Power Lunch - S&P 500 hits record to start the week, Wall St. braces for key earnings 10/14/24

Episode Date: October 14, 2024

The S&P 500 rose to a fresh record today, as investors wait to see whether the next batch of key corporate earnings can continue to power the market to new heights. We’ll tell you all you need to know.Plus, we’ll speak to an analyst who believes sentiment on shares of Apple’s stock has gotten unjustifiably negative. He’ll make his case for us ahead of its earnings results. 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 alongside Contessa Brewer. Welcome, Contessa. Good to have you here. I'm Tyler Matheson. The big story for the markets right now is the Dow and S&P 500. Once again, hitting all-time highs. The NASDAQ, just about 1% from a record. This is probably not the most, the greatest number of all-time records for the S&P in a year, but it's getting up there. But you just can't keep a broad rally down, apparently. Apparently not. Meanwhile, helping to lead the NASDAQ is NVIDIA, CEO Jensen-Wong. with some positive comments. Apple also higher. We're going to speak to an analyst who says sentiment on Apple has gotten too negative. Lots of questions here about how much Apple relies on Chinese consumers and is the stimulus, or lack thereof, really a factor in whether Apple goes

big or... What's the way I saw over the weekend was that we may have seen the last of the annual announcements of an iPhone, that they may go to a less sort of regular every single year coming out with an upgraded version because all the upgrades may not be as... as exciting as they once were. And next, David Teper said, buy everything in China because he thinks the government will do whatever it takes to support the economy. But current stimulus plans have left investors wanting, and Chinese stocks are way off their recent highs.

One of the arguments is that they announced stimulus and they never sort of add up to as much as the hype. And they just want more detail, and that detail is not been forthcoming. We'll have to wait and see in a couple weeks as things go forward. But for now. That's the way it is. Let's see. We'll begin with the markets, broadly speaking, because as we mentioned, new highs for the 8 Dow and the S&P 500, there are always worries and hurdles, but right now the markets seem to be clearing them. Let's bring in Mike Santoli for more. You know, October can be a rough month, but so far, hey, we're only halfway through, Mike. There's a lot of time left here.

The second half of the game is still to be played. A lot can happen, but so far, so good. For sure, Tyler. And you know, one of the things about those seasonal tendencies for some choppiness or downside action in October is everyone kind of knows them going into October. And so we were braced for something worse. I think that the persistent uptrend in this market is a function of the known visible positives just outweighing the feared hypothetical negatives. And those positives, of course, the economy has begun again outperforming economists forecasts. You have the Fed that is in easing mode to whatever degree ultimately. But right, right? now in easing mode into an earnings upswing for the S&P 500. That's not the most common combination out there. And obviously, you know, we have corporate credit spreads that are very tight. So just this general acceptance of risk out there. Soft landing seems more positive and benign and, of course, believable than not right now. Now, what do we have to worry about? Well, we're elevated in valuation, 21 times forward earnings probably can't sustain too many disappointments on that front. The volatility index is down a bit today. It's under

20, but it has been evidence of people bracing for the potential of volatility to kick up in October, at least past the election. But that's now starting to ease back. It was very anomalous to have the market clicking to new highs, having the volatility index be that high. So it seems as if right now, at least today, it's the VIX that is buckling here. Mike, we like having you around. So if you'll just stay put, we want to get to the next big question, can the market continue to rise to every challenge? Or are we going to see earnings derail this rally? Our next guest thinks, hey, stocks have some further room to run, at least in the near term. Malcolm Etheridge, Capital Area and Planning Group managing partner, also a CNBC contributor. Malcolm, it's

good to see you. Why do you think that there's fuel in the tank? Thanks, Contessa. I think that it's a mistake to try and maybe view this particular market cycle that we're in with AI and the trends that have come from it, just focusing on a traditional valuation lens, right? Considering we don't know exactly where we are in that Gartner hype cycle, right? Have we reached that trough of disillusionment? We really don't know. And so I think that that leaves a lot of opportunity for positives, even if it's not in the Mag 7 or the hyperscalers or mega-cap tech or whatever other name we use to describe them. If we don't use traditional valuation metrics to assess AI opportunities in this market, what are the metrics we should be looking at? Yeah, I think

the fundamentals matter a little bit more, right? If we just consider the fact that names like Microsoft and Amazon and Alphabet, they've been investing billions of dollars the last few years into generating large language models that can create technology off the backside of them that we have yet to even really understand what the true value of those is. And so I think there's a lot of intrinsic value still trapped inside of each of these companies that owns one of those large language models. And so that alone is a fundamental that tells us there's still more value there to be realized, we just can't really put a number on it yet because we're still so early in the process of building out the technology. We're going to use AI to evaluate AI. Yeah, yeah, exactly.

Malcolm, one of the things it seems you're very interested in are data centers and the sort of virtuous circle of companies that surround them. Explain that and name some names. Yeah, so if you just consider the fact that I just named three of the hyperscalers, right, Microsoft, Amazon, and Google, I'll stick with them. Each time Microsoft, for example, goes to buy another GPU from Nvidia, it's got to go into a data center somewhere, which means then that a new data center has to be built, which means that someone's got both power and cool that data center. Someone's got to manage that data center.

So I'm looking at names like Digital Realty, for example, which is kind of an obvious one to anybody who's been following this trend. But they're the seventh largest publicly trader REIT right now with a market cap of something like $50 billion, but based on their working relationships among the mega cap tech names alone, I could see them moving up a couple spots and overtaking somebody like assignment properties or public storage by the end of the next year, because for one, on their last earnings call, they pointed out that half of the bookings, or I should say only half of their bookings right now come from AI-related activity. So that's a lot of opportunity for them. Plus, they have these

companies beating down their door right now, wanting their own data centers instead of having to co-locate, which has traditionally been digital realty's playbook. So to me, they're similar to NVIDIA in the sense that they've got way more demand for their product than they have supply. And that's what's going to drive a stock like a digital realty even higher in 2025. And you also like a dear old utility, Dominion. Yeah, so, Tyler, I know being from Virginia, you know just how much of the world's web traffic flows through northern Virginia. Dominion is perfectly situated being a Virginia power company. it provides power to basically the entire state.

And so what's unique about them is as AI is forcing all of these different energy producers to focus on expansion in a way they haven't in some time, Dominion is perfectly positioned to take advantage of that opportunity that's going to come from all the rest of this activity we've been talking about. All right. Well, then I note that you don't own Dominion personally, but you do own digital realty. Mike, back to you for a minute. One of the things that's been remarkable in this most recent rally is the way it's

It's broadened out past the sort of superstar performers that we saw in the beginning of the year. We're seeing the best S&P performance leading into a presidential election ever. The best performance in the S&P to this point in the calendar year since 1997. But that kind of marks what was then, as I recall, I was so young back then. But the internet bubble, it was like leading up to the internet bubble. Have you seen in the past where there's an economic, implosion following this sort of optimism on all counts? Yes, Contessa, at some point. I mean, 97, I mean, it was like two years into the internet craze. You probably had two and a half left to go in

terms of stock market upside benefiting from it. But you did have a choppier road, 97, 98. You both had these serious corrections. And it wasn't just because of disillusionment with tech. It was because you had some kind of rupture in the capital market. You had Russia defaulting. You had the tie currency crisis. You know, things kind of popped up. And the question is, if you have an expensive market, do you have the shock absorbers to handle those things? So I do think right now, my first question, after seeing that performance year-to-date and seeing things like Nvidia and everything else run higher and really fatten up the year-to-date performances, is it too much of a good thing yet? Has technical conditions and sentiment really gotten overheated? And I wouldn't say they have

just yet. It's actually been a more measured increase. You mentioned the broadening out of the market. It's not just six or seven stocks. In fact, last quarter was very broad. Interestingly now, you do start to see Nvidia and Apple kind of grab the range today, and maybe they can act as support here. They had their three-month reset and cooled off a bit. The one thing that you point out in your column here is that you're seeing the volatility index above 21. At the same time, the S&P 500 is at like 21.9% higher this year, both at 21.

What does that tell you about this market? It's interesting. So it's expensive. It's well-owned. Meaning, people are generally bullish for the end of the year. But there's this little multi-week period. We are in it right now when everybody believes there is the possibility of pre-election jitters, post-election disappointment, something out there that could cause, plus the seasonal effects, that could cause the index to have a little bit of a pullback or have volatility spike. So that's just, the VIX is just telling you people are buying insurance against that possibility, not that they're really negative on. stocks or that there's something necessarily very scary brewing in the markets. I would expect credit conditions to worsen more than they are right now, much more if that were the case. All right. Well, Mike's taking the closing bell by the horns and coming up at 3 p.m. hosting that show. Malcolm Etheridge, it's good to see you. Thank you for joining us with your perspective. All right, gentlemen, coming up, a catalyst call. Wall Street sentiment around Apple shares has grown bearish recently. But one analyst says, excuse me, the negativity.

is overblown and the company's latest earnings should propel the stock higher. He'll join us to make his case when Power Lunch returns. Welcome back to Power Lunch, the NASDAQ, the best performing index today, now less than 1% from its all-time high. Invitya, big driver, getting very close to a new record as well. Seema Modi joins us at the desk with more on this, just plowing straightforward. This record run. And I think it brings up this question of, on Wall Street, how long can Nvidia's dominance last when it comes to AI chips? And the marketplace, as we know, is only getting increasingly more competitive. Here's what NVIDIA's CEO Jensen Wong told,

Altimeter Capital's Brad Gersner on his podcast yesterday. To me, when I think about a computer, I'm not thinking about that chip. I'm thinking about this thing. That's my mental model. And all the software and all the orchestration, all the machinery that's inside. That's my computer. And we're trying to build a new one every year. Yes.

That's insane. Same. Nobody has ever done that before. We're trying to build a brand new one every single. year and every single year we deliver two or three times more performance. As a result, every single year we reduce the cost by two or three times. Wong also dismissed the idea of Nvidia being the next Cisco, which was at a similar position in the late 1990s and famously lost market share. He also said that computing tools,

the need to curate more data, all underscore the important role Nvidia is playing. And he does not think AI will eliminate jobs. He looked at Nvidia, for example, which employs 32,000 employees with plans to get to 50,000 with 100 million AI assistance, which he says will increase the company's overall output. He also praised Elon Musk for the speed at which he's building a supercomputer in the span of 19 days, which he says typically takes about three years to plan, guys. A hundred million AI assistance for the, what, for the 50,000 employees that he expects to? Exactly. He wants, he's growing. He's looking to hire more people, go from 32,000 to 50,000, But coinciding with that, building out these AI assistance, which will help them run these models and launch AI applications.

Can they keep up that pace of a new offering every year? Is that sustainable? That's the big question, right? With Blackwell, we are seeing those delays. Of course, we'll be getting earnings in November to get a better picture on the timeline and how much revenue they expect next year. But that's the timeline. Is every year a new product that will be faster, cheaper, and better than some of the other alternatives. That's significant, especially when you think about Google, meta, Amazon.

on all working on their own in-house chips as well. All right. Thanks very much, Seema. Good to see you. Thanks to have you here. All right now to another tech heavyweight. Let's talk Apple. Why not? While shares are up 20% this year, sentiment has recently turned more bearish on the stock amid weak demand for the iPhone 16. But our next guest disagrees. He just added Apple to his tactical outperform list and thinks earnings at the end of this month. They're going to push the stock higher. I meet Darianani is senior managing director at Evercore ISI. I mean, why don't you make the case for Apple here? Because a lot of people are a little down on it, a little disappointed with the reception of the iPhone 16, among other things, and worried about China.

Yeah, listen, the disappointment on iPhone 16 so far, I think, is driven by two things. One is the lead times, how quickly you can get an iPhone 16 seems much shorter today than was for iPhone 15, for example. Our take is very simple. I think lead times, delivery times are a reflection of two things. it's either demand's really bad or supply is really good. And I would argue supply is really good. You're more far away from the pandemic. The forecast models are better.

I think the short of lead times are more a reflection of better supply versus demand. And then Apple intelligence, we think, will eventually become a bigger driver for demand. And I would almost expect that end of October, when Apple will formally lay out and launch Apple intelligence with iOS, it could spur incremental demand as some of those features, you know, not just get used by consumers. but critically get used by app developers and get them more integrated into the product. So we see a couple of catalysts over here that should help them. I mean, did you find it curious that here is this phone that is supposed to be equipped to run the latest AI, but Apple said, hey, we're not really ready to give you the latest AI until a month later.

That's not usually the way they've done it. And to me, it dampened a little of the enthusiasm that I or a person, potential buyer might have for the product? Listen, it is unusual the way they did. I'll concede that, but I would much rather have them have a more polished final product out to the masses versus have a half-big product out that may just disappoint and disillusion you much more. So while it's frustrating to see you get delayed by end of the month, I do think it's a better solution given the fact that, you know, the data launch it, a billion iOS users are downloaded and use it pretty extensively, right? So hopefully it's more ready for prime time by that framework versus perhaps putting out a half big product early. There's so much skepticism right now about the Chinese consumer.

There's so much anticipation about Chinese stimulus and whether that might spark more buying. But how much of a threat is Huawei in China? So Apple actually did really well against Huawei as some of the tariffs impeded Huawei negatively. So Apple has certainly picked up a good bit of market share in China. The risk is always the sum of the sum of it. fit or all of it started to reward back. Now, I'd say more stimulus dollars with Chinese consumers is directionally a good thing for high-priced products, like an iPhone, like smartphones. Then the question becomes, can Apple really compete with Huawei? And I would argue that, you know,

why we still does not have access to leading edge technology, which means they really can't run chips in three nanometers or two nanometers over time. So you do think Apple product will resonate well with customers. Apple intelligence, but I think eventually is going to be a driver, is probably not going to be in China for at least six months to they can figure out some of the local approvals that they need. So I do think they'll do better in China, but I do think Huawei is incrementally a bigger threat for them given some of the nationalistic dynamics at play. And what about wearables and subscriptions, which have become, you know, an increasingly important part of Apple's bottom line? Yeah. Listen, it's a great point. I would say,

I would say beyond Apple intelligence, actually, the improvements they had in AirPods and Apple Watch were much more pronounced. You almost seem to be finally getting to this magical crossover point between variables and healthcare devices, which I think could resonate and drive a lot of demand. So I do think variables will actually see a really good inflection higher, and you're finally seeing some good momentum over there. Services, I would point out, have actually shown some really good momentum. we think that will be one of the areas of upside is better services and services critically has much better gross margins to it versus the hardware product does. Yeah, so what you're saying is like they could see more profits on that particular

segments of the business and depending on how much it grows than they do on their hardware. Absolutely. Services, if you have an idea, run at 80%, 75, 80% gross margins, even know what product it is. Hardware generously is running at 35% gross margins for them. Amit, Darion, Nani, thank you so much for joining us. We appreciate your time today. Thank you. Coming up, lucky number 13.

Every sector of the market has found technical support on the 13-week moving average. Our Chartist explains what that means for the broader market and how you might be able to cash in. Market Navigator is next. All right, welcome back to Power Lunch, everybody. We've got green numbers there. The industrial is up about a half percent, S&P 500, 3 quarters percent, and NASDAQ, a little bit more, all-time highs earlier in the day for the S&P. So, Dom, what is in today's market navigator, my Magellan? All right. So here's the thing. With those record highs that we're

talking about, technology is a very big part of that story. So with that record territory, our next guest is keeping an eye on sectors and the rotating around. And she's also talking about her strategy in the face of these volatile conditions. She says technology is well positioned. Forget get this, a breakout, which could mean even more record highs. We're speaking with Jessica Inskip, Director of Research, over at stockbrokers.com. And Jessica, let's take us through this positioning argument right now. What is it that you are seeing, navigate us through that tech story and why you think a breakout is in the cards?

Absolutely. It speaks to the bigger picture that we're seeing within the market, the broadening that we've been focusing on. But technology is really positioned for a breakout and has created what I like to call consolidation for that type of momentum that we're looking for. We have failed to make a higher high since July 8th. That higher high is 237 when we're looking at XLK. But when I'm looking at consolidation,

I want to see a breakout or what momentum or the chances of that occurring. When we are seeing stuck in a trading range, I want to see if we're making lower or higher lows. And that's exactly what I'm seeing. That direction of sideways is going to come to a meeting point at some point, which is really well positioned for a breakout that I see within XLK. But again, looking for that close above 237 and a weekly

close above 237. So if that were to happen, that's upside fuel, a catalyst for that kind of breakout move to the upside. What do you think could be the catalyst that we're seeing or not seeing that could make it so that that move higher is in the cards, really? Yeah, absolutely. So from a technical perspective, we got a crossover from MACD, which is always a good sign. That's our signal. But the catalysts, of course, is earnings. We're getting into earnings season. Tech's going to be a little later on, the big ones even later so. But it's just the anticipation where the market gets excited, and that could certainly be enough just to take us over that line. And then if we want to talk about targets, when we do observe that weekly close above 237, I love to use Fibonacci extensions

from the lowest lows in that full overall market. So if I'm going back October 2022, yeah, we can get a target of 271 utilizing the Fibonacci extensions at the 127.2 line. So there is a lot of room for upwards momentum if we observe that's breakout out of consolidation that we're seeing right now. All right. So for all of those chart patterns and the terminology that she's thrown out there, basically if these certain levels get hit, success could be get more success. One last question before we leave you, Jessica, that tech trade is the biggest influence on the entire S&P 500. If that were to happen, does that? say that the bull market continues for the broader S&P?

I would certainly believe so. It's a big component of the S&P 500, but it's not as black and white as that. There's certainly more cushion because I see some momentum even within industrials. And like we said coming on at the top of the show, every single sector is showing support at the 13 weekly moving average. And I use the 13, 26, and 40 because we look at the market quarterly. So if one quarter of prices is serving as support, that's a really good sign of a debilful. additional momentum going forward, absolutely.

All right, Jessica Inskip over at stockbrokers.com. Thank you very much. We appreciate it. We'll see you soon. Thank you. I didn't have her peg for a Fibonacci Extension fan. Yeah, I think she's all about the Nautilus shell and trying to figure out some of those. But the idea that you have higher lows. Yes. It sort of establishes the foundation from which a market can move high.

People talk about fantasy sports and ceilings and floors. You kind of like to see those floors get raised every once in a while for those players as well. The floor is low for the Giants. I'm a Niners fan. I'm in a state of flux right now. I'm in this consolidation phase. All right, Dom, good to see it. You got it.

All righty, Contessa, over to you. Well, guys, you can join us October 24th for our CNBC Your Money event. You're going to hear from financial experts who will share advice on how to grow your wealth, achieve your investment goals, and safeguard your money. Who doesn't want to do that? Scan the QR code on your screen or visit CNBCEvents.com slash your money to learn more. As we had to break, check out shares of Trump media hired by nearly 20% today, nearly 90% so far in October on a perceived shift in the election odds. We'll be right back. Welcome back to Power Lunch.

The Nobel Prize in Economics awarded today to a group of three economists for the research into how countries become wealthy and prosperous. Summing up their research at the press conference, one of the winners said, quote, broadly speaking, the work we have done for, favors democracy, which leads us to concerns about China's economy after a huge surge on hopes for stimulus. Chinese stocks have pulled back as those details have just been vague. Eunice Yunus Yunn joins us now. What are you learning about the stimulus and whether it's coming down the pike? Well, Contessa, the details are vague because the problem here is that transparency really isn't part and parcel of the overall policymaking process here. The government has been attempting to message to the market that they want to get more involved in supporting

the economy. But they've been leaving investors wondering about the specifics of this plan. Over the weekend, the finance minister held a much-anticipated briefing and laid out some of the steps. He said the right things, saying that they hope to take the most powerful steps in years to tackle local government debt. They would expand funding for unsold homes, so tackling the troubled property sector, and they hinted at ample room for greater government borrowing. Many investors were expecting to see more, had hoped to see a headline fiscal spending number, but there were some who took it positively. Bank of Ameriqa, for example, called it a policy pivoting point. The Chinese vice premier has been on an inspection tour of real estate projects

to try to encourage people to really push through. those home deliveries and there's been a lot of anticipation that we are going to see more specific soon. In fact, just tonight, the Chinese media had said that the China may raise $845 billion, the equivalent in Remembe, in new special bonds over three years. So mainland Chinese investors would be very happy to hear that news if it does come to fruition, especially after the bad economic data that we had for September. The core inflation, export, import, credit and bank loan growth, all pointing to weaker growth. Contessa? You know, it's interesting because a lot of the commentary that we have heard has been,

it seems like, focused on broader macroeconomic themes and housing in particular. What are you sensing in terms of stimulus for the Chinese consumer? Yeah, that was very small. It really wasn't a big part of the overall announcement and also the weekend discussion and the briefing. And so, and that is key. I mean, there are many people here who've been saying that the fiscal spending component and really addressing the issues for consumption are going to be what's going to drive the economy forward or needs to be, you know, needed to drive the economy forward into next year.

One of the numbers that I'd mentioned, the export import numbers, the trade numbers were supposed to be what would help China get out of this mess. that they would export their way, sell all their stuff for a very competitively priced price point overseas. And now it looks like those numbers are not hitting. So that is a big problem for the Chinese government. They need to be able to rely more on Chinese consumption. And right now, their major problem is that consumers don't have the confidence to spend. And those consumers, and that means that they're not importing as much goods either, right?

The Chinese economy. Yeah. Yeah, yeah, that's right. They're not importing as much. Also, the oil price, oil imports were being affected as well. People are not traveling as much. I was looking at some of the tourism pricing numbers. They were not as good. So, you know, that's a big issue that the government needs to address. And there have been a lot of questions as to why they haven't been doing more. And part of it is some people are saying it's because of the risks from debt that have been kind of traumatized the policymakers here. They don't want to go back there after the financial crisis in 2008, 2009. But the other issue, I think, strikes, kind of hits the point that you were talking about, right, as leading up to the segment. And that is that you have, there's an expectation, there's a belief that Chechen Ping is the one who has to sign off on everything. And so, and that there could be an ideological reason why he doesn't necessarily want to push ahead with growth. So he's complained a lot about welfareism and the idea of fiscal spending in that way.

And then, you know, so just that because of that, that's really seen as another major issue for the way China could go forward. If you do have one person who is in charge who makes all the decisions, and then it doesn't really want to make the decision that prioritizes growth and instead sees national security, for example, or tech dominance as other issues that are more important. All right. Thank you very much, Eunice. Eunice Yun, Yun, in the middle of the night in Beijing, Thanks, as always. Meantam, let's get to Julia Borsden now for a CNBC News update. Hey, Julia. Hi, Tyler. Italy, Germany, France, and Great Britain issued a joint statement today calling for Israel

to end its attacks on the United Nations peacekeeping mission in Lebanon, known as Unifil. The mission has said it is facing repeated attacks from the Israeli military in recent days, which the group of countries said violates international humanitarian law. Israel has called on the UN to move the group out of the area as a single. continues its ground offensive against Hezbollah. Sean Combs, also known as Diddy, is facing a series of new civil lawsuits filed in federal court today. The complaints filed by five people include allegations of sexual assault and rape spanning from 1995 to 2021. Diddy's lawyers claim the new suits are the result of people looking for a payday.

It comes as the music mobile mogul faces a federal sex trafficking indictment in New York. He has pleaded not guilty. And a New Jersey transit light rail operator died today when a commuter train hit a chunk of tree on the tracks. The transit system says 23 others on board were treated for minor injuries. Authorities are now working to determine how the tree ended up on the tracks. Tyler, back over to you. Very interesting. Thank you very much. Julia Borsden reporting. Well, property and casualty insurance carriers saw a strong start to the year with many of them,

seeing big profits and even bigger stock gains in 2024. but a pair of hurricanes slamming the southeast in the past few weeks have thrown a wrench into things. Contessa, who's sitting right here, is going to give us those details next. Well, Moody's just a few hours ago released an estimate of $35 billion to $55 billion in private market insured losses from hurricanes, Milton and Helene. But, of course, the wide scale of damage could throw a real monkey wrench in, this turnaround trend that we've seen for property and casualty insurers this year. The last two years, you saw this industry paying out more in claims and expenses than it took in premium. So that's the combined ratio. And anything that is over 100% shows it's not an underwriting profit.

But a report by the Insurance Information Institute in Milliman showed that the first half of the year, things turned a corner in part. And look, we all have probably noticed this. Property insurance, our car insurance premiums have just soared. insurers have been scrambling to get enough rate to cover their risks. And in part, it's because first half losses, you know, natural catastrophes, were lower than expected. So, Tyler, what you're seeing now is the stocks on these companies have just soared all state and progressive up 67, 58 percent. You're seeing Berkshire Hathaway and Chubb and Travelers and AIG seeing enormous gains because they've been able to raise rates. That's exactly right.

And they're making up for losses. But what we're likely to see with even take Allstate, which is the number four auto insurer in Florida. But remember, auto insurance, when you issue a comprehensive policy, you're responsible for paying on flood claims as well as wind and trees falling on cars and things like that. For cars. But so Allstate might see this as an earnings event. This might disrupt the earnings. It may even be so big that. Allstate then can turn around to its reinsurer and file a claim. But reinsurers, who might

also get hit this earning season, are going to turn around January 1st, hike the rates again, most likely, and then we all start the cycle again of rising rates. It goes again, and it comes back to the consumer who will end up having to pay more ultimately because the insurer is having to pay more for the reinsurance. We have to watch this because it's a complicated situation, and we don't have a great handle yet on what private insured losses are. You can only imagine that there are tens of thousands. of cars and trucks that have been destroyed by flood.

Absolutely. You're absolutely right. All right. Moving on. Shares of Vistra hire after BNP Parabha initiated the stock in an outperform. The best performer on the S&P this year, it is up 240%. But BTIG out with its own note,

warning of a looming correction for AI stocks. Could you buy more Vistra or cash out? We'll find out when we turn to three stock points. Only three. There's three. All right, time for today's three stock launch, and we look at three stocks making moves off of some analyst calls today. Our trader is our friend Victoria Green, CNBC contributor, and CIO at G Squared Private Wealth. Up first, Victoria, is Caterpillar. Those shares are lower after a downgrade from Morgan Stanley, citing risk of downward earnings revision for the heavy equipment maker. Your trade on, the big cat.

For me, it's still the rip here. It's been on a tear since mid-September. And I do like this stock. I just think it's moved too far, too fast. There's so much being better on the China recovery, really driving all these machinery and manufacturing. There's a little bit of uncertainty on data that came out. Their exports were softer on data release Sunday. They've been a little bit vague on exactly what the stimulus is going to be.

We didn't get real numbers. And if you look at U.S. manufacturing, that's been the one weak point in the economy. I think if you look at this, they had declining earnings in Q2. I know a lot of bad news is priced in. They're saying, hey, it might get better. I just am concerned about an inventory bill. I'm concerned that you're just going to see slowing sales, especially in Asia Pacific, which is about 18%.

For me, it's, look, lock in your profits, look somewhere else. This is a good stock, but just really, really expensive right here after a solid September. And I don't think the manufacturing data has been there to back it up. Vistra has been riding the AI-related energy boom here. The company got some attention because it dethroned Nvidia as the best S&P performer year-to-date. $240. That is attention getting BNP Parabreiber. initiating at outperform with a 231 price target.

Would you be a buyer? Absolutely. I think this is a $200 stock easily. If you look at it, we're finally seeing power needs grow, and they're one of the only publicly traded independent operators, so they're not regulated. They can mark to market. They've got great prices on the forward pricing

from their earnings deck last quarter. You can see their trajectories. They're bringing on more and more capacity, and they've got a great marketplace in Texas. And so I look at it and say, okay, people are now starting to do all these tie-on. for data centers that they're going to build near power plants, build new nuclear, build new solar. And we see that as a huge catalyst for them. And so it's a way to play the AI hyperscalor space

without paying the exorbitant multiples that you're seeing in tech. Yes, it's still a little bit cheaper, even at about 26 times forward earnings, still cheaper than a lot of the other AI plays out there. And we are going to need more power. And they've got a footprint everywhere you'd want a footprint. They've got nuclear, they've got solar, they've got natural gas, they don't have a huge amount of coal. And for me, I can see them continue to have these projects online. They've been very shareholder friendly with buybacks as well as dividends. And they should have their max capex probably this year, a little bit lower next year. And they're growing earnings. How could you not like a stock that has a runway to earnings growth as strong as Vistra does?

All right. Let's go to Canada Goose finally. It's sliding today as Wells Fargo downgrades it to underweight, citing challenges facing the luxury outer wear space. What is your trade here on Canada Goose, which is down today. Goose down. No, I think it's goose might be cooked a little bit. Terrible dad pun there. But look, like, this is a sell for me. I think their competition is very strong.

You've got that Arterix brand coming out. That's been stronger selling in China. They had some really good news on that brand in China and bad brand news overall on Canada Goose. And they need to be the cool factor, the it factor for you to pay $1,800 for a jacket. They've struggled with multiple fronts. They're struggling to sell anything beyond the heavyweight jacket,

which is their highest margin piece of clothing out there. They're struggling to move into other parts other than the lightweight jackets, you know, any other clothes that they can put out there. They're not selling as well, and their direct-to-consumer push is slowing. So wholesale has been slowing. The DTC channel isn't rising as fast as wholesale is slowing. And so you look at all these headwinds. They can't get their foothold back in China.

I think they're losing ground to other luxury sports brands, and that could dethrone them as the cool jacket that own this winter. So for me, I think the stock could retest the 10-8. area and maybe push lower. And I just think I'm going to sit out on Canada goose. Canada goose out in the cold. Goose. Cooked. Victoria, thank you. Appreciate it. Always. Still ahead. New York state of mind. The Big Apple sports teams are back in the spotlight after years of disappointment. The Mets and the Yankees both advancing to the league championship series. It is no coincidence. They have some of the highest payrolls in baseball. Let's dive into that next.

All right, let's give you a quick check on the markets. All higher right now. The industrials up 222 points. S&P up 47 or 8 tenths of a percent and the NASDAQ, nearly 1 percent higher. Shares of flutter rising today as Bank of America initiates coverage with a buy and a price target, seeing more than 30 percent upside. The parent of Fandul, the market leader in the nation, also getting positive commentary from JMP securities and Wells Fargo.

And boy, is it a great time of year for the sports better, as you've got the NFL, you have the NFL, you have the NFL starting, NBA season begin soon. You have baseball playoffs. Even better for sports fans in New York is both the Mets and the Yankees will be playing in the league championship series. Today, Mike Ozanian joins us now. You have two teams in New York. You've got the Dodgers in Los Angeles.

Major market teams, Cleveland, let's not leave them out. But, like, how big is this for TV ratings? This is huge. And if you're Major League Baseball, you're dreaming of a Yankees Dodgers World Series. that would be optimal in terms of ad rates, in terms of viewership. I mean, if you get to game seven of a Yankee Dodgers World Series, you could see ads going for $700,000 per 30-second spot. You know who doesn't want that? New Yorkers.

New Yorkers want a subway series. Yeah, but ratings last time we had a subway series were not that spectacular because outside of New York, the ratings aren't that good. Well, you know, like we live in New York, so we're sort of like... You also get, if you got a Dodgers, Yankees World Series, you have the two greatest or most popular players in the game, Otani and Judge. Absolutely, and this translates into huge money. If you go seven games because the minimum number of games, so World Series you're talking four,

60% of the revenue, the gate receipts, goes to the players, 40% to the owners. When you go beyond four games, the ratio switches, 60% to the teams, 40% to the players. So the Yankees could make upwards of $40 million should this series go seven games. What do you think tickets will go for in the after? Let's say there's a subway series, New York versus New York. What would the tickets go for in the aftermarket? And let's say there's a New York, L.A. series. What would the tickets go for?

I would say thousands of dollars, clearly in New York for both. I mean, Mets haven't been there in a long time. The Yankees since 2009. So, I mean, just got to stub up and see what some of the prices are. They're crazy. And then you have tickets, concessions, merchandise, on all of that. Does that all go into some of what the teams are seeing for revenue increase? The two ways you look at the economics of this is the immediate results, which besides the tickets,

you're talking about concessions. If you have a store in your stadium, the team keeps that money as well. But this is also huge for brand building, if you're one of these teams. I mean, Mets fans have been disappointed for so long. Steve Cohen, the owner of the Mets, he's looking to flip that. And a trip to World Series would do exactly that. For the Yankees, they're involved in a lot of other businesses besides baseball. They're involved in soccer. They own a piece of A.C. Milan. They're involved in major

league soccer. So you're talking about extending this through other sponsorships with all your assets. It's an empire. We're going to continue to follow that. Mike. Thank you for coming in. Thank you. Before we go, Lily Ledbetter, an icon of the Equal Pay Movement in America has died at 86 years old. Her activism led to the signing of the Fair Pay Act of 2009 under President Obama, which makes it easier for workers to sue if they discover pay discrimination. Now, in the 90s, after nearly 19 years of working for Good Year, Ledbetter learned she had been earning thousands of dollars less each month than her male counterparts. Later, she sued the company in a case that went all the way to the Supreme Court. And despite losing that case, she became a tireless advocate for gender equity, hailed as a hero, a champion for women and for workers by union leaders and executives alike.

She fought for this cause until the very end. But according to equal rights advocates, women still only earn about 78 cents on the dollar that men do. Black women, 66 cents. Latina, and Native American women barely make more than 50 cents on that dollar. Clearly, there is more work to be done on this front and more work beyond just women. Like when we look at people with disabilities that you want to see more pay equity in the workplace, Lily Ledbetter was an amazing woman. She was a pioneer in that area. And an underappreciated, unknown one, I think. And have the support of her husband when she said, let's go forward and she found out about the pay inequity.

Her husband supported her in that fight that went all the way to the Supreme Court. So it says a lot about the male allies in that fight as well. Yeah, absolutely. Well, she will certainly be missed, but her memory lingers in what she did. That's right. Very, very important. And that will pretty much do it, I guess. Why don't we just end it here?

Market check? Do we do a little market check? Yeah. Well, all the arrows are green right now. Now the industrials up a half percent. NASDAQ also higher. So is the S&P 500. There you got them, all of them.

NASDAQ up almost a full percent. Thanks for watching, Power Lunch. And we'll see you. Closing bell starts right now.