Power Lunch - S&P 500 falls as Wall Street's struggles from monthlong rout continue 3/20/25

Episode Date: March 20, 2025

The S&P 500 is lower again today, as uncertainty around the economy continues to weigh on stocks. We’ll tell you all that 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.

And welcome to Power Lunch as the so-called Godfather of AI, the CEO of Nvidia, Jensen Wong, speaking right now on quantum computers. The markets holding on with bated breath. But what if the hope does not live up to all the hype? Plus, by one big investor says he is negative on nearly everything. And from Tesla to Lamborghini will hit two very different models and stories in the car market. We got a lot coming up. Let's start with a check on the markets, which were in the red this morning, back into the green and now are starting to give that up today. We've lost most of the gains as the Dow turns negative of the S&P earlier as well. The NASDAQ, the Russell's are among the weakest performers.

And as mentioned, a few headlines in the autospace, Piper Sandler making three big calls, cutting Tesla's price target, still overweight, upgrading Carvana, downgrading Stalantis and Rivian. In the tech space, Microsoft on pace for its eighth straight negative week. That would be the first time since 2008. Meta is back in the green for the year, and Snap is having its best day since January, snapping a six-week losing streak. All right, so as Kelly walked you through, folks, there is a lot to get through this hour. But let us start with the company and really the man that everybody seems to be listening to right now.

That, of course, is NVIDIA CEO Jensen Wong. He is talking about quantum computing at a big event out west, not only laying out his vision for the future, but maybe doing a little bit of healing, making nice with some competing companies he may have inadvertently offended last year by suggesting their research. reality may be a lot further out than they are letting on. So that kind of got us thinking. What if the AI reality is a lot further out than we all collectively think? Your first guest today says the time is now for all things AI. His company, Sandbox AQ, using AI to speed up critical drug development. Joining us is Jack Hittery. Jack, great to have you on. Brian, good to see it. I know. You were just out

west, by the while. I don't know how you made it. I don't want to know. It's probably had some to do with AI. Okay. Is there any chance, because you're right in the thick of it with your company, any chance at all that all this hope and hype may take longer than we think? Well, Brian, there's three key takeaways from Jensen's keynote on Tuesday. First, the demand for Blackwell is strong. He cited that just a demand from the cloud providers, the four biggest cloud providers, Google, Amazon, Microsoft, Oracle is 3.6 million Blackwells versus Hopper. That's about 3x the Hopper demand. And he joked with his sales team right in the keynote and said, don't buy Hopper, buy Blackwell. His sales team was not happy with that, of course. But his point was that the demand for

Blackwell. He claims that he's now beyond the Blackwell manufacturing issues and the production issues. And now they're delivering Blackwell. That's their super high-end chip. That's right. That is the Cadillac escalade of Nvidia. 25X the power, the compute power of a hopper chip. And that's important for data centers because data centers need power. If you can fit the blackwell chip in and have 25X to compute with the same basic electric demands, that's a win for the data centers. Second big takeaway, his key point on demand for compute is that reasoning models, these new models you're hearing from deep seek to open AI, the 01 model that has a chain of thought that gives you a more reasoned answer rather than just a quick answer. They need 150X the compute, Brian, than a regular quick spit-out model.

So his claim, what he's trying to convince the audience of is that the demand is not only there now, it's growing because there's a demand for reasoning models, not just the quick model. And the final point he made is on networking. The speed in which you can move data around, and that's his announcement on Silicon Photonics, the Quantum X chip. Not a quantum chip, but it's called Quantum X. it's the first big silicon photon ship combining electrons and photons on the same integrated chip.

So a lot to take in from Jensen's keynote. And his key point is that the demand is here now, not just coming in the future, particularly driven by reasoning models that need 150 times the compute than a normal models. So for those who thought maybe they need less or could operate at the frontier. But I think to your point, there was a lot in there that he gave people and probably gave them what they needed to hear. You look at the stock, you look at the markets. They seem to have taken it in stride. That brings us to today. Now he's making a reference to quantum.

Today is Quantum Day. At Nvidia, yes, DTC, Quantum Day. You know, I'm starting to get a handle on AI. Well, not really. And now comes Quantum. They're going to open a Quantum Research Lab in Boston, he says. We just showed the quantum stocks. They're in the red somewhat today.

You know, the Righetti CEO just said it's not good enough for any practical use. Jensen cut him off. Anyway, can you kind of give us the context around quantum? which at first, NVIDIA seemed to poo-poo, is now saying, we're cool on that, too. And again, these other competitors, obviously, where it's like D-Wave is down 14%. Yeah, so Jensen and NVIDIA has moved its estimates of quantum from the initial thing that he said 15 to 30 years. He's now clarified that five to 15 years. And so that is actually more near term than he initially had talked about.

I think he had the chance to talk to a lot of quantum companies, understand the milestones. Just in the last 90 days, we've had key. milestones from Google with the Willow chip. We've had Amazon with the oscillate chip, and we've had Microsoft with the Myerato 1 chip. That's three key milestones on error correction, bringing down the noise and errors in these quantum chips. That's the key to look at when you look at scaling quantum computers. The future is not quantum or GPU. It's GPU and quantum together. So you were spun off from Google, were you not? That's right. Okay. So Google's biggest acquisition ever this week, by far. $30 billion? $32 billion.

dollars. Whiz, you know, and you're sort of... Founded like four and a half years ago. Exactly. And I know you guys are sort of in the cyberspace. I don't know if we quite put it that way, because this is all getting very sophisticated. But does that acquisition make sense to you? Or as we're talking about quantum and AI and all of this, do, does Google need to do something

more clearly in the avenues of these two developing technologies? Well, Google has a deep commitment, of course, to AI with Gemini and has one of the biggest programs on quantum with its willow chip. And again, the big demonstration from Google recently with Hartman and team is that as you scale the number of cubits, you can actually suppress those that noise, those errors that pop up. That's the key metric we need to see happen as we scale from hundreds of cubits where we are today to thousands to millions of qubits. So let me go back to sort of my take. And maybe I'm way off here. Okay.

We've been talking about flying cars since the late 1960s. We've been talking about flying cars for 50 years. We used to have supersonic air travel, the Concord. Now we don't. Hopefully we'll have it again with boom. Hopefully we'll have it, I think, to get here on time. My only point is that given, and I know you're not a markets guy, Jack, but given all the attention around AI and all the money we're spending,

which is propping up the stock market, is there any chance? Are you confident that all the stuff we're talking about ultimately will have that last mile? that enables this to occur because flying cars happen. They're possible. They're just not probable or profitable. And so we don't have them, but we should. Are you confident that AI will be there when we need it? Brian, great question.

I think the last two years was really about chat GPT, about GPTs doing more consumer, prosumer work where you type in a prompt, you get back an essay and email, a summary. The next two years is really about B2B. It's really about impact in pharma and making new medicines and new diagnostics. It's really about energy. Aramco using AI now to take hydrocarbons from low-value fuels to high-value composites and higher-value products they can sell in the market.

Their downstream is going to change radically in the next few years. It's talking about chemistry and energy and batteries. It's talking about the automakers. Jensen made an announcement yesterday about GM, two days ago about GM. You're going to see the automakers start to use AI, not just for auditors. autonomous, but also to lightweight the vehicles, to actually change the product itself. So the big, big demarcation point in AI is last two years is really about consumer AI. The next two years about B2BI, Brian, that is a much bigger impact on the economy.

That's 80%, Kelly, of the GDP of the economy. I'd rather have Chad GBT and Grok than flying cars, personally. I don't need the flying car. I'm good. Because you would need a flying minivan. And it's hard to innovate in the physical. world. There's all these regulations. There's red tape, you know, but in the internet it has been. Don't you think Congress is going to get a hold of AI? That's the part of the problem.

They're going to muddle in, try to do what they do. The next few years, I think we're not going to have. I don't think we're going to have a regulatory issue in AI in the current DC climate. I think that's actually not going to be a key issue. But right now, what we want to see, I think we're going to see in the next two, three years, is the impact of AI on the biggest sectors, on the B2B sectors. Last two years, more B2C. And to your point, Kelly, about WIS and cyber, that's, I think, where Quantum Day really comes in. As you see the scaling of quantum, as you see the scaling of AI, those are the two dream tools of hackers. Hackers love AI and quantum.

It's causing an arms rate. If those are the dream tools of hackers, then companies now have to go to all these quantum things. It's an arms race. They defend us. That's right. They have to defend us. We're going to push the vanguard and then you'll pay us to defend you against us pushing the vanguard. So you see Google making a lot of bets, Amazon, Microsoft, and new bets, and now, Nvidia, looking at that future of GPU plus QVAR, and now, combined on the cloud. And those clouds, you already see happening, we see that integration on the cloud, not only that and also with DGX cloud, which is, of course, the cloud of Nvidia itself. So, you know, I think that Jensen's keynote made a number of key points.

I think we do need to look at the reasoning models when we look at the demand for AI. But most importantly, the next two, three years, let's look at AI's impact on B2B and on the big, big industries of our society, rather than just the B2C. I love it. Aren't you excited now? It's coming. They're going to give us the flying cars and everything. I want both. I want AI and flying cars because the AI is going to make the car light enough that we can fit all of our families. I'll say this. If you want flying cars, it's going to be great. You're going to have to go to Dubai. Dubai is going to be the first spot. I'll save my prediction right here on CNBC. Dubai will be the first with some of the flying cars. So

Jack Hittery Sandbox, AQ, and Flying Car Acolyte. We appreciate it. Thank you very much. We actually have some more news in the AI space with new funding details for perplexity. Kate Rooney with the details. Kate? Hey, Kelly, yeah. Speaking of AI, startup perplexity I'm hearing is in talks to raise another mega round of funding that would roughly double its valuation to $18 billion. This is according to a source familiar with the deal who asked not to be named because it's not public yet. It is still in the early stages, I'm told. So those numbers could change. But what I'm hearing so far, $500 million as a part of this round, that could go even higher. It would put its post-money valuation. An $18 billion. I'm also told this company,

perplexity has a $100 million annual recurring revenue rate. So Bloomberg did first report this one. The company declined to comment. But perplexity is trying to take on Google with a search engine. Kelly, we were just talking about it. It offers APIs as well. It uses a variety of different models. Anthropic and Open AI are also starting to move in this direction,

trying to move into search. The company has been on a money raising blitz in Silicon Valley. It was only founded about three years ago. Was valued at $3 billion. If you just flash back to last year, it does signal some of the, the all-out investor demand we're seeing out here. Some of its backers right now include SoftBank and Vidia,

Jeff Bezos, the Amazon founder, and venture capital firms, including IVP and NEA. Not clear if those guys are participating in this round, but it is another signal of the demand we're seeing. Listen, I don't want to rain on their parade. It's a great day for them. But $18 billion is not what was Open AI, 150 lately. So 61 is Anthropics, so coming in third for the big ones.

But these numbers are just getting, I feel like our context here, yeah, you're sort of the benchmark is now open AI and some of the mega private deals. So a billion dollar rounds, I just feel like are becoming the norm, which is what this could turn into. It's still early stages. The flying cars. There's everywhere. Kate, thank you very much. Kate Rooney.

After the break, the big short, notable investor, Danny Moses joining us. He's short stocks, but is betting big in two areas. That's next. Welcome back to Power Lunch, a seesaw session for the markets. We started in the red. We rallied. Now we're in the red again. Existing home sales in February, up 4% from January, creating a little bit of optimism, but just a little.

As for the Fed, Powell didn't seem to push investors one way or the other. He tried to give them some pause. Our next guest says investor confidence is slipping. Danny Moses is founder of Moses Ventures. Danny, it's good to see you. Welcome to Power Lunch. Thanks for having me. So I take it you're bearish on the market overall.

Is that like a long term or a philosophical statement or just a short-term tactical thing? Tactical, I think, is the best way to put it. There are ways to express that by being long, certain things in the marketplace. And then I think just being short right now, the overall market at 21 and a half times forward earnings with everything going on doesn't seem like a big risk in my opinion. And I think Powell, what he laid out yesterday was, first of all, the tariffs are maybe ruining a soft landing. But the key to me, which may end up being a positive in the markets, was that he talked about the end of quantitative tightening. And I'm not sure if people picked up on this, but he's basically going to roll off mortgage-backed-back securities continue. and potentially reinvest those into treasuries.

So we know he's been meeting with Scott Besson on and off, and that's a key point. So something I'm watching just as it relates to the markets in general is what we know that 10-year yields are the key to everything, or at least Besson believes it is. And Powell was pretty outspoken for the first time in a long time. And so I take that into account. But that being said, I think the market's expensive. And I think there's a change kind of in the world and economic order, how people view the U.S. markets.

But so in other words, and I'd love to know because shorting the market is so hard, right? I mean, okay, you can go into it when maybe in January, you know, you finally get 14 signs that things are a little overheated. Now you've had a bit of a washout, a waterfall, I think Tom Lee called it last hour. And he said, you know, it thinks there's signs that it's bottomed out. So he had a few of those technical and otherwise to mention. You kind of hinted that maybe the 10-year, if it does slip, could be a more bullish development. But are you sticking with the short position until when? So I just want to say the market may look like it could rally based upon where it's come from.

But on an absolute basis, I think the market is still expensive. So I think we are underestimated the impact to the economy of the cuts we're making at the federal government and what that might mean, the knock-on effects into the economy. So I think we're hurting the revenue side of the equation. When your debt's GDP is over 120%, you really can't make a mistake. So I think we are being overly optimistic on how this is going to play out. So I think we're going to start to hear when first quarter earnings are reported that there is a market slowdown potentially and a hit to consumer confidence, which you've already seen, which I don't think is pricing it to the markets.

Let's play a game, Danny. Kelly, you guys ready? I'm just going to make it up right now. Hey, Danny, it's pride. What do you think Danny is more important for the markets? If you had to pick one, is it potential big cuts in government spending, or is it all the hype and hope around AI? Well, I think AI is a secular growth trade, and it's certainly an important part of the market.

I think that's priced into the market. So if you look at the S&P, obviously, I won't run through all the top names, but they make up the majority of the S&P 500. So they're an important part, if you are going to short the S&P 500 to understand that, but those feel fully value to me. I know you just guess you just had on. I'm glad I wasn't on the quantum, you know, computing segment or AI segment. But, you know, I think that the market itself,

I don't think is fully realizing the impact that you just mentioned of cuts how that will reverberate through the economy. So I think we're getting a little bit overly optimistic in terms of how it's going to play out. And yes, could be a temporary. Type of reprieve, sure. So that was kind of our point in structurally that last segment, and Jack was fantastic. Nobody's saying, I have no idea if any of this stuff is going to play out better or worse than it will.

I guess as an old market guy now, Danny, as I consider myself to be, I am a little bit worried that the market is so reliant on kind of everything one guy, Jensen Wong says, and all the predictions he makes. and I do worry, and this is my job, I guess, what if we're off by 10 to 20 percent or 15 percent or 9 percent? And those projections and those capital spending projections don't come true. Is the market vulnerable then? Yes. The answer is yes. And let's go back to 99, 2000 time period.

The Internet was obviously the story it was growing. Fiber optic companies were the whole story. But you could take the amount of fiber that was being talked about and wrap it around the earth, I think 100 times. So at some point, the secular trade, and the internet obviously was real and it's grown, becomes cyclical. And when that does happen to your point, I'm not going to make a comment on Nvidia, other than the fact that rarely do you see hardware companies maintain margins in the mid-70s percent. It just doesn't happen. So at some point, it will catch up with itself as far as it's multiple. Obviously, it's a great company. It doesn't look expensive on an earnings multiple basis,

but you have to assume that your margins are going to maintain to justify current valuations. And you're right. it is the beginning and the end of everything that's AI. That's a little bit scary, in my opinion, in the markets. You have a couple of areas, Danny, that you're actually quite bullish on. One of them, you say all roads lead to gold. You've been bullish on gold for a few years. We're at all-time highs. We went above $3,000 in ounce. We'd love to know how much more runway there. And then on betting, which I'd rather talk less about, frankly. But I'm curious why you're so sort of positive on a couple of those stocks. Well, so we can start with gold. Gold was supposed to only work in high inflation environments.

Gold actually, at the peak of CPI in 2022, was on its lows. It's rallied ever since. So that didn't work. It's only supposed to work with a declining dollar. We've seen that the dollar's strength, whether it's due to tariffs, I know it's come off recently, gold was working. What is that telling you? It's telling you there's geopolitical noise out there.

It's a great way to hedge for it. But I think more than that, what it's telling you is that we're losing grip on the global economy. And so what does that mean? Fiat currencies, obviously, aren't. is highly valued these days as a hard currency like gold. And I totally get the Bitcoin argument. They're actually very similar to own Bitcoin or not gold. I would just rather own something that has been proven out over centuries versus on something new of not knocking on Bitcoin,

but it's the same philosophical application that exists. So I'll say that these gold targets that you're seeing, to me, there's no difference in gold 3,000, 3,500, 4,000, 4,500. I know that sounds outlandish, but you're talking about a large market cap of over 20 trillion if you want to look at gold as a whole. And the way that it's performing, now, it's in strong hands. So central banks own it. They're not going to be selling it anytime soon. It's just now getting into retail. You might have fits and starts where it sells off here and there, but I think owning the miners and owning the physical gold through what however mechanism we want is the way to play it. I know we got to go, but Flutter and Genius Sports just a couple of seconds on that.

Yes, a sector that is not impacted by tariffs, a sector that has secular growth, whether you believe in online gambling or not. Both names, I believe, are cheap relative to the growth rates. And Jeannie is probably my favorite stock out there. And this sector, has been using AI before you ever heard of Nvidia. So I think that these companies have a long runway for growth. And obviously, there is another secular growth area that I think we're going to see over time. We're showing Genies forward P.E.S. 300. Okay. Okay. It's not 300. It's about a $10 stock. It's about a $2.5 billion market cap. I don't know. They would love that thing, I think. If that was the PE ratio, I think you just showed,

but it doesn't trade off of earnings, trades off EBITDA. So. All right. Fair enough. You're the, expert. Danny, really appreciate you making the time. Thank you for having me, guys. Danny Moses of Moses Ventures. All right, there you go. Big take on stocks. Now let's talk about the bond market. See what's happening there.

Rick Santelli is in Chicago. Rick, seeing a down-tick a little bit in the 10-year yield. Yeah, you know, it's been an interesting session. If you look at the last eight sessions going back to the 11th of March, twos and tens, what you can see is we dabbled in areas we haven't traded since March 11th, but then we reversed. And up until a few minutes ago, other than short maturities, the middle and end of the curve were basically very close to unchanged.

It's very important, once again, for tomorrow's weekly close, see which side of 4% a two-year, which side of 4 and a quarter a 10 year. I still believe that it's not going to be lower rates that we're going to be seen over the next several months. Now, let's switch gears to the dollar index. Dollar index is now up. Wednesday's high was higher than Tuesdays. Today's highs higher than Wednesdays. We're stacking.

That's a bullish thing. The dollars seemed to avoid paying much. attention to yesterday's Fed meeting. Now, we're going to play an experiment here, okay? I'm going to show you a chart of 17 years of the dollar index from 2003 to right before COVID hit in March of 2020. And what I want you to notice for those whole 17 years, the highest point on that chart is 2016 at 103.30. Now, let's open a chart up to present time. Now, I know that in 22, we were up at 114. But currently at 10388, we are still above that 17 years pre-COVID high level in the dollar index. I think the demise of the dollar or as a reserve currency is highly overrated. Believe me,

our benevolence will keep that currency, the reserve currency for the rest of my lifetime. The dollar index is still going to be the transactional currency despite headlines and all the political issues of the day. Brian, back to you. Rick, thank you very much. All right, up next. Big Tech Technicals. Your next guest says that we are approaching a pretty key level for stocks. We're going to give you the details of exactly what that is in Market Navigator.

Next. All right, welcome back to Power Lunch, everybody. Before we get to the great Dom Chu and Market Navigator, here's a macro look at the markets who were higher earlier today. The Dowdown, yeah, one-tenth of 1%. The NASDAQ, though, tech, always the story yesterday. Nice gains today, given a little bit. to that back, we're down six-tenths of one percent, 113 on the NASDAQ. The aforementioned,

you like what I did there? The great Dom Chu, what is in our, your market navigator today? We're going to talk a little bit about what you just talked about with regard to where the market sits, because Fed share Jay Powell says the economy is strong overall, believes we're in a, quote, good place to react to any signs of weakness. And he's signaling two more rate cuts maybe for the balance of this year. So what does that mean for the technical aspect, the chart patterns? Our next guest says a look back at recent history could give us some clues about where we are headed. That's the point of technical analysis, pattern identification. So joining us for the breakdown on the charts is Jessica Inskip, Director of Investor Research at Stockbrokers.com.

And Jessica, you're standing in front of a touchscreen, and I love this because you're going to draw on there for us. Take us through the charts and what you are seeing right now. That I am, Dom. So let's start with the weekly view of the S&D P-500, which this is the daily, which we can talk about that as well. But if we look at the weekly view, actually, in the 1326 and 40 weekly moving averages, we had a turnover. And our big resistance is actually 5760. If we move to the daily, we can see here around August of last year, this is an important component that we want to focus on for the market. We had a cup and handle breakout. And that was a very big moment in time back in August of 2024. If you could remember,

the Fed just put Fed rate cuts on the table. We were talking about recession fears. We were talking about so many things that we're talking about right now. And we overcame that because the Fed finally cut rates and we had better data. It's so interesting to me that the key moment of resistance that we're at right now is that 5,700 or 5600 area or zone that we're up against. And it's essentially the same level where we are having the same type of uncertainty, those same type of recession fears. And certainty was even the carry trade unwind. So it's an important level that we need to overcome right now. However, there is some great, great moments.

If we could plot Volinger bands on here or standard deviations, essentially this is going away. So it looks something like this. Since this is moving forward, this means there's more momentum, less from the downside, and it's deviating upward, which is a really, really great sign. but it comes with a caveat. We're at this pivotal moment where we're at this area of resistance, which is that 5,700, 5,700 area or level. If we cannot overcome that,

here's that weekly view that I was talking about. If we cannot overcome that, what will happen on a daily view if we stay here for too long is that death cross that a lot of technicians are very cognizant of that 200 over the 50-day moving average,

which could send us down just systematically, even if it's not fundamentally driven. That's something to be wary of. But if we can look at technology as a whole, this could perhaps drive the market so we can pull up the XLK technology chart or the daily view. Yeah, if we can see that, that gives us an indication that there's actually a turnover in the moving average convergence divergence. So if we could see MACD give us that signal that will give us upwards momentum. And we're stopping, though, at the same level in August. Okay. All right. So it seems like there are a lot of moving parts of the signals right now for the technicals.

We'll have to keep in on some of those developments, Brian. Especially the death cross. There you go. And you have to say. Thank you very much, Jessica, for that death cross the way it is. But hopefully it's not as ominous. Not Christopher Cross. He was a great pop rock singer of the 70s and 80s. Or just Arthur's theme. Chris Cross. Jump. Well, jump, jump, well, jump. The Mac Dad will make you. Jump, jump. Anyway. Kelly will say this back.

You make you? Jump, jump. Thank you both. Coming up, three big insights into the auto industry. Amazon used cars, Tesla turmoil, and the Lambos. We'll hit it when Power Lunch returns. Welcome back to Power Lunch. I'm Bertha Coombs with your CNBC News Update.

The Justice Department missed a noon deadline today to provide more information about whether the Trump administration violated a federal judge's orders on deportations under the Alien Enemies Act. Over the weekend, the federal government used the 17-19. 98 Act to remove people from the country it said had ties to a Venezuelan gang. Meanwhile, Taiwan's president told the American Chamber of Commerce today that his self-governing island will raise its defense spending to more than 3% of its GDP. Taiwan will also buy more U.S. equipment and expand its military to address what it sees as a rising

threat from China. President Trump had previously demanded Taiwan increase its defense spending to as much as 10%. And Canada's Transportation Board issued a preliminary report today on the February 17th crash landing of a Delta Airlines jet in Toronto. It found the plane's alert system gave a high-speed warning just seconds before it touched down and the landing gear collapsed, causing a wing to detach and the plane to catch fire. Miraculously, all 80 people on board survived. Kelly, back to you. Bertha, thank you, Bertha Coombs. Automotive news reporting late.

yesterday that Amazon is looking to enter the online used car market. Citizens writing in a new note, the move could unlock a trillion dollar market, giving Amazon's retail business significantly more runway. Nick Jones is Citizens Equity Research analyst behind the note. So, Nick, does this put them in direct competition with the likes of Carvana? Yeah, it would definitely put them in competition with Carvana. But, you know, investors should really remember the youth car retail market is hyper fragmented. The top 10 used car retailers,

of seven or eight percent market share. Carvana today is only around 1%. So a new entrant, we actually think would normalize kind of a digital first selling process, which kind of near to medium term would probably help Carvana and kind of this idea that you could buy a car online. But it would certainly create some competition. We see the biggest risk to kind of small localized dealer groups

who are kind of regional in nature or even more local than that. So in other words, you don't think Amazon getting into the business of selling used cars online necessarily hurts other providers of selling cars online. You think it hurts local dealers? Correct. When you sell cars online, a big benefit is centralizing the inventory. And an easy example is, you know, someone who buys a convertible in L.A. will pay more than someone in Chicago. So if you can source the car in Chicago and sell it in L.A., there's natural arbitrage built in to the industry. So those models tend to have a structural cost advantage to localize dealers who source locally. So really we see Amazon potentially looking to acquire Carvana down the

road if they want to get more meaningfully into the space. Is there anything here that would then give you caution in terms of the rest of kind of your coverage space? Or do you think this is kind of all upside and sorry for those who were the incumbent players in the market? We got to view it as all upside to the auto, online auto space. You know, for small dealers, long term, you know, they'll chip away at the margins. But remember, people buy cars every around six years. This is going to be a very long runway. Competition will matter much further in the future than now. Very interesting. We're talking a lot of cars today, flying cars, Amazon selling cars. Nick, thanks very much. We appreciate it. Nick Jones there from Citizens.

And we're going to stay on the topic of cars because the topic of one car company is getting almost everybody's attention. That, of course, is Tesla. The once red hot stock slammed this year, over 40%. And today, Tesla recalling nearly all cyber trucks is over an issue where a rear panel could fall off. Because of a guy named Elon Musk, there's also a lot more going on around Tesla right now. Some of it is pretty scary, a little dystopian. NBC this morning reporting that someone published a list of Tesla owner's personal information, including names and contact information, along with statements urging people to damage or vandalize Tesla cars, all in order to protest Elon Musk, and that is not all.

Minnesota governor and former VP candidate Tim Walls commenting two days ago on the Elon Musk-owned X that watching Tesla's stock losing money is good for people who, quote, need a little boost during the day. This is all happening, as we've been told for years, that buying American-made electric cars helps the environment and is a good way to help fight climate change. So if you dislike Tesla because of Musk or any other reason, and you want to buy a different American-made electric car. What are your options? Well, there's not many right now. You've got some of the European companies that make EVs here. Mercedes BMW and VW all make one or two

models here in the United States. Got a couple of Cadillacs like the Lyric and the Escalade, the Ford Lightning pickup truck, the Machia is made in Mexico, and two Rivians. Other than that, most EVs are made overseas or in other countries. So those are the options, Kelly. In other words, if you want to bet on an EV future, Tesla is kind of your only. Well, if you care about U.S. made, and some people don't, but if you did say, I want mostly are all made in the United States, these are most of your options right now.

Well, the Chinese ones would be highly competitive with this set, but I think they have 100% tariffs slapped on them, so not going to break into that market, leaving us with these options, really. All right, well, let's have a little bit of fun, because speaking of the automobile industry, we have got some really, really hot stuff to show you next as the head of Lamborghini.

We'll show us some of their red-hot products next. Welcome back. Let's have a little fun because sales are Moldo Caldo for Lamborghini. And if you pardon my very bad or non-existent Italian, I'm hoping that means very hot. Lamborghini closing out last year with its best ever results. And the Italian car company, known for its famous bull logo and sexy styling, continues to build out its hybrid electric market with the Rio Valto and soon to be rolled out, Tamarario. Joining us now is chair and CEO of Lamborghini, Stefan Vincolman. Stefan, I probably

massacred both the car names, your name, but I know Lamborghini has a name. Thank you very much for joining us. You just heard us talk about sort of the lower end of the car market. What is the future for the Lamborghini buyer and connoisseur, really, for both hybrid and fully electric? Our first step into electrification was announced by us almost four years ago when we said we want to hybridize all of our lineup. So now all our cars are plugged in hybrid cars, the Revuelto, the Temerario, and the Uruz S.A. And this is very well received by our customers because we have a waiting list of one and a half years. So exclusivity, scarcity is to the utmost importance for our brand, because this also enables us to have a very good residual value of the use cars, which almost every time is higher than the price of the new one. We will have the first full electric car as an additional model by the end of this decade.

We think then the time is going to be sufficiently ready and the market also that we can have this car. It will be a GT car, a 2 plus 2 car. So it will be a perfect add-on to our SUV and to the two supercars we have in the lineup. Okay. I bought. I'm a 30-year car racer, Stefan, but I bought an EV. And I'm not going to lie, I missed the engine sound. want to hear that Lamborghini engine per.

So if you go fully EV, maybe you come up with the Lanzador, 2,000 horsepower. We'll see what happens. Do you mimic the engine noise? Do you let it go silent? What is the proper way to build one of these cars? God, there's no substitute for that engine sound. First of all, we have to say that the three cars we have in the lineup today are all plugging hybrids.

So they have, one has a V12 and the other two, they have a V8. So we have the perfect sound for Lamborghini, and this will stay also in the years to come. When we speak about the additional cars, so the first full electric car, we will not copy the sound of an internal combustion engine. We need to create and we need to amplify maybe what is in the car at that time, but it's not something we have decided.

far. What is also equally important is the emotional aspect why you drive the car. So the respond not only acceleration, top speed and handling behavior, but also the feeling you have while you drive the car. And this has to be a typical Lamborghini one. On the sound, we are still working, but it will not copy the sound of the internal combustion engine. Stefan, to ask you kind of a boring or kind of a downer business in competition question, just going back to the parent company, Audi, Volkswagen, which, of course, are going through some troubles right now. I mean, you're in the luxury segment of the market,

so you should be much more insulated from competition with Chinese EVs, for instance. But what would you say about the state of the European auto industry right now? I can speak mainly about Lamborghini. This is my task and my job. In general, the automotive industry has challenges. On one hand, side, for sure, they have to keep up with the price. pricing of the electric cars. They have strong competitors coming up in China, not only in China, but also coming from China into the European market. This is something which they have to

handle. We all have to handle, and I think that this is something which at the end of the day is positive for the customers to have more competition. And I think that you, European brands have heritage. They are strong and that they will keep up with all the competitors which might come up. For us, Stefan, I was going to ask you, what do you see is the, and you can sort of dream or visualize here, Stefan, because we look out 15 years. And 10 years ago, five years ago, we said every car will be electric in a couple of years. I always kind of doubted that. What do you see? What will be the makeup of the global. automobile market in five to ten years?

So this is very much related to the legislator. There seems to be an opening for the opportunity to continue to build plug-in hybrid cars or internal engine, internal combustion engine cars, also after 2035. This depends a lot on the opportunity to have synthetic fuels to offset the CO2. emissions. This is something which would be very positive for a brand like Lamborghini. Remember, we are selling a bit more than 10,000 cars, where the entire automotive industry is selling about 80 million cars a year. So we are neglectable part of this. But we take it very seriously.

We say every new car has to be more performing than a generation before, but on the same time, we also have to reduce the emissions, the CO2 emissions, from generation to generation. So we are part of the game. But there are opportunities if we get synthetic fuels done. And also in 10 years time, we still have internal combustion engine cars. Yeah, I think synthetic fuels, maybe the thing, not enough people are talking about. Stefan Vinkerman, he is the chair and CEO of Lamborghini. Motto grazie.

Thank you very much for joining us, Stefan. How is that? Okay. My Italian is not so. That was it. That was all like. Time for today's three stock. Oh, we got, we're going to break. All right. We'll see you after this for three stock lunch. Welcome back. It's three stock lunchtime. And here with our trades is Boris Schlossberg,

the managing director of FX strategy at BK asset management. Boris, we've got Tesla five and Kava to hit today. And I don't think you like any of them. But let's talk about Tesla and whether you would like it more if Elon Musk either step down as CEO of the company or step down from his role in Washington or neither. I don't think it makes any difference. I think the car business is a very tough business and Tesla has never traded as a car company. It always traded as a tech fantasy on autonomous driving. I think if people start valuing as a car company, you're going to see more multiple compression. So I think Tesla may have a hard time to go forward unless they come out and solve autonomous driving and that's a completely different story. But until then, I still think it sees goes lower.

Right. But if he leaves, it's not like no one can run their autonomous future. right? Right. But my point is that valuation and everything else in Tesla has really dependent upon this dream of autonomous driving. And until they actually achieve it, it could be re-rated as purely a car car company. And, you know, car business is a tough business, it has much lower multiples than Tesla is getting. So there's so much more compression to go in Tesla unless it really achieves a breakthrough. So at this point, I think it's really not a buy. All right. That's not a buy. You're a hold on five below, which was having a nice day today as well. And you're a pass on Kava, unless, you know, Yeah. The story with Kawhis, basically, even if it compounds at 40% for the next 10 years,

it's still going to be at 40 times earnings. Love the business. Hate the stock at this point. I like the lamb meatballs. Boris, we had to really crunch it down today, but we really appreciate your time and running through a Boris Schlossberg three-stock lunch. It was one and a half stock lunch, but we got it done. Thanks for watching Power Lunch, everybody.