Power Lunch - S&P 500, Nasdaq retreat from records as Nvidia slides 12/9/24

Episode Date: December 9, 2024

The S&P 500 and Nasdaq are retreating from record highs today, with tech shares struggling and investors looking ahead to key inflation data due out this week. Nvidia shares dropped about 3% on the heels of a Chinese regulator announcing it’s investigating the AI chip darling for potentially violating the country’s antimonopoly law. 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.

Good afternoon, everybody, and welcome to Power Launch alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us. The major averages are lower right now. Despite some deal news, it's usually positive for the markets overall. First, Omnicom is buying Interpublic Group of $13 billion as the advertising industry perhaps reshapes in the face of AI. And shares of Hershey are soaring on reports that Mondalese is exploring a takeover of the company. may be a more favorable environment to deals is around the corner. And our friend Chris Grissanti will be happy. His Hershey shares are up 13%. Let's begin, though, with police making an arrest

in the shooting of the CEO of United Healthcare. Bertha Coombs is in New York City with the very latest. Bertha? Kelly, a 26-year-old man is in custody in Altoona, Pennsylvania, with New York investigators headed down to speak with him. According to Mayor Adams, he matches the description of the person they have been looking for. And authorities also credit the social media presence and the media for having put

out that picture of the suspects showing his face, helping to lead to this arrest. Here's what the police commissioner had to say. Earlier this morning in Altoona, Pennsylvania, members of the Altoona Police Department arrested Luigi Mangione, a 26-year-old male on firearms charges. At the time, he is believed to be our person of interest in the brazen targeted murder of Brian Thompson, CEO of United Healthcare last Wednesday in Midtown Manhattan. Police say that he arrived in Altoona by bus. Of course, police also say that the suspect last week left New York by Greyhound bus after, soon after having committed the horrible murder of Ryan Thompson, the CEO of United Healthcare. They also found on him a fake ID that was

also used by the suspect, they say, here in New York with a fake name, fake New Jersey ID, as well as a gun, which investigators say appear to have been 3D printed, as well as a silencer in his bag. And according to multiple reports, they also found a handwritten manifesto. that railed against the health insurance industry. At this point, they believe that this may be suspect, but at this point they have not officially named him as their suspect. Back over to you. So we can presume that this was the result of a tip that was called into police,

either by a customer of the McDonald's or an employee of the McDonald's who recognized this individual of interest based on video footage or the photographs that have been released by New York police? That's correct, Tyler. Apparently it was an employee of the McDonald's who called it in saying that this person resembled the person of interest that they were searching for. Police say basically all of that surveillance footage

and that one image that showed his face were really very, very important in this case. They were able to track his movements, know that he had left the New York City area know that he had done so by bus and certainly traveling by bus if someone is trying to hide their movements is easier than traveling by plane where you have to show a valid ID in order to get onto a plane so they are at this point going to speak with that suspect and try to get more details but this afternoon this

all comes as the family of Brian Thompson is laying him to rest in a private ceremony, you can only imagine that it's a little bit of solace to know that someone is in custody. Bertha, thank you very much. Bertha Coombs reporting from a rainy Manhattan. For more on this developing story and what it means for companies and CEOs, let's bring in Jacob Silverman, the CEO of Global Risk Advisory firm Kroll and Richard Toranzano, chief executive of the Torrenzano Group, a global reputation and high stakes issue management firm. Jacob, let me begin with you.

What are your customers calling and asking you about in terms of how to protect their key people better? First of all, thank you for having me on your show and my condolences to the Thompson family on the tragedy of last week. So we are getting a significant amount of inbound inquiry, as you can imagine. And in the first instance, companies and their executives are asking, well, what do we do? How can we create a scenario and scenario planning that can protect us? It's the basics. What can we do based on where our culture is all about? And the executive travel habits and the executive general habits are all about to make sure that we prevent this type of tragedy from happening again.

So we're getting basically an outpouring of inquiry on what do we do next. Rich, it's good to see you. I know that you believe fervently that it is not merely a question of physical security for executives and key individuals within companies, but the hints and traces and digital fingerprints that they may be leaving intentionally or inadvertently as to their whereabouts. These are public companies in many cases that have an obligation to say who their key people are and where they may. be presenting to the investment community or other things. What's the fine line that a company needs to walk here between sharing the right amount of information about their executives and the executives' whereabouts and the safe amount

of information to disclose? Let's take that in two parts. And hi, Ty and hi, hi Kelly, good afternoon. And I also extend sincere wishes to the family. the board and the management of any company must protect the safety and welfare of employees and their physical assets. There's no question about that. But when they get into the digital world, they're quite behind. Corporations have done an excellent job using the digital world to promote their products. But in some of the actions they've taken the last few days,

taking down pictures of executives, taking down bios of executives, it seems like an overreaction and a not well-thought-out reaction to what the digital. world is today. Its power, its scope, its depth. For example, they, the United Health Care took down the bios and photos of the world. Their executives or their About Me section, as did CVS in a number of other health care organizations. Well, there's dozens of- Can you blame them? Can you blame them? I can't, but let's talk about what they're doing. First of all, there's serious archival sites throughout the internet that can retrieve that information. Secondly, as public companies, most of that information is available on their website in the

investors section in their proxy in other areas. So while there's a good reaction to try to protect, I'm not sure what that's what that's accomplishing. I think the corporate world in this area is a little behind in time. And I think they have to look at this and determine what they're going to do for another example. A few months ago, actually in February, we were called in. by a major security firm.

They were having a problem with the information about their CEO in New York Stock Exchange, a listed company, getting out on the internet, his new home, his weekend home in the Hamptons, new cars with license plate numbers, pictures of his homes, et cetera. And they couldn't understand what this was coming from. So we scrubbed the web. And we found that all that information was coming from his two teenage daughters and his wife on their Facebook postings and their TikTok postings. So while we have to re-educate executives on how to deal with the new world, we may have to re-educate employees and their families on how to deal with this new world.

Although, Jacob, I might say it's an impossible task. People have LinkedIn. They have social media. They have Facebook. You can't expect people to not have some kind of public presence, especially in positions like that. Everything's just too well known these days. I'm curious if you think this threat is going forward, one that would most. mostly continue to center around the health care industry and those executives may be the nervousness they continue to feel or if it's more broad. Well, I think it's more broad. The health care industry certainly is an industry that is right

for people holding grudges and there being a heightened level of anxiety, but there are analogous situations that cross industry. And at the end of the day, whichever industry one is in, the executives have to understand their own habits. There might be some habit, that is required, but you're right, it's impossible to take down one's social media presence. So the protection protocols really have to be geared towards how do we operate in a world, irrespective of industry, that can actually ferret out intelligence well in advance of it becoming an imminent threat. And there are always emerging signals in the world of social media, in the dark web and the regular web, that can be pieced together to inform a view

of how to protect oneself. So, Rich, let's pivot the conversation just a bit. There has been a tremendous amount of really, in my view, kind of heinous backlash against the, but understandable backlash against the health insurance industry. If a health insurer was one of your clients and they were under assault, what would you be advising them to do? Well, first of all, I think this has been going on for a while, as our colleague just said. Business has been under attack for some time.

It was under attack by many of the regulatory agencies in the Biden administration. It goes back to the Occupy Wall Street days. So this is not new for business. I think what we're seeing is the tip of a spear right now pointed directly at the healthcare companies. So long term, there's two things that they need to be thinking about. First, they can't hide. They have to promote their products. They have to promote their company.

They have to promote their executives. How do they do this in a change world that's radically changed in the last few days? You do that by continuing to go out and make speeches, to continue to promote your products, but maybe you have some new protocols in place that are talked about in how you promote them. You can't not have an investor meeting, but you're going to have to have a lot more security around them. You can't not make speeches at industry conference, but executives may have to have more security around. So there are new protocols that have to be in place. I am advising some companies in healthcare business, and very briefly what we're telling them is that you need to talk differently to your customers.

You have to turn a telescope around and see what your customers are really saying. This has been building up for a decade. There's been books written about this. There's been some of the harshness you talked about on the Internet the last few days. This just didn't happen in the last four or five days. This has been building up for a great deal of time. So there's two things they need to do. First, really look at what the customers are saying

and how do they re-approach their customer in a different way. For example, if you ask me to look at my health care or your health care policy and read it, I have no idea how to read that. Most attorneys can't even read it. So you've got to approach your product in a way that is easy to use. with customers. Secondly, you may have to change some policies. For example, I think it was Anthem just a couple of weeks ago was going to cut back on the time of anesthesiologists. And when this happened, they said, well, we're not going to do that. Well, how silly is that? I mean,

the gentleman who's the head of United Health Care talked about unnecessary care. Well, if my doctor wants to give me a test and you say it's unnecessary, I'm going to believe my doctor. I'm not going to believe my insurance company. Well, that taps in, I think, we have to leave it, Rich and here. That taps into some of the anger that has been expressed. And I used a strong word to describe it, some of the reaction to this killing, that in effect made the individual, whoever the individual was who did this, turned that person into some, in some senses, a folk hero for doing what this individual supposedly did.

And now we have to leave it there, gentlemen. This will be a longer conversation. We appreciate your time today. Jacob Silverman of Kroll, Richard Toranzano of the Toranzano Group. We appreciate it. Very interesting. Coming up, valuations are at record highs. Is it a good thing?

Well, it's not the only thing rising. Uncertainty in the U.S. remains high. Geopolitical tensions are spreading. Should you de-risk, we will discuss that next. Welcome back to Power Lunch. Stocks are starting the week to the downside, with deal news being overshadowed by the fall the Syrian government. Bitcoin is lower as well. And a sign worries about geopolitics could be overshadowing enthusiasm, at least for today. Broadly speaking, should you be thinking about derisking

your portfolio? Here to help us answer that is FB Capital Partners, the Director of Research, Mike Bailey. All right, Mike, it's a question everyone's asking with the market run the way that it's been and signs of froth elsewhere. What do you do? So I think the first step is know what you own. Certainly a lot of folks, if you've been long the market, the broader market, S&P 500, It's been a great run, and things have changed. If you look back at sort of the top holdings now, what were those top holdings a few years ago? It's a little bit different. InVinia went from nothing to sort of the number one position.

It's a relatively expensive stock compared to the broader market. That's pulled valuations up. So broader markets are getting a little more expensive, but it's just a reminder. Just spend some time, go back and dig in there. Do you have some overweights? Are you overweight tech or maybe you're overweight the AI theme? It could be a time to just rebalance a little bit and get back more towards a kind of a modest average. But I do think as valuations creep back up to sort of some potentially dangerous levels we saw in late 21, just a very good reminder.

We're towards the end of the year. Take a little break. You know, wipe the dust off the portfolio. Take a look. Just make sure you kind of really understand some of those bigger positions. But you can't afford to be out of the market. And I think this is the conundrum. A lot of people feel where they can say, yeah, I can look at this and think, you know, it's a little frothy.

But I can't get out. I mean, you get out of some of the days the way they end up compounding, even if the market corrects. 20% you still lose money in the long run. Absolutely. So it's time in the market. You do want to be fully invested. That's what we're recommending to our clients. I think the question is, what are you fully invested in? You know, are you sort of involved in some speculative pieces? You know, Bitcoin's out there. Some things are really moving up. Or are you still diversified? If you've got a balanced account and you own bonds and stocks are doing great, hey, maybe it's a time to rotate a little bit out of stocks and pour some money back into bonds and sort of, you know, be ready to live to fight another

day. However, I think one of the things that's really important here as stocks are starting to get more expensive, dig through a little bit. If you own some individual stocks, take a hard look. Are those things looking expensive? And has there been any bumpiness in terms of quarterly earnings? That's something that could really sink a portfolio. A bunch of names, getting expensive. Oh, by the way, missing and lowering. That's really painful. So as long as you've got a diversified portfolio, you've got names looking back the last couple of quarters, they're doing pretty well. those are some names you want to make sure you've got plenty of exposure to. I guess I could have done better with some individual names, but I could have done pretty doggone well with a Schwab 1,000 fund or a total market index fund.

Why wouldn't I just do that and sit and let it sit? Sure, that's one approach. A lot of folks just want to own the broader market. I think, frankly, it goes back to behavioral finances and some stuff we've focused on a lot. Some folks just really struggle with buying individual securities and getting interested. trouble, whether you're anchoring to the purchase price and really struggling for those folks. You might say, you know what, I'm just going to go passive, own the broader market, and I'm not going to touch it.

I'm just going to rebalance back into fixed income if I need to. That's a pretty good approach for a lot of folks. For some, if you work for an employer, let's say you've got a big chunk of employee stock or something like that, that does change the story a little bit. You do have to make sure you're not overweight one particular sector or stock. That might suggest you go back and start to buy some individual stocks to sort of counterbalance some of his big exposures. I've always heard that one of the risks that's more common than people realize is that spouses work for the same company, and as a result, they're totally over-exposed

to that company's securities, that company's 401K, etc. You have to say that on a day that Comcast is down 10%. Yeah. Yeah. Mike, thanks very much. Mike Bailey of FBB Capital Partners. After a quick break, sticking with geopolitical risks, we'll explore how China will fare under round two of Trump in the Oval Office, our market navigator after this. Welcome back to Power Lunch. In a rare day where we're seeing right across the board here for the markets, the NASDAQ, I believe, touched a high earlier today. The Dow was positive, but now the blue chips are down a quarter percent, S&P NASDAQ down about half of one percent. And China is the big news. It's vowing to unveil what it calls more proactive fiscal measures

and moderately looser monetary policy next year to boost domestic consumption. That's according to an official readout of a key policy meeting. And it comes as President-elect Trump as promising tariffs on Chinese-made goods entering here. So how do you best invest in China now? You can see some of the movements here, not much overall for the Chinese stocks, but a lot of the U.S. listed Chinese names in particular. Joining me to make sense of it all is Jason Sue, founder and CIO at Raleant Global Advisors. Jason, we all remember David Tepper's big call on China a couple of months ago.

He said at the time, you should just buy everything. That said, there's been a lot of disappointment at what, you know, there's not like a big bang moment here, but for the stimulus measures either. So what do you think people should do? Well, I mean, first of all, I think Beijing's been somewhat unwavering since the end of September about going to do what it takes to save the economy, whether it's with Trump 2.0 or not, they're going to pump in money. They're going to spend money to really rekindle growth.

Now, I think people are too fixated on specifically what is the right policy, what will work. I don't think anyone knows, but I think the only thing you need to count on, as Teper says, is Beijing will get a fixed. They'll keep throwing money at it until it gets fixed. But they're working sort of against themselves. I mean, they could have not, you know, put the boot on the neck of the tech giants a few years ago. At what point do we really see a meaningful change? But maybe that's a side question to whether the central question of what to own there, do you agree with Teper?

I mean, do you think people should just own a wide basket of Chinese stocks or do something much more tactical? You know, I would say, first of all, you do want to be tactical because this is a market where it pays to be active. And in this case, being tactical right now means you do want to own a broad basket, right? Because it's going to be a lot of money coming in and flooding the market. It's going to lift all boats. I don't think you want to sort of pretend you have a crystal ball and know exactly what stock that water might go toward. I would say right now be tactical, on the broad market, and you're going to do pretty well.

You know, there have been different things like over the years betting on the Chinese consumer. But to the extent that China keeps artificially lowering its currency, it's hard to see them ever having a real vibrant consumer spending economy. So should we just bet on the same old, same old, maybe more of the suppliers, the manufacturers, that kind of thing? You know, I do think so. And I think it's going to take a while for Chinese consumers to regain confidence. It's not that they don't have money to spend, right? This is not the Japan situation where consumer bet too big on home prices and, you know, lost their shirt. But this is where they're sitting on $30 trillion U.S. dollars in bank-like deposits.

That household just don't want to tap and don't want to spend the confidence issue. So I think right now it's going to be the government spending, stimulating. It's going to be stimulating. It's going to be stimulating. So I'd say the consumer plate, you can probably wait for phase two. All right, if we get one. Jason, thanks. Always good to check in with you, Jason Sue, with Revenue.

Raylant. Ty? All right. Thanks, Cal. A head on Power Lunch. Reddit rolling out new AI features. We've got the details on that. We return. Welcome back to Power Lunch. I'm Courtney Reagan with your CNBC News Update. Israeli Prime Minister Benjamin Netanyahu said just moments ago the fall of the Assad regime in Syria could open the door to a hostage deal with Hamas. He says Hamas will be isolated without Syrian support. His announcement comes as National Security Advisor Jake Sullivan is due to travel to the Middle East to discuss a deal. President-elect Trump's pick for Defense Secretary Pete Hegseth is back on the hill today for meetings with several senators. He sat down with Senator Roger Marshall of Kentucky this afternoon as the former Fox News anchor

makes his pitch to lead the Pentagon. Meanwhile, Trump's pick to head the FBI, Cash Patel, and director of National Intelligence pick Tulsi Gabbard are also holding meetings today. An auction house Sotheby's showed off the oldest known stone tablet inscribed with the Ten Commandments today. It will open for bidding on September 18th. The Marble's Lab is about 15. 100 years old. It weighs 155 pounds and is estimated to sell for one to two million dollars. Tyler, I'm surprised the bid wouldn't be higher. Yeah, well, it may go there. Less than the banana.

If a banana with duct tape can go for what, $6 million, right? That's $6.2. That's going to go for more. You'd hope, I guess. I don't know. Back over to you. Thanks, Court. Thanks.

Chairs of Nvidia are lower today after China says it is looking into possible violations of the country's anti-monopoly laws by that company. Eunice Yuni joins us now from Washington with more. Welcome to Washington, Eunice. Thanks, Tyler. Well, the Chinese market regulator said that NVIDIA is under investigation for two reasons. It's suspected of violating China's anti-monopoly law, and it may have breached conditions of China's approval of NVIDIA's 2020 acquisition of Israeli networking company, Melanix. Two of the seven conditions are confidential, so it's still unclear what NVIDIA actually has done. However, one of the conditions, is that Nvidia needs to keep supplying GPU accelerators to China.

So the sale of Nvidia's graphics processor units to China has come under scrutiny by the U.S. for their critical role in the country's AI ambitions. China accounts for about 15% of Nvidia's sales. And the company said that Nvidia wins on merit and it is happy to answer any questions for Chinese regulators. Tai? All right, Eunice.

We actually want to ask you while you're here about China's latest comments on stimulus. The Chinese stocks were soaring today, the K-Web up more than 10%. How seriously should we take these efforts? I think that is much more serious than what we've heard previously. The Chinese President Xi Jinping had chaired a high-level meeting overnight to outline the economic priorities of next year. The readout signals that the leadership is preparing to ramp up stimulus. So investors were very focused on the phrase moderately accommodative monetary policy. that was a phrase that we last heard after the great financial crisis. The policymakers also pledged to use more active.

They said fiscal policies. That's something that investors have been hoping for and to stabilize property, stocks, and trade. It's still, though, unclear how far the leadership is actually going to go, given all their concerns about financial risks and debt. However, many China investors guys are hopeful that 2025 will bring greater fiscal spending and other supportive steps. Among those risks that you, that you, you were thinking of and some of which you mentioned, where do Trump tariffs fit? Are they an afterthought

to the Chinese regime, something that would occasion them to be, quote, moderately accommodative in their monetary policy? Where does it fit? Well, there's a lot of speculation that the reason why China is thinking of ramping up a stimulus is because they are concerned about what the Chinese have described as external factors, such as the Trump administration coming in and hitting the Chinese with very high tariffs. So the government has been doing whatever it can to try to signal to exporters that it's there and it has their back, but it's still unclear exactly how this is all going to pan out. A lot of the authorities are looking to see exactly what the Trump administration is going to do. All right. Very interesting. Eunice, thanks. Great to have you here.

And Reddit's announcing a new AI powered feature. Julia Borson is here with a look and the stock's been on a tear, Julia. That's right. Reddit shares hit an all-time high earlier, today, though have given out much of those gains, but the stock is still up a whopping 380% since the company's IPO in March. One factor driving up the stock, the promise in both search and in AI, which are coming together in Reddit's new product launched today. Reddit's debuting a new tool called Reddit Answers, which uses AI to enable Redditors to ask questions and receive answers from the platform's communities. Now, this is Reddit's biggest AI push yet, aiming to unlock the value of the conversations on its platform, platform which has been criticized for being

hard to navigate. This new tool also aims to make Reddit a bigger player in search, which CEO of Steve Huffman has said would be a key growth driver, saying that Reddit is an attractive alternative to Google search because the answers come from humans. Also today, Morgan Stanley upgraded Reddit to overweight with a price target of $200, saying, quote, given the quality, recency and breadth of Reddit's data, improved search behavior, could lead to materially higher engagement, time spent per user, and ultimately monetization. Morgan Stanley saying things Reddit's U.S. ad unit pricing is still half that of its peers, and its U.S. ad load is at least 40% lower, so search could be a good spot for adding more ads. Kelly? I've been very impressed with Reddit's

rally, and I didn't know, Julia, how much of it was some of the licensing deals that struck with Google, if it was just old-fashioned user growth, that kind of thing. Well, it seems like what they've really done here is continue to deliver on these partnerships, figuring out how to make that wealth of content they have valuable to potential partners, but also just doing a better job of monetizing on the platform. It seems like this next leg of growth

is going to be driven by making Reddit easier to use, easier to navigate, and a big piece of that is AI. And search is incredibly valuable because not only if AI-powered search works, does that make it easier to drive engagement? But then also you have a new spot where you can put ads in between those search results. Very good. Julia, thank you. We appreciate it. Julia Borsden. And still to come, Florida's condo crisis. Potentially hundreds of thousands of dollars and new assessments are looming in the new year, with individual homeowners likely on the

hook to pay them. We've talked about this a little bit already, but we'll get the full story when power lunch returns. Welcome back. Florida's condo market. facing a new cliff. New rules go into the effect at the end of this month, requiring condos at least 30 years old to do inspections and make repairs. It all dates back to that deadly collapse back in 2021. Diane Oleg is here on set with us with a look at what these new rules are going to cost people and what this is doing to the market. Yeah, absolutely, Kelly. As the inspections are done, the bills are coming due and for some associations, costs are in the millions of dollars, meaning condo owners are on the hook. Roughly one million units fall under the jurisdiction of the new rules.

are hoping to sell, others are actually walking away, and still others are looking to investors to bail them out. Longtime Florida real estate analyst Peter Zaluski calls it the condo cliff. The cliff is effectively, I would compare it to what we saw during a Great Recession, which is effectively zombie buildings. These are the units where a small minority are going to have to basically bear the cross or pay for everyone else who's not able to pay, whether they can't or they choose not to pay. In South Florida, which is Miami-Dade, Brower, and Palm Beach counties,

three quarters of all the condo units for sale are more than 30 years old and subject to the new rules. In the usually busy summer season this year, sales were down 21.5% year-over-year. The average price down 2.4%. And in Q3, active listings were up 60%. Stefania Mogulon is an agent in Miami

who says the pool of buyers now is extremely limited. So sellers have to either pay assessments first or slash their price. But there is another exit. A building behind me has been agreed in majority to sell to a large investor who's going to tear down the building and put a luxury waterfront property. I think it's safe to say that foreclosures or short sales may happen. I don't know yet. I haven't seen many yet because again, the investors are buying out the buildings that they feel are in a desirable location. While the prices were only down 2% in the summer seasons, Zaluski says it was only in September that the area really started to get bombarded with information about what was coming. And now there is, of course, a lot of buyer regret, shocker.

So these are buildings of how old and older? 30 years and older. 30 years and older. And they are subject to repairs on roof, structural. Repairs, maintenance, and new assessments. Yes, and they also have to create a fund for the future to do repairs. Yeah. And so people who own the house free and clear, the condo free and clear, some of them are just walking away?

They are because, look, a lot of these are retirees, remember? And they are on a fixed income, fixed budget, and they bought the condo years ago expecting that this would be their budget for the rest of time. And all of a sudden, they're hit with these fees in the hundreds of thousands of dollars. These are not small assessments. And these are not luxury condos. These are not people with tons of extra cash to throw around. So some of them are just saying, I mean, you remember the... foreclosure crisis. Some people just put the keys in.

And who are the, who are these investor buyers? Big developers. Big developers. They're not private equity companies. Some, possibly. But what they really want, they don't want the building. They want the land. They want the land. Yeah. They want to knock down the building. And as we know in Miami, there is great demand. We've called it the great divide of Miami condos. There's the older and then there's a luxury, huge demand for those beautiful new luxury buildings. So they can knock down the old building. I'm surprised. Was there ever any talk of trying to help subsidize these efforts?

Yes. And there are, you know, there are lenders now who are trying to help people out with loans that could go across 30 years. And there's talk in the legislature. The governor had said he wanted to call a special session, but the legislative agents were saying they want to push it back till next year

until they see what some of these fees really are. All right. Diana, thanks very much. Diane Oleg. Applund on pace for its worst day in two years after getting snubbed from joining the S&P 500, stalling its monster run-up in 2024. that trade in three-stock lunch when we were welcome back everybody the s mp 500 just had its quarterly rebalancing with apollo

global and workday set to join the index as of december 23rd replacing corvo and amendum holdings so for today's three-stock lunch we thought we'd trade some names that did not make the cut this time around and here with our trades is brian vendig he is CIO of NJP wealth advisors. Brian, welcome. First up, we're going to go to Aplovin, the app monetization giant on pace for its worst day in more than two years after getting snubbed by the S&P. Now, the shares have had an enormous run-up this year, as you see so far, up almost 800 percent through Friday's market closed. Brian, what do you say here? Well, Tyler, with that run-up, I mean, the Ford P. and the stock is around 100 as I think

about earnings going into next year. And also considering at the heart of the business, yes, it has a great AI tool that helps to support monetization of advertising. But at this point, I would say with the news that came out today and the pullback, it's a little too rich for me to jump in. So if you've been a long-time investor, for me, I would say it's time to cash in and wait for valuations to be a little bit more reasonable and look to the next generation of its AI tool and where it might be going next. All right. So that's a sell on Apploven. Let's see about Trade Desk. The online ad firm lower, but still on pace for its best year since 2020, about an 87% gain. Would you jump in here?

Well, Kelly, another really interesting business. Again, modernization, advertising, giving purchasers the ability to choose. But when considering the fact that it's in a marketplace that there's such high competition and now Amazon's jumping in to this type of business. And we're talking about the areas of online advertising that's outside of Alphabet's exposure, which is only about 40%. That's a long way of saying, I think I'd sell on this one as well and take profits from a really good year and a stock move overall. All right. Our final name this time around is Coinbase, lower for the second time in three sessions and on pace for its worst day in nearly a month. But the crypto sector has seen a huge boost since Election Day on bullishness for deregulation under President-elect Trump.

the stock, Coinbase, up 63% since Election Day, Brian? Well, Tyler, I do like those tailwinds, especially with a lot of the cabinet picks that the Trump administration has put out and also some of the commentary recently about where crypto could go as a means to back the U.S. dollar. And considering that Coinbase really generates majority of its revenues through trading activities, we know that as the word gets out looking at this 50% move, that we recently seen since the election and just Bitcoin alone, I think it really provides a good opportunity for Coinbase to monetize moving forward, but also considering that the regulatory

environments changing and that they did have some issues there with the SEC, I think this might help. And I would just keep an eye on the stock and look for great entry points from here. Would you like, did you like the exchanges better than the cryptos themselves? Well, that's a great question, Tyler. I mean, I think it depends on the investor, because my view is that it's still a speculative space. So I always, again, from a professional management point of view, look for a means to diversify. So I like investing more in the ecosystem than the tokens.

But at the same point in time, with the backdrop of some of these macro opportunities, it should lift tokens, should lift the ecosystem higher if this deregulation and more acceptance of digital assets pervade into our financial system. Let's talk a little bit about the broader markets and whether you think that they are you know, going to turn a little defensive as we move towards the end of the year, or what you expect as we turn into 2025 and a new administration? Yeah, well, I like to quote Billy Joel on this one. You know, he had a song that talked about going to extremes, if you remember, Tyler. And I would say, as long as those policy decisions from Washington and the Fed don't go to extremes, we should fall back

on a good fundamental backdrop. Fed cutting rates maybe two or three times next year, slowing you, U.S. economy slowing consumer spending that should help to bring inflation and rates down. But I still really like earnings. And as long as those outlooks fold with increases greater than 10% year over year, I like the fact that there could be some participation outside of mega-cap tech and helping to support these valuations. So I wouldn't give up on the market right now, but it's probably very easy to say volatility in Q1 as some of these policy pieces play out from our friends in Washington. All right. Well, we'll see. Obviously, it's going to be an interesting time in the markets and across the country and around the world as we all adjust and get ready for a new administration. Brian Vendig, thank you. Appreciate it. Thanks, Tyler. You got it.

And it's your last chance to join our CNBC Financial Adviser Summit tomorrow, December 10th. Industry Insiders will convene to discuss the market trends, emerging risks, and strategic insights that can help advisors better serve their clients. Just scan that Q. You know, because of this, I got to be a lot. You know, because of this, I got to discuss. So do you know John Rogers beat Michael Jordan in one-on-one basketball? Is that right? People, they can't wait for this thing. He was a player at Princeton, I believe. John Rogers was. Yes. If you want more of this hot content, just scan that QR code or visit C&BC.com.

I'm not a bad basketball player either, I'm told. Well, there you go. On the box. That's right. There's more information you want to join their team, so to speak. We'll be right back. And now to the story that's dividing offices in New York City, including our own. Steve Cohen and the New York Mets signing Juan Soto to a $765 million contract,

the biggest deal in sports history. Our Mike Ozanian joins us with some more details on this. Mike, where do we begin? Oh, my goodness, Kelly. I mean, this is a deal that in the big picture could turn the New York baseball scene totally around. You have to go back almost 30 years until the Mets own the tabloids. And that's what this deal could do. They could take the tabloid scene away from the Yankees.

on a payroll sense. We haven't seen a contract like this ever before in baseball, biggest signing bonus ever, and the biggest guaranteed contract in the history of sports and dollar terms. Wow. You got to put a team around him, though. Yeah, you do. You got to put a team around and you've got to find pitching. See, you're like me, old school, Tyler. You know, pitching and defense wins in the World Series where my Yankees fell short. But they can do it. How does one finance a package like this? Now, obviously, in the case of Steve Cohn, who's, worth probably $25 billion, he can write it out of his tip jar. But how do you do it?

How do you finance it? I think that's what he's going to do. He's going to write checks because even in the season that just finished, the Mets were so far above the competitive balance tax. We call it the luxury tax in baseball. He's going to have to pay about $100 million over the payroll. So, you know, you're talking about putting a team around, getting more pitching. What are they going to do with first base with Pete Alonza?

You're going to have to fill that gap. So he's going to, on top of the payroll, top of what he's going to pay Soto, he's going to have to write another enormous check. Do deals like this, the one that was done with Otani a year ago, the one that was done with Judge a year or so ago, do they make the competitive balance in baseball worse? In other words, how in the world can Kansas City and Pittsburgh and Minnesota compete with this kind of money for these kinds of players? They can't, and particularly as we go more into this environment. where the local TV deals on cable are struggling, you know, with the Diamond Sports bankruptcy and so forth. So you're going to have more, it's going to be more encumbered on local ticket,

local sponsorships from stadiums and stuff. It's going to be really, really hard, really impossible. Some people are saying, I know they've said this before, but that baseball, which is the only sport without a cap, it's going to really try to have a cap. There are signing bonuses right there. You look at some of them, $75 million for Soto. Just to sign.

He bets 65 million. Shurs are 50. Shurs are not even basically playing anymore, right? I mean, he's been injured the past three years or so. Is there a point at which this just gets out of control? I mean, or is it now? Some people were saying that when Aaron Judge signed his deal for an annual value of 40 million a year. Don't forget, with Soto, after five years, if the Metsdon, yeah, he's got an option to increase it to an average annual value of 55 million. Now, I know he's a lot younger signing this deal than Aaron Judge was, but still, Otani pitches, hits great.

True. His average annual value is less than Soto's. So, you know. And he's deferring most of it. Look, this is Steve Cohen, the way I see at this. He's going for it, not just in terms of on the field, he's going for it off the field. The Mets last season, only middle of the pack in attendance. Yeah.

I could, you know, bet you my house right now they're going to be right up there this coming season. So he's going to start to get some of that back. But no, as you point out, the gap between the haves and haves-nots is growing. Every other team is going to have to find their Steve Cohen or equivalent to keep this all going. Mike, thanks very much. And for more sports business news, visit cnbc.com slash sport. Meantime, thank you very much for watching the fellow lunch. Closing bell starts right now.