 company-owned locations in the U.S. So the number of stores is small, but remember, it's also been important because both store disruptions and boycotts have,

had stemmed from union actions or an activity over the last year that had a meaningful impact to sales in recent quarters. And just one other thing, of course, you know, this exchanging of letters doesn't necessarily mean Nichols at the bargaining table. But, you know, he is acknowledging the union as these talks resume with union delegates and company representatives. Guys, back over to you. What is the reception out there that Mr. Nicol, I believe, cut a deal where he doesn't have to live or work out of Seattle out of headquarters? Is that popular or not? I mean, with workers, I think it remains to be seen. You know, I believe that there was reporting from Bloomberg last week, kind of saying that they will still have to go to the office, office rather, several days a week, and that, you know, he'll also be in office several days a week in addition to traveling.

He's also got a satellite office in California. I'm not quite sure what the tone on the ground from the baristas is just yet. I think the union in particular, that's not really come up as a priority for them as they work toward this foundational agreement, much more concerned with some of the. things that he laid out, you know, in his agenda, basically, within the first few months. And one of those things is getting the U.S. stores better staffed back on track and winning the morning and making sure people really want to come into Starbucks every day. So I think that's a priority. And making sure the union's requests are answered will be a part of that moving ahead.

Better staff, as the thing I notice most there, is that their staff is stretched. Since they've got all these product lines, they've got a lot of different drinks, I forget how many thousand combinations they have, but they've also got in many places, the digital order and drive up and walk in and maybe not enough people to man the shop. Yeah, you'd imagine there will be some menu streamlining to you under his leadership. That's something that was done at Chipotle. And as you said, there are so many options at Starbucks. And I think probably consolidating some of that so that the baristas can kind of make things more quickly.

And, you know, customers have fewer options to choose from. Well, the New Journal had a good story on that. And I forget what the total number of combinations was, but it was in the tens of thousands. Wow. It's the toothpaste problem, though. guys, too. Social media phenomenon on there, yeah. You're afraid that if you get rid of the one thing that 300 people want, you know, so

you just end up keeping this endless variety. It's a bit of a risk, but one he probably has to take. Kate, thank you. Kate Rogers. All right, as we had to break, let's do a quick power check. This is where we look at the best and worst performing stocks in the S&P 500 and tell you why. On the positive side, it's Vistra. It's a

utility company based in Irving, Texas. This happens to be the second largest owner of independent nuclear plants. And of course, nuclear has been a big hot topic lately. The stock has been up for 13 straight sessions, including today, and you see it there at 119. It is up, what is, I can't read it, six and a half, six and a quarter percent. On the negative side of the S&P is global payments. Week 2025 guidance had announced today, facing some analysts downgrades as well, price target cuts, that'll do it to you,

revealing some signs of weakness for consumers and businesses. That's your power check. That stock down, 6%. We'll be right now. Welcome back to Power Lunch. The S&P 500 hit a record high again today, earlier on, following its 41st record close of the year last night. But don't get too comfortable. Stocks are lower this session now. But our next guest is also expecting an S&P correction to the low 5,000s by the fourth quarter, or about a 10% drop from here. Let's bring in Stiefle Chief Equity Strategist Barry Bannister. Barry, don't pop our balloons. Everyone's saying it's going to look kind of good into year end. Why don't you think so? Well, there's a lot of enthusiasm right now. There's no question. A number of the economic indicators, some of the conference board readings such as present conditions versus expectations of conditions, the weakness and the breadth of the non-farm payrolls, what's called a diffusion index, the jobs plentiful versus hard to get heading down, meaning we've eroded some of that excess supply. on labor demand, and a bottoming out of unit labor costs. This is going to affect upside for inflation. When you add it all together, it's a slowing economy, particularly on the job side.

There's a lot of optimism out there, and the market's expensive. So we would certainly urge caution going into the late third and then fourth quarter. So if I could translate, tell me if I've gotten this right, you think we're going to have headlines about a labor slowdown, about maybe sticky wages or some sort of lingering inflationary pressures that perhaps constrain the Fed of being able to deliver the now half point or 75 basis points of cuts that are priced into the market? Have I got that right?

Yeah, if you look at futures, December 2025 Fed Fund's futures, they're slightly below 3%. Well, it's very hard to justify getting below 3% without a slowdown. and if we don't have any slowdown, if we continue to utilize these limited resources that we have, then what you would end up is a no-landing scenario where rates and yields should not be dramatically lower. So I don't have any problem with the views of the, and I haven't had a problem with views of the Fed being more dovish in 2024. It's what people expect in 2025 that started to be priced in. and the 31% year-to-year gain in the S&P 500, everything just feels very frothy.

So you've got, you say, a near three-generation high in the S&P 500 PE, and the growth versus value relative outperformance sounds, but has never been higher, I guess. And that has always presaged a recession and a bare market. Well, we look at the growth rate of growth relative to value. So you take the growth index with dividends and you divide it by the value index and that's just growth relative to value Then we do the growth rate of that index and that way you can calculate how much the growth managers have walloped the value managers in the last 10 years Ten year compounded they beat them by over seven percent They outperform them by 100 percent at a seven-k acre compound annual growth rate

It's been miserable if you were a value portfolio manager for the past 10 12 years However, since that financial crisis low in 2009 to now, you've gotten in line with growth versus value to where you were in late 99, early 2000. I was there. You were there. Not as many people were in this business 25 years ago when we were at these levels. And we know what a prolonged bull market looks like. We've had one.

It lasted about as long as the one off the Reagan years into 1999, 2000. and trees don't grow to the sky. So when we look at valuation, we look at all the things that we do, we're very quantitative and we're very pictorial. We show this market is expensive. Barry, the thing that to me is more worrisome, as much, I don't want a near-term correction, but do you believe we're expected to see lower forward returns

over literally, you know, another decade or two? We've heard, and I haven't been doing it 25 years, but I've heard a lot about lower returns in the future that have never yet panned out. Do you think this time is going to be different? Well, as long as I do this, I'm almost 40 years now, so it's kind of getting a little bit old and tedious. But the thing I would say about it is that we're looking at about 6% returns for the 10 years,

ended 2035. We get there through various measures such as equity risk premium, which would take a long time to explain. What's easier to explain is that the price earnings, ratio now in the mid-20s will drop on trailing earnings to about 18 times. The earnings will comfortably double. They've comfortably doubled every 10 years for decades, and there's nothing that we see that wouldn't lead to another double. So double the earnings, take the multiple down. You're looking at about a 6% return for 10 years, including dividends reinvested.

So price only, maybe four. That's not going to make a lot of baby boomers and post-baby boomers retirement plans whole. So enjoy, you know, enjoy this while it lasted, but investing is about to get a lot more difficult. I don't know. Maybe the multiple is going to be, if the multiple is okay, because, you know, we're the best, you know, horse in the global markets, and the companies are going to get more productive thanks to AI. I don't know if I want to say multiple expansion, but maybe it hangs in there. Yeah, there's no doubt that the AI, which is, I think this is apostasy, but I think it's more evolutionary than revolutionary. It's just a better way to use the data we already had on the internet. The internet was revolutionary.

Fiber optics and telecom was revolutionary. And so I think this is evolutionary. It's been hyped up. I don't think it lends itself to the monopolies that allow the enormous returns, both cash and earnings in tech companies. In other words, having an AI position is probably better for society than it is for a monopolist like social media meta or search alphabet, Google. So it's going to be interesting

to watch this general purpose technology develop, but so far to me, it just looks evolutionary. Now you're making us all feel scared again. It's not Halloween yet. Barry, thanks for joining us, though, to break it down. Appreciate your time. I'm very panister with steeple. All right.

Further ahead on power, Novo Nordisk CEO, taking some shots from Congress over the cost of Ozympic Wagovi. It's super hot injectables for diabetes and weight loss. Our next guest also testified before Congress yesterday on obesity, and she has some thoughts on the weight loss space.

We'll be right back. We're in a few minutes with Fitness icon and CNBC stock draft participant, Gillian Michaels. Welcome back to Power. Let's give you a quick check on the markets, all of them in the red. ever so slightly, 2-100s of a point for the NASDAQ, the S&P 500, down about a fifth of a percent,

but the industrial is off 240 or about a half percent. The yield curve spread is widening, and for that and more, let's go to Rick Centellie in Chicago. Yes, Tyler, indeed. You know, if you look at a spread going back to Fed Day on Tuesdays, first of all, it's trading positive 23 basis points, which means it's gone from basically three-four positive to 23. positive. That is a huge move. And if we look at a three-month chart, it's moved 73 basis

points since the third week in June, a very aggressive move. But it's the logic behind it. That's the most important. Today we had a five-year note auction, and the auctions have been going a little better, especially with the shorter maturities. And that's really at the epicenter, or at least half of the epicenter of the spread. We see short maturity yields dropping because the Fed and members of the Fed like Austin Goolsbee are pretty much putting up banners we're going to continue to ease. This is the beginning of a cycle. But yet long-dated Treasury yields really are bucking that trend.

And there's a variety of reasons. I personally think it's debt and deficits. But some may think it's the economy doing better than the Fed thinks it is or shares with us. Just look at today's new home sales. If you look at those, even though the number was a bit off, You're looking at back-to-back 700,000 seasonally adjusted annualized units. We haven't done that since the first couple of months of 2022. Yesterday, the dollar index closed at a 14-month low close.

Very significant under 100.5. However, it's having an upday against every currency today. It's higher against the euro, the yen, the pound, and yuan. But all those currencies outside of the yen are very much at extreme. So it might be a bit of a breather. It's very significant that it closed under 100.5 for the weekly close on Friday to continue this sell signal in the dollar index. Kelly, back to you. I was hoping you quickly on that, Rick, when at these levels then, what, you think it's a big deal so far or no? Oh, I think it is a big deal. And I think there's a lot of moving parts to the dollar.

I can give you good pluses and good minuses, but I am strictly coming at this from a technical perspective. Okay, and we are seeing that reversal at least this afternoon. Rick for now, thanks. Rick Santelli. Let's get to Brian Sullivan then for a CNBC News Update. Brian. All right, Kelly, thank you very much for the FBI and police in Santa Barbara, California, investigating a suspected explosion at the courthouse of the city of Santa Maria. NBC affiliate KBSY reporting somebody threw a backpack at security, and then there was an explosion. Police have not confirmed that chain of events, but do say two people have non-life-threatening injuries, and that one person was detained immediately following the incident.

Russian President Vladimir Putin today announcing a revised nuclear doctrine, saying that if a nuclear power supports another country's attack on Russia, they would be considered an aggressor. However, Putin did not specify whether that meant Russia could respond to such an attack with its own nuclear weapons. And a Secret Service agent has reportedly been accused of sexually assaulting a campaign staffer for Vice President Kamala Harris. Real Killer Politics reports the incident occurred on a scouting trip to Wisconsin over the past week. Secret Service said in a statement that its Office of Professional Responsibility is investigating a misconduct allegation,

and the agency has zero tolerance for sexual misconduct. Kelly, back to you. And they are under so much pressure as it is, Brian thanks. Still to come, fighting for the Maid in America mantle, Vice President Harris is set to roll out a new set of industrial economic policies, focused on incentivizing domestic manufacturing, it is a goal shared by both candidates, but their approaches are very different. We'll compare and contrast when we come back. And we'll speak to two senators behind a bipartisan bill to help small businesses manage

costs better. Power lunch will be right back. Welcome back. Yesterday, former President Trump spoke during our hour about his economic policies, focusing on made-in America and bringing manufacturing back to the U.S. with the help of more tariffs. Now, Vice President Harris is set to unveil her own economic policies with an emphasis on Made in America. Same goal, but the two differ in regards to how to get there. Megan Kassella joins us with more. Megan? Hey, Kelly, that's right. So Harris has two goals with a speech she's giving this afternoon.

The first is to flesh out her economic worldview a bit more. She'll talk about herself as a pragmatic capitalist. She'll say she's not bound to any specific ideology, so distancing herself there from labels that she's too progressive. And she'll say she sees a need for government to work with businesses. to help grow the middle class. But the second goal here is to roll out a new set of proposals that you mentioned focus on boosting domestic manufacturing, specifically in what the campaign is calling industries of the future.

So think quantum computing, clean energy, AI. We don't know exactly what she'll propose today, but I'm told to expect new policy ideas aimed at making the U.S. a global leader and a job creator in those industries. And part of Harris's focus, too, will be on drawing a contrast with Trump, who she'll criticize as the candidate for billionaires. And this week, we can see the differences in their proposals. It's really carrot versus stick here to create more manufacturing jobs. Harris is talking mostly about investing in new industries.

And Trump is talking more about using tariffs as a threat or a negotiating tactic to push more companies to produce goods in the U.S. And guys, there is some evidence for focus on this issue may be working. A Reuters poll out this week showed that Trump still holds a two-point lead with voters on economic issues, but that's down from the 11-point lead that he held in the same poll two months ago. Tyler? All right, Megan, thank you very much. Meantime, as both political campaigns, not to mention the majority of voters, focus on the

economy. One part of the economy has drawn the attention of two senators, one a Democrat, one a Republican. Together, they've introduced a bill that will help small businesses do what huge companies do, specifically hedge the cost of such commodities as gasoline, lumber, electricity, and others. Here to discuss the Helping Small Business Thrive Act, or Democratic Senator Gene Shaheen of New Hampshire and Republican Senator Bill Cassidy of Louisiana. Both join us now from Capitol Hill. Glad to see you both together and working in this bipartisan way. I'll throw a jump ball out there. How would this program work in the case of a small business that buys a lot of gasoline? Let's say it's a construction contractor. Give me an example and either one of you can go first.

Well, first of all, as you point out, small businesses are critical to the U.S. economy. Two-thirds of jobs are created from small businesses. And so what we want to do is to provide every opportunity for those small businesses to succeed. And one of the challenges they have is that they can't hedge their costs of commodities. And we did a small business field hearing in New Hampshire a couple of weeks ago. And what I heard from those small businesses was that energy costs were a huge, challenge. And so what this bill would do is allow us to allow small businesses under the oversight of the small business administration to hedge on commodity costs. And so it gives them

the kind of advantage that large businesses now have. In other words, Senator Cassidy, the small business would be able to lock in a price for a commodity for a set period of time, guaranteeing that price. And if the price went up, they'd spend it, they'd have to pay that higher price, but then magically money would appear for them, right? I mean, from the small business administration, you'd get a rebate because you'd locked in at a lower price. Am I understanding correctly? It wouldn't have to occur like that. Right now, bigger business, is thinking airline, will hedge jet fuel. Now, they may be paying $3.50 for a gallon of jet fuel, which is currently going for $3. So they're buying on, they're paying a little bit extra. But they do

lock in the $3.50.50 price so that if the price of the jet fuel goes to $4, then they're held harmless. Now, they can do that because they have massive buying power. Small businesses, and we're speaking of businesses 500 or less, don't have that. So one mechanism, SBA could set up would be a cooperative, if you will, where small businesses were able to come together and have the buying power as a unit that Southwest has by itself. And with that, they'd pay a little extra on the front end, but they would again hedge in case there is a future increase. Keep in mind, a significant portion of small businesses will go bankrupt within the first five years because they're operating on very thin margins. We're trying to say within that thin margin,

you can make a plan, a business plan that allows you to survive the sudden increase in a price of commodity that could not be anticipated. Senator Cassidy, how much would this potentially cost because all of these plans, your proposal, a lot of what we've heard from both of the candidate's president, they all sound good and they sound useful and they sound like they would help people. But I'm just wondering at what point it matters how much we're spending when we're running such large deficits and already have such high debt. So a couple of things, this is totally dialable. You can make it so it cost a lot or cost a little. But again, the way I laid it out, in which you're just forming a cooperative in which the buying power of multiple businesses

across different industries as combined shouldn't cost a heck of a lot. And by the way, on the hedging, you're just giving, there's going to be an upside and a downside when you hedge. And so someone initially, in the way it mostly occurs, is able to buy, but they're paying a little extra on the upside, and then they pay less on the downside. So I don't think we have to talk about the cost of this as being prohibitive. But if it is, Senator Shaheen and I help negotiate the bipartisan infrastructure bill. We know how to bring something in where it's acceptable politically, but has an incredible impact in terms of the economy.

So, Senator, and this is a pilot program, so it's an opportunity for us to see how it will work and to make changes that are appropriate as we see how it rolls out. Would there be, Senator Shaheen, a cost to the business associated with this price lock-in that they would get? In other words, is there a premium that they would have to pay in order to buy the, I guess it's really a forward contract? No, but what they would do is pay the cost of whatever that commodity is. In other words, so if they locked in a $3.50 cost for gasoline over the next six months, gasoline goes to $5. They still have to pay the $5 at the pump, but they would get reimbursed for that by the federal government? through this cooperative purchasing that they would be able to set up through the small business administration. And what happens, Senator Cassidy, if they buy, they lock in the price at $350 and the price goes to $275?

What happens then? They just pay the $275 and they've protected themselves against an upside price shock and they get the benefit of the lower cost. There are different ways to do this. And Gene describes one way, and I describe it. described another in which now they continue to pay the 350 and they forego that downside if you will for protection against the upside so so we're trying to come up with a mechanism to help small businesses thrive now there are different ways to structure that but when we know that the price of commodities fluctuating over the last five years has really did a not has really done a number on a lot of

small businesses we're willing to do a pilot project to see if we can come up with a system by which they can be buffered against the kind of market swings that occur in some of their inputs. It's just a final. And at least for a pilot project, it seems like a reasonable thing to do. I would just offer the comment that we know that interest rates have been a huge headwind for small businesses because they can't tap those fixed income markets. And for many of them, Fed rate cuts might be a big salve as well.

Senator Shaheen, I don't know if you want to address that, but also to just kind of, I kind of play it out for us a little bit from the investor's point of view here. We've been keeping one eye on a potential government shutdown. There's a few weeks left to go in the election. Should we be thinking that a shutdown is likely at this point? Or, again, is that not a near-term issue? Well, a shutdown is not going to happen. Certainly, we are going to get a continuing resolution done today.

The House is taking it up this afternoon. We will take it up immediately after the House is finished. And I believe we've already passed out of the appropriation. committee, 11 of the 12 appropriations bills. So we're positioned in the Senate to be very able to negotiate with the House as the House is doing their work as well. So I'm confident that we are going to keep the government funded. It's in everyone's interest. It's good for business. It's good for our military. And it's good for our constituents at home. And Senator Cassidy, I'm sorry, if that moves forward and there's no legislative,

on the election security that I know some representatives were earlier pushing for. Do you feel comfortable going into this what's likely to be very contested election that will still have free and fair elections and there won't be a big concern in the aftermath about that, about election access and not having strict enough controls in place? Well, you're asking me, am I satisfied or comfortable that there won't be like concerns afterwards. I think whoever loses is going to have concerns. But we have processes by which those concerns can be heard and vetted. And we saw last time that there's multiple recounts. I suspect there'll be recounts this time. It looks like it's going to be razor-close.

And I think the process can work. I'll say that. Let me have one more thing about the continuing resolution. It also has increased funding for the Secret Service. We're certainly concerned about that after two assassination attempts upon Trump. It also has money for disaster relief. Louisiana's been hit by Francine, but now we see another big storm coming down to Florida and Georgia. So there's other things in this, a continued authorization of the National Flood Insurance Program. There's other things in here that are very important to Louisiana and New Hampshire and elsewhere. And we're going to get a briefing this afternoon, all of the senators, about election security. So we will be very well prepared when we go home to talk about what we need to do to ensure that we have free.

and fair elections. And I'm confident in New Hampshire, it's not going to be an issue. Give us a call when you find out. We'd love to hear from you. Thank you. Thank you both. Senator Shaheen, Senator Cassidy. We appreciate it. Thank you. Let's get a quick check on our 2024 stock draft standings now with fitness icon Jillian Michaels, currently in sixth place, up about 9% with her picks of Microsoft and JPMorgan. She'll join us next on Power Lunch. Shares of Amgen are falling today and costing the down nearly 100 points of its 255 point decline. Angelica Peebles joins us now with those details. What's going on, Angelica?

Hey, Tyler, that's right. Amgen today under pressure, and that's after the company reporting that two phase three trials were successful, but the results were a little disappointing to analysts. So there were two drugs here, one for eczema and another for myasenia gravis. And both of these trials were successful, but again, saying that they weren't that competitive and it's not clear that they are better than what's already out there. So you're seeing that reflected in the stock today, Tyler. All right, Angelica. Thank you very much. Appreciate it. Quick update on our stock draft now. The mentalist owes Perlman is still number one with Carvana, driving his portfolio up nearly 60 percent since this draft in late April. Former NFLer Eddie George and Nev Shulman are in second and third.

Our next guest, fitness expert and podcast host Jillian Michaels, is in sixth place with team cash crew. She picked Microsoft and J.P. Morgan. Meantime, Jillian had an interesting day yesterday. She testified on nutrition and health in front of Congress. On the same day, the CEO of Novo Nordist was pummeled in a separate hearing on the Hill over the price of his company's blockbuster diabetes and weight loss drugs. Jillian Michaels is here with us now. Thanks so much for your time, and we really appreciate it today. So thank you so much for having me. This has become like a big, a big banner issue in a societal fight and and what's in it for as far as you're concerned? Honestly, just trying to get

the poison out of our food, period, end of story, selfishly. It is very difficult to try to spend all of your time avoiding heavy metals, microplastics, food colorings, glyphosate. I mean, it's absurd. We can take all the agency in the world, but until there's a systemic change, it's going to be virtually impossible for Americans to get healthier. We need help. Amen, amen, sister. I say to you as I try, you know, there's books out on this now that are bringing attention to the issue of ultra-processed foods and so forth.

But how does this dovetail with the rise of obesity drugs? Okay, I'm going to try to make this as quick as possible, but you've got dysfunctional agriculture legislation called the Farm Bill. And that means that all these tax subsidy dollars are going to, GMO crops like corn and soy because they're high yield. They're heavily sprayed with all kinds of chemicals and fertilizers, pesticides, or besides fungicides, this bounty of cheap calories goes to big food. Who then mess with it a little bit more to make it really addictive, to undermine your

satiety, and to then inundate your environment with it. So now they're exploiting our psychological hungers, our stresses, they're surrounding us with food, so willpower and that fleeting moment is gone because food is everywhere all the time. And then it's biologically addictive. They're hacking your biology and exploiting our psychology. And then Big Pharma is waiting on the other side to pick us up and give us obesity drugs, statins, blood pressure Medicaid. I'm with you, but would it be better to not have Big Pharma trying to ride to the rescue? I mean, the system is what it is. We're not going to, I think, outlawed at this point.

So is it not at least some mechanism to give people, you know, some sort of break from the addiction? Well, the hope is that we would have a change with regard to our food system and people's habits around food and empower them to start making some simple changes, even just removing soda. I could give you a long list of the issues with these drugs. And I have done it a ton of times. But the reality is they cost hundreds, if not thousands, a month. They plateau. They come with a host of other very serious side effects, and everything has to be a cost-benefit analysis.

So unless you're very ill and very advanced with things like type 2 diabetes, heart disease, chronic kidney disease, I don't think you really want to be looking at. Stomach paralysis, pancreatitis, the potential for thyroid cancer, albeit rare, nausea, vomiting, intestinal blockage. There are also, aren't there, Jillian, some salutary side effects of these drugs? or at least in early studies indicating that they can be helpful in other ways. I mean, I just want to make that point.

No, that's actually not true. Well, I don't know that that's a fact. I mean, I do. I've done quite a bit of homework on it. I know all the studies that you're referring to. And the reality is that we can't point to any mechanism outside of weight loss in any way conclusively, arguably with people that have advanced chronic kidney disease, they saw it slow progression, but not reverse.

And in fact, if you look at what does reverse kidney disease and even prevent it would be exercise, being the most powerful tool for prevention. Get a walking pad. Lose weight naturally and you'll have no risk for side effect, just as many benefits and more. So- No, I don't disagree with that one bit.

Let me ask you, the question I really wanted to ask you is with respect to what is being done and how our food is being grown and then process, What is the one thing, if you could correct one thing in that entire complex, what would it be? Would it be removing excess sugar, which I believe is an addictive substance? Would it be artificial colors? You mentioned a lot at the top. What would the one thing be?

What you need to do is end Citizens United and get the lobbyists out of Washington, and it becomes very simple. They do this in Europe already. we have a roadmap. If you look at the work of Jason Karp and Vani Hari, they're already showing us. They're illustrating in real time in Europe. All this crap is banned. There's only 400 chemicals there.

We have 10,000 here. How about we follow that roadmap? Low-hanging fruit. All right, Gillian, thanks so much. We appreciate it. Good luck continuing in our stock draft. Power launch will be right back, the latter. Welcome back.

Just finishing a conversation with my friend here. With the few moments we have left in the show, we wanted to get you a few more headlines and some trades to go with them. Time for three-stock lunch. Our trader is Victoria Green. Contributor at CNBC, CIOG-squared, private wealth. We begin with Ford shares heading downhill, downgraded by Morgan Stanley. It cites Chinese competition and tentative U.S. consumers. Is there a Ford in your future, Victoria? No, it's a sell. I'm sorry. They just can't get it together.

I also think it's a fundamental shift against legacy automakers from Detroit. They're just losing ground. They're trying with their skunk works to compete, and they do talk about their benching to BYD for a cheap EV, but nobody in the U.S. has been able to make a $30,000 EB and be profitable. For me, Ford has nothing beyond the F-150, and they can't just rely on that. Chrome may slow down. For me, it's a sell. I can see it hitting 970 and going lower.

Ouch, that would be about 70 cents down from where it is now. What about KB. Home? This is part of a winning category, but it's on the decline after they missed profit forecast with those interest rate concerns and kind of the economy's direction in general. general, it's down more than about 5% today, Victoria. What do you do with it? I'm buying the dip. They have really strong up channel support here up and through 74. There's 50 day moving averages holding here. I could see this stop continue to push higher, potentially in the 95 to 100 by year end. Mortgage rates coming down, 49% of their buyers or

first-time home buyers. That's a huge market for them to play in. They actually had a very upbeat and optimistic 2025 forecast. I think margin missed because of discounting. They talked about thought this in June in July. August improved trends. We can could see Q3 be much stronger. I'm going to buy the dip here. I'll buy it and ride it to 100. All right. And finally, we got your door dash. Shares are hired today on an analyst upgrade. Keybank tags the stock overweight. In this case, I guess that's a compliment. Citing ongoing gains in food and grocery delivery. Your trade, Victoria, on the dash. It's a hold for me. I love this stock, but it's hard to buy here. It's super expensive.

I own it. I want to hold it. I think they have such a diversified revenue stream. They actually just announced a new merchant platform coming out today, trying to get more and more merchants in. beyond restaurants. So they're looking at grocery. They're looking at retail. They want you to go pick up the dog food and get it delivered to your door. They're much more of a pure play in the retail delivery. And I'm not going to deny, we are all getting lazier. And we absolutely love things being delivered directly to our doorstep via one-click. DoorDash is great at that interface. For me, this is a hold that's just really hard to buy and start buying here at this level. Don't let Jillian Michaels hear that. Victoria.

We're lazy. We're lazy. We want our processed foods delivered without having to get off the Couch! Bring it on. Oh, my. I know. It's the yin and yang of life, right? You got to have a little health and then a little bit of maybe, you know, whatever. Yeah. We had a guess on earlier who thinks the S&P may correct down to 5,000. You agree, disagree. Quick. I disagree. I think it's 58, 6,000, not down to 5. All right. Thanks a lot. Appreciate it. That was three stock lunch. We gave it to them right there. Yes, we did. It was a sugar-free version, I think, for the most part. All right. Thanks for watching, Power Lunch.

everybody closing about starts right now